What Aptiv (APTV) Said on Its Q3 Earnings Call

Key Points

• Aptiv reported Q3 revenue of about $3.2 billion, up 2%, with non-automotive growth of 11% offsetting a 1% decline in automotive revenue. Adjusted EBITDA was $567 million, and adjusted EPS was $1.42.
• Non-automotive bookings reached $3.8 billion, more than double the prior-year period, supporting Aptiv’s plan to generate over $3 billion in non-automotive revenue in 2026. The company also secured about $4 billion in quarterly awards and remains on track for its $20 billion bookings target for 2026.
• Aptiv maintained its full-year income statement outlook but lowered the midpoint of free-cash-flow guidance by $25 million to $650 million. For 2027, it flagged risks including chip and commodity inflation, potential vehicle-production declines, and pressure on Intelligent Systems from two German luxury automakers.

Aptiv NYSE: APTV reported third-quarter revenue growth of 2% and an adjusted EBITDA margin of 18%, as growth in non-automotive markets helped offset a modest decline in automotive revenue. The company also maintained its full-year income statement outlook while narrowing its revenue range and lowering the midpoint of its free-cash-flow guidance.

Chair and Chief Executive Officer Kevin Clark said Aptiv generated approximately $3.2 billion in third-quarter revenue and secured roughly $4 billion in new business awards. Year-to-date bookings exceeded $13 billion, and the company said it remains on track to reach its $20 billion bookings target for 2026.

The company repurchased more than $230 million of stock during the quarter, bringing year-to-date repurchases to more than $550 million. Aptiv expects to repurchase at least $650 million by year-end and said it plans to return 100% of free cash flow to shareholders in 2026 and through at least the end of 2027.

Non-Automotive Growth and Booking Momentum

Clark said Aptiv’s non-automotive bookings reached $3.8 billion, more than double the prior-year period. The company is expanding in end markets including aerospace and defense, telecom and datacom, diversified industrials, energy storage, AI data centers, drones and robotics.

Aptiv expects to generate more than $3 billion in 2026 revenue from non-automotive markets, including $2 billion across aerospace and defense, telecom and datacom, and diversified industrials. During the quarter, the company received awards for humanoid robotics in China, data-center and battery-energy-storage connectivity products, medical-device cable assemblies and telecom network-infrastructure software.

The company also expanded partnerships with NVIDIA and Samsung. Aptiv said its NVIDIA collaboration combines NVIDIA edge platforms with Aptiv sensing, compute, software and systems-integration capabilities for physical AI and intelligent-edge systems. Its Samsung partnership centers on use of the Wind River Cloud Platform to support AI-RAN development in Korea.

In automotive, Aptiv cited bookings growth in China, where bookings increased 30% and more than 20% were tied to export programs. Clark said China-based OEM export programs accounted for roughly 10% of Intelligent Systems revenue in 2026 and are expected to reach the mid-teens percentage range in 2027 based on bookings.

Third-Quarter Segment Performance

Chief Financial Officer Varun Laroyia said non-automotive revenue increased 11% in the third quarter, while automotive revenue declined 1%. North American revenue grew 5%, Europe revenue fell 5%, and Asia-Pacific revenue rose 5%. Asia excluding China grew 13%, primarily due to India, while China revenue increased 1% as Intelligent Systems posted its second consecutive quarter of growth in the region.

• Intelligent Systems: Revenue was $1.4 billion, down 3%. Automotive revenue declined 4%, while non-automotive revenue rose 3%. Segment adjusted EBITDA margin contracted 240 basis points, primarily reflecting lower higher-margin software and services revenue and the timing of engineering credits.
• Engineered Components: Revenue was $1.8 billion, up 6%. Automotive revenue increased 2%, and non-automotive revenue rose 16%, driven mainly by diversified industrials. Adjusted EBITDA margin declined 100 basis points due to commodity headwinds, partly offset by higher-volume flow-through.

Adjusted EBITDA totaled $567 million, while adjusted earnings per share were $1.42, down $0.06 year over year. Laroyia said EBITDA margin declined 140 basis points because of product mix, lower software revenue, engineering-credit timing, commodity costs and investments in organic growth initiatives.

Third-quarter free cash flow was $194 million, bringing year-to-date pro forma free cash flow to $44 million. Aptiv attributed the pacing in part to costs associated with the separation of its former Electrical Distribution Systems business, inventory investments intended to improve supply-chain resilience, and seasonality.

2026 Guidance and Fourth-Quarter Outlook

Aptiv maintained its full-year income statement guidance at the midpoint but narrowed its revenue range. The company narrowed its free-cash-flow range and reduced the midpoint by $25 million to $650 million.

Laroyia said the free-cash-flow drag related to spin-related costs and supply-chain-resiliency investments is now expected to total $500 million, compared with an earlier estimate of $450 million. Separation costs are expected to be somewhat lower than planned, while inventory investments are expected to be higher due to inflation.

For the fourth quarter, Aptiv forecast revenue of $3.2 billion at the midpoint, representing adjusted growth of 3%. The company expects adjusted EBITDA of $612 million and an adjusted EBITDA margin of 19.4%, along with earnings per share of $1.45 at the midpoint.

The expected fourth-quarter revenue growth reflects production recovery at a North American OEM and higher commercial-vehicle revenue, partially offset by lower vehicle production. Aptiv expects software and services revenue to remain below the prior-year period due to the timing of enterprise awards.

2027 Outlook Includes Inflation and Production Risks

Aptiv offered preliminary views on 2027, describing an environment shaped by semiconductor and memory-chip inflation, broader commodity inflation, tariffs, potential supply-chain disruptions and vehicle affordability pressures. The company said third-party forecasts as of September called for flat global vehicle production, though Aptiv views that scenario as the high end of its planning range and is also considering a scenario in which production falls 2%.

The company estimates approximately $700 million of semiconductor-price inflation in 2027, primarily related to memory. Laroyia said customer recoveries for these costs would be neutral to EBITDA but would dilute margin because the higher prices passed through to customers would not carry margin.

Aptiv also expects continued pressure in its Intelligent Systems business from two German luxury OEMs through the end of 2027. Clark said the headwind totals roughly $250 million to $300 million, driven by softer schedules on export platforms, program roll-offs and changes in planned vehicle-platform launches. The company expects those pressures to largely abate in 2028.

Despite the near-term uncertainties, Aptiv expects its revenue growth to reaccelerate in 2028. Clark said the company is evaluating the composition of its businesses and product portfolio and plans to provide an update in the first quarter of 2027.

About Aptiv (NYSE:APTV)

Aptiv PLC NYSE: APTV is a global automotive technology company that develops systems and software intended to make vehicles safer, more connected and increasingly automated. Its solutions are used by automakers in passenger vehicles and commercial vehicles worldwide.

The company's product portfolio includes advanced driver-assistance and active-safety systems, vehicle computing platforms, infotainment and connectivity technologies, automated-driving solutions, and electrical and electronic distribution systems.

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