Q2 2026 Aptiv PLC Earnings Call

August 4, 2026

Operator: Good day, and welcome to the Aptiv Q2 2026 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Betsy Frank, Vice President, Investor Relations. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Shelley. Good morning, and thank you for joining Aptiv's second quarter 2026 earnings conference call. The press release and slide presentation can be found on the Investor Relations portion of our website at aptiv.com.

Betsy Miller Frank: Thank you, Shelley. Good morning, thank you for joining Aptiv's Q2 2026 earnings conference call. The press release and slide presentation can be found on the investor relations portion of our website at aptiv.com. Today's review of our financials exclude amortization, restructuring, and other special items and reflect the continuing operations of Aptiv as of 30 June, reflecting the treatment of our EDS segment as a discontinued operation for Q2 2025. The reconciliations between GAAP and non-GAAP measures are included at the back of the slide presentation and the earnings press release. Unless stated otherwise, all references to growth rates are on a pro forma adjusted year-over-year basis. During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings.

Betsy Frank: Thank you, Shelley. Good morning, thank you for joining Aptiv's Q2 2026 earnings conference call. The press release and slide presentation can be found on the investor relations portion of our website at aptiv.com. Today's review of our financials exclude amortization, restructuring, and other special items and reflect the continuing operations of Aptiv as of 30 June, reflecting the treatment of our EDS segment as a discontinued operation for Q2 2025. The reconciliations between GAAP and non-GAAP measures are included at the back of the slide presentation and the earnings press release. Unless stated otherwise, all references to growth rates are on a pro forma adjusted year-over-year basis. During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings.

Speaker #2: Today's review of our financials excludes amortization, restructuring, and other special items, and reflects the continuing operations of Aptiv as of June 30, reflecting the treatment of our EVS segment as a discontinued operation for the second quarter of 2025.

Speaker #2: The reconciliations between GAAP and non-GAAP measures are included at the back of the slide presentation and the earnings press release. Unless stated otherwise, all references to growth rates are on a pro forma adjusted year-over-year basis.

Speaker #2: During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings.

Speaker #2: Joining us today are Kevin Clark, Chair and Chief Executive Officer; and Varun Laroyia, Executive Vice President and Chief Financial Officer. With that, I'll turn the call over to Kevin.

Betsy Miller Frank: Joining us today are Kevin Clark, Chair and Chief Executive Officer, and Varun Laroyia, Executive Vice President and Chief Financial Officer. With that, I'll turn the call over to Kevin.

Betsy Frank: Joining us today are Kevin Clark, Chair and Chief Executive Officer, and Varun Laroyia, Executive Vice President and Chief Financial Officer. With that, I'll turn the call over to Kevin.

Speaker #3: Thank you, Betsy, and thanks, everyone, for joining us this morning. Starting on slide 3, during the second quarter, we generated 2% revenue growth and 10 basis points of EBITDA margin expansion.

Kevin P. Clark: Thank you, Betsy, and thanks, everyone, for joining us this morning. Starting on slide three, during Q2, we generated 2% revenue growth and 10 basis points of EBITDA margin expansion. We continue to demonstrate progress diversifying our business, evidenced by double-digit non-auto revenue growth in the quarter and new business awards in attractive high-growth markets that present expansion opportunities for Aptiv. While we are increasingly optimistic about the long-term opportunities presented in these areas, in the near term, we continue to contend with challenges in our traditional automotive market, which are leading us to lower our 2026 guidance, including prolonged sales weakness in the domestic China market, which is causing local OEMs to reduce H2 production on vehicle platforms for the domestic market, and also leading to a further reduction in schedules from luxury European OEMs for vehicles exported to the China market.

Kevin Clark: Thank you, Betsy, and thanks, everyone, for joining us this morning. Starting on slide three, during Q2, we generated 2% revenue growth and 10 basis points of EBITDA margin expansion. We continue to demonstrate progress diversifying our business, evidenced by double-digit non-auto revenue growth in the quarter and new business awards in attractive high-growth markets that present expansion opportunities for Aptiv. While we are increasingly optimistic about the long-term opportunities presented in these areas, in the near term, we continue to contend with challenges in our traditional automotive market, which are leading us to lower our 2026 guidance, including prolonged sales weakness in the domestic China market, which is causing local OEMs to reduce H2 production on vehicle platforms for the domestic market, and also leading to a further reduction in schedules from luxury European OEMs for vehicles exported to the China market.

Speaker #3: And we continued to demonstrate progress diversifying our business. Evidenced by double-digit non-auto revenue growth in the quarter, and new business awards and attractive, high-growth markets that present expansion opportunities for Aptiv.

Speaker #3: And while we're increasingly optimistic about the long-term opportunities presented in these areas, in the near term, we continue to contend with challenges in our traditional automotive market, which are leading us to lower our 2026 guidance.

Speaker #3: Including prolonged sales weakness in the domestic China market, which is causing local OEMs to reduce second-half production on vehicle platforms for the domestic market, and also leading to a further reduction in schedules from luxury European OEMs for vehicles exported to the China market.

Speaker #3: Varun is going to walk you through how these dynamics and other factors are impacting our guidance for the remainder of the year and what specifically has changed since we last spoke to you.

Kevin P. Clark: Varun is going to walk you through how these dynamics and other factors are impacting our guidance for the remainder of the year and what specifically has changed since we last spoke to you. I will spend a bit more time discussing the actions we are taking, including how we are working to evolve our business mix in and outside of the automotive market to mitigate the challenges we are experiencing today. Now that the separation of EDS is complete, we will continue to evaluate additional opportunities to maximize value for shareholders over the long term. Now let us begin by reviewing our Q2 progress against our strategic priorities. During Q2, we continued the momentum we had established, leveraging our product portfolio and operating capabilities across diverse end markets, including product innovations, where we secured our first Gen 8 radar award, an important component of our ADAS platform.

Kevin Clark: Varun is going to walk you through how these dynamics and other factors are impacting our guidance for the remainder of the year and what specifically has changed since we last spoke to you. I will spend a bit more time discussing the actions we are taking, including how we are working to evolve our business mix in and outside of the automotive market to mitigate the challenges we are experiencing today. Now that the separation of EDS is complete, we will continue to evaluate additional opportunities to maximize value for shareholders over the long term. Now let us begin by reviewing our Q2 progress against our strategic priorities. During Q2, we continued the momentum we had established, leveraging our product portfolio and operating capabilities across diverse end markets, including product innovations, where we secured our first Gen 8 radar award, an important component of our ADAS platform.

Speaker #3: And I'll spend a bit more time discussing the actions we're taking including how we're working to evolve our business mix in and outside of the automotive market to mitigate the challenges we're experiencing today.

Speaker #3: And now that the separation of EDS is complete, we'll continue to evaluate additional opportunities to maximize value for shareholders over the long term. Now, let's begin by reviewing our second quarter progress against our strategic priorities.

Speaker #3: During the second quarter, we continued the momentum we'd established, leveraging our product portfolio and operating capabilities across diverse end markets. Including product innovations, where we secured our first Gen 8 radar award and important component of our EDS platform.

Speaker #3: Penetration into new end markets, where the products we've developed for automotive have applications in other markets, reflected in the award from Robust AI, which I'll talk more about later.

Kevin P. Clark: Penetration into new end markets, where the products we have developed for automotive have applications in other markets, reflected in the award from Robust.AI, which I will talk more about later. An expansion of our software partnership ecosystem with leading-edge AI players, including most recently with NVIDIA. This list represents a small portion of the $5 billion of new business awards during Q2, bringing our year-to-date total to $10 billion, putting us on track for our $20 billion full-year target. We also continue to increase the resiliency of our business model by leveraging our digital twin and n-tier tracking capabilities to provide our automotive and adjacent market customers with a step change in supply chain visibility. Reaching long-term supply agreements is part of our supply chain resiliency efforts.

Kevin Clark: Penetration into new end markets, where the products we have developed for automotive have applications in other markets, reflected in the award from Robust.AI, which I will talk more about later. An expansion of our software partnership ecosystem with leading-edge AI players, including most recently with NVIDIA. This list represents a small portion of the $5 billion of new business awards during Q2, bringing our year-to-date total to $10 billion, putting us on track for our $20 billion full-year target. We also continue to increase the resiliency of our business model by leveraging our digital twin and n-tier tracking capabilities to provide our automotive and adjacent market customers with a step change in supply chain visibility. Reaching long-term supply agreements is part of our supply chain resiliency efforts.

Speaker #3: And expansion of our software partnership ecosystem, with leading-edge AI players, including most recently with NVIDIA. This list represents a small portion of the $5 billion of new business awards during the second quarter, bringing our year-to-date total to $10 billion.

Speaker #3: Putting us on track for our $20 billion full-year target. We also continue to increase the resiliency of our business model, by leveraging our digital twin and end-tier tracking capabilities to provide our automotive and adjacent market customers with a step change in supply chain visibility.

Speaker #3: And reaching long-term supply agreements is part of our supply chain resiliency efforts. These are both great examples of the actions we've taken to enhance the robustness of our operating model, better enabling us to keep our customers connected in this dynamic environment.

Kevin P. Clark: These are both great examples of the actions we have taken to enhance the robustness of our operating model that are enabling us to keep our customers connected in this dynamic environment. It is one of the reasons we were recently recognized as Supplier of the Year by Ford in the supply chain category. On capital allocation, we repurchased $250 million of our shares in Q2, bringing our year-to-date total to $325 million, with an intention to repurchase a similar amount in H2 of the year and bring the full-year total to over $600 million. Over the next few years, we are committed to returning approximately half of our free cash flow to shareholders through share repurchases while simultaneously pursuing smaller bolt-on M&A transactions to diversify the business and better position us for the long term.

Kevin Clark: These are both great examples of the actions we have taken to enhance the robustness of our operating model that are enabling us to keep our customers connected in this dynamic environment. It is one of the reasons we were recently recognized as Supplier of the Year by Ford in the supply chain category. On capital allocation, we repurchased $250 million of our shares in Q2, bringing our year-to-date total to $325 million, with an intention to repurchase a similar amount in H2 of the year and bring the full-year total to over $600 million. Over the next few years, we are committed to returning approximately half of our free cash flow to shareholders through share repurchases while simultaneously pursuing smaller bolt-on M&A transactions to diversify the business and better position us for the long term.

Speaker #3: And as one of the reasons we were recently recognized as supplier of the year by Ford in the supply chain category. On capital allocation, we repurchased $250 million of our shares in the second quarter, bringing our year-to-date total to $325 million.

Speaker #3: With an intention to repurchase a similar amount in the second half of the year, and bring the full-year total to over $600 million. And over the next few years, we're committed to returning approximately half of our free cash flow to shareholders, through share repurchases.

Speaker #3: While simultaneously pursuing smaller bolt-on M&A transactions to diversify the business and better position us for the long term. Turning to review our business segments through the lens of the automotive and non-automotive end markets we serve.

Kevin P. Clark: Turning to review our business segments through the lens of the automotive and non-automotive end markets we serve. Starting with the automotive market highlights during the quarter, we made some meaningful progress expanding our business with leading OEMs in Asia Pacific driving growth in new business bookings across next generation technology areas, including our full stack Gen 6 ADAS system and in-cabin solutions like driver and cabin monitoring. Notable program launches in the quarter included within the Intelligent Systems segment, a full tech stack ADAS award across additional vehicle lines of a large European OEM, demonstrating the flexibility and scalability of our solutions and continued strength of our technology partnership. The launch of our next generation digital cockpit for a luxury European OEM, incorporating software-enabled functionality via over-the-air updates and lifecycle management capabilities.

Kevin Clark: Turning to review our business segments through the lens of the automotive and non-automotive end markets we serve. Starting with the automotive market highlights during the quarter, we made some meaningful progress expanding our business with leading OEMs in Asia Pacific driving growth in new business bookings across next generation technology areas, including our full stack Gen 6 ADAS system and in-cabin solutions like driver and cabin monitoring. Notable program launches in the quarter included within the Intelligent Systems segment, a full tech stack ADAS award across additional vehicle lines of a large European OEM, demonstrating the flexibility and scalability of our solutions and continued strength of our technology partnership. The launch of our next generation digital cockpit for a luxury European OEM, incorporating software-enabled functionality via over-the-air updates and lifecycle management capabilities.

Speaker #3: Starting with the automotive market highlights during the quarter, we made some meaningful progress expanding our business with leading OEMs in Asia Pacific and driving growth in new business bookings across next-generation technology areas, including our full-stack Gen 6 ADAS system and in-cabin solutions like Driver and Cabin Monitoring.

Speaker #3: Notable program launches in the quarter included within the intelligence systems segment a full tech-stack ADAS award across additional vehicle lines of a large European OEM, demonstrating the flexibility and scalability of our solutions and continued strength of our technology partnership.

Speaker #3: And the launch of our next-generation digital cockpit for a luxury European OEM, incorporating software-enabled functionality via over-the-air updates and lifecycle management capabilities. Within the Engineered Components segment, the integration of our high-voltage interconnects on a European OEM's next-gen, high-powered 800-volt architecture program.

Kevin P. Clark: Within the Engineered Components segment, the integration of our high voltage interconnects on a European OEM's next gen high-powered 800-volt architecture program. We also continue to innovate across our product portfolio, evidenced by the introduction of our advanced occupancy classification system, which is the industry's first occupant detection system that utilizes AI ML-based computer vision software and is powered entirely by an in-cabin camera, streamlining vehicle systems architecture, as well as lowering cost. We also secured several important new business awards in the quarter. Within Intelligent Systems, these include a Gen 8 radar award by Volvo Cars for its next gen software-defined vehicle platform, where we will enable robust perception across increasingly complex environments and driving scenarios. As well as an award from a large North American OEM's next generation software-defined vehicle architecture, a critical milestone in the transition to more centralized vehicle architectures.

Kevin Clark: Within the Engineered Components segment, the integration of our high voltage interconnects on a European OEM's next gen high-powered 800-volt architecture program. We also continue to innovate across our product portfolio, evidenced by the introduction of our advanced occupancy classification system, which is the industry's first occupant detection system that utilizes AI ML-based computer vision software and is powered entirely by an in-cabin camera, streamlining vehicle systems architecture, as well as lowering cost. We also secured several important new business awards in the quarter. Within Intelligent Systems, these include a Gen 8 radar award by Volvo Cars for its next gen software-defined vehicle platform, where we will enable robust perception across increasingly complex environments and driving scenarios. As well as an award from a large North American OEM's next generation software-defined vehicle architecture, a critical milestone in the transition to more centralized vehicle architectures.

Speaker #3: We also continue to innovate across our product portfolio, evidenced by the introduction of our advanced occupancy classification system which is the industry's first occupant detection system that utilizes AI/ML-based computer vision software and is powered entirely by an in-cabin camera.

Speaker #3: Streamlining vehicle systems architecture as well as lowering cost. We also secured several important new business awards in the quarter, with an intelligence systems these included Gen 8 radar award by Volvo Cars for its next-gen software-defined vehicle platform.

Speaker #3: Where we will enable robust perception across increasingly complex environments and driving scenarios, as well as an award from a large North American OEM's next-generation software-defined vehicle architecture.

Speaker #3: A critical milestone in the transition to more centralized vehicle architectures. And with our engineered components, these include high-voltage bus bars across the North America and China markets for battery pack and charging applications, demonstrating continued penetration of both existing and new OEM customers on their next-generation EV platforms, and the continued expansion of our business with the leading China local OEMs across our key product lines.

Kevin P. Clark: Within Engineered Components, these include high voltage busbars across the North America and China markets for battery pack and charging applications, demonstrating continued penetration of both existing and new OEM customers on their next generation EV platforms, the continued expansion of our business with the leading China local OEMs across our key product lines, including high-speed cable assemblies and high voltage inlets across platforms for both the domestic and the overseas markets. Moving to slide six to discuss our progress in non-automotive markets, which reflects the applicability of our technologies across a diverse set of end markets and the strong operating execution by our team. Starting with program launches during the quarter. In Engineered Components, we launched a new program providing high performance interconnects for a utility scale energy storage provider that leverages the same technology we're already delivering in automotive.

Kevin Clark: Within Engineered Components, these include high voltage busbars across the North America and China markets for battery pack and charging applications, demonstrating continued penetration of both existing and new OEM customers on their next generation EV platforms, the continued expansion of our business with the leading China local OEMs across our key product lines, including high-speed cable assemblies and high voltage inlets across platforms for both the domestic and the overseas markets. Moving to slide six to discuss our progress in non-automotive markets, which reflects the applicability of our technologies across a diverse set of end markets and the strong operating execution by our team. Starting with program launches during the quarter. In Engineered Components, we launched a new program providing high performance interconnects for a utility scale energy storage provider that leverages the same technology we're already delivering in automotive.

Speaker #3: Including high-speed cable assemblies and high-voltage inlets across platforms for both the domestic and the overseas markets. Moving to slide 6 to discuss our progress in non-automotive markets, which reflects the applicability of our technologies across a diverse set of end markets, and the strong operating execution by our team.

Speaker #3: Starting with program launches during the quarter. An engineered components we launched a new program providing high-performance interconnects for a utility-scale energy storage provider, that leverages the same technology we're already delivering in automotive.

Speaker #3: And in Intelligent Systems, we launched our integrated cockpit controller for one of the industry-leading commercial vehicle OEMs. In terms of product development in the second quarter, this included expanding our high-performance interconnect product lines for complex aerospace and defense platforms, where space-efficient, high-density solutions are critical for customers.

Kevin P. Clark: In Intelligent Systems, we launched our integrated cockpit controller for one of the industry leading commercial vehicle OEMs. In terms of product development in Q2, this included expanding our high performance interconnect product lines for complex aerospace and defense platforms where space efficient, high density solutions are critical for customers. Collaborating on an optimized power solutions for 800-volt DC architectures with a leading developer of power electronics for next generation infrastructures, including data centers, a market where we experience strong commercial momentum and see very meaningful growth opportunities over the next few years that will further accelerate with the transition to 800-volt architectures. Lastly, achieving a key software milestone in cybersecurity rating for our enterprise Linux operating system, which will expand our potential opportunities in the government and the defense markets.

Kevin Clark: In Intelligent Systems, we launched our integrated cockpit controller for one of the industry leading commercial vehicle OEMs. In terms of product development in Q2, this included expanding our high performance interconnect product lines for complex aerospace and defense platforms where space efficient, high density solutions are critical for customers. Collaborating on an optimized power solutions for 800-volt DC architectures with a leading developer of power electronics for next generation infrastructures, including data centers, a market where we experience strong commercial momentum and see very meaningful growth opportunities over the next few years that will further accelerate with the transition to 800-volt architectures. Lastly, achieving a key software milestone in cybersecurity rating for our enterprise Linux operating system, which will expand our potential opportunities in the government and the defense markets.

Speaker #3: And collaborating on optimized power solutions for 800-volt DC architectures with a leading developer of power electronics for next-generation infrastructures, including data centers. This is a market where we've experienced strong commercial momentum and see very meaningful growth opportunities over the next few years.

Speaker #3: That will further accelerate with the transition to 800-volt architectures. And lastly, achieving a key software milestone in cybersecurity rating for our enterprise Linux operating system, which will expand our potential opportunities in the government and the defense markets.

Speaker #3: A few notable business awards in the second quarter included robust AI selection of our intelligent perception solutions and compute, including AI- and ML-based sensor fusion powered by our innovative Pulse sensor for its Gen 3 Carter-Cobot.

Kevin P. Clark: A few notable business awards in Q2 included Robust.AI selection of our intelligent perception solutions and compute, including AI and ML-based sensor fusion powered by our innovative PULSE Sensor for its Gen 3 Carter Cobot, which I'll talk more about on the next slide. In Engineered Components, an award for our high performance cable management and protection solutions for large scale solar energy and battery storage projects in the US market. Lastly, we continue to expand our commercial presence in non-auto markets through our partnership ecosystem. First with NVIDIA, where we extended our partnership to provide Aptiv's production grade software to Edge AI customers using NVIDIA Compute. Second, with Kyndryl, which is an important extension of our enterprise partner ecosystem where Kyndryl will deploy our Wind River software as part of its mission critical solutions portfolio.

Kevin Clark: A few notable business awards in Q2 included Robust.AI selection of our intelligent perception solutions and compute, including AI and ML-based sensor fusion powered by our innovative PULSE Sensor for its Gen 3 Carter Cobot, which I'll talk more about on the next slide. In Engineered Components, an award for our high performance cable management and protection solutions for large scale solar energy and battery storage projects in the US market. Lastly, we continue to expand our commercial presence in non-auto markets through our partnership ecosystem. First with NVIDIA, where we extended our partnership to provide Aptiv's production grade software to Edge AI customers using NVIDIA Compute. Second, with Kyndryl, which is an important extension of our enterprise partner ecosystem where Kyndryl will deploy our Wind River software as part of its mission critical solutions portfolio.

Speaker #3: Which I'll talk more about on the next slide. And an engineered components award for our high-performance cable management and protection solutions for large-scale solar energy and battery storage projects in the U.S. market.

Speaker #3: Lastly, we continue to expand our commercial presence in non-auto markets through our partnership ecosystem, first with Nvidia, where we've extended our partnership to provide Aptive's production-grade software to edge AI customers using Nvidia Compute, second with Kyndryl, which is an important extension of our enterprise partner ecosystem where Kyndryl will deploy our WindRiver software as part of its mission-critical solutions portfolio.

Speaker #3: Together, they enable customers to more easily deploy and operate mission-critical systems, while accelerating adoption through joint go-to-market initiatives and integrated offerings. Turning to slide 7, I want to spend a few minutes providing an overview of our progress capturing opportunities in new end markets, which we're confident will meaningfully diversify our non-automotive revenue mix over the next few years.

Kevin P. Clark: Together, they enable customers to more easily deploy and operate mission critical systems while accelerating adoption through joint go-to-market initiatives and integrated offerings. Turning to slide seven. I want to spend a few minutes providing an overview of our progress capturing opportunities in new end markets, which we're confident will meaningfully diversify our non-automotive revenue mix over the next few years. The robotics and drone markets are higher growth, higher margin sectors where opportunity has materialized much faster than we previously anticipated, driven by the same demands for autonomous solutions that have been transforming automotive over the past decade. Since initially outlining our addressable market opportunity and growth targets for non-automotive markets, we've achieved the following.

Kevin Clark: Together, they enable customers to more easily deploy and operate mission critical systems while accelerating adoption through joint go-to-market initiatives and integrated offerings. Turning to slide seven. I want to spend a few minutes providing an overview of our progress capturing opportunities in new end markets, which we're confident will meaningfully diversify our non-automotive revenue mix over the next few years. The robotics and drone markets are higher growth, higher margin sectors where opportunity has materialized much faster than we previously anticipated, driven by the same demands for autonomous solutions that have been transforming automotive over the past decade. Since initially outlining our addressable market opportunity and growth targets for non-automotive markets, we've achieved the following.

Speaker #3: The robotics and drone markets are higher-growth, higher-margin sectors, where opportunity is materialized much faster than we previously anticipated, driven by the same demands for autonomous solutions that have been transforming automotive over the past decade.

Speaker #3: Since initially outlining our addressable market opportunity and growth targets for non-automotive markets, we've achieved the following: In robotics, we secured partnerships with three leading robotics manufacturers, and one of those partnerships has advanced to a meaningful commercial agreement.

Kevin P. Clark: In robotics, we secured partnerships with three leading robotics manufacturers, and one of those partnerships has advanced to a meaningful commercial agreement, and we expect to be making additional commercial announcements during the balance of the year. In drones, in July, we secured our first commercial award from a leading drone manufacturer with total lifetime revenues of over $500 million over a 5-year program. This award will be included in our Q3 bookings numbers. We're actively engaged in discussions with several drone manufacturers that we expect to translate into commercial agreements during the balance of the year. The content per device opportunity in the robotics and drone markets are significant, and our initial awards represent a large portion of that total content opportunity. Both of these markets present time to market advantages versus our experience in automotive.

Kevin Clark: In robotics, we secured partnerships with three leading robotics manufacturers, and one of those partnerships has advanced to a meaningful commercial agreement, and we expect to be making additional commercial announcements during the balance of the year. In drones, in July, we secured our first commercial award from a leading drone manufacturer with total lifetime revenues of over $500 million over a five-year program. This award will be included in our Q3 bookings numbers. We're actively engaged in discussions with several drone manufacturers that we expect to translate into commercial agreements during the balance of the year. The content per device opportunity in the robotics and drone markets are significant, and our initial awards represent a large portion of that total content opportunity. Both of these markets present time to market advantages versus our experience in automotive.

Speaker #3: And we expect to be making additional commercial announcements during the balance of the year. In drones, in July we secured our first commercial award from a leading drone manufacturer.

Speaker #3: With total lifetime revenues of over $500 million, over a five-year program. This award will be included in our third quarter bookings numbers. We're actively engaged in discussions with several drone manufacturers that we expect to translate into commercial agreements during the balance of the year.

Speaker #3: The content per device opportunity in the robotics and drone markets is significant, and our initial awards represent a large portion of that total content opportunity.

Speaker #3: And both of these markets present time-to-market advantages versus our experience in automotive. In summary, we're increasingly confident in the broad relevance of our product portfolio across multiple end markets, which will significantly change our business mix.

Kevin P. Clark: In summary, we're increasingly confident in the broad relevance of our product portfolio across multiple end markets, which will significantly change our business mix. We have a high degree of confidence in achieving annual revenues from the robotics and drone markets of about $300 million over the next few years. We believe we're also uniquely positioned to benefit from growth opportunities in the space, energy storage, and data center markets, which we'll talk more about in the future. I'll now turn the call over to Varun to go through our financial results and guidance in more detail.

Kevin Clark: In summary, we're increasingly confident in the broad relevance of our product portfolio across multiple end markets, which will significantly change our business mix. We have a high degree of confidence in achieving annual revenues from the robotics and drone markets of about $300 million over the next few years. We believe we're also uniquely positioned to benefit from growth opportunities in the space, energy storage, and data center markets, which we'll talk more about in the future. I'll now turn the call over to Varun to go through our financial results and guidance in more detail.

Speaker #3: We have a high degree of confidence in achieving annual revenues from the robotics and drone markets of about $300 million over the next few years.

Speaker #3: We believe we're also uniquely positioned to benefit from growth opportunities in the space, energy storage, and data center markets, which we'll talk more about in the future.

Speaker #3: I'll now turn the call over to Verran to go through our financial results and guidance in more detail.

Speaker #2: Thanks, Kevin, and good morning, everyone. Starting on slide 8 with our second quarter financial results. We delivered revenues of $3.3 billion, which grew at an adjusted rate of 2% and were just shy of the midpoint of our guidance.

Varun Laroyia: Thanks, Kevin, good morning, everyone. Starting on slide eight with our second quarter financial results. We delivered revenues of $3.3 billion, which grew at an adjusted rate of 2% and were just shy of the midpoint of our guidance. Looking at revenue growth by region, North America grew 10%, driven by strength across both segments. In Europe, revenue was down 8%, primarily reflecting volume pressures with select luxury OEMs, predominantly in Intelligent Systems. In Asia Pacific, revenue increased 6%, including 5% growth in China, driven by improved mix with local OEMs, partially offset by a slowdown in production for the domestic market. Adjusted EBITDA totaled $613 million, and Adjusted EBITDA margin increased 10 basis points. This came in ahead of our guidance due to the timing of recoveries and operating performance. FX and commodities amounted to a 30 basis point headwind to margin in line with our expectations.

Speaker #2: Looking at revenue growth by region, North America grew 10%, driven by strength across both segments. In Europe, revenue was down 8%, primarily reflecting volume pressures with select luxury OEMs, predominantly in Intelligent Systems.

Speaker #2: And in Asia Pacific, revenue increased 6%, including 5% growth in China, driven by improved mix with local OEMs, partially offset by a slowdown in production for the domestic market.

Speaker #2: Adjusted EBITDA totaled $613 million, and adjusted EBITDA margin increased 10 basis points. This came in ahead of our guidance due to the timing of recoveries and operating performance.

Speaker #2: FX and commodities amounted to a 30 basis point headwind to margin, in line with our expectations. Earnings per share was $1.63 and increased of 12 cents from the new active performer results in Q2 2025, reflecting higher operating income and the benefit of share repurchases and interest other income partially offset by higher tax expense.

Varun Laroyia: Earnings per share was $1.63, an increase of $0.12 from the New Aptiv pro forma results in Q2 2025, reflecting higher operating income, the benefit of share repurchases, and interest other income, partially offset by higher tax expense. Free cash flow for the quarter was an outflow of $33 million and included approximately $70 million in cash separation costs associated with the Versigent spin-off, which we highlighted last quarter. Moving to slide nine and starting with highlights on the consolidated business. We generated strong results in strategically important non-automotive revenues with 12% growth while absorbing some customer mix headwinds in our automotive business in the second quarter, where revenues declined 1%.

Speaker #2: Free cash flow for the quarter was an outflow of $33 million and included approximately $70 million in cash separation costs associated with the Vertiv spin-off, which we highlighted last quarter.

Speaker #2: Moving to slide 9 and starting with highlights on the consolidated business. We generated strong results in strategically important non-automotive revenues with 12% growth, while absorbing some customer mix headwinds in our automotive business in the second quarter, where revenues declined 1%.

Speaker #2: Adjusted EBITDA margin increased 10 basis points, driven by flow-through on revenue growth, strong performance across material and manufacturing, and a benefit in timing of certain recoveries.

Varun Laroyia: Adjusted EBITDA margin increased 10 basis points, driven by flow-through on revenue growth, strong performance across material and manufacturing, and a benefit in timing of certain recoveries, more than offsetting the impact of stranded costs following the Versigent spin, which we are aggressively working to eliminate. Turning to Intelligent Systems, revenue of $1.5 billion was flat versus the prior year, which reflects strength in the non-auto, which was driven by software and services. This was offset by automotive revenues, which were impacted by weakness with certain European OEMs and a lower production at a North American OEM impacted by a supplier fire. Intelligent Systems Adjusted EBITDA margin declined 120 basis points, primarily driven by investments in non-auto markets and the impact of stranded costs.

Speaker #2: More than offsetting the impact of stranded costs following the Vertiv divestiture, which we are aggressively working to eliminate. Turning to Intelligent Systems, revenue of $1.5 billion was flat versus the prior year, which reflects strength in non-auto, which was driven by software and services.

Speaker #2: And this was offset by automotive revenues, which were impacted by weakness with certain European OEMs and lower production at a North American OEM impacted by a supplier fire.

Speaker #2: Intelligence systems adjusted EBITDA margin declined 120 basis points, primarily driven by investments in non-auto markets and the impact of stranded costs. Moving to engineered components, revenue of $1.8 billion grew 3% versus the prior year, driven by double-digit growth in non-auto markets and most specifically in diversified industrials and aerospace and defense.

Varun Laroyia: Moving to Engineered Components, revenue of $1.8 billion grew 3% versus the prior year, driven by double-digit growth in non-auto markets and most specifically in diversified industrials and aerospace and defense. While automotive revenues were essentially flat. Adjusted EBITDA margin increased 100 basis points and reflects flow-through on volume growth, favorable timing of the previously mentioned recoveries, and performance initiatives, partially offset by stranded costs. Turning to our full-year 2026 financial guidance on slide 10. As a reminder, historical New Aptiv pro forma financials are on the investor relations website under the quarterly financial section, and those correspond to our guidance that treats Q1 as New Aptiv pro forma. Starting with the full year, we now expect revenue in the range of $12.6 billion to $12.8 billion, which implies adjusted growth of 2% at the midpoint. I'll discuss the changes here in detail on the next slide.

Speaker #2: While automotive revenues were essentially flat. Adjusted EBITDA margin increased 100 basis points, and reflects flow-through on volume growth, favorable timing of the previously mentioned recoveries, and performance initiatives partially offset by stranded costs.

Speaker #2: Turning to our full year 2026 financial guidance on slide 10. As a reminder, historical new active performer financials are on the investor relations website under the quarterly financials section.

Speaker #2: And those correspond to our guidance that treats Q1 as new active performer. Starting with the full year, we now expect revenue in the range of $12.6 billion to $12.8 billion, which implies adjusted growth of 2% at the midpoint.

Speaker #2: I'll discuss the changes here in detail on the next slide. We expect adjusted EBITDA in the range of $2.31 billion to $2.37 billion, and an EBITDA margin of 18.4% at the midpoint.

Varun Laroyia: We expect adjusted EBITDA in the range of $2.31 billion to $2.37 billion and an EBITDA margin of 18.4% at the midpoint, reflecting the impact of lower revenue growth, which is partially offset by performance. We now expect adjusted earnings per share in the range of $5.60 to $5.80, with a midpoint of $5.70 reflecting lower operating earnings, partially offset by a slightly lower effective tax rate and a lower share count. This also includes the projected impact of an additional $300 million in share repurchases through the remainder of the year, as Kevin mentioned. Lastly, free cash flow is expected to be in the range of $625 million to $725 million, reflecting the reduction in EBITDA.

Speaker #2: Reflecting the impact of lower revenue growth, which is partially offset by performance, we now expect adjusted earnings per share in the range of $5.60 to $5.80.

Speaker #2: The midpoint of $5.70 reflects lower operating earnings, partially offset by a slightly lower effective tax rate and a lower share count. This also includes the projected impact of an additional $300 million in share repurchases through the remainder of the year, as Kevin mentioned.

Speaker #2: Lastly, free cash flow is expected to be in the range of $625 million to $725 million, reflecting the reduction in EBITDA. As a reminder, this includes the one-time cash separation costs associated with the Vertiv spin-off, which have already been largely incurred year to date.

Varun Laroyia: As a reminder, this includes the one-time cash separation costs associated with the Versigent spin-off, which have already been largely incurred year-to-date, and the continued investments in supply chain resiliency for semiconductors. For Q3 specifically, we expect adjusted revenue growth of 1% at the midpoint, adjusted EBITDA and EBITDA margin of $560 million and 17.7% at the midpoint, and earnings per share of $1.30 at the midpoint. Turning back to our full-year guidance to discuss the key changes to revenue in further detail. We are reducing full-year revenue guidance at the midpoint by $300 million, which reflects the following. First, approximately $150 million related to changes in customer production schedules. These schedule revisions are primarily related to weakness in the domestic China market, with both local China OEMs and European OEMs that export to China.

Speaker #2: And the continued investments in supply chain resiliency for semiconductors. For the third quarter specifically, we expect adjusted revenue growth of 1% at the midpoint, adjusted EBITDA and EBITDA margin of $560 million and 17.7% at the midpoint, and earnings per share of $1.30 at the midpoint.

Speaker #2: Turning back to our full-year guidance to discuss the key changes to revenue in further detail, we are reducing full-year revenue guidance at the midpoint by $300 million, which reflects the following:

Speaker #2: First, approximately 150 million dollars related to changes in customer production schedules. These schedule revisions are primarily related to weakness in the domestic China market, with both local China OEMs and European OEMs that export to China.

Speaker #2: Second, $100 million related to delays in program launches and ramps, specifically a delayed ramp in production volumes on certain programs in China, and a launch with a European OEM where the launch is delayed by the OEM and we did not benefit from the expansion to additional car lines as we originally anticipated.

Varun Laroyia: Second, $100 million related to delays in program launches and ramps, specifically, delayed ramp in production volumes on certain programs in China, and the launch with a European OEM where the launch is delayed by the OEM, and we did not benefit from the expansion to additional car lines as we originally anticipated. Finally, approximately $50 million related to the timing of enterprise sales in software and services. While these items have impacted both business segments, the Intelligent Systems business is disproportionately impacted by the above factors. Now translating this to the implied ramp in year-over-year revenue growth from H1 to H2 that we outlined last quarter. As a result of what I just described, the following have changed.

Speaker #2: And finally, approximately 50 million dollars related to the timing of enterprise sales in software and services. While these items have impacted both business segments, the intelligent systems business is disproportionately impacted by the above factors.

Speaker #2: Now, translating this to the implied ramp in year-over-year revenue growth from the first half to the second half that we outlined last quarter.

Speaker #2: As a result of what I just described, the following have changed. First, the 150 basis points improvement in growth from lapping of previously identified headwinds specifically the lower production with a major North American customer due to a supplier fire, and program cancellations with local China OEMs is unchanged.

Varun Laroyia: First, the 150 basis points improvement in growth from lapping of previously identified headwinds, specifically the lower production with a major North American customer due to a supplier fire and program cancellations with local China OEMs is unchanged. Second, launches and ramps are now expected to contribute 200 basis points to revenue growth in H2 of the year. This is lower by 100 basis points than initially anticipated, reflecting the programs I previously described. Beyond that, the outlook for vehicle production in H2 has turned from a tailwind to a headwind. This is further amplified by our customer and program mix due to the schedule changes I outlined earlier, which are cumulatively now a 150 basis point headwind to revenue growth in H2. I want to wrap up with some closing comments on these revisions.

Speaker #2: Second, launches and ramps are now expected to contribute 200 basis points to revenue growth in the second half of the year. This is lower by 100 basis points than initially anticipated, reflecting the programs I previously described.

Speaker #2: And beyond that, the outlook for vehicle production in the second half has turned from a tailwind to a headwind. This is further amplified by our customer and program mix due to the schedule changes I outlined earlier, which has accumulatively now a 150 basis point headwind to revenue growth in the second half.

Speaker #2: I want to wrap up with some closing comments on these revisions. First, the China domestic market, which has, and continues to be, a more volatile region, has clearly deteriorated relative to when we last updated you.

Varun Laroyia: First, the China domestic market, which has and continues to be a more volatile region, has clearly deteriorated relative to when we last updated you. Second, we were not conservative enough in certain assumptions, particularly around launches and ramps. To that end, we have incorporated an additional element of conservatism in H2 of this year. I'll close by noting that we continue to see long-term opportunity across a diverse set of end markets and across regions where we are delivering solid progress, as evidenced by our revenues, bookings, and commercial awards. With that, I will turn the call back to Kevin for his closing remarks.

Speaker #2: And second, we were not conservative enough in certain assumptions, particularly around launches and ramps. To that end, we have incorporated an additional element of conservatism in the second half of this year.

Speaker #2: I'll close by noting that we continue to see long-term opportunity across a diverse set of end markets and across regions, where we are delivering solid progress.

Speaker #2: As evidenced by our revenues, bookings, and commercial awards. With that, I will turn the call back to Kevin for his closing remarks.

Speaker #1: Thanks, Varun. I'll wrap up on slide 12. Excuse me. In summary, we remain confident in the significant long-term opportunity resulting from secular trends that are demanding solutions that can sense think act and optimize.

Kevin P. Clark: Thanks, Varun. I'll wrap up on slide 12. Excuse me. In summary, we remain confident in the significant long-term opportunity resulting from secular trends that are demanding solutions that can sense, think, act, and optimize, and the customer needs they introduce for high performance and cost-optimized solutions. However, we also acknowledge the more near-term challenges to our business, driven by ongoing volatility in the domestic China market and the related impact on our broader automotive customer mix. To be clear, our customer mix in China has improved and dramatically moved towards the local OEMs. However, this improvement has not been enough to offset the rapid shift of local OEMs business toward export platforms, as well as the reduction of European vehicle exports into the China market. Holistically, we continue to focus on improving the revenue mix of our business both inside and outside of automotive.

Kevin Clark: Thanks, Varun. I'll wrap up on slide 12. Excuse me. In summary, we remain confident in the significant long-term opportunity resulting from secular trends that are demanding solutions that can sense, think, act, and optimize, and the customer needs they introduce for high performance and cost-optimized solutions. However, we also acknowledge the more near-term challenges to our business, driven by ongoing volatility in the domestic China market and the related impact on our broader automotive customer mix. To be clear, our customer mix in China has improved and dramatically moved towards the local OEMs. However, this improvement has not been enough to offset the rapid shift of local OEMs business toward export platforms, as well as the reduction of European vehicle exports into the China market. Holistically, we continue to focus on improving the revenue mix of our business both inside and outside of automotive.

Speaker #1: And the customer needs they introduce for high-performance and cost-optimized solutions. However, we also acknowledge the more near-term challenges to our business, driven by ongoing volatility in the domestic China market and the related impact on our broader automotive customer mix.

Speaker #1: To be clear, our customer mix in China has improved, and dramatically moved towards the local OEMs. However, this improvement has not been enough to offset the rapid shift of local OEMs business toward export platforms, as well as the reduction of European vehicle exports into the China market.

Speaker #1: Holistically, we continue to focus on improving the revenue mix of our business, both inside and outside of automotive. We also remain laser focused on execution, delivering margin expansion, earnings growth, and strong free cash flow generation across a variety of different macro backdrops.

Kevin P. Clark: We also remain laser-focused on execution, delivering margin expansion, earnings growth, and strong free cash flow generation across a variety of different macro backdrops. We're keenly aware that these efforts need to translate into increased shareholder value. Based on the significant value opportunity we see in our stock, combined with the strength of our cash flow generation and balance sheet, we intend to remain active buyers of our shares, utilizing approximately 50% of our expected free cash flow on a more regular basis over the next few years to repurchase our shares. In 2026, our repurchases will be materially above this level. We're also committed to continually evaluating our business portfolio in light of changes in the macro environment to maximize shareholder value. We're confident that we'll continue to deliver value for our customers, drive profitable growth, and create sustainable long-term value for our shareholders.

Kevin Clark: We also remain laser-focused on execution, delivering margin expansion, earnings growth, and strong free cash flow generation across a variety of different macro backdrops. We're keenly aware that these efforts need to translate into increased shareholder value. Based on the significant value opportunity we see in our stock, combined with the strength of our cash flow generation and balance sheet, we intend to remain active buyers of our shares, utilizing approximately 50% of our expected free cash flow on a more regular basis over the next few years to repurchase our shares. In 2026, our repurchases will be materially above this level. We're also committed to continually evaluating our business portfolio in light of changes in the macro environment to maximize shareholder value. We're confident that we'll continue to deliver value for our customers, drive profitable growth, and create sustainable long-term value for our shareholders.

Speaker #1: And we're keenly aware that these efforts need to translate into increased shareholder value. Based on the significant value opportunity we see in our stock, combined with the strength of our cash flow generation and balance sheet, we intend to remain active buyers of our shares, utilizing approximately 50% of our expected free cash flow on a more regular basis over the next few years, to repurchase our shares.

Speaker #1: And in 2026, our repurchases will be materially above this level. We're also committed to continually evaluating our business portfolio in light of changes in the macro environment to maximize shareholder value.

Speaker #1: We're confident that we'll continue to deliver value for our customers, drive profitable growth, and create sustainable long-term value for our shareholders. Operator, let's now open the line for questions.

Kevin P. Clark: Operator, let's now open the line for questions.

Kevin Clark: Operator, let's now open the line for questions.

Speaker #3: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure you mute function is turned off to allow your signal to reach our equipment.

Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit your question to one initial with one follow-up so that we may take as many questions as possible. Again, you can press star one to ask a question, and we will pause for just a moment to allow everyone an opportunity to signal for questions. We will now go to your first question. It will come from the line of Itay Michaeli with TD Cowen.

Speaker #3: We do ask that you limit your question to one initial with one follow-up so that we may take as many questions as possible. Again, you can press star one to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions.

Speaker #3: We'll now go to your first question. It will come from the line of Itai McCalley, with TD Cowan.

Itay Michaeli: Great. Thank you. Good morning, everyone. I know it's a little bit early to talk about 2027, but I'm just curious how some of the changes you're seeing in the H2 of the year kind of inform you in terms of just the prior 4% to 7% growth rate and look into 2027 and beyond and kind of how we should think about that, just given some of these changes here in the H2.

Speaker #4: Hi. Great. Thank you. Good morning, everyone. I know it's a little bit early to talk about 2027, but I'm just curious kind of how some of the changes you're seeing in the second half of the year kind of inform you in terms of just the prior four to seven percent growth framework into 2027 and beyond, and kind of how we should think about that, just given some of these changes here in the second half.

Speaker #2: Yeah, sure. Thanks, Itai. Listen, our long-term view of what the business is capable of remains intact. Now, clearly, drivers of growth are constantly changing.

Kevin P. Clark: Yeah, sure. Thanks, Itay. Listen, our long-term view of what the business is capable of remains intact. Clearly, drivers of growth are constantly changing, especially in an environment that is dynamic as this environment is. When you look at the automotive sector, IHS has brought down the growth outlook for future vehicle production. Clearly, material cost inflation is increasing in light of various macroeconomic factors. However, having said that, within the automotive sector, for the second straight year, we're running with very strong bookings across both of our businesses with the leading automotive OEMs inside and outside of China. On the non-auto side, opportunities are materializing much faster than we had initially expected, and that's across both of our business segments. We've had a tremendous amount of success leveraging our automotive portfolio into these new markets. That's an area that we're very optimistic.

Kevin Clark: Yeah, sure. Thanks, Itay. Listen, our long-term view of what the business is capable of remains intact. Clearly, drivers of growth are constantly changing, especially in an environment that is dynamic as this environment is. When you look at the automotive sector, IHS has brought down the growth outlook for future vehicle production. Clearly, material cost inflation is increasing in light of various macroeconomic factors. However, having said that, within the automotive sector, for the second straight year, we're running with very strong bookings across both of our businesses with the leading automotive OEMs inside and outside of China. On the non-auto side, opportunities are materializing much faster than we had initially expected, and that's across both of our business segments. We've had a tremendous amount of success leveraging our automotive portfolio into these new markets. That's an area that we're very optimistic.

Speaker #2: Especially in a environment that is dynamic as this environment is, when you look at the automotive sector, IHS is brought down the growth outlook for future vehicle production.

Speaker #2: Clearly, material cost inflation is increasing in light of various macroeconomic factors. However, having said that, within the automotive sector, for the second straight year, we're running with very strong bookings across both of our businesses with the leading automotive OEMs inside and outside of China.

Speaker #2: On the non-auto side, opportunities are materializing much faster than we had initially expected. That's across both of our business segments, and we've had a tremendous amount of success leveraging our automotive portfolio into these new markets.

Speaker #2: So that's an area that we're very optimistic about the environment. Certainly, is dynamic. I won't get into specifically into 2027 at this point in time.

Kevin P. Clark: The environment certainly is dynamic. I won't get specifically into 2027 at this point in time. As we move later into the year, that's something that we'll certainly provide incremental information about and updates on.

Kevin Clark: The environment certainly is dynamic. I won't get specifically into 2027 at this point in time. As we move later into the year, that's something that we'll certainly provide incremental information about and updates on.

Speaker #2: As we move later into the year, that's something that will certainly provide incremental information about and updates on.

Speaker #4: Great. That's helpful, Kevin. And as a quick follow-up, good to hear a little bit more conservatism in the second half guidance. I think the Q4 revenue guide still implies a pretty healthy uptick versus Q3.

Itay Michaeli: Great. That's helpful, Kevin. As a quick follow-up, good to hear a bit more conservatism in the H2 guidance. I think the Q4 revenue guide still implies a pretty healthy uptick versus Q3. Maybe just talk about some of the drivers, inputs, and takes, and degree of visibility into that Q4 ramp. Thank you.

Speaker #4: Maybe could uld you talk about some of the drivers and puts and takes and degree of visibility kind of into that Q4 ramp? Thank you.

Speaker #2: Itai, hi. Good morning. It's Varun Laroyia out here. Listen, yes, in terms of when you think about the year-over-year second half, and also Q4 in particular, essentially it's a couple of points, right?

Varun Laroyia: Itay, hi, good morning. It's Varun Laroyia out here. Listen, yes, in terms of when you think about the year-over-year H2 and also Q4 in particular, essentially it's a couple of points, right? The first is the year-over-year uptick in the production with the North America customer, which had a fire at their supplier a year ago. That unwinds from a comp perspective. The second is growth in our software and services business. As I mentioned, the $50 million reduction in software enterprise bookings is from a timing perspective. We expect Q3 to be softer, but again, return to high single, double-digit levels in the Q4, and then just growth in our Engineered Components business.

Speaker #2: The first is the year over year uptick in the production with the North America customer which had a fire at their supplier a year ago.

Speaker #2: So that unwinds from a comp perspective. The second is growth in our software and services business. As I mentioned, the 50 million reduction in software enterprise bookings is from a timing perspective.

Speaker #2: So, we expect Q3 to be softer, but again, return to high single- to double-digit levels in the fourth quarter, and then just growth in our Engineered Components business.

Speaker #4: Good. That's very helpful. Thank you.

Itay Michaeli: Great. That's very helpful. Thank you.

Speaker #3: Your next question will come from the line of Mark Delaney with Goldman Sachs.

Operator: Your next question will come from the line of Mark Delaney with Goldman Sachs.

Speaker #5: Good morning and thank you very much for taking the questions. Kevin, you mentioned that even though Aptive has been making good progress with its bookings for the Chinese domestic OEMs, not enough of those were on the export vehicles.

Mark Delaney: Good morning. Thank you very much for taking the questions. Kevin, you mentioned that even though Aptiv has been making good progress with its bookings for the Chinese domestic OEMs, not enough of those were on the export vehicles. Maybe you could talk a bit more on that. I would have thought Aptiv was very well-positioned for exports, given the global nature of Aptiv and your strength in other regions. Maybe talk a little bit more on what's happening and what Aptiv is going to do on that front going forward.

Speaker #5: Maybe you could talk a bit more on that. I mean, I would have thought Aptive was very well positioned for exports given the global nature of Aptive and your strength in other regions.

Speaker #5: So maybe talk a little bit more on what's happening and what Aptive is going to do on that front going forward.

Speaker #2: Yeah. So Mark, that's a great question. In a very fair one. So we are very well positioned I would say over the last couple of years, the real focus was on how do we get stronger mix with the leading local OEMs.

Kevin P. Clark: Yeah. Mark, that's a great question and a very fair one. We are very well-positioned. I would say over the last couple of years, the real focus was on how do we get a stronger mix with the leading local OEM. When you take a look at our revenues today in China on export platforms, it's about 10% of total revenues. The mix is more heavily weighted for the domestic platforms. As you look at our bookings over the last two years, that percentage has significantly increased. The benefit of our product portfolio and our capabilities outside of the China market are certainly coming into play. Right now, our revenues don't match the bookings mix over the last two years. That's something we're working on, and that's something, quite frankly, we've been making progress on over the last year or so.

Kevin Clark: Yeah. Mark, that's a great question and a very fair one. We are very well-positioned. I would say over the last couple of years, the real focus was on how do we get a stronger mix with the leading local OEM. When you take a look at our revenues today in China on export platforms, it's about 10% of total revenues. The mix is more heavily weighted for the domestic platforms. As you look at our bookings over the last two years, that percentage has significantly increased. The benefit of our product portfolio and our capabilities outside of the China market are certainly coming into play. Right now, our revenues don't match the bookings mix over the last two years. That's something we're working on, and that's something, quite frankly, we've been making progress on over the last year or so.

Speaker #2: When you take a look at our revenues today, in China, on export platforms, it's about 10% of total revenues. So the mix is more heavily weighted for the domestic platforms.

Speaker #2: As you look at our bookings over the last two years, that percentage has significantly increased. So the benefit of our product portfolio and our capabilities outside of the China market are certainly coming into play.

Speaker #2: But right now, our revenues don't match the bookings mix over the last two years. And that's something we're working on, and that's something, quite frankly, we've been making progress on over the last year or so.

Speaker #5: Okay, thank you. I also wanted to ask about the non-automotive opportunities. And it's nice to see the solid growth over the last couple of quarters there.

Mark Delaney: Okay. Thank you. I also wanted to ask about the non-automotive opportunities and nice to see the solid growth the last couple of quarters there. You mentioned specific progress in drones and robotics. I think you said that business could approach $300 million of revenue in the next few years. What does that mean in terms of profitability? I know non-auto can be higher margin, but maybe there's also a number of investments you're making. If you could speak a bit more on what you're seeing there and how to think about the profit implications.

Speaker #5: You mentioned specific progress in drones and robotics. I think you said that business could approach 300 million of revenue in the next few years.

Speaker #5: What does that mean in terms of profitability? I know non-auto can be higher margin, but maybe there's also a number of investments you're making.

Speaker #5: So if you could speak a bit more on what you're seeing there and how to think about the profit implications, thanks.

Kevin P. Clark: Yeah.

Kevin Clark: Yeah.

Speaker #2: Yeah. Yeah. So from a run rate standpoint, margin profile, as you can imagine, is much higher than what it's in automotive. We're investing in non-automotive capabilities today from a product and go-to-market standpoint that we talked about.

Mark Delaney: Thanks.

Kevin P. Clark: Yeah. From a run rate standpoint, margin profile, as you can imagine, is much higher than when it's in automotive. We're investing in non-automotive capabilities today from a product and go-to-market standpoint that we talked about. There's minimal capital investment because we're using existing facilities, existing machinery and equipment. From a capital standpoint, that's less of an upfront cost and initial drag. Both markets are much higher margin profiles than what we experience in the automotive industry.

Kevin Clark: Yeah. From a run rate standpoint, margin profile, as you can imagine, is much higher than when it's in automotive. We're investing in non-automotive capabilities today from a product and go-to-market standpoint that we talked about. There's minimal capital investment because we're using existing facilities, existing machinery and equipment. From a capital standpoint, that's less of an upfront cost and initial drag. Both markets are much higher margin profiles than what we experience in the automotive industry.

Speaker #2: There's minimal capital investment because we're using existing facilities. Existing machinery and equipment. So from a capital standpoint, that's less of an upfront cost. And initial drag.

Speaker #2: But it is a both-markets are much higher margin profiles than what we experienced in the automotive industry.

Speaker #5: Thank you.

Mark Delaney: Thank you.

Speaker #3: Next question will come from the line of Emmanuel Rosner with Wolf Research.

Operator: Next question will come from the line of Emmanuel Rosner with Wolfe Research.

Speaker #6: Oh, great. Thank you so much. One quick question on the change in guidance. It seems like so I understand some of the revenue drivers, but it seems that the EBITDA line, maybe the implied incremental would be pretty high, like around maybe 40%.

Rachelle Smith: Great. Thank you so much. One quick question on the change in the guidance. I understand some of the revenue drivers, but it seems that the EBITDA line, maybe the implied incremental would be pretty high, like around maybe 40%, which seems maybe a little bit above the normal. Can you maybe just talk about the change in the EBITDA guidance?

Emmanuel Rosner: Great. Thank you so much. One quick question on the change in the guidance. I understand some of the revenue drivers, but it seems that the EBITDA line, maybe the implied incremental would be pretty high, like around maybe 40%, which seems maybe a little bit above the normal. Can you maybe just talk about the change in the EBITDA guidance?

Speaker #6: Which seems maybe a little bit above the normal. So can you maybe just talk about the change in the EBITDA guidance?

Speaker #2: Yeah. Emmanuel, it's Varun Laroyia out here. Listen, the specific one really is the software timing item that I mentioned. So that really is to do with the product mix.

Varun Laroyia: Yeah, Emmanuel, it's Varun Laroyia out here. Listen, the specific one really is the software timing item that I mentioned. That really is to do with the product mix. That's the one which kind of leads to the H2, the $50 million reduction that I'm talking about. That really is what impacts that.

Speaker #2: So that's the one which kind of leads to the second half. The 50 million reduction that I'm talking about, that really is what impacts that.

Speaker #6: Okay. So this is a very, very high decremental. And so therefore, on average, the total is around that 40%.

Rachelle Smith: Okay. This is a very high incremental, therefore on average, the total is around that 40%?

Emmanuel Rosner: Okay. This is a very high incremental, therefore on average, the total is around that 40%?

Speaker #2: Yeah. I think it's I think typically the mix would be the decremental would be less than that. I think just given the size of the software revenue reduction, with roughly 50 million dollars in the back half, the flow through on that tends to be higher.

Varun Laroyia: Yeah, I think typically the mix would be, the decremental would be less than that. I think just given the size of the software revenue reduction was roughly $50 million in the H2, the flow-through on that tends to be higher, therefore the overall decremental in that particular period is higher.

Speaker #2: Therefore, the overall decremental in that particular period is higher.

Speaker #6: Understood. And then I understand the software revenue change is timing. Can you maybe just give a little bit more color around what's going on on the ground?

Rachelle Smith: Understood.

Emmanuel Rosner: Understood.

Varun Laroyia: Okay.

Rachelle Smith: I understand the software revenue change is timing. Can you maybe just give a little bit more color around what's going on the ground, and just sort of like how to think about growth in software on a go-forward basis?

Emmanuel Rosner: I understand the software revenue change is timing. Can you maybe just give a little bit more color around what's going on the ground, and just sort of like how to think about growth in software on a go-forward basis?

Speaker #6: And just sort of like how to think about growth in software on the go forward basis.

Speaker #2: Yeah. So growth in software so we've been growing kind of low double digits over the high single digit, low high single, low double digits over the last several quarters.

Varun Laroyia: Yeah. Growth in software. We've been growing kind of high single, low double digits over the last several quarters in the software business. Our software business is kind of twofold when you break it down: embedded solutions, which I would say tend to be less lumpy, and then enterprise solutions that go into markets like telco and industrial markets, which tend to be larger in terms of their overall size, Emmanuel. At times they can shift for various reasons, and when they shift, it has a more pronounced impact on a particular quarter's growth rate.

Speaker #2: In the software business, our software business is kind of twofold when you break it down. Embedded solutions, which I would say tend to be less lumpy and then enterprise solutions that go into markets like telco and industrial markets, which tend to be larger in terms of their overall size of manual.

Speaker #2: And at times, they can shift for various reasons. When they do shift, it has a more pronounced impact on a particular quarter's growth rate.

Speaker #6: Okay. But on the go forward basis, the what sort of like growth rate would you expect?

Rachelle Smith: Okay. On a go-forward basis, what sort of like growth rate would you expect?

Emmanuel Rosner: Okay. On a go-forward basis, what sort of like growth rate would you expect?

Speaker #2: Yeah. I think our growth rate will continue in the double digit sort of growth rate with a target to getting to that mid-teens sort of growth rate.

Varun Laroyia: Yeah, I think our growth rate will continue in the double digits sort of growth rate, with a target to getting to that mid-teen sort of growth rate. We've been a bit below that over the last few quarters.

Speaker #2: We've been a bit below that over the last few quarters.

Speaker #6: Got it. Thank you.

Rachelle Smith: Got it. Thank you.

Emmanuel Rosner: Got it. Thank you.

Speaker #3: Next question will come from the line of Joe Speck with UBS.

Operator: Next question will come from the line of Joseph Spak with UBS.

Speaker #5: Thanks. Good morning, everyone. Look, I appreciate sort of the coming clean on not being conservative enough. And you think you've built in more cushion going forward.

Joseph Spak: Thanks. Good morning, everyone. Look, I appreciate sort of the coming clean on not being conservative enough, and you think you've built in more of a cushion going forward, but we've been here before. Maybe you could just sort of walk through what you're doing to sort of changing your planning process for some of this uncertainty, because I know it's schedule changes and ramps, but really it's all sort of the same, right? It's all one and the same. It's volume. How are you thinking about, one, planning the business and two, sort of communicating that on a go-forward basis? Like, what's changing from here?

Speaker #5: But we've been here before, so maybe you could just sort of walk through how or what you're doing to sort of change your planning process for some of this uncertainty.

Speaker #5: Because I know it's schedule changes and ramps, but really, it's all sort of the same, right? It's all one and the same. It's volume.

Speaker #5: So how are you thinking about, one, planning the business, and two, sort of communicating that on the go forward basis? What's changing from here?

Speaker #2: Yeah. Yeah. I think no. And Joe, that's a fair question. So I think as it relates to as China becomes a bigger part of our overall revenue base, is that China local OEMs become a bigger part of our overall mix.

Kevin P. Clark: Yeah. I think, Joe, that's a fair question. I think as it relates to as China becomes a bigger part of our overall revenue base is the China local OEMs become a bigger part of our overall mix. As you know as well as I do, China OEMs have a number of different nameplates, or a higher mix of nameplates relative to the Western OEMs. Just a more significant haircut from an overall conservatism standpoint. I think that is the major change in terms of our process, in terms of how we operate internally and how we forecast externally. To date, we've had a process where we've discounted those schedules, obviously have not discounted them enough. I would say the China domestic market is significantly weaker at this point in time than what it's been over a number of years with domestic retail sales down 20%.

Kevin Clark: Yeah. I think, Joe, that's a fair question. I think as it relates to as China becomes a bigger part of our overall revenue base is the China local OEMs become a bigger part of our overall mix. As you know as well as I do, China OEMs have a number of different nameplates, or a higher mix of nameplates relative to the Western OEMs. Just a more significant haircut from an overall conservatism standpoint. I think that is the major change in terms of our process, in terms of how we operate internally and how we forecast externally. To date, we've had a process where we've discounted those schedules, obviously have not discounted them enough. I would say the China domestic market is significantly weaker at this point in time than what it's been over a number of years with domestic retail sales down 20%.

Speaker #2: As well as I do, China OEMs have a number of different nameplates or a higher mix of nameplates relative to the Western OEMs. Just a more significant haircut from an overall conservativism standpoint.

Speaker #2: I think that is the major change in terms of our process, in terms of how we operate internally and how we forecast externally. So to date, we've had a process where we've discounted those schedules.

Speaker #2: Obviously, have not discounted them enough. I would say the China domestic market is significantly weaker at this point in time. Than what it's been over a number of years with domestic retail sales down 20%.

Speaker #2: I think most people in our industry would have expected that the China government would have stepped in to provide some element of support as it relates to the industry.

Kevin P. Clark: I think most people in our industry would have expected that the China government would have stepped in to provide some element of support as it relates to the industry. It hasn't yet. Assuming that they would provide some support, obviously near term, was a mistake. I think it's just an overlay of significantly more conservatism.

Kevin Clark: I think most people in our industry would have expected that the China government would have stepped in to provide some element of support as it relates to the industry. It hasn't yet. Assuming that they would provide some support, obviously near term, was a mistake. I think it's just an overlay of significantly more conservatism.

Speaker #2: It hasn't yet. And assuming that they would provide some support, obviously, near term, was a mistake. So I think it's just an overlay of significantly more conservatism.

Speaker #5: Okay. Thanks for that, Kevin. And then maybe just some quick hitters on some of the non-auto things. One, how quick can sort of the drone business come in to sales?

Joseph Spak: Okay. Thanks for that, Kevin. Then maybe just some quick hitters on some of the non-auto things. One, how quick can sort of the drone business come into sales? I noticed you said you're collaborating on 800 VDC. Can you just describe that a little more? Is that something you're licensing and building, or are you creating your own solution? Then the optical M&A, is that a tech buy and something you need to commercialize, or is there a book of business there?

Speaker #5: I noticed you said you're collaborating on 800 VDC. Can you just describe that a little more? Is that something you're licensing and building, or are you creating your own solution?

Speaker #5: And then the optical M&A, is that a tech buy and something you need to commercialize, or is there a book of business there?

Speaker #2: Yeah. So there's a couple layers to that. So as it relates to whether it's drone robotics, or energy storage, depending on the customer, the path to market is much faster.

Kevin P. Clark: Yeah. There's a couple layers to that. As it relates to whether it's drone robotics or energy storage, depending on the customer, the path to market is much faster. On the robotics and drone awards this year, we'll have revenues in 2027. I would expect typically roughly 6 months path to revenue. On the energy storage/data center side, most of our product portfolio is in and around power side. Transition to 800-volt, given our existing portfolio in 800-volt, present incremental opportunities. We're working with several players. We'll be talking about more commercial awards, I'm sure over the next couple months. Today, in that space, we have under $50 million in revenues. We expect that to grow at a very rapid rate, Joe, over the next 3 years.

Kevin Clark: Yeah. There's a couple layers to that. As it relates to whether it's drone robotics or energy storage, depending on the customer, the path to market is much faster. On the robotics and drone awards this year, we'll have revenues in 2027. I would expect typically roughly 6 months path to revenue. On the energy storage/data center side, most of our product portfolio is in and around power side. Transition to 800-volt, given our existing portfolio in 800-volt, present incremental opportunities. We're working with several players. We'll be talking about more commercial awards, I'm sure over the next couple months. Today, in that space, we have under $50 million in revenues. We expect that to grow at a very rapid rate, Joe, over the next 3 years.

Speaker #2: On the robotics and drone awards this year, we'll have revenues in 2027. So I would expect typically roughly six months past to revenue. On the energy storage slash data center side, most of our product portfolio is in and around power.

Speaker #2: Side, transition to 800-volt given our portfolio, existing portfolio in 800-volt, present incremental opportunities. We're working with several players. We'll be talking about more commercial awards I'm sure over the next couple months.

Speaker #2: Today, in that space, we have under 50 million in revenues. We expect that to grow at a very rapid rate Joe over the next over the next three years.

Speaker #2: And again, most of that is in and around power, both to the rack and now with some capabilities in the rack. And the M&A acquisition is just building out our portfolio as it relates to a products that we can take quite frankly across multiple markets.

Kevin P. Clark: Again, most of that is in and around power, both to the rack and now with some capabilities in the rack. The M&A acquisition is just building out our portfolio as it relates to products that we can take, quite frankly, across multiple markets.

Kevin Clark: Again, most of that is in and around power, both to the rack and now with some capabilities in the rack. The M&A acquisition is just building out our portfolio as it relates to products that we can take, quite frankly, across multiple markets.

Speaker #5: Thanks, Kevin.

Joseph Spak: Thanks, Kevin.

Speaker #3: Your next question will come from the line of Colin Langen with Wells Fargo.

Operator: Your next question will come from the line of Colin Langan with Wells Fargo.

Speaker #4: Oh, great. Thanks for taking my questions. We've talked a lot about China being weak. I'm not sure if I'm looking at slide 8 wrong.

Colin Langan: Oh, great. Thanks for taking my questions. We have talked a lot about China being weak, and I am not sure if I am looking at slide eight wrong, but it actually looks like you outperformed in China according to that slide. You were up five and the market down three.

Speaker #4: But you actually looks like you outperformed in China according to that slide. You were up 5 and the market down 3. And it was pretty weak in Europe.

Colin Langan: Yeah.

Kevin Clark: Yeah.

Colin Langan: It was pretty weak in Europe. Is that really the bigger issue, because I think you mentioned also in comments about European exports to China weakening. Is that the bigger factor that is causing a headwind here? Is that possibly why we have seen other suppliers have not cut guidance is, do you have higher exposure to some of those players and that is having a bigger impact?

Speaker #4: So is that really the broker issue, or because I think you mentioned also in comments about European exports to China weakening. Is that the bigger factor that's causing a headwind here?

Speaker #4: And is that possibly why we've seen other suppliers haven't cut guidance? Do you have higher exposure to some of those players, and that's having a bigger impact?

Speaker #2: No. So, there are a couple of aspects. We talked about traction in commercial awards in China with the local OEMs. We have made significant progress.

Kevin P. Clark: No. There is a couple aspects. We talked about traction in commercial awards in China with the local OEMs. We have made significant progress, and that is what is reflected in our overall year-over-year growth. Having said that year-over-year growth was not as strong as we had initially forecasted and included in our guidance. Yep, we showed strong growth, strong outgrowth, but not where we expected it to be. As it relates to the impact of China, the domestic market, the decline in the domestic market, the reduction in schedules impacted the local OEMs, impacting both our EC business as well as our IS business. Our IS business was disproportionately impacted by the number 2 player in the China market, who we were launching several active safety programs with.

Kevin Clark: No. There is a couple aspects. We talked about traction in commercial awards in China with the local OEMs. We have made significant progress, and that is what is reflected in our overall year-over-year growth. Having said that year-over-year growth was not as strong as we had initially forecasted and included in our guidance. Yep, we showed strong growth, strong outgrowth, but not where we expected it to be. As it relates to the impact of China, the domestic market, the decline in the domestic market, the reduction in schedules impacted the local OEMs, impacting both our EC business as well as our IS business. Our IS business was disproportionately impacted by the number 2 player in the China market, who we were launching several active safety programs with.

Speaker #2: And that is what's reflected in our overall year-over-year growth. Having said that, that year-over-year growth was not as strong as we had initially forecasted and included in our guidance.

Speaker #2: So yep, we're strong. We showed strong growth, strong outgrowth, but not where we expected it to be. As it relates to the impact of China, the domestic market, the decline in the domestic market, the reduction in schedules impacted the local OEMs.

Speaker #2: Impacting both our EC business as well as our IS business. Our IS business was disproportionately impacted by the number two player in the China market.

Speaker #2: Who we were launching several active safety programs with. From a European standpoint, it really is principally the export of vehicles into the China market from two luxury European OEMs.

Kevin P. Clark: From a European standpoint It really is principally the export of vehicles into the China market from two luxury European OEMs that we saw a significant reduction in their schedules, depending on the OEM, late June or July. I think they are the OEMs that have been the most public about their challenges in the China market, so you can identify who those are. That is where the biggest impact, quite frankly, is.

Kevin Clark: From a European standpoint It really is principally the export of vehicles into the China market from two luxury European OEMs that we saw a significant reduction in their schedules, depending on the OEM, late June or July. I think they are the OEMs that have been the most public about their challenges in the China market, so you can identify who those are. That is where the biggest impact, quite frankly, is.

Speaker #2: We saw a significant reduction in their schedules, depending on the OEM—late June or July. I think those are the OEMs that have been the most public about their challenges in the China market.

Speaker #2: So you can identify who those are. So that's where the biggest impact quite frankly is.

Colin Langan: Got it. Just to follow up on our earlier questions, the margins seem to the quarterly cadence here is a little odd. It's like there's a pretty negative decremental sequentially and then a big incremental into Q4.

Speaker #4: just to follow up on our earlier questions, the margins seem to kind of the quarterly cadence here is a little odd. It's like there's a pretty negative decremental sequentially and then a big incremental into Q4.

Colin Langan: Yeah.

Kevin Clark: Yeah.

Speaker #4: Is this all recovery driven? Is there some cost headwinds in Q3?

Colin Langan: Is this all recovery driven? Is there some cost headwinds in Q3?

Speaker #2: So there are three things. So here's how I would look. I would look at it. One is just volume flow through Q2 to Q3.

Kevin P. Clark: There are three things. Here's how I would look at it. One is just volume flow through Q2 to Q3. The incremental impact of a piece of that being software, so higher margins. Going from Q3 to Q4, bounce back in software, higher margin, volume pick up, just underlying volume and flow-through on that volume. Third, as you know, engineering credits, recoveries, things like that tend to be stronger in Q4 than they are in other quarters. That's the walk. There is an element of Q3 margin that's impacted by, Varun mentioned in his comments, timing on recovery. Normally that would have shown up in Q3. Q3 is a little bit, let's call it artificially lower than what we would have expected. That has some general impact.

Kevin Clark: There are three things. Here's how I would look at it. One is just volume flow through Q2 to Q3. The incremental impact of a piece of that being software, so higher margins. Going from Q3 to Q4, bounce back in software, higher margin, volume pick up, just underlying volume and flow-through on that volume. Third, as you know, engineering credits, recoveries, things like that tend to be stronger in Q4 than they are in other quarters. That's the walk. There is an element of Q3 margin that's impacted by, Varun mentioned in his comments, timing on recovery. Normally that would have shown up in Q3. Q3 is a little bit, let's call it artificially lower than what we would have expected. That has some general impact.

Speaker #2: The incremental impact of a piece of that being software. So higher margins. Going from Q3 to Q4. Bounce back in software. Higher margin. Volume pickup.

Speaker #2: Just underlying volume. And flow through on that volume. And third as you know, engineering credits recovery, things like that tend to be stronger in the fourth quarter than they are in other quarters.

Speaker #2: So that's the walk. There is an element of Q3 margin that's impacted by, as Varun mentioned in his comments, timing on recovery. So normally, that would have shown up in Q3.

Speaker #2: So Q3 is a little bit let's call it artificially lower than what we would have expected. That has some general impact. But my comments about the walk as it relates to volume software recoveries that's the biggest piece.

Kevin P. Clark: My comments about the walk as it relates to volume software recoveries, that's the biggest piece.

Kevin Clark: My comments about the walk as it relates to volume software recoveries, that's the biggest piece.

Speaker #4: Got it. All right. Thanks for taking my questions.

Colin Langan: Got it. All right. Thanks for taking my question.

Speaker #3: Your next question will come from the line of James Pigarello with BNP Paraba.

Operator: Your next question will come from the line of James Picariello with BNP Paribas.

Speaker #4: Hi everyone. Kevin, can you share some thoughts behind the portfolio changes you had indicated at the tail end of your prepared remarks?

James Picariello: Hi, everyone. Kevin, can you share some thoughts behind the portfolio changes you had indicated at the tail end of your prepared remarks?

Kevin P. Clark: Listen, I don't have any specific comments I would make at this point in time. Clearly, we're operating in a very dynamic market, right? That's across regions and across technologies. As we always do, we're evaluating that mix of products, that portfolio, and how we optimize and drive shareholder value. I would just leave it at that.

Kevin Clark: Listen, I don't have any specific comments I would make at this point in time. Clearly, we're operating in a very dynamic market, right? That's across regions and across technologies. As we always do, we're evaluating that mix of products, that portfolio, and how we optimize and drive shareholder value. I would just leave it at that.

Speaker #2: Listen, I don't have any specific comments. I would make it this point in time, clearly we're operating in a very dynamic market, right? And that's across regions.

Speaker #2: And across technologies. As we always do, we're evaluating that mix of products, that portfolio, and how we optimize and drive shareholder value. So I would just leave it at that.

Speaker #4: Yeah, understood. And then, can you just share a segment-level color on the updated guide here for the full year? What's embedded for each segment's non-auto growth in the outlook?

James Picariello: Yeah. Understood. Just, can you share segment-level color on the updated guide here for the full year? What is embedded for each segment's non-auto growth in the outlook? Thanks.

Speaker #4: Thanks.

Speaker #2: Yeah. I think non-auto growth for both, for the full year, are relatively strong. Third quarter in the intelligence system segment, it'll be weaker given that software adjustment that I talked about.

Kevin P. Clark: Yeah, I think non-auto growth for both for the full year are relatively strong. Q3 in the Intelligent Systems segment, it will be weaker given that software adjustment that I talked about. We see a strong bounce back in Q4. Non-automotive revenue growth across both of the businesses has been very strong and in line with our 8% to 10% sort of framework that we have provided previously.

Kevin Clark: Yeah, I think non-auto growth for both for the full year are relatively strong. Q3 in the Intelligent Systems segment, it will be weaker given that software adjustment that I talked about. We see a strong bounce back in Q4. Non-automotive revenue growth across both of the businesses has been very strong and in line with our 8% to 10% sort of framework that we have provided previously.

Speaker #2: But we see a strong bounce back in the fourth quarter. Non-automotive revenue growth across both of the businesses has been very strong. And in line with our 8 to 10 percent sort of framework that we've provided previously.

Speaker #4: And then just like revenue core growth and margins, by segment or just directionally? Would be great. Thank you.

James Picariello: Just like revenue core growth and margins by segment or just directionally would be great. Thank you.

Speaker #2: Yeah. Yeah. Just to be sure, are you asking that for the full year or?

Kevin P. Clark: So-

Kevin Clark: So-

Varun Laroyia: Yeah. Sorry, go ahead, Kevin.

Kevin P. Clark: Yeah, just to be sure, are you asking that for the full year or?

Kevin Clark: Yeah, just to be sure, are you asking that for the full year or?

Speaker #4: Yeah. Yeah. Full year.

James Picariello: Yeah. Full year.

James Picariello: Yeah.

Kevin Clark: Yeah.

Speaker #2: Yeah. Listen, in terms of both businesses, based on the latest updates that we've mentioned, as I mentioned, the revision in guidance is largely impacting the intelligence systems business, right?

Varun Laroyia: Yeah. Listen, in terms of both businesses, based on the latest updates that we've mentioned, as I mentioned, the revision in guidance is largely impacting the Intelligent Systems business, right? We kind of gave you the puts and takes associated with that. From an Intelligent Systems perspective, we would expect the business at this point of time to be approximately flat on a year-over-year basis on a revenue basis, with Engineered Components growing in the low to mid single digits. That's point number one. With regards to margins, essentially what we've kind of talked about previously, solid margins coming through both businesses with EBITDA margins in Intelligent Systems, call it at the mid-teens level, and then with regards to on a full year basis, and then on our Engineered Components business in the, call it, low twenties.

Speaker #2: And we kind of gave you the puts and takes associated with that. So from an intelligence systems perspective, we would expect the business at this point of time to be approximately flat on a year-over-year basis on a revenue basis.

Speaker #2: With engineered components, growing in the low to mid single digits. So that's point number one. And then with regards to margins, margins essentially what we've kind of talked about previously, solid margins coming through both businesses, with EBITDA margins in intelligence systems caught at the mid-teens level.

Speaker #2: And then, with regards to, on a full-year basis—and then on our Engineered Components business—in the, call it, low 20s, so call it roughly about 22 points of margin for the full year.

Varun Laroyia: Call it about roughly about 22 points of margin for the full year.

Speaker #4: Thank you.

James Picariello: Thank you.

Speaker #3: Your next question will come from the line of Tom Narayan with RBC.

Operator: Your next question will come from the line of Tom Narayan with RBC.

Speaker #4: Hi. Good morning. Kevin Barun at Betsy. Just one more question on this three buckets of it's change. That's okay. So it looks like, yeah, look, the schedule change, you have the I I think the European OEMs, the Chinese market, the delayed programs and the timing one coming back in Q4.

Tom Narayan: Good morning, Kevin, Varun, and Betsy. Just one more question on this three buckets of this change, if that's okay.

Kevin P. Clark: Sure.

Kevin Clark: Sure.

Tom Narayan: It looks like the scheduled change, you have, I think, the European OEMs, the Chinese market, the delayed programs, and the timing one coming back in Q4. The timing one's fairly obvious, but just curious on the other two. I guess, do you have any level of confidence that those other two buckets, you clearly gave those buckets distinctly for a reason, potentially coming back in 2027. Is this what's reliant on the Chinese government coming back with stimulus? Are some of those like you know you're getting back? Then I have a follow-up.

Speaker #4: The timing one's fairly obvious, but just curious on the other two. I guess do you have any level of confidence that those other two buckets you clearly gave those buckets distinctly for a reason.

Speaker #4: Potentially coming back in 2027—is that what's reliant on the Chinese government coming back with stimulus, or are some of those, like, you know, you're getting back and then have a follow-up?

Speaker #2: In a time, you're talk you're speaking to all three buckets or are you speaking to the reduction in H2 customer schedules?

Kevin P. Clark: Tom, you're speaking to all three buckets, or are you speaking to the reduction in H2 customer schedules?

Kevin Clark: Tom, you're speaking to all three buckets, or are you speaking to the reduction in H2 customer schedules?

Speaker #4: Just the non the timing one we already know. It's coming back in Q4. But then you had two other items, right? Schedule changing and delayed program.

Tom Narayan: The timing one we already know. It's coming back in Q4. You had two other items, right? Scheduled changing and delayed program. Just curious of those two buckets potentially coming back in 2027.

Speaker #4: So just curious of those two buckets potentially coming back in 27.

Speaker #2: Yeah. So it's there's two aspects to the China local market. Aspect one is domestic China market with domestic local OEMs. And how that plays out during 2027.

Kevin P. Clark: There's two aspects to the China local market. Aspect one is domestic China market with domestic local OEMs, and how that plays out during 2027. It's, at least for us, difficult to envision another year where the China local market is down 20% and production schedules are therefore adjusted to that point. It's difficult to envision that, but those are some of the things that we're working through. There's a second piece as it relates to within that. The bulk of that $150 that Varun talked about is China local OEMs. There's a part that is effectively European exports into China. I think it's possible that those European exports into China, we don't see a bounce back during 2027 in light of the competitiveness of the China market.

Kevin Clark: There's two aspects to the China local market. Aspect one is domestic China market with domestic local OEMs, and how that plays out during 2027. It's, at least for us, difficult to envision another year where the China local market is down 20% and production schedules are therefore adjusted to that point. It's difficult to envision that, but those are some of the things that we're working through. There's a second piece as it relates to within that. The bulk of that $150 that Varun talked about is China local OEMs. There's a part that is effectively European exports into China. I think it's possible that those European exports into China, we don't see a bounce back during 2027 in light of the competitiveness of the China market.

Speaker #2: It's at least for us difficult to envision another year where the China local market is down 20% and production schedules are therefore adjusted to that point.

Speaker #2: So, it's difficult. It's difficult to envision that, but those are some of the things that we're working through. There's a second piece as it relates to that within.

Speaker #2: So the bulk of that 150 that Varen talked about is China local OEMs. And then there's a part that is effectively European exports into China.

Speaker #2: I think it's possible that those European exports into China we don't see a bounce back during 2027 in light of the competitiveness of the China market.

Speaker #2: As it relates to the program delays and launch ramps—listen, the local China OEMs—I’m confident that you’ll continue to see their launches ramp at a slower, at a lower slope than what was originally forecasted.

Kevin P. Clark: As it relates to the program delays and launch ramps, listen, the local China OEMs, I'm confident that you'll continue to see their launches ramp at a lower slope than what was originally forecasted. There's one program from BYD that we're confident will be launched, just was shifted, and that's an export vehicle program. There is the program that Varun talked about that was a European OEM, that was a delayed launch from a European OEM that had initially the view was it was going to be rolled across multiple programs. That program is launching as we speak, so that will be a tailwind from a revenue standpoint as we head into 2027.

Kevin Clark: As it relates to the program delays and launch ramps, listen, the local China OEMs, I'm confident that you'll continue to see their launches ramp at a lower slope than what was originally forecasted. There's one program from BYD that we're confident will be launched, just was shifted, and that's an export vehicle program. There is the program that Varun talked about that was a European OEM, that was a delayed launch from a European OEM that had initially the view was it was going to be rolled across multiple programs. That program is launching as we speak, so that will be a tailwind from a revenue standpoint as we head into 2027.

Speaker #2: There's one program from BYD that we're confident will be launched just was shifted and that's an export vehicle program. And then there is the program that Varen talked about that was a European OEM that was a delayed launch from a European OEM that had initially the view was it was going to be rolled across multiple programs.

Speaker #2: That program is launching as we speak, so that will be a tailwind from a revenue standpoint as we head into 2027.

Speaker #4: Yeah. That's very helpful. It doesn't sound as bad as then the non-automotive question I have. You mentioned this is coming in ahead of expectations.

Tom Narayan: That's very helpful. It doesn't sound as bad as Then the non-automotive question I have, you mentioned this is coming in ahead of expectations. I know you discussed this at the Investor Day, and these are all very different verticals, but just curious what you're seeing on the competitive side here that you're able to win so much here. I would have thought that there'd be incumbents in these verticals. Is this simply just lack of competitors and like a rising tide lifts all boats? How have you guys been so successful in capturing these new business wins here?

Speaker #4: And I know we discussed this at the Investor Day. These are all very different verticals, but just curious what you're seeing on the competitive side that allows you to win so much here.

Speaker #4: I would have thought that there'd be incumbents in these verticals or is this simply just lack of competitors and kind of a rising tide lifts all boats?

Speaker #4: Just the power of you guys been so successful in capturing these new business wins here.

Speaker #2: Yeah. So I think so I would put them into two buckets. I would put the drone and robotics buckets where we're playing. And our principal focus on the drone and robotics here is in and around autonomy.

Kevin P. Clark: Yeah. I'd put them into two buckets. I would put the drone and robotics buckets where we're playing, and our principal focus on the drone and robotics area is in and around autonomy. Robotics, it tends to be AMRs. Although we have commercial opportunities with a few of the humanoid players, our view on significant volume is likely to more come from players like AMRs. It tends to be more of a nascent industry. I know there's a lot of talk about the size and growth, but it's a bit more nascent. It's not only our technology where we bring opportunity, but it's also our capability as it relates to systems engineering, bill of material, supply chain, and manufacturing that is differentiated from the typical players in a nascent industry. On the drone side, that's even more so the case.

Kevin Clark: Yeah. I'd put them into two buckets. I would put the drone and robotics buckets where we're playing, and our principal focus on the drone and robotics area is in and around autonomy. Robotics, it tends to be AMRs. Although we have commercial opportunities with a few of the humanoid players, our view on significant volume is likely to more come from players like AMRs. It tends to be more of a nascent industry. I know there's a lot of talk about the size and growth, but it's a bit more nascent. It's not only our technology where we bring opportunity, but it's also our capability as it relates to systems engineering, bill of material, supply chain, and manufacturing that is differentiated from the typical players in a nascent industry. On the drone side, that's even more so the case.

Speaker #2: So robotics, it tends to be AMRs although we have commercial opportunities with a few of the humanoid players. Our view on significant volume will be more is likely to more come from players like AMRs.

Speaker #2: It tends to be more of a nascent industry. I know there's a lot of talk about the size and growth, but it's a bit more nascent.

Speaker #2: And it's not only our technology where we bring opportunity, but it's also our capability as it relates to systems, systems engineering, the material supply chain, and manufacturing that is differentiated from the typical players in a nascent industry.

Speaker #2: On the drone side, that's even more so the case. There's significant demand, for reasons that you're aware of. There is a requirement for a non-China supply chain for a number of different technologies.

Kevin P. Clark: There's significant demand for reasons that you're aware of. There is a requirement of a non-China supply chain, a number of different technologies. That's something that we have visibility to and we can provide. Our perception systems and compute and ability to take bill of material costs out is unique relative to what their current supply base, which isn't very mature and isn't quite as organized as what we're accustomed to. I would say it's a mix of bringing our technical capabilities, but there's an equal part of what we do day in and day out from an automotive standpoint, so that there aren't really the traditional competitors, if I could say. It's an area that we're moving very fast in. We've invested in capabilities, as Varun talked about.

Kevin Clark: There's significant demand for reasons that you're aware of. There is a requirement of a non-China supply chain, a number of different technologies. That's something that we have visibility to and we can provide. Our perception systems and compute and ability to take bill of material costs out is unique relative to what their current supply base, which isn't very mature and isn't quite as organized as what we're accustomed to. I would say it's a mix of bringing our technical capabilities, but there's an equal part of what we do day in and day out from an automotive standpoint, so that there aren't really the traditional competitors, if I could say. It's an area that we're moving very fast in. We've invested in capabilities, as Varun talked about.

Speaker #2: That's something that we have visibility to and we can provide. Our perception systems and compute, and our ability to take bill of material costs out, is unique relative to what their current supply base—which isn't very mature and isn't quite as organized as what we're accustomed to.

Speaker #2: So I would say it's a mix of bringing our technical capabilities, but there's an equal part of what we do day in and day out from an automotive standpoint so that there aren't really the traditional competitors if I could say.

Speaker #2: It's an area that we're moving very fast in. We've invested in capabilities. As Varen talked about, we're going to continue to invest and actually ramp up our investment in this area because the potential opportunity near term is significant and as I said, the margin profile pricing here is more value-based than cost-based.

Kevin P. Clark: We're going to continue to invest and actually ramp up our investment in this area because the potential opportunity near term is significant, and as I said, the margin profile pricing here is more value-based than cost-based. The nature of those two markets are very good. I should now go to, if I can, just to the energy storage/data center. Listen, our sweet spot is power. That's what it is. We've put a team very focused on those two specific markets based on our backgrounds in power distribution. We are working with players who are well-known in the automotive space for energy storage, including a now Texas-based global OEM, as well as the leading China OEM as it relates to leveraging our automotive relationship. Then we're working with several players that I alluded to who support those markets today for incremental opportunities.

Kevin Clark: We're going to continue to invest and actually ramp up our investment in this area because the potential opportunity near term is significant, and as I said, the margin profile pricing here is more value-based than cost-based. The nature of those two markets are very good. I should now go to, if I can, just to the energy storage/data center. Listen, our sweet spot is power. That's what it is. We've put a team very focused on those two specific markets based on our backgrounds in power distribution. We are working with players who are well-known in the automotive space for energy storage, including a now Texas-based global OEM, as well as the leading China OEM as it relates to leveraging our automotive relationship. Then we're working with several players that I alluded to who support those markets today for incremental opportunities.

Speaker #2: So the nature of those two markets are very good. On the I should now go to if I can just to the energy storage slash data center.

Speaker #2: Listen, our sweet spot is power. That's what it is. We've put a very a team very focused on those two specific markets based on our backgrounds, backgrounds in power distribution.

Speaker #2: We are working with players who are well-known in the automotive space for energy storage, including a now Texas-based global OEM, as well as the leading China OEM, as it relates to leveraging our automotive relationships.

Speaker #2: And then we're working with several players that I alluded to who support those markets today for incremental opportunities. And today, again, our revenues are relatively small, but the size of the commercial pursuits and bookings we're confident will ramp up revenues certainly much faster than what we experienced in the automotive market.

Kevin P. Clark: Today, again, our revenues are relatively small, but the size of the commercial pursuits and bookings, we're confident will ramp up revenues up certainly much faster than what we experienced in the automotive market.

Kevin Clark: Today, again, our revenues are relatively small, but the size of the commercial pursuits and bookings, we're confident will ramp up revenues up certainly much faster than what we experienced in the automotive market.

Speaker #4: Thanks a lot.

Tom Narayan: Thanks a lot.

Speaker #1: Your next question will come from the line of Rajat Gupta with JP Morgan.

Operator: Your next question will come from the line of Rajat Gupta with JPMorgan.

Speaker #4: Great. Thanks for taking the question. I just wanted to start with one clarification. On the first quarter restatements, if I look at the press release and take the six-month EBITDA number, it implies a lower 1Q than what was provided.

Rajat Gupta: Great. Thanks for taking the question. Just wanted to start with one clarification on the Q1 restatement. If I look at the press release and take the six-month EBITDA number, it implies a lower Q1 than what was provided in the Q1 deck and the financials on the website. Just want to make sure if that is just an accounting nuance that we need to be aware of.

Speaker #4: In the Q1 deck and the financials on the website, I just want to make sure if that is just an accounting nuance that we need to be aware of.

Varun Laroyia: Hey, Rajat. Yeah.

Speaker #4: Thanks.

Rajat Gupta: Thanks.

Speaker #2: Rajat, it's Varun Laroyia here. Listen, that's all CODO. Associated with the vestige and spin. So what you need to look at is the Q1 proforma on our investor relations portal.

Kevin P. Clark: Rajat, it's Varun out here. Listen, that's all CODO associated with the Versigent spin. What you need to look at is the Q1 pro forma on our investor relations portal.

Varun Laroyia: Rajat, it's Varun out here. Listen, that's all CODO associated with the Versigent spin. What you need to look at is the Q1 pro forma on our investor relations portal.

Speaker #4: Understood. So that's the right number. Okay, got it.

Rajat Gupta: Understood. That's the right number. Okay. Got it.

Speaker #2: Yeah.

Varun Laroyia: Yes.

Speaker #4: Yeah. And just to follow up, just in the bookings mix, within the intelligence systems, year-to-date bookings or just the second quarter bookings, are you able to share any more detail in terms of how much is full stack ADAS including software versus modular?

Rajat Gupta: Just to follow up, just in the bookings mix, within the Intelligent Systems, year-to-date bookings or just the Q2 bookings, are you able to share any more detail in terms of how much is full stack ADAS including software, versus modular? I'm curious if that mix has changed at all over the last few months as a lot of manufacturers try to build more internal capability. Thanks.

Speaker #4: And I'm curious, if that mix has changed at all, over the last few months, a lot of manufacturers try to build more internal capability.

Speaker #4: Thanks.

Speaker #2: Yeah. Our the trend that we're seeing and I want to make sure I think you're talking about the intelligence systems and tech stack. Is more of a separation of software and hardware and quite frankly, more software opportunities.

Kevin P. Clark: Yeah. The trend that we're seeing, and I want to make sure, I think you're talking about the Intelligent Systems and tech stack.

Kevin Clark: Yeah. The trend that we're seeing, and I want to make sure, I think you're talking about the Intelligent Systems and tech stack.

Rajat Gupta: Yeah

Kevin P. Clark: The trend we're seeing is more of a separation of software and hardware, and quite frankly, more software opportunities. I referenced the full tech stack award from a Gen 6 ADAS standpoint. We're seeing or experience a significant portion of our bookings in 2026 will be Gen 6 ADAS solutions, the bulk of which will include our hardware and our software. We're seeing more momentum there. We're seeing more OEMs come to us as they work on their path to software-defined vehicles, asking us to do some of that software development in and around areas like middleware, and other portions of their software tech stack. I know we often get asked that question about insourcing from an OEM standpoint, and it varies a bit by OEM, but we would tell you our experience has been the overall trend. We've not seen that.

Kevin Clark: The trend we're seeing is more of a separation of software and hardware, and quite frankly, more software opportunities. I referenced the full tech stack award from a Gen 6 ADAS standpoint. We're seeing or experience a significant portion of our bookings in 2026 will be Gen 6 ADAS solutions, the bulk of which will include our hardware and our software. We're seeing more momentum there. We're seeing more OEMs come to us as they work on their path to software-defined vehicles, asking us to do some of that software development in and around areas like middleware, and other portions of their software tech stack. I know we often get asked that question about insourcing from an OEM standpoint, and it varies a bit by OEM, but we would tell you our experience has been the overall trend. We've not seen that.

Speaker #2: And I referenced the full tech stack award from a Gen 6 ADAS standpoint. We're seeing or experience significant portion of our bookings in 2026 will be ADAS Gen 6 ADAS solutions the bulk of which will include our hardware and our software.

Speaker #2: So we're seeing more momentum there. We're seeing more OEMs come to us as they work on their path to software-defined vehicles, asking us to do some of that software development in and around areas like middleware and other portions of their software tech stack.

Speaker #2: So I know I know there's a we often get asked that question about insourcing from an OEM standpoint. And it varies a bit by OEM, but we would tell you our experience has been the overall trend.

Speaker #2: We have not seen that. In fact, we've seen several OEMs who have attempted to do broad-based software and have decided to go down a different path and be more reliant on suppliers.

Kevin P. Clark: In fact, we've seen several OEMs who have attempted to do broad-based software that have decided to go down a different path and be more reliant on suppliers.

Kevin Clark: In fact, we've seen several OEMs who have attempted to do broad-based software that have decided to go down a different path and be more reliant on suppliers.

Speaker #4: Got it. Got it. That's helpful. Yeah. Thanks for that color. And good luck.

Rajat Gupta: Got it. That's helpful. Yeah. Thanks for that color, and good luck.

Speaker #1: And that was our last question. This will now conclude today's question and answer session. I will now turn the call back over to Mr. Kevin Clark for any additional or closing remarks.

Operator: That was our last question. This will now conclude today's question-and-answer session. I will now turn the call back over to Mr. Kevin Clark for any additional or closing remarks.

Speaker #2: Thank you, everyone, for joining us today. Have a great day.

Kevin P. Clark: Thank you, everyone, for joining us today. Have a great day.

Kevin Clark: Thank you, everyone, for joining us today. Have a great day.

Operator: This call is now complete, and thank you so much for joining.

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