Good day and welcome to the Aptiv First Quarter 2021 Earnings Conference Call. My name is Anna, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Elena Rosman, Aptiv's Vice President of Investor Relations, you may begin your conference.

Thank you, Anna. Good morning and thank you to everyone for joining Aptiv's first quarter 2021 earnings conference call. The press release and related table along with this live presentation can be found on the investor relations portion of our website at ir.aptiv.com. Today's review of our financials excludes restructuring and other special items and will address the continuing operations of Aptiv. The reconciliation between GAAP and non-GAAP measures for both our Q1 financials as well our full-year 2021 outlook are included at the back of today's presentation and the earnings press release. During today’s call we will be providing certain forward-looking statements, which reflect Aptiv's current view of future financial performance and may be materially different from our actual performance for reasons that we cite in our Form 10-K and other SEC filings, including uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and impact on the global economy. Joining us today will be Kevin Clark, Aptiv's President and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and then Joe will cover the financial results in more detail before we open the call to Q&A. With that, I would like to turn the call over to Kevin Clark.

Thank you, Elena, and thank you everyone for joining us this morning. Beginning with slide 3, we had a strong start to the year reflecting our ability to outperform in a challenging environment. Our focus on execution translated into stronger revenues and earnings in the quarter. Revenues totaled $4 billion, that's up 20% from the prior year, driven by our industry-leading portfolio of safe, green and connected technologies. Operating income reached $437 million, reflecting margins of 10.9%, an increase of 370 basis points from the prior year, and earnings per share totaled $1.06, an increase of 56%. The results reflect strong revenue growth, partially offset by labor inefficiencies and increased premium freight costs associated with a growing number of supply chain disruptions. The 5% growth in global vehicle production was principally driven by a 72% increase in China, lapping the impact of last year's pandemic-related shutdowns, partially offset by a decline in vehicle production of 4% in North America and 1% in Europe as OEM customers idle plants in response to the tightening of the global supply chain. For the balance of the year, we expect the supply chain to remain stressed in the near term, and volatility in production schedules is expected to actually increase. However, the Aptiv team is doing an excellent job executing in this very fluid environment, minimizing the effects of the supply chain disruptions, and keeping our employees safe while delivering for our OEM customers. Turning to slide 4, this year supply chain disruptions have been further exacerbated by severe weather in the Southwestern United States and a facility fire at one of the industry's major chip suppliers in Japan. As a result, we continue to experience volatility in production schedules, elevated freight and logistics expenses, and higher raw material input prices, as the industry struggles to meet strong customer demand levels. As I mentioned, based on our daily discussions with customers and suppliers, we expect supply chain disruptions to actually increase over the next few months before the environment begins to improve in the second half of the year. However, given the factors at play, we continue to expect global vehicle production to increase 10% for the full year, reflecting continued strong consumer demand, the absence of last year's pandemic-related production shutdowns and customer intentions to make up first-half production shortfalls in the second half of the year. Moving to slide 5. Despite the near-term economic uncertainty, we remain confident in our initial financial outlook for the year. Our industry leading cost structure provides incremental flexibility to rapidly adjust to changes in customer production schedules, and our portfolio of advanced technologies positions us to benefit from the acceleration of safe, green and connected secular trends, which have led to increased demand from both leading and emerging electric vehicle manufacturers ramping up production globally, including the leading U.S. EV company, Volkswagen, Volvo, Rivian, and NIO. Our scalable satellite architecture ADAS platform is now being deployed across multiple OEMs and vehicle segments across the globe. And our connected services solutions are providing fleet owners with the information necessary to optimize vehicle uptime and lower operating costs, as well as OEM customers with the vehicle-level data to reduce product development and warranty expenses. We're very proud of the positive impact these technologies are having today. I want to recognize the tremendous dedication of the global Aptiv team, which has launched these complex and highly integrated solutions during these very challenging times. In summary, our flexible and sustainable business model is reinforced by a consistent and deliberate management approach to disciplined revenue growth and an industry-leading cost structure sustained through cycle resiliency, allowing us to compound earnings and cash flow and reinvest that cash to create long-term shareholder value. Moving to slide 6, first-quarter bookings totaled $5.2 billion, reflecting a strong funnel of new business opportunities and robust customer win rates. Our advanced safety and user experience segment booked approximately $1 billion, reflecting the lumpiness of new business awards, further exacerbated by the semiconductor supply shortage, which has extended customer decision timelines as resources have been reallocated. As a result, a number of larger business pursuits are now slated for award in the second half of the year. New Business bookings for our Signal and Power Solutions segment totaled $4.7 billion, including nearly $1 billion of high-voltage electrification awards, driven by the increased demand for electrified vehicle platforms. Our strong track record of new business bookings is proof that our portfolio of advanced technologies is well aligned to the areas of growth within our industry, and our position as the only provider of both the brain and the nervous system of the vehicle enables us to provide unique value to our customers. Moving to slide 7, we believe that our long-term success and ability to create value for our stakeholders are directly linked to building a more sustainable business that continuously delivers on our mission and strategy. Our mission to develop safer, greener and more connected solutions, which enable the future of mobility, is integral to both the products we create and the way we conduct business. Aptiv is committed to protecting human health, natural resources and the environment in which we live and operate. Our commitment to environmental stewardship is companywide, and we aggressively pursue initiatives to minimize our environmental impact. In 2012, we set a long-term target to reduce our carbon output by 30% between 2011 and 2019, which we actually exceeded, reducing emissions by over 40% during that period. In our 2020 sustainability report, we published new, more aggressive sustainability targets that include a further 25% reduction of CO2 emissions by 2025. In addition, we committed to the science-based targets initiative, joining the effort to create a zero-carbon economy to help prevent the effects of climate change. As a result, we're excited to announce Aptiv’s path to carbon neutrality, which includes being carbon neutral across our global operations by 2030 and providing carbon-neutral products to our customers, and achieving net neutrality by 2040. We remain committed to addressing some of mobility's toughest challenges while at the same time reducing CO2 emissions globally. We plan to showcase our industry-leading electrification portfolio and capabilities at our upcoming high-voltage technology teaching, which is scheduled for early June. Turning to slide 8, despite the challenges we currently face, we remain focused on further strengthening our track record of outperformance and long-term value creation. While our industry continues to be tested, our operating performance has validated our business model and through-cycle resiliency. As we look ahead, we position Aptiv to continue to outperform with focused investments that have increased the resiliency of our business and expanded the markets we serve, leveraging our unique brain and nervous system capabilities to deliver even more content on the electrified Software Defined vehicles of the future, which together yield accretive growth opportunities and present incremental value creation opportunities through smart capital deployment, resulting in meaningful shareholder returns as the economic recovery continues to unfold. So with that, I'll hand the call over to Joe to take us through the first-quarter results in more detail.

Thanks, Kevin, and good morning, everyone. Starting with slide 9, we experienced recovering momentum in the first quarter, generating strong sales, income, and cash performance despite the supply chain constraints Kevin referenced earlier. Revenues of $4 billion were up 20%, 15% ahead of vehicle production, which was up 5% on our weighted market basis. Adjusted EBITDA and operating income were $630 million and $437 million respectively, reflecting stronger volumes and disciplined cost management, partially offset by approximately $70 million of COVID-related and supply chain-related costs. Earnings per share in the quarter were $1.06, reflecting higher operating income, offset by the Motional joint venture results and higher share count and tax expense. Operating cash flow is strong at $252 million driven by higher EBITDA while CapEx was $134 million. Looking at first-quarter revenue in more detail on slide 10, broad demand recovery, some inventory restocking, and our engineered components businesses contributed to strong growth over market in every region. We also had favorable FX in commodities, partially offset by price declines of approximately 1% a quarter. From a regional perspective, North America revenues were up 5%, representing nine points of growth over market driven by new launch volume and favorable truck and SUV platform mix. In Europe, the trend of strong double-digit market outgrowth continued with further adoption of our high-voltage electrification and active safety solutions. Lastly, in China, revenues grew by 94%, reflecting 22 points of growth over market, as the volume recovery led to production upside and inventory replenishment with our major customers. As a reminder, China operations were shut down between late January and March of last year. Moving to the segments on the next slide, advanced safety & user experience revenues increased 11% in the quarter, reflecting six points of growth over underlying vehicle production, including double-digit active safety outgrowth, despite semiconductor supply shortages. Segment EBITDA increased 31% excluding the impact of Motional JV deconsolidation, driven by higher sales and disciplined cost management, partially offset by supply chain disruption costs. Signal and Power Solutions revenues were up 23%, reflecting 18 points of market outgrowth. Record outgrowth was driven by continued strong demand for high-voltage electrification solutions in Europe and China, favorable truck and SUV platform mix in North America, and the benefits of inventory replenishment within the engineering components businesses. EBITDA in the segment increased 43% on strong sales conversion, driving meaningful margin expansion despite headwinds from supply chain costs and FX in the quarter. Both segments saw lower price declines in the quarter due to customer timing, which is expected to return to normalized levels over the course of the year. Turning now to slide 12 and our 2021 macro outlook. As Kevin mentioned earlier, the worldwide shortage of semiconductors impacting the auto industry continues to limit near-term production visibility. Based on discussions with our customers and suppliers, we expect supply chain disruptions to remain volatile in the second quarter, given the additional impact of the Naka fire and Texas weather events. While we don't expect the supply-demand imbalance to fully recover to normalized levels until 2022, the situation is expected to improve in the second half of the year to allow for partial recovery of lost vehicle production from the first half. Accordingly, we will not be providing guidance for the second quarter as it remains highly likely that vehicle production will shift between the quarters. However, we continue to believe we have adequately reflected the current situation in our original guidance for fiscal year 2021, which estimates global vehicle production of 84 million units, up 10% with minor adjustments within the regions. Our assumption for North America has increased slightly, offset by a reduction in Europe as markets continue to face extended lockdown measures. While the supply chain remains extremely tight, we have taken swift action to mitigate these impacts to help customers prioritize certain platforms to meet increased levels of demand, which was reflected in the strong outgrowth we saw in the first quarter. Although we are not updating our full-year guidance, we remain confident our industry-leading portfolio of safe, green, and connected technologies will continue to yield market growth in the range of 6% to 8%, consistent with the framework we've previously provided. Turning to slide 13, despite the uncertainty that remains in the near term, we are confident in the original guidance range we provided for 2021. For the year, we continue to expect revenues to be in the range of $15.1 to $15.7 billion, up 16% with six points of growth over market at the midpoint, and a modest tailwind from FX and commodities, which combined more than offsets our normal price declines. EBITDA and operating income are expected to be $2.4 billion and $1.6 billion at the midpoint respectively, with strong year-over-year sales conversion, despite operating with $100 million of COVID-related costs and incurring approximately $80 million to $100 million in manufacturing and logistics costs related to supply chain shortages this year. Lastly, the benefits of our ongoing initiatives are more than offsetting the $150 million of austerity measures taken primarily during the pandemic-related shutdowns in the second quarter of 2020. We expect earnings per share in the range of $3.35 and $3.85 per share, or $4.20 to $4.70 per share when excluding the impact of the equity income losses of the Motional joint venture. Lastly, operating cash flow of approximately $1.9 billion. As a reminder, we will resume providing quarterly guidance when we have improved visibility on customer production schedules and global supply chain disruptions. With that, I'd like to hand the call back to Kevin for closing remarks.

Thanks, Joe. Let's wrap up on slide 14 before opening it up for questions. As we navigate the road ahead, we're closely monitoring the current environment, including the pace of economic recovery and the ongoing disruptions in the supply chain. That said, our portfolio of advanced technologies continues to outgrow the market, while world-class talent, leading cost structure, and a strong track record of execution position us to lead the industry forward in this recovery. Our performance is a direct result of our strong cultural foundation built on the values of thinking and acting like owners. We remain laser-focused on delivering on our commitments to our customers, shareholders, and employees, while advancing our mission to create a more sustainable business and environment. Aptiv’s industry-leading portfolio is enabling a more efficient and accelerated path to electrified software-defined vehicles now demanded by consumers and required by our customers, and we're helping to create a safer, greener, and more connected world as we advance our path to carbon-neutral operations and products by 2040. At Aptiv, we're moving forward with purpose as a company with a strong financial position and the flexibility to reinvest in our people and our technology portfolio, creating significant value for all of our stakeholders. Thank you again for your time. Let's open up the line for questions.

Thank you. We will take our first question from Joseph Spak of RBC Capital Markets. Please go ahead.

Thank you. Good morning, everyone. Kevin and Joe, I understand you aren't offering quarterly guidance due to the uncertainty. However, it seems the first quarter may have performed better than expected, with solid results in high voltage and active safety, along with related margin performance. I'm trying to clarify your reiterated guidance: is this a timing issue where things are unclear about their arrival, or is there a heightened level of caution due to the unpredictable schedules you mentioned and potentially increased costs?

Yes, maybe Joe I’ll start and Joe can walk you through more of the details. Q1 was a strong quarter, without a doubt, you know, it's a very volatile environment. Based on what we have visibility to today, Q2 will be even more volatile than Q1. Operating in that environment presents challenges. Now, we're confident from an operational standpoint, we're buttoned down and we're operating well, confident that we'll continue to operate at a high level as we head into Q2. But again, it'll be choppy as we look at some of the challenges and disruptions in the supply chain. Our focus is on ensuring that our customers get the parts they need to produce the vehicles that they're trying to produce, which consumers want. Based on our forward visibility as we look into Q3 and Q4, all of our customers are very committed to producing the vehicles that they were unable to produce in Q1 and Q2, and we're all working very actively across the supply chain from the semiconductor providers to the resin providers all the way through to our customers. In a tough environment, we're operating reasonably well. But again, it's challenging. It's requiring incremental resources and costs, from a day-to-day management standpoint in our factories, as well as from transportation and logistics, and incremental engineering resources to make sure that we provide our customers with options or incremental flexibility to the extent we see parts shortages. When you look at Q1, a big portion of the outgrowth, as Joe mentioned, is some element of restocking of the overall supply chain in areas like cable management products and connectors, which certainly drive some benefit in the first half of the year. But that would be my take on how we view the environment as well as how we perform. Joe, you can provide more visibility.

Yes, no, obviously, I agree with everything Kevin said. I did mention a couple of times in my prepared comments around just the replenishment within the connector side of the business and Hellermanntyton we were expecting that over the course of the year. I think as we look at it right now, it's to your cadence comment coming, it certainly looks like it's coming in the first half of the year. That's going to be worth a few points of growth in the first half of the year versus the back half. Again, it's good business; it's the tiers replenishing, it's the distribution channels replenishing, and we had expected it in the year. So it's more of a timing issue. As Kevin mentioned, we're seeing increased volatility in Q2. The original chip disruptions or supply chain constraints that were COVID demand-related are starting to ebb down in Q2, as we expected, but the impact of the Naka Fire and the Texas weather on Q2 unit production will, based on what we're seeing right now, could certainly be as significant from a number of units perspective for the industry as the original disruption. And obviously, all of that is coming in Q2. So we're just mindful of how much production the industry can get through and keep tuned. We remain confident it can be made up in the back half of the year, but we obviously have a fair amount of volatility we're managing through here over the next three to four months.

But I think it's fair to say one thing, if Joe and I were to bet, we would say Q2 disruption is bigger than Q1 disruption based on the availability of semiconductor parts associated with that, as well as the challenges with the weather down in Southwestern U.S. and the Naka Fire.

Thanks for that. The second question, I guess, it just dawned on the cash here and the $2.8 billion, you're effectively pointing to another billion in free cash over the next few quarters. I know, back when you raised some capital a year ago, you wanted a little bit of a war chest to speak. And you can time the M&A but it appears that war chest is going to get quite large. So any updated thoughts on either buybacks or other uses of that cash?

Our primary focus remains deploying it for M&A. We're working at it; that pipeline's coming back strong. Obviously, there are some challenges from a travel perspective and meeting perspective around remaining COVID restrictions, particularly outside of the U.S., but we continue to believe over the course of the year that that's where that cash gets utilized.

Joe, it's important to note that, post-COVID, the reality is that all the trends we've talked about—safe, green, connected—have actually accelerated. Demand for high-voltage solutions; we talked in our prior call about high-voltage pursuits increasing over the last couple of years from 10 to 15 to in the range of 50. We're currently up north of 100, so there's tremendous opportunity for us to invest organically or via acquisition. There are a number of areas that Joe and the M&A team are focused on in and around advancing technologies to support the growth in high-voltage electrification, as well as to support increased needs for software in areas like ADAS, user experience, and smart vehicle architecture. There are numerous opportunities to deploy that capital in a smart way.

Okay, thanks for all that color.

Thank you. Our next question comes from Rod Lache of Wolfe Research. Please go ahead.

Good morning, everybody. Well, I understand there's a lot of volatility here—replenishment in the first quarter, volatility in the second quarter—but I was hoping you might be able to just take us out a little bit, maybe into the back half or into next year and speak to whether there are any kind of long-term consequences from what you're seeing right now, either in terms of growth over market, or cost for Aptiv’s people or your customers. Do you think there's shifting towards a higher mix of vehicles, delaying launches, or doing anything that would affect you longer term?

Yes, Rod, it's Kevin. I'll start. We have a view that, over the medium term, you're going to continue to see supply chain tightness, certainly from a semiconductor standpoint as well as others, like resin, that will continue through 2022. From an overall demand standpoint, consumer demand is very strong, which certainly creates significant customer demand for Aptiv. That demand is around the areas where we play, right. It's about accelerated electrification and increased demand for products like ADAS or ADAS solutions, and more demand for connectivity solutions, all of which are places that we are positioned. There's a significant driver increase from our customers in software-defined vehicle solutions, which is a very strong tailwind. As we take a step back and look at consumer demands, positive customer polls, we have strong supply chain challenges, but we will work through that. Today we're operating, I think, we have 16 product redesign programs that we're going through, providing our customers with either alternative choices from a product availability standpoint or cost reduction opportunities that we review with the team on a daily basis. We think that's something we'll manage through reasonably well. From a customer standpoint, in addition to the strong consumer poll, all of our customers are focused on building their most profitable, highly content vehicles. A portion of the benefit we saw in Q1 and I'd expect to see in Q2 is pulling for more advanced ADAS solutions and high-voltage electrification—all things that consumers want—which is a strong tailwind. So as we sit here today, like everyone, we struggle day-to-day to deal with supply chain challenges. We're operating extremely well, and we've put in the processes in place to mitigate that. The underlying trend or demand for the areas in which we play has, we'd actually say, accelerated post-COVID. The semiconductor issue probably further accelerates the demand for the areas that we play.

Thanks for that. Just secondly, we're seeing so many automakers now talking actively about the things that you guys have been discussing for 10 years with respect to software-defined capability and architectures. But they're also increasingly discussing taking control of software competency in-house; you're hearing that from Ford with the FNV and GM is hiring 5,000 engineers, Volkswagen’s head of software said they’re going to go from 10% of the software value adding a car to theirs aspiring to 60%. Are you seeing the same from where you sit, and do you think that has any implications for you in terms of the software value add that you're delivering?

Listen, in some areas, we are, and in some areas, we're not. Our focus is on developing solutions that ultimately integrate into that full software-defined vehicle concept. This provides us with software content opportunities, integration content opportunities, and hardware content opportunities. Our focus is on ensuring we provide our customers with whatever they want—be it all of it or part of it. We know there are a lot of OEM customers talking about increasing their investment in software; for a number of them, that will make sense. For a lot of them, they will have challenges executing on that. We're focused on ensuring that we're there to help. There are others who frankly, don't view it as a core competency and will outsource it. So it doesn't really change our strategy. We think it validates what we've been talking about and the need for the competencies that a company like ours has, and it's an area that we will continue to aggressively invest in. You've seen the pull as it relates to bookings in areas like advanced ADAS solutions, user experience, high-voltage electrification, so we continue to view it as an opportunity. It's reflected in the six to eight points of outgrowth that Joe's been discussing.

Yes, that's a good point. We're seeing it in the bookings. Thanks for that.

Thank you. Our next question comes from Chris McNally of Evercore. Please go ahead.

Thanks so much, Team. I want to ask two questions specifically about the high-voltage and EV business. So the first one is around some market share math. I know you won't be able to confirm it 100%. So maybe just tell me if I'm crazy about the math, but I'm just going to lay out. So you won about $900 million in awards in Q1. We don't know where that will end the full year, but maybe that's $3 billion plus; you've been running in this $2 billion-plus range. I calculated on 2025, maybe the industry is something like $8 billion to $9 billion in awards. Currently looking at 2025, the EV number is 500 to 600 hours of content per vehicle. That would mean that you could have a share in the 40% range, which would be above your traditional electrical architecture but not so out of the realm of possibility. So does that math seem anything wildly off in terms of calculations?

Yes, I'm not sure if we've looked at it that way. Joe, can comment on it? I think working backward at a high level, right? The industry is committed to spend about $300 billion investing in creating or developing high-voltage electrification platforms or vehicles. Correct. I mean, you've seen the announcements from GM, $20 billion to deliver 30 new EVs. There was a recent BCG study that indicates that 50% of vehicle production will be high-voltage by 2026, which is a significantly higher percentage than what was predicted just a year ago. Certainly, there's a tremendous tailwind for high-voltage electrification. OEMs have reached the point where they've made the choice between internal combustion engines and high-voltage battery-electric vehicles; they have chosen the latter, and there's a significant investment in that area. It's a huge opportunity for us. I mentioned, a few years ago, we were pursuing 10 to 15 programs per year. This year, we'll be pursuing somewhere between 75 and 100 programs. When you look at our historic win rate, which is north of 60%, 65%, and consider our core capabilities and what we're able to bring in terms of a full system solution, the opportunity is significant.

Yes, Chris, I mean, like Kevin said, we haven't put it back into the math the way you just did, but qualitatively, we've got that business has one out of three and a half pieces of content on one of the vehicles manufactured today on the low voltage side, right? So we do play at a very high level from a capability and customer share perspective. When you add on top of that, I think one of the advantages we have for customers in high voltage is we're able to meet very high volume requirements very quickly, just given the scale of our Signal and Power Solutions. So we can get off—get out of the gates very quickly and you're seeing volumes ramp. I mean, we had our high-voltage business with some of the launches; it grew 125% in Q1. Now, that's a very strong quarter, but you're really looking at the quality of the launches in Europe and China, the quantity and quality of the launches. The other take away here is that OEMs will always have to make decisions around which vehicles to build, given the supply chain constraints. They're currently focusing in North America on trucks and SUVs, but in Europe, they're continuing to focus on EVs. So, again, we've got a strong market position in the low-voltage space, and would expect that to at least be the starting point for our highest high-voltage business over time and to be able to grow from there.

Great, and it's super helpful. And then the second quick question just on the growth rate for this year. Correct me if I'm wrong, maybe I just set up an old projection, but I think you were targeting roughly 55% or 60% growth for high voltage for the year, until you mentioned the 125% in Q1. Typically, seasonality isn't weighted too much; if anything, we're going to get a second-half push from both Europe and production looking at some of the major EV platforms. Is there some upward pressure on that 55% to 60% for the full year, assuming even a chip shortage continues?

Listen, I think we're going to stay away from the details on the back half of the year, just until we get further visibility and until the dust settles. We're obviously confident in the full-year outlook, including the 55% to 60% growth for high voltage. That certainly acknowledges Q1 is a good start in that direction. But we're going to stay away from specifics until we have more clarity as we move forward.

Okay, great. Thank you.

Our next question comes from Mark Delaney of Goldman Sachs. Please go ahead.

Yes, good morning, and thanks very much for taking the questions. There's been an increase in auto OEM announcements recently about plans to bring new ADAS platforms to market, and I think after this ADAS business, if I'm remembering correctly, is north of a billion dollars of revenue already and has been growing quickly. But maybe you could elaborate on what the company's seen in terms of the design and pipeline opportunity with ADAS and what you're expecting for future growth in that business?

Yes, demand for ADAS continues, right? A few years ago, 50% of global vehicle production had an ADAS system on it. I think today we're at about 65%. In a few years, it will be 75% or more, with regulations driving other requirements for ADAS, especially in places like Europe. The end caps are driving the demand for ADAS solutions in North America, Europe, as well as China. It's a product or solution which helps OEMs sell cars while also typically being a profitable option. Rebuy rates are up north of 95%, and ADAS demand continues to be strong. I think our outlook this year is that ADAS will grow roughly 35% on a year-over-year basis, while market growth is about half of that. Market growth will continue to be strong, and we are well positioned, based on our history and market position in ADAS, to continue to grow well above market in the space.

That's helpful. Thanks. And then my follow-up question was about the company's commitment, so that it made today to CO2 reduction. And thank you for what the company is doing on that front. I recognize the costs of clean energy are falling, and you can actually be cheaper than traditional fuel sources. But as you think about meeting these objectives that you articulated today, is there any change we should be expecting in terms of the financial model and what sort of margins the company may be able to operate at?

Well, Mark, it’s Joe. I mean, we obviously feel comfortable achieving these targets within the existing framework. We’re really treating these targets in the process to achieve them seriously and really internalizing them. We treat them very much like any other performance target that we have in the business, and if added it to the list of things that need to be balanced to hit the financial framework. We feel comfortable that we'll be able to do that.

Thank you. Next question comes from Emmanuel Rosner of Deutsche Bank. Please go ahead.

Hi, good morning, everyone.

Good morning.

I was hoping to put a finer point around your growth over market outlook. So I think you maintain that six points for the full year. Obviously, you had an extremely strong start with some things like refilling of stocks and all this, but just generally feels like, as you said throughout this call, a lot of automakers are prioritizing a lot of the vehicles that have more content. Can you just talk about the puts and takes around the growth of our markets for the full year still at six points, that's still towards the lower end of your normal framework? And why, if there's any upside risk to this?

Yes, well, Emmanuel, we're going to stay away until really the dust settles before refining the full year outlook. We obviously remain very comfortable hitting that original guidance from January. As I mentioned, we are seeing some channel replenishment within the engineering components businesses, and both tiers on the auto side as well as the industrial side of the businesses. I'd call that probably three to four points of growth moving from in the first half that won't repeat. To us, we expected it to happen in the full year; we assumed it would be in the back half, but it seems to be happening faster than original expectations. Some of that will change based on the heavier content mix, as customers have to make choices around what vehicles to manufacture; they're leaning towards trucks, SUVs, and EVs. The assumption is, and again we just don’t have the updated schedules to revise these, we're still seeing the full-year guidance we have of 6% growth.

Okay, that's helpful color. Second question is about promotional and in particular, your partnership with Lyft. Can you update us on the status, sort of the next milestones? Obviously, over the last few weeks or so, there was also this announcement of Lyft selling their separate autonomous operations to Toyota, but with also the potential some partnership and the robotaxi there as well. Any impact on your relationship or these things just two separate contracts?

Yes, it's Kevin. They're two separate activities. Our relation—most of the Motional team is doing a fantastic job. I think you saw the announcement in February of this year regarding the first driverless testing that they're doing in Las Vegas, the selection of the HMG Ionic Q5 platform as the next platform that they're going to put their Gen 2 automated driving platform on. So a battery-electric vehicle, a really attractive vehicle from Hyundai. The team could move forward with that. Lyft is a strong partner; we have an agreement with Lyft, where they're going to be purchasing vehicles from Motional and launching in a second city in the United States in 2023. More to come, and it’s a relationship that we really value and we're looking to expand.

Thank you very much.

Thank you.

Our next question comes from David Katz of Jeffries. Please go ahead.

Good morning, everyone. A couple of questions on Signal and Power, first was hoping you could provide some more color on the commodity headwinds in the quarter itself, and maybe how you're thinking about the impact for the balance of the year.

That's Joe, let me start. So yes, listen, I think that obviously one of the top of the list is copper. Copper prices are up there; we haven't seen these levels since 2011. I do think it's important to note that we have been here before with copper. So there is precedent for how both positive and negative changes in copper prices flow through the P&L and how our offset mechanisms work. We're about 80% pass-through on copper. So changes in copper prices can be both positive and negative, and pass through to customers. The remaining 20% we have to absorb, so we're fairly well insulated from copper fluctuations. We talked about this before—there will be a margin rate impact as higher copper prices flow through, but they tend to be somewhat offset by pricing actions or operational efficiencies. Inflation around things like resin; we've expected introductory prices that will go up over the course of the back half of the year into next year. Semiconductor supply is probably more on the automotive side, but at this point, the inflation we’re seeing and expecting, I would put into the context of being manageable relative to our broader commercial discussions with customers and the initiatives we have in place to offset costs. So, copper, by far the largest, but structurally we're very well positioned to mitigate or pass through those increases.

Okay, got it. That's helpful. Thanks, Joe. And then one more follow up on the restocking discussion. I guess, could you just remind us of your distribution exposure, and then I was hoping you could talk about your expectations for kind of underlying commercial vehicle and industrial market growth? From our vantage point, it seems like industry-wide connection order books are at record levels right now. And understanding the visibility is a bit lower there, but we're just trying to get a sense for kind of the end demand expectations versus the channel fill that's clearly taken place.

Sure, let me start with CV. We're obviously seeing strong growth as contributors in both our industrial and commercial vehicle markets. So we're seeing only and if you have the growth rates right there, just the CV growth rates continue to be our growth above market continues to be very strong in CV.

Yes, but we were in CV just over 25% in the quarter.

And again, that's really driven in part by the Signal and Power Solutions business. Obviously, the connection systems business is developing a strong CV business, as well as some things like infotainment in the advanced safety and user experience business. As it relates to the distribution channel, that's a smaller part of our business, it's in the hundreds of millions of dollars. It's more impactful in a particular quarter when we see a restock. That's within Signal and Power Solutions. The Hellermanntyton business as well as our connection systems business does push through distribution, but again, it's framed in hundreds of millions of dollars in volume, but it is impactful in the first half of the year given the level of replenishment in the distribution channel. We are seeing increased levels for the tier ones on the auto side, David, so that comment refers broadly to restocking with both the tier ones and distribution channels.

Okay, got it. That's helpful. Thank you.

Thank you. Our next question comes from Dan Levy of Credit Suisse. Please go ahead.

Hi, good morning. Thank you. I wanted to, sorry, if you mentioned this earlier, but I want to go into the growth of the market in the first quarter, the 15 points. If you could just provide any color by the drivers by region, I assume that I know that there was obviously some lumpiness there but pretty big growth of market in the other regions as well and then give me a sense how much of the benefit you got from partially built vehicles. And then how much of the benefit was mixed in the quarter?

Yes, let me highlight the growth over market we’ve got laid out in the deck. Strong growth over market in and obviously China, as we talked about, but all regions showed positive growth of 9% to 10% across North America and Europe, helped by high-voltage business, high voltage business and engineered components, not just restocking but also just the strong demand underlying those businesses. I expect, as you get to the back half of the year, particularly in China, we'd expect some of that growth to stabilize as we just start to emerge. China was out first, had a very strong back half of last year, so had very strong growth in the back half of last year. As it relates to partial vehicle builds, we know they're happening; we have very little visibility into that, for most cases it is because we’re shipping, and they’re building. To the extent that’s a part that we’re contributing, we also have that on order for us, but really don’t have visibility into broadly what that means for the industry, realizing that people will comment that there’s a lot of yard holes, yard-hole vehicles at this point, but really doesn’t necessarily flow through to what we’re seeing.

Okay, great. And then my second question, I just want to follow up on Rod's question earlier in specific to active safety. And I know about it was a month ago or so we saw a headline, Volvo is expanding its collaboration with Nvidia, and I think that's more on the compute side. But clearly, it seems like you have more automakers trying to do a little more on the active safety side. I recognize there's multiple ways you can work with customers and bigger pie roles may change, but maybe you could just give us a sense of how that dynamic is working out with automakers. And are they taking on the Aptiv space? Are they taking more of an active role in forming their functionality versus relying on suppliers? And what's the piece that's always going to be with you regardless of whether the automakers themselves want to bring in more functionality and help?

Yes, Dan it’s Kevin. Listen, again, it's all over the place. It depends on the OEM. You have to start with the first point in terms of the overall market, and penetration rates of active safety is increasing significantly, with fast-growing areas really in and around that L2, L2+. You have unit growth, and significant content growth. There are OEMs who historically have, and some who it's an increased focus now, want to be more involved in that overall development of the active safety solution. It tends to be today in and around feature development. So how does the vehicle respond to certain particular driving incidents to give it a feel of a particular brand, whether it be more aggressive, or less? Most of what we've seen is in and around the feature side. We have some customers that we're doing soup to nuts, the full platform. We have other customers who are doing the platform, and we're integrating certain features that they want to develop. Our Gen 2 ADAS platform is currently under development and will allow OEM customers to do more or less of that and provide them with the tools necessary to develop those features if they choose to. There are areas that I think would be challenging for OEMs to take responsibility for, is to your point on the controller side, and two, on the perception system side, whether that be the radar solution, the vision solution, the LiDAR solution, and on the sensor fusion side, taking inputs and developing the software necessary for the vehicle to perform and respond to those inputs, I would think those would be the most challenging areas. But we'll see; some OEM customers may decide to try that. I think as a company that’s been in this area for a very long time, it's complex; it’s a safety feature that needs to perform 100% of the time. Our history and experience do create a bit of a headwind for insourcing all that.

Great.

Thank you.

Thank you. Our final question comes from Brian Johnson of Barclays. Please go ahead.

Yes, good morning, or good afternoon if you're in Dublin. A different spin on a couple of questions that come up around OEMs being more active in technology. This one, though, is about the impact of the chip shortage. What does that mean for high-performance procurement at the OEMs? We had a consultant on a webinar talking about how his firm would be encouraging OEMs to look deep into the supply chain to understand where the chips are coming from. That was clearly best practice after Fukushima, but also to begin outsourcing many more chips. So it raises the question of whether you're a built-to-print electronics black box manufacturer, whether that's detrimental to margins. Do you see this trend as well, and is it something you would encourage? And how does this impact your product lines, especially how you've evolved them towards higher-margin software? How would Aptiv fare in that kind of environment?

Yes, that's a great question, Brian. Now, obviously, there's more semiconductor content going into the car, as you know, and having a good understanding of the supply chain and capacity within various semiconductor manufacturers is extremely important. What you're referring to is that you can see a scenario where that works for things like microcontrollers, which are more commodity-like semiconductor products, and there's little customization needed. It is a fairly standard solution that goes across multiple areas within the car. When you think about the higher-performing areas, like active safety, like radar and vision systems, obviously, you're talking about a very different model because of the engineering effort and the close relationship we have with customers. So you need to know what capacity in the supply chain looks like. The architecture that we're headed down today means that the number of those microcontrollers actually reduces significantly, right? You cut out that number in half. I think there is an aspect to this activity that I do believe is supportive. The OEMs will become more focused on the supply chain to understand what supply chain resilience looks like and where dual validation exists to reduce risks.

And just as a quick follow-up. Some suppliers in Europe have been blamed by their customers for not handling the chip shortage; would you say Aptiv for an OEM who wants to look further up his or her supply chain? Is that the kind of service visibility, transparency that you add? And does it actually help your OEM relationships?

Yes, I think it helps our OEM relationships. I think we've fared well through this challenging environment. Honestly, unless you were sitting on a year’s worth of chips, it would be hard for anyone in this space not to be impacted. That is the reality when you look at the effects of COVID and demand spikes outside of automotive as well as inside automotive. There's an element of a perfect storm, but I think it's important we as an industry learn from it, and make whatever adjustments that need to be made. We will continue to work to identify areas of improvement or redundancy.

Okay, thank you.

Thank you.

Thank you. That concludes today's question-and-answer session. I would now like to turn the call back to Mr. Kevin Clark for any additional or closing remarks.

Great. Thank you very much. Thanks everyone for your time. Just a few closing comments. Just to highlight as it relates to Q1 results and as we talk about the full year. Obviously the business is performing well. Supply chain is obviously and it will continue to be choppy as we head into Q2 and improve as we move into Q3 and Q4. Increases in costs are related to supply chain tightness or they will continue through some cost pressures, but we have several initiatives underway to engineer out these cost pressures and maintain margins. There is also a tailwind in demand for safe, green, and connected post-COVID. The demand for the solutions that we provide, whether it’s high voltage electrification, ADAS, or connectivity, is actually accelerating, and that’s certainly a positive. As Joe mentioned, we are highly confident in our full-year outlook. Again, near-term it’s going to be choppy. Looking ahead in 2021, we believe we're poised for multi-year growth with a multi-unit pace as well as content growth based on demand for high-voltage electrification, advanced safety solutions, and vehicle connectivity. So despite the challenging environment right now, we are extremely excited about the balance of the year as well as the future. Thank you everyone for your time. Have a great day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.