Okay. All right. Why don't we kick off? Good morning. Thank you, everyone, for joining. I'm Dan Levy. I lead U.S. Autos Research Coverage at Barclays and very pleased to have with us here at the Barclays Industrial Select Conference, Aptiv. They've been a mainstay at this conference for many years now. Very pleased to have with us Kevin Clark, the company's chairman and CEO of Aaron LaRoya, CFO. So we're going to go through a series of fireside chat-style questions. Anyone who has any questions at the end, glad to take them. Before we start that, as we've done in the past, we're going to kick off with a couple of the audience response questions to make this reactive or interactive. Sorry, you don't get to vote. You can react. So why don't we start, if we can just pull up question number one. Do you own the stock? You both own the stock. You're very overweight. Good, as you should be. Okay, so you have some opportunity here. All right, why don't we pull up question number two, general bias toward the stock, and you're going to be positive, as you should be. Okay, so I want to start just with a big picture question, and I think this is more just a question of perspective because, you know, for those of us that have looked at the active Delphi story over many years, really since the IPO in 2011, I think really the story has been just a story of a portfolio transition, pieces moving in and out of the portfolio, and you have a big transaction that's coming up. Your EDS business is being spun off into precision at the end of the first quarter here. So maybe you can just talk about, you know, this next chapter and why this maximizes the value creation that you've had in the past and how this fits in the story of portfolio transition of Aptiv.

Well, again, thanks for having us here. We really appreciate participating in your conference. So to Dan's point, the history of Delphine Aptiv has been an active process of always aligning the portfolio with market trends and customer needs. So that's something that we as a management team with our board focus on a regular basis. And we've gone through a number of transitions, whether it be focused M&A growth in and around areas like interconnects, cable management solutions, in and around software portfolio, in and around power plants. And we've done that for several years. And as we've looked at where the world is today and we assessed our product portfolio after a long period of time, We made the decision about a year ago, or announced about a year ago, that we're going to separate our EDS business now, which will be called Versagem Post Spin, which is about signal power distribution in the car. It's the number one player in vehicle architecture globally, to provide that business with, one, the focus, the opportunity to really focus on that singular product line to continue to expand and take share in the automotive space across multiple markets, as well as to grow in other markets. And that business is uniquely very much a process business, a supply chain business, as much as it is a manufacturing business. So highly complex process, highly complex supply chain. It's really about doing a lot of little things right. What remains with NuAptiv is a business, our intelligent systems business, which is software stack, advanced compute, advanced sensor suite. So when you think about where the world's headed in terms of physical AI, as an example, whether that's on ADAS solutions or it's in-cabin or it's outside of automotive in robots or in drones, it's how do you enable things to sense, think, and act? And how do you ensure that they're engineered in a way where they can always be optimized, which is something that we do in our automotive space all the time. In addition, we have a rather large interconnect business, which is a key part of when you think about the device we talked about whether it's a camera, whether it's a radar whether it's a LiDAR sort of solution that interconnect, that high speed connector the high speed cable assembly is a very important part of that whole aspect of something acting those are both product companies so the mentality, the approach is very different Setting those two businesses up to grow, to grow in automotive, to grow outside of automotive, which is a big piece of the opportunity in our view. Those two businesses are already 25% of revenues are outside of automotive versus the EDS business, which is roughly 10%, strong positions in A&D, in space, in industrial markets, in telco and datacom. a great footprint that we can leverage with existing technology as well with investments we're making in new products and new innovations. So the new Aptiv is really about how do we play in the right areas within automotive, how do we do that in commercial vehicle, and then how do we continue to grow in spaces like aerospace and defense, in commercial space, in telecom and datacom, with a software stack as well as a hardware stack. It's a higher growth, much higher margin business, much more cash generative, which gives us a lot of optionality, whether it's investments or returning cash to shareholders.

Why don't we unpack the growth dynamics of new apps? So for 2026, you guide it to 3% for Total Co. That's going to be 2% organic. That's, you know, three to four points ahead of underlying LVP. It's better than what you've done. So maybe just help us understand in the past. I know LVP is weighing down on the magnitude of growth versus, you know, your longer-term guidance. But this improvement versus 25, what's at play here? Is it customer mix? Is it certain launches? Help us unpack the growth on these.

Dan, thank you. And again, I'll just repeat what Kevin said. Thank you for having us here. Tremendous conference. And I've had the opportunity to come here for several years. So much appreciated. With regards to our confidence from a growth perspective, three key elements to think about. The first one is just the robust level of bookings we've enjoyed over the past several years, right? If you think about over the past three years or the past five years, the level of bookings we've had in the $25 to $30 billion, right? So that kind of starts in terms of the bookings we already have and the launches associated with those that are coming through. That's number one. The second one is, as you may recall, in 2025, we had three program cancellations in our intelligence systems business in China. And then there's a large legacy UX program that also has been weighing down. Those two elements essentially will abate in 2026, so that will no longer be weighing us down on a full-year basis. And the final point I'll kind of highlight is, you know, a couple of weeks ago when we talked about our guide for 2026, we talked about, you know, the progress we had made with bookings with China domestic OEMs, for example. You know, almost 80% of our bookings were China domestic OEMs. In addition to that, the team has just been making tremendous progress with non-China APAC OEMs. Think Japan, think Korea, think India. And those markets are, one, they're kind of growing fast, and historically we haven't had the same level of bookings that we've enjoyed. So as you think about our confidence level, it's actually born from the fact of what we have already done. and what we will be launching here shortly.

The only other thing I'd add, Varen covered most of everything. From an industrial standpoint, we've been booking at roughly $4 billion a year, non-automotive bookings, and that's in a space that's growing kind of from a revenue standpoint 8% to 10%. When you look at our software revenues, which on a gap basis are roughly $600 million, that's a mid-teens growth rate. So as those become a bigger part of the overall portfolio, and we grow at market with those particular products, it drives the revenue growth as well.

Okay, so actually I want to unpack that, right? So this is going to be a quarter, roughly a quarter of your mix post-spin. You know, 8% growth in 25, I think especially when considered the biggest piece of that is commercial vehicle, which had a very challenged end market year, is pretty impressive. Maybe help us unpack where this is coming. Is it just across the end markets? Was there something in CV that was unique?

So for us, commercial vehicle, we have a very broad swath of commercial vehicle markets. So it's Class 8, it's on-road, it's off-road, it's commercial trucks in vans, delivery vans, things like that. So medium-sized commercial vehicle. So that class is really delivery vans was a big piece of what drove growth in the commercial vehicle side. On the industrial side, which is over half of that non-auto piece, that was growing at the high end of that 8% to 10% range. That was the fastest growing part of our overall revenue from a market standpoint, which we expect to continue. So, solid growth within commercial vehicles, especially in those delivery truck areas that we have a particular focus on. and then further augmented by the industrial growth, the non-commercial vehicle side of the business.

Okay. And then as far as expanding into these markets, maybe you could just help us paint the picture of what the competitive landscape is because I think we know within your automotive businesses, you're generally top two or top three across most of your products. How do you stand versus competitors in some of these other non-automotive end markets, and how are you determining where to play and where not to play?

Yeah, so I'd start with we're in these markets already, whether it's through our Wind River footprint and capabilities and have been in, for example, Wind River, the biggest portion of their revenues go into the A&D market, So actually serve places where you think about robotics or drones. We're in the space with our Interconnect portfolio from Winchester. So those are markets that we actually have line of sight visibility to and we operate in today. I would say it's now a more focused effort of how do we bring the full portfolio, so the Interconnect portfolio, the high-speed cable assembly portfolio with the software portfolio of Wind River, as well as how do we take our existing legacy product portfolio, marry that to some of those industry-specific technologies and go to market. And, you know, what we have in our automotive market is a very strong position in interconnects, a very strong position in sensors and sensor suites, software stack, advanced compute. You need the exact same applications when you think about a robot. It's exactly the same. Automotive industry does a very good job of designing and engineering and manufacturing solutions that ultimately are parts of systems and taking out cost. And we have the ability to bring a technology solution at a much more attractive on cost, and we can scale to significant levels of production, which obviously is very attractive to players that are in those markets, especially when they're at the front end of the curve from an overall growth standpoint.

And within some of these applications, right, and you mentioned some of the humanoid robots or even drones, right, there's some very high CPVs that I think were being discussed on the last earnings call. How much of this is, these are products that are within the Aptiv portfolio already, and it doesn't take much change in the validation to change the application?

No, it's the validation process in those particular areas are actually less than what we go through from an automotive standpoint. So obviously the product needs to function, needs to be at quality, needs to be tested. But actually, the curve is actually not as steep. It's really about some element of decontenting that takes place. And then it's how do we bring the system together so that it can easily replace what's currently being used, and we can do it at lower cost and equal performance and, quite frankly, better quality. Right. Okay.

So it's the cost and quality, and it's the ability to bring it to market. that's your play here. Okay, let's unpack then the software and services revenue, which is $600 million. That's, you know, like 5% of new Aptiv. So maybe you could just unpack that. How much of that is from Wind River and what's driving that growth in the coming years?

So the bulk of that is from Wind River. Although when you look at our ADAS platform, our in-cabin experience platform, we've had more and more success and more demand from our traditional automotive OEM customers to have natural upgrades, lifecycle management from a software stack standpoint. So it does include that and when we quote business now we're working real hard to separate that software revenue from that hardware revenue. So that will be a part of the overall growth. And that includes everything from software features to middleware to real-time operating systems. So that's a part of the automotive piece. The Wind River piece, when you think about it, is a mix of embedded and enterprise solutions. Embedded solutions, which it's a leading provider of RTOS and middleware solutions for the A&D market, which gives us a great position as we talk about things like robotics and drones that we're leveraging. But they've also grown the product portfolio in and around cloud solutions for enterprise. and given what's going on in the enterprise space with players like Red Hat, VMware, and others, it's presented us with a real growth opportunity. So those are the drivers. Our outlook for this upcoming year is kind of mid-teen sort of growth rate for software. We're confident in it. We're highly confident in that based on the business that we've already booked and the visibility that we have, and it's obviously a much higher margin profile than the hardware solutions we sell.

Okay. Let's pivot the growth discussion to China. And Varen, one of the points you're making is that you're getting increased mix bookings with the locals. So last year, China growth was down slightly. It underperformed the market. Now that your portfolio or the revenue is aligned with the domestic mix, you're talking about being on the right OEMs. What's your confidence that the growth can turn around this year?

Yeah, let me take that. So outside of the kind of program cancellations that I referenced earlier, we, based on the bookings and based on the trajectory, despite where the market is expected to be this year for China, we are confident that China revenue will grow, right, across all three segments, right, and largely driven by our intelligent systems business on a percentage basis, right? And as you double-click into the why, outside of those kind of elements I just mentioned previously, it's the bookings that are coming through. It's playing with the large OEMs that not only will and are growing, despite the domestic challenges, they are also the ones that are leading exporters, and we are certainly enjoying good volume on that. So if you were to go back and think about, well, the last couple of years from, say, you know, the last couple of years, we basically doubled that business to a run rate of about $300 million on export volume, right? So as you think about some of those aspects, and that will continue, you know, we feel good about the China business across all three segments, and we just have a terrific team out there. You know, it's in region, for region. They work with local suppliers from an environment perspective. We're working through from a performance perspective with regards to footprint rotation, footprint consolidation. So there's a whole aspect of how the China business runs. But I do want to just take a moment to actually share a little bit more than just the China. It's a very important market for us across the APAC region, roughly about 70% of our business in the APAC region. And as I mentioned earlier in this fireside chat, the non-China APAC business is also growing tremendously well. You know, historically, with the J3, for example, it's been difficult to break through with them, but we certainly won good business from our radar technology with a couple of them. More recently, in Korea, we are booking tremendous business not just for APAC, but also for Europe at this point of time. a record year for bookings with that Korean OEM, for example. And then the India market, relatively small compared to China, has been a strong driver of growth for us also. And if you think about the wins we've recently announced, whether it be with intelligent systems, by having a local presence, local engineering, manufacturing, understanding the regulations that are coming through, for example, with ADAS and safety regs out there, Our ability to win, which we already have with a large CV OEM, but more to come, we feel good about the APAC business beyond just the China business.

So to that point, you know, and I'm pretty sure that you are under-indexed versus those OEMs and that LVP. What's the opportunity to sort of catch up and have that become an appropriate portion of your mix relative to where it is on an industry level?

Are you referring to China?

No, the non-China piece. The non-China piece.

The J3. So to put it in perspective, to Varen's point, last year, Asia, non-China, we booked roughly $4 billion of business on a baseline revenue of about $1.5 billion. A billion of that, or just under a billion, is in India with the two primary OEMs. In Japan, that's a significant portion, about a third. and then the balance is Korea. And over the last, I don't know, three or four years, we've been very focused on investing in local engineering capabilities to support growth in those markets with those OEMs. So we think it's a real opportunity. The ADAS awards that we have with Nissan and Honda, from a radar standpoint, ultimately we're confident will translate into more system awards. Similarly with the Korean OEM, who we've had a strong relationship with for a long period of time, but it tended to be with a portion of our perception system portfolio versus our full system solutions. We delivered a full Gen 6 ADAS or awarded a full Gen 6 ADAS solution award, a full in-cabin user experience award. So as we deliver on those, we feel like there's an opportunity to further penetrate.

And the $300 million of run rate export business that you have from China, your confidence that to the extent that that Chinese OEMs are a larger portion of the mix in Europe or in some of the other markets that you can keep up with that meaning even if the core European OEM volume declines you can sort of keep up with total Europe mix we do

we do and I'll give you a couple of points out there first of all the 300 million of run rate is the China domestic OEMs, right? So, for example, there's a large North America-based global manufacturer that also exports from China. The numbers that I just shared with you are China domestic OEMs. That's point number one. The second one is, as we know, the export-led economy from an auto perspective in China is certainly on a tremendous trajectory, but at the same time, given the global macro, there are demands of them to actually go and put down capital and plants in various other markets also. And so from that perspective, we feel we're in a tremendous position based on the conversations, and obviously we are unable to kind of announce, but just tremendous position to be able to showcase our global footprint in being able to get them a fast track into other markets also. Understanding the regs, understanding the overall ecosystem and being able to get them a faster SOP timeline for example we feel good about that so whether it be export led or for that matter as they go and put our plants outside of China we are tremendously positioned. Okay

this is helpful so let's just a question on margins your guidance this year both for yourself and Versigent, New Aptiv and Versigent, there's a healthy amount of net performance in there and this follows is I think what we've seen in the last few years where your net performance has just been really strong, more than offsetting the price downs that we would normally expect to weigh on the business. So maybe you could just unpack the performance and how much more runway there is on driving net performance to get the margins to be as healthy as they are.

Yeah, absolutely. Listen, it really starts in terms of the incremental sales volume that's coming through. And just to give you a kind of framework, On an EBITDA basis, incremental sales volume coming through from a new active perspective is roughly the 26% to 27% uptick. And then from a Versigen perspective, about 20% to 22%. So just trying to put that piece so clearly from a sales volume growth perspective, that is one item. The second piece I'll share with you is whether it be best cost locations for our engineering talent. The work that we're doing from active business services are global back office activities. The footprint consolidation, footprint rotation, those are multi-year elements in any case. So we do believe those programs will continue to deliver. The final piece I'll share with you, and we don't really talk about it that much, but again, material performance is something that our supply chain team does incredibly well. We certainly talked about it from a memory perspective a couple of weeks ago, but it's what the team has done. and we've been able to support it from our balance sheet to be able to increase inventory, to be able to give those commitments to our supplier partners also, which helps. The final point, and this is just a data point, Kevin, Betsy, and I were talking about it some time back, is we were doing a look back on 2025, and if you go back and think about the level of macro and FX, well, metals, copper, and FX hits we took in 2025, it was significantly higher than what we had anticipated. We overcame over 100 basis points of FX and commodities impact, and yet we hit our margin commitments in 2025. So just in terms of the ability of the team, our global teams to be able to be intensely focused on delivering for our customers and operationally executing day in, day out, that's what kind of drives these results.

Great. Let's pull up the last few ARS questions. If we could do ARS question number three. We got the growth piece, we got the margin piece, so now we're going to head it up to EPS growth. Question number three, please. Through cycle EPS growth for Aptiv will be above peers. Peers, I think, we're generally defining as on the automotive side. Although, are you benchmarking against the broader industrial set when you're? Okay, above peers, good. Okay, so question number four, excess cash. And while this is going on, maybe just a word on the bolt-on M&A strategy, which I think is very critical for new Aptiv.

Yeah, listen, over our history, we've done over 25 M&A transactions. So our real focus is on bolt-on M&A in the interconnect portfolio. So how do we augment that portfolio with additional technologies, principally focused on non-automotive applications, so focus there. on the intelligence systems, more of a focus on partnerships, minority investments, maybe, maybe some small acquisitions, and that's in and around principally the software stack.

Right. And the way that you look at your multiple as a means to trying to get some of the assets that you want, to what extent does the multiple maybe limit some of the opportunities?

Listen, it's something that we obviously, it's a lens that we look through, obviously. So as we evaluate M&A opportunities, I'll underscore that bolt-on from a size standpoint, and then opportunities that are financially accretive, right? They drive more revenue growth. They're higher margin, more cash flow generative. So the net result is the financial profile of the business is stronger. And then obviously come with synergy opportunities. Question number five, please.

Multiple. I will note, 21X, I think, is like the market multiple today. So we've seen, obviously, these bands, by the way, you can start the clock, please. These bands actually are consistent across every year. So you can see clearly the market has veered higher. Okay, so there's clearly some opportunity on the multiple. And then just the last one is share price, headwind, growth, margin, capital deployment, execution. You can start the clock. And I assume, you know, listen, you've got the balance of both growth and margin. You know, how are you splitting that focus?

Well, for us, it needs to be both, right? We need to deliver earnings growth and cash flow generation at the end of the day. That is the focus. We know investors are looking for higher growth from a revenue standpoint and are translating that into earnings growth. So that's where the focus is. In 2026, as we talked about when we announced Q4 earnings, there's very, very strong financial leverage in the system for both New Aptiv and Versigent. In new Aptiv, there are some areas that we're investing as it relates to adjacent market expansion, which is a mix of engineering and a mix of go-to-market capabilities to accelerate or deliver on the growth opportunity that we're highly, highly confident is there. So, listen, we're very excited about Aptiv post-spin. We think the opportunity is significant. We think we're very well positioned.

I'm just going to try to squeeze in one more last one. And I know on memory, you sort of framed your exposure on the last call, $175 million. I think that's, you know, something like low single-digit percentage of COGS for new Aptiv. I think you gave us some sense. It's low double-digit percent increase on the COGS this year. But maybe how are you framing for 2027 and beyond once your contracts are up for renewal? And how does this sort of DDR3-4 versus 5 transition play out?

Yeah, listen, this is something we've been working on for the last several years in terms of making sure that we have multiple alternatives for delivering any particular technology. So I'd say we're very well hedged. We're working with our OEMs in terms of when you think about memory and memory's connection with ADAS solutions in the selection of the SOC, how do we ensure that we have alternatives? We've invested in inventory over the last couple of years so that we're we're well positioned we have longer term agreements that we have signed not with all of our memory providers but with some of them that gives us more certainty on one availability to price and then three to the extent you know prices increase beyond what we have in our baseline assumptions for for business opportunities we'll be going back to our customers with price increases which so that's what we've been doing for the last four or five years and have done it very successfully great so okay we'll leave it there okay thank you so much thanks for having us