Aptiv (NYSE:APTV) reported record fourth-quarter revenue and outlined its 2026 outlook during its Q4 2025 earnings call, highlighting continued progress in expanding beyond automotive markets and preparing for the planned April 1 spinoff of its Electrical Distribution Systems (EDS) business as VersaGen.
Fourth-quarter results: record revenue, FX and commodity headwinds
For the fourth quarter, Aptiv reported revenue of $5.2 billion, up 5% on a reported basis and 3% on an adjusted basis. Chair and CEO Kevin Clark said the company delivered “another solid quarter” while navigating a shifting macro environment. Adjusted operating income was $607 million and adjusted earnings per share were $1.86, up 6% year over year, driven by share repurchases and lower interest expense, partially offset by a higher tax rate.
Operating cash flow totaled $818 million, down from the prior year due to higher working capital—primarily continued investment in semiconductor inventory—and approximately $80 million of separation costs tied to the upcoming VersaGen spinoff.
Regional performance: strength in North America, mix pressures in China
On a regional basis, Aptiv’s fourth-quarter adjusted revenue growth was led by North America, where revenue rose 8%, supported by double-digit growth in both Intelligent Systems and EDS. Europe revenue declined 1%, tracking overall vehicle production in the region. China revenue fell 5%, which Laroyia attributed to unfavorable mix, though he said performance versus the market improved. Management noted that approximately 80% of Aptiv’s China new business awards in 2025 came from local OEMs.
Segment results: margins shaped by investment, timing, and input costs
- Intelligent Systems: Revenue was $1.4 billion, up 2%. Operating income declined 17%, driven by investments to expand into non-automotive markets, the timing of engineering-related credits and recoveries, and unfavorable FX.
- Engineered Components: Revenue was $1.6 billion, up 1%. Operating income rose 8%, and margin expanded 60 basis points on volume flow-through and performance improvements, more than offsetting FX and higher copper, gold, and silver prices.
- Electrical Distribution Systems (EDS): Revenue was $2.3 billion, up 5%, primarily driven by North America. Operating income declined 2% and margin contracted 90 basis points, reflecting significant FX and commodity headwinds and unfavorable labor economics, partially offset by manufacturing and material improvements.
Responding to questions about Intelligent Systems profitability, Clark said full-year segment margins increased 30 basis points excluding FX, but fourth-quarter results were impacted by significant FX pressure, less fourth-quarter weighting of engineering credits than typical, and accelerated engineering investment related to robotics opportunities—investment that will continue into 2026.
Bookings and strategic focus: robotics partnerships and non-auto expansion
Clark said Aptiv continued to leverage its operating model and product portfolio to penetrate non-automotive markets aligned with “automation, electrification, and digitalization.” During the quarter, Aptiv announced partnerships with robotics companies Robust.AI and Vecna Robotics spanning sensing, compute, and software. The company also highlighted the launch of a modular connector series developed jointly by its automotive and aerospace teams and a new award related to energy storage and management in electrical distribution systems.
For 2025, Aptiv reported $27 billion in full-year new business awards, below its $31 billion target, which management attributed to customer awards shifting into the first half of 2026, consistent with commentary from the prior quarter. The company exited the year with what it described as a large and growing pipeline and expects 2026 bookings for total Aptiv (including VersaGen) to exceed $30 billion.
2026 outlook: pro forma views for “new Aptiv” and VersaGen, Q1 cadence, and taxes
Management provided 2026 guidance on both a combined basis and on a pro forma basis for “new Aptiv” and VersaGen, reflecting the planned April 1 spinoff of EDS.
New Aptiv (pro forma) is expected to generate revenue of $12.8 billion to $13.2 billion, up 4% at the midpoint, reflecting new launches, easing headwinds that weighed on 2025 growth, and improved mix. EBITDA is expected to be $2.42 billion at the midpoint, with an EBITDA margin of 18.6%. Laroyia said the outlook includes about $50 million in stranded costs and $35 million of engineering and go-to-market investments to support non-auto growth. Excluding stranded costs, he said pro forma margin would be up 30 basis points year over year, supported by flow-through and manufacturing and material improvements, as well as faster growth in software and services.
New Aptiv’s adjusted EPS is guided to $5.70 to $6.10, assuming an effective tax rate of 18.5%. Laroyia noted the EPS guidance does not include potential share repurchases, but does include the expectation of paying down about $1.9 billion in debt in 2026, primarily funded from expected VersaGen spin dividend proceeds of about $1.6 billion with the balance from cash on hand. After the paydown, management expects both new Aptiv and VersaGen gross leverage to be in the 2.0x to 2.5x range.
New Aptiv free cash flow (operating cash flow less capital expenditures) is projected at $750 million at the midpoint, net of about $250 million in separation costs to be settled in 2026 and a further $200 million of semiconductor inventory investment. Management said inventory coverage has been increased to about 12 weeks to improve supply chain resiliency amid concerns about an industry-wide DRAM shortage. The company expects minimal supply impact in 2026, but anticipates higher semiconductor input costs that it expects to pass through to customers.
VersaGen (pro forma) revenue is expected to be $9.1 billion to $9.4 billion, up 2% at the midpoint against a backdrop of vehicle production down 1% in 2026, with EBITDA of about $990 million and EBITDA margin of 10.7% at the midpoint. The company expects margin expansion from volume and operational improvements, offset by labor economics, FX, and commodities. Free cash flow is guided to $250 million at the midpoint, reflecting ongoing investments in footprint rotation and manufacturing automation.
For the first quarter of 2026 (to be reported as total Aptiv given the expected April 1 spin date), Aptiv guided to revenue of $5.05 billion at the midpoint, reflecting adjusted growth of about 1%. Adjusted EBITDA is expected to be $740 million with a margin of 14.7%, including a 120-basis-point headwind from FX and commodities. Adjusted EPS is guided to $1.65 at the midpoint with an effective tax rate of 20.5%. Laroyia attributed the higher tax rate to implementation of the Pillar 2 global minimum tax and said the cash tax rate is expected to be about 300 basis points lower than the effective rate.
On the call, executives also addressed memory pricing exposure. Clark said Aptiv’s purchase value for memory is roughly $175 million for 2026, mostly DRAM 3 and DRAM 4, with low double-digit price increases expected in 2026 due to inventory and longer-term supplier contracts. He said 2027 negotiations are already underway and that Aptiv expects increases to be higher than 2026 but below the 100% to 120% increases being discussed in the market, adding that the company has engaged OEM customers and is confident it can pass through higher costs.
Joe Liotine, CEO of VersaGen, said the EDS business had “a very good year” in 2025, with solid revenue growth, EBITDA margin expansion, and strong bookings, and said the team is focused on ensuring a smooth transition ahead of becoming an independent public company on April 1.
About Aptiv (NYSE:APTV)
Aptiv plc is a global automotive technology company that develops safer, greener and more connected solutions for the mobility industry. The company designs and supplies advanced electrical architectures, electronic systems and software that enable vehicle connectivity, active safety, advanced driver-assistance systems (ADAS) and autonomous driving capabilities. Aptiv’s customers include major automakers and mobility service providers seeking to integrate higher levels of automation, electrification and software-defined features into production vehicles and mobility platforms.
Product and service offerings span vehicle electrical systems and wiring, connectors and harnesses, high-voltage electrification components, power electronics and charging solutions, sensors and compute platforms that support ADAS and autonomous functions, and the software and services required to integrate and manage these systems.
