Aptiv Announces Blowout Q3 2020 Earnings

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Aptiv (NYSE:APTV), the manufacturer of vehicle components and a provider of smart mobility as well as autonomous driving solutions, has generated gains of over 178 percent relative to the year-to-date low of $33.55 registered back in March. Today, the company has come under a fresh spotlight as it announced its earnings for the third quarter of 2020.

Aptiv (NYSE: APTV) Financial Scorecard

For the three months that ended on the 30th of September, Aptiv generated $3.7 billion in revenue, exceeding consensus expectations by over 11 percent.

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(All figures are in billions of dollars)

The snippet below gives a more granular breakdown of Aptiv’s revenue.

As a refresher, Aptiv’s Advanced Safety and User Experience segment provides software and advanced computing platforms while its Signal and Power Solutions segment offers the requisite networking architecture required to support integrated systems in vehicles.

Aptiv also reported operating income of $364 million.

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(All figures are in millions of dollars)

Finally, the company has reported $1.13 in non-GAAP EPS, exceeding consensus expectations by 37.80 percent.

(All figures are in dollars)

Aptiv incurred a tax benefit of $2 million in the third quarter of 2020, resulting in an effective tax rate of approximately negative 1 percent. The Company also generated net cash flow from operating activities of $559 million in the pertinent quarter, compared to $325 million in the comparable period of 2019.

Aptiv noted in its earnings press release:

For the three months ended September 30, 2020, the Company reported U.S. GAAP revenue of $3.7 billion, an increase of 3% from the prior year period, despite global vehicle production declines of 4% (4% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, "AWM") over the same period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 3% in the third quarter. This reflects growth of 3% in Europe, 11% in Asia, which includes growth of 14% in China, and 3% in South America, partially offset by a decline of 3% in North America.

As far as projections are concerned, the snippet below provides the full FY 2020 outlook:

Of course, today’s earnings release comes as Motional – a joint venture between Aptiv and Hyundai – recently announced a partnership with the on-demand shuttle startup, Via, to launch a robotaxi service in the U.S. in the first half of 2021. Under this arrangement, the autonomous vehicles provided by Motional will be integrated with Via’s online platform which, in turn, will handle client-facing services such as bookings, routing, fleet management, customer experience, etc. While pertinent details have not been released as yet, the initial launch of the service is expected to take place in a U.S. city that is already being served by Motional, thereby, narrowing the geographical scope to Boston, Pittsburgh, Las Vegas, and Santa Monica.

On the 26th of October, Morgan Stanley included Aptiv in a list of 64 companies that are slated to extract outsized benefits from the rapid transition to EVs. Apart from obvious names such as Tesla (NASDAQ:TSLA), NIO (NYSE:NIO), General Motors (NYSE:GM), and Nissan, the list also included LG Chemicals, PPG (NYSE:PPG), NXP Semiconductors (NASDAQ:NXPI), etc.