Joined by Aptiv, a global industrial tech leader that provides advanced electrical safety, connectivity, and software solutions to both the light vehicle, commercial vehicle markets, and also other industrial markets as well. Key to Aptiv's story right now is the company is looking to spin off its EDS business, which I'm sure we'll dive into more during the conversation. From the company, I'm very honored to be joined by Kevin Clark, Chairman and CEO, Varun Laroyia, the CFO. We certainly look forward to diving into many of the most pressing issues facing the industry. Great. I wanted to start with the big one, the spin. Why is it important, in your view, to have the EDS spin now? Unfortunately, I'm old enough to remember there were parallels, but the Delphi, there may be some parallels with the Delphi powertrain spin. Curious on your kind of high-level views on that and also why now. Yeah. First, thanks for having us. We welcome the opportunity to engage with you and our investors. Why now on the spin? Maybe a little bit, I'll talk a little bit about the EDS business and compare and contrast that to the portfolio of businesses we have within Aptiv. The EDS business, it's a number one or number two player across literally every market that it operates. It's a little over $8 billion in revenues, a leader when you think about vehicle architecture as it relates to wire harness technology. Roughly over 50% of that business is full-service solutions. We're designing and optimizing vehicle architecture for the OEM. As a result of that, over a number of years, we've developed a leading competitive position literally across the globe and much higher margins than our competitors when you look at the universe of competitors that are out there. It's what we refer to as a program or platform sort of business for each vehicle program versus our other businesses that are really product businesses, whether that be interconnect solutions, our advanced Active Safety business, our User Experience. We've built product platforms that go across multiple vehicle lines. In the EDS line of work, it's a much more customized solution based on a particular vehicle, the features, the powertrain, other sorts of items. The approach, our approach to customers, the approach to optimizing cost structure, driving profitability, it's a very different approach. When we look at the space that the EDS business plays in, it's a space where we should see consolidation within the automotive industry. That's our strong view. That business is uniquely positioned to participate in that. It's also a business that we think is pretty easily leverageable into other markets. When you think about solutions that are out there, whether they be drones or robots or aircraft or satellites, they all have wire harness, all of them. Just given the dominant position, the tactical prowess, the management capability that we have in that EDS business, combined with the margin profile, which is different than the margin profile of our interconnect or AS&UX business, right? I think mid to high single-digit sort of operating margins versus the ECG business with close to 20% operating margins are AS&UX business with a plan and target to get the mid-teens, given the software nature. Growing that business is more difficult to do as a part of Aptiv versus separate as a standalone business where that business can have its own capital allocation strategy, its own product strategy, and quite frankly, investors who are focused on that particular business and its opportunities for growth. I would say different from the powertrain spin, Edison, going back a few years, that was 2017. Our powertrain business, high level of technology, but also very high level of CapEx and very long-term commitments from a customer standpoint. Powertrains go through these very lengthy life cycles. And a number three or number four market position versus the leaders in that industry. This particular business is much less capital intensive. It's much more cash flow generative, and it has a leading position, as I mentioned, across every single market. It's really about how do we optimize that business and position it for outsized growth. On the Remain Co, I think myself and many of you, we see the value creation potential there. Can you talk about the profile of the company in a little bit more detail in terms of growth, in terms of strategy? Sure. That business will include our AS&UX business, which is principally Active Safety User Experience solutions that are perception systems, advanced compute in software. That is the nature of the product portfolio there. Then our Engineered Components business, which are interconnects, some cable management solutions, so comparables in that space. Our players like Amphenol, like TE Connectivity, a private company called Molex. Those are the big players in that business. It is a highly engineered, so engineered in on a relative basis, tends to be lower cost solution, high cost of failure. Displacement of that technology is once you are designed in and you are part of a solution, you tend to stay in. That explains the margin profile of that business. Both of those businesses have a greater non-automotive footprint. Within the AS&UX business, it tends to be heavier weighted in A&D and telecommunications. Most of that sits with Wind River and all of it is software. On the Engineered Components side, I'd say it's more distributed. It includes industrial. It includes data centers. It includes telco. It includes some A&D space. Both of those businesses, we think, are uniquely positioned to continue to grow in automotive, but also grow outside of automotive, which has been one of our focus areas for the last five years. While we'll continue to pursue opportunities, obviously, in the automotive space, we'll also be very, very focused on how do we diversify revenues into other markets in a real intelligent way. You've alluded to in the past M&A being a big part of it. Is that very important to Remain Co coming to Market? Yeah, I think it's a big value creation opportunity. At Aptiv, over the last 10 years, we've done roughly 21 M&A transactions, I think six divestitures. It'll be two spins with the EDS spin. We've been successful from an M&A standpoint. On the ECG side, that market is very fragmented. There's a number of opportunities from an M&A standpoint. It's where in the past we've done a lot of M&A transactions. Quite frankly, the bulk of our transactions have been in that space as we've built that business. We'll continue to do that with bolt-on transactions. We'll continue to do that. On the AS&UX side, there are M&A opportunities. I think we'll be leaning more towards investment opportunities on the software side to grow that portfolio of products or to take our existing portfolio and bring it into other markets. It will be a big piece of the overall strategy. It is a business that, from a cash flow standpoint, given the margin profile of the business, will generate a significant amount of cash flow, certainly more than what we have consolidated after basically now. On EDS consolidation, I think it's been talked about in that subcategory for a while. Why do you think it's taken, or why do you think nothing bigger has happened? I guess, did you consider selling it at any point? I'd say we're focused on how do we maximize value. So that's our objective. The spin we control, right? That's our timetable. That's our execution of our project plan. So that's the path we're headed down. If there's an alternative to a spin that is better for shareholder returns, that's certainly something that we would entertain. I think your question is really, why hasn't there been more consolidation in the automotive industry, right? And that's supply base and OEM. Listen, I don't have a great answer, but as you all know, it takes a buyer and a seller and an agreement on value. That's not always easy to do. Capital structure. So coming out of all this, obviously, it seems like the strategic priorities are a bit different between the two. How does one think about the setup? Thank you. I will just echo what Kevin said earlier. Thank you for having us. It is great to see you, but also to meet with investors and potential investors. Thank you for the opportunity. With regards to capital structure for both EDS and the new Aptiv Remain Co, the first point is both businesses have a prodigious amount of free cash flow conversion, right? EDS will have north of 80% conversion of net income. Remain Co will have over 90% conversion, right? That is just to set the table, which is a tremendous position to be in. With regards to Remain Co, we intend to remain investment grade. We are investment grade at this point in time and will remain. Very comfortable with the level of leverage we are currently running. As you know, Edison, we have been running the better part of almost three quarters ahead of our publicly committed debt paydown levels from last summer's ASR. With regards to EDS, strong sub-investment grade is really what we are targeting. There will be leverage, but it will be well contained. That business has a certain set of strategic imperatives, some of which Kevin mentioned, but also to give it a good standing in terms of what they need to kind of go and chart out. Let's shift gears a little bit more to the industry in the more near term. It's been a volatile start to the year, I think, from a policy perspective, certainly. With some stability, I want to say, cautiously optimistic now, how are you seeing the production schedules in North America and maybe some of the inputs coming in? Q2, we gave full year guidance in February to get stuff back. Our overall outlook for global vehicle production was down 3%. That was effectively our outlook for the calendar year. Q1 came in in line with our expectations. I think vehicle production was down on an Aptiv average weighted market basis down two. We did not give full year guidance or update full year guidance on our Q1 earnings call. We gave guidance as it related to Q2, just given all the uncertainty that you are referring to. High level of confidence in our Q2 outlook. I think that is vehicle production down roughly four points. Have seen a little bit of shifting of schedules, but I would call it puts and takes with offsets. A little bit more weakness in North America, offset with strength in China. The longer-term schedule, so Q3, Q4, we've seen a little bit of shifting. I'd say a small bit of softening, but not much. We're watching it really closely. Obviously, given just the environment and kind of the uncertainty regarding trade, regarding tariffs, regarding rare earth minerals, regarding impact on vehicle production, we do have some worry that we'll see a little bit of softening in the back half. We haven't seen anything yet to really, I'd say, call that ball. We are naturally, in light of just being sensitive to that, there's certain areas that we're reducing investment, we're cutting costs, we're playing wait and see. Regardless, we feel like we're in a good position from an overall competitive and full year result standpoint. I don't know if there's anything else I want to. No, I think, I guess, just to add, we would like to get back with giving clarity to our investors. As soon as the dust settles. Certainly, when we come out with second quarter earnings, we will update. I just want to kind of put that piece out there in addition to what I've said. Totally. Curious on your thoughts, maybe by region. North America, obviously, I think you kind of covered pretty well. Europe, any signs you're seeing there? I know emissions has been topical, has that impacted? I know it doesn't directly impact you, but indirectly. Yeah, some slowdown in EDS, offset largely with increases on the internal combustion engine side. China, obviously, continues to be strong. We expect that trend to continue. We characterize it as a little softening in North America, North America and Europe, some softening on the EV front. Europe about where we expected the things to play out today. China, we're seeing strength. On China, maybe we can dive a little bit more into what you're seeing there. I think there's some hope that some of the foreign automakers, JVs, may be seeing a little bit of bottoming out after kind of getting decimated over the last year. Are you seeing any signs of that? Maybe some of the JVs stabilizing? Listen, there certainly was a slightly better than expected Q1 from a production perspective. The question is the level of sustainability and then really where the long-term direction of those is. That direction of travel will continue towards China domestic OEM. How do we think about your mix, I guess, toward local OEMs? I know you quantified it at some various points. I know it's growing. When does that become kind of in line with the market and become kind of a tailwind? Yeah, listen, so great question. Thank you. If you're going to go back in terms of 2024, our China revenues were approximately 54% China domestics. Over the past couple of years, we've been picking up the better part of 10 percentage points a year to a point where, based on where our current trajectory is, we expect to exit 2025 at market parity, which we expect to be about 70-30, so 70% for China domestics. That is where we will exit the year. As you think about what has been a headwind for us over the past few years, that essentially will moderate or basically will kind of bottom out going into 2026 with regards to China growth relative to our customer mix. Important China market for those of you here. Traditionally, when we're awarded business, so we refer to them as bookings, new business bookings, we're awarded business in the West, so in the U.S. or the European markets, it's typically a two- to three-year launch cycle between award and launch of a program with an OEM. The reason we're able to close that gap from a mix of our revenues versus industry production mix in China, in China, it's 9-12 months. I mean, it's literally a third to a half. We have programs in China, ADAS programs we've been awarded in the last couple of years. We're literally a program awarded at the end of March or April. We're launching a new ADAS system, a Level 2++ ADAS system within nine months. Bookings in China have been strong the last couple of years, especially last year, very strong. Bringing on those new programs happens very, very quickly. In terms of the growth you're getting to parity, is that kind of the same between the Remain Co and the SpinCo, or is there any noticeable difference? It's a little bit faster on the Remain Co than it would be on the SpinCo, but both are making significant progress. Listen, give me a piece to kind of, when we talk about our China business, and this is for being clear with everyone here, but also those that are kind of calling in, that we do business with the top 8, 10, 12 OEMs, right? As you think about it, these are the likes of Chery, Geely, BYD, Great Wall, those are the folks that we deal with. We're happy with the business that we do with them. As they continue to grow, that certainly helps. There certainly are several more, dozens more OEMs below that threshold also. That's activity that we have very consciously, not kind of actively participated in. The price points, level of quality, it's not something that we would be able to add value both to them, but also back to our shareholders. I just wanted to kind of classify, just to give that clarity in terms of who we do business with out there. As they grow, we're certainly there to support them, not only in China, but also for the export volume. As now they've begun to move out into South America and Europe and other international markets, given our footprint, we certainly are actively engaged with helping them get international operations up and running also. Last thing on China, I know you mentioned getting to parity, which is very impressive. I think very few U.S. auto suppliers can say that. Does that have any implications for margins? In the context of what we've heard, obviously it's very cutthroat on pricing. Is that something that worries you at all? Yeah, I think to the really good point Varun made, will there be an impact on margins? From our standpoint, that's something we can manage through in terms of customer mix, program mix, as well as cost structure. Cost structure, we'll start with that. We've been consolidating footprint. We've been rotating west. We've been rotating both our engineering and manufacturing activities. Further reducing costs to deliver solutions in China. We have global platforms on the AS&UX and ECG business that we leverage, the global aspect of product design, but it's obviously manufactured, delivered in China. To the point that Varun made, we're very focused on where do we bring the most value so that we're not competing just on cost, right? We operate in areas where in reality, the capabilities or the landscape of competitors out there are smaller that you need to compete on systems capability, engineering capability, quality. We run into less of that sort of price pressure. Do you need to be competitive? Absolutely. Are we able to be competitive? We are. And we're able to do that while at the same time we maintain our margins with incremental cost action. Shifting to the longer term, SVA, we've obviously heard a lot about that in the last couple of years. We've seen some more activity, I guess, from some of the OEMs. How do you think about that going forward? Is that something still a huge priority, or do you think OEMs essentially will try to insource? No, it's a huge priority that we remain uniquely positioned to do. OEMs are headed down that path. Faster pace in China today, which I would refer to as kind of an SVA light with more focus on zonal controllers, less focus on taking wire harness content out of the car. Fastest moving there. A few of the European OEMs obviously are continuing down that path. North America, slower. EV adoption has some impact. Not that you can't use SVA on an ICE platform. You can. The aspect of redesigning vehicle architecture, it's easier to do when you're designing a clean sheet program for electrification as you enable. It gives you more flexibility to do that. As we've seen a slowdown in North America, it's impacted some of the pace of that activity. I'd say all the OEMs across the globe are focused on SVA, are headed down a path towards SVA, but at different paces. As it relates to OEMs doing things internally or externally, which is a question we get asked across our portfolio, we would say it's a mix. We'd say the trend actually is reversing. There's a number of OEMs, and you all are aware of them, that have spent exorbitant amounts of money trying to do things internally, and those activities have not been successful. A recognition that they need suppliers like Aptiv. We're very intentional in our approach commercially to have open architectures where the extent our customers wish to do some or part of a solution, they're able to do it. We've designed our ADAS stack, our User Experience stack, where it's open architected from a software hardware standpoint. It's chip agnostic so that we give our customers flexibility to partner with those that they want to partner with or do some of the activity internally. In terms of the, I don't know if you've provided any order book numbers around SVA or customer account, any sense to help us kind of figure out the trajectory of that business in the long term? Yeah. We haven't provided a public update recently. I'd say no change since the last time that we have. I would say the amount of activity with OEMs, we're working with more than 20 OEMs across the globe at this point in time. I'd say the pace of activity has picked up significantly and will continue to do so. You mentioned some of the OEMs have tried to do this in-house and spent a lot of money to not necessarily much success. What do you think are the hardest aspects of that? Why is it so kind of difficult for them? I think it's experience and expertise principally in and around systems integration, both from a software standpoint and a hardware standpoint. You have players like ourselves who've done that for a number of decades, right? I mean, we have the experience of doing that. I think that's item number one. I think item two, where we play from a cost standpoint, you think about it, we're developing solutions for, we do business with, I don't know, the top 50 OEMs across the globe. We're doing things relatively consistently across that customer mix. It's hard to envision a scenario where any single OEM can bring that much experience, capability, leverage from an overall customer standpoint to bear and do it as cost-effectively as we're able to do it. Importantly, I just want to make sure we reiterate this. Our approach to our customers is we want to help our customers get to where they want to be. We want to enable them. It is important that we participate in that path from a revenue standpoint. We are very, very open in terms of we sell open systems where we will work with customers or their suppliers to enable or deliver the solution that they are looking for, whether that is vehicle architecture on the wire harness side or that is what we do at AS&UX for an overall ADAS or User Experience system. Another big mega trend, autonomous vehicle autonomy, whether it's ADAS, higher levels of ADAS versus Robotaxi. You were very early on, Aptiv was very early on getting involved. Now we're at a point where you have Waymo, which is getting more rides than ever, Tesla obviously with the launch this month, a lot happening in China. Where does Aptiv want to truly play going forward? We were early in autonomy, to your point. We always use it as an extension of our ADAS business, right? When you think about accidents, 95% of accidents are human errors. Ultimately, the safest vehicles ultimately will be vehicles that have limited, quite frankly, human control of the vehicle. We have a partnership or a joint venture with Hyundai. We launched our own autonomy group back in 2015. We ultimately, in 2020, formed a joint venture with Hyundai where they were bringing the vehicle, they brought the vehicle technology, we had the ADAS or the autonomy technology that we contributed. We have progressed the technology significantly. A couple of years ago, we looked at the path though to commercializing autonomy. I mean, making money off of providing autonomous solutions to the mobility on demand market. Our view was that was further out. In terms of doing that and making money, having that profitable, we're out beyond the end of this decade. We sold a part of our, an additional part of our interest to the Hyundai team. We now own, I don't know, 15% of Motional versus 50% of Motional. We're very active with it. I'm on the board of Motional. We meet on a regular basis with the Motional team and the Hyundai team. We're firm believers in autonomy. We think it's going to take a while to bring costs down to deliver the solutions. We'll see expanded ODDs and solving of some of the edge cases. We continue to bring that into our ADAS solution. The exposure, those learnings, those technologies, Motional is a customer of Aptiv's from a hardware and software standpoint. We're looking for more ways to partner with them. Can I let you lead without talking a little bit about tariffs? I guess there's a couple of angles to it. In the near term, I know the idea is to pass on the cost to the OEMs. Is that playing out as expected and at speed? Yeah. I'll actually set the table a little bit differently. Given the work we've done on a couple of items, one is our mantra of in region, full region. The vast majority of our operations are in region supporting, whether it be Asia, Europe, or for that matter, North America. In terms of trade flows between continents, it's not that significant. The second point I'll just kind of share with the broader team out here is 95% of our trade flows into the United States are from Mexico. And 99% of our product is USMCA compliant, right? Just kind of setting that piece up to say it's not the case that we pass everything on. The question is, how do we mitigate and what is the true exposure? Said differently, our direct tariff exposure is de minimis. I think that's the kind of key piece to understand because the USMCA compliance, number one, having the certificates of origin, being able to track that, having them kind of stood up for scrutiny, audit as the case may be, that is kind of point number one, right? That holds, so it kind of leads to a de minimis direct cost exposure. In addition to that, we're working with our customers in terms of where we need to reroute certain products for the smaller element, or for that matter, just kind of moving ahead in terms of seeing what's around the corner in terms of what the administration is trying to get done. In whichever way we can support our customers, we certainly are working on that front. With that, whatever is something that we are unable to mitigate, for example, the wire harness side, the entire industry is in Mexico, right? Or in Central America. From that perspective, making sure that we do not end up becoming uncompetitive, right? That is the other piece that we are working on. Whatever is still kind of outstanding in terms of certain products on the Active Safety side or on the highly Engineered Components piece, we will get to the right answer in any case. It is those elements that we know the industry does not have here. We are not losing competitiveness. Those are the ones that get lost through. I'd say, Edison, for us, the most complex, Varun talked about the direct impact is de minimis. Yes, we've been successful pushing on costs that we can't change supply chain or source. We've been able to push that onto our customers. It's the indirect, right? What's the impact on vehicle production? Does the economy slow? Does decision-making slow down within our OEM customers? We've seen some of that, right? As they try to navigate whatever the particular issue of the day is related to changes in trade policy. That's what we're watching most closely. That's what we're most sensitive to. Obviously, vehicle production has a big impact on our business and revenues. That gets back to our how do we look at the second half of the year and how much visibility that we have or don't have at this point in time. On the recoveries, maybe this is a question. Are you surprised at how kind of seamless it's been if we think about the last couple of years with other types of recoveries? Asking our customers for money is never easy. We manage it well. I think it's one of those from our customers, they recognize the ability of the supply chain to absorb. With every one of them, though, as a part of this, our commitment is how do we alleviate this, right? In a tariff environment, what do we do from a sourcing standpoint? How do we work with them? How do we find opportunities for offset? We're very aggressive about that. How do we get creative? Varun talked about, I think if you talk to OEMs across the globe, our supply chain is world-class. I mean, end of this year, our entire global supply chain will be mapped in our digital twin down multiple levels. We have visibility to where we source from. We have visibility where alternatives are, and we can move very, very quickly. That brings value to our customers that most of our competitors, quite frankly, do not have. Last question for me, growth above market. I think originally you're kind of thinking about five points. Any puts and takes to that? Yeah. I don't know if we have any update on growth over market other than a comment from me. I think in today's dynamic environment, I think with rapid changes in customer mix, vehicle mix, especially in places like China, I think dividing revenues by global vehicle production, it's something that investors can look at. I'm not sure it's as straightforward as it was five or ten years ago. Obviously, our focus is on revenue growth, high-quality revenue growth, delivering margin expansion. We understand the importance of that. That's where you'll hear us talking more about. We'll obviously give you visibility of what global vehicle production is in terms of actuals in our outlook. We'll probably talk about some other things to help investors measure progress that we're making. We're not sure that historical calculation is really the most useful, to be transparent, to investors in determining success of businesses. I think we have time to maybe sneak in one question from the audience, if anyone is. Edison, while people are thinking about questions, I'll just kind of add to what Kevin said. We are focused on growing the business. Okay? Growing top line, and as we get deeper into multiple end markets outside of auto, how relevant has that specific metric become, for example? Same thing with software, how relevant has it become? Top line growth is key, accretive margins, and then just the free cash movement version. That's what we believe is the key underpinnings of just running a financially successful business with kind of which rewards those that kind of support us. One quick question. Yeah. I would actually have two potentially quick ones, if I may. The first one would be slightly linked to the growth of our market question, just on SOPs. A couple of your competitors have been complaining about OEMs pushing out SOPs, and there is lower volume ramp-ups than actually planned. Do you see that improving currently in the current environment across Europe and North America? Yeah. Listen, I think there's always an element of that that goes on with our OEMs. I wouldn't complain about our customers. It's something that we've navigated for decades and decades. I think to the extent there's uncertainty, obviously, it's more problematic for our customers, and that tends to slow things down. We're working with them and staying close to them as it relates to their decisions on production. Have we seen a significant change one way or the other? I would say not really. Thank you. And then just a very short-term follow-up. Did you already see any sort of production stops, short ones from the rare earth export restrictions? Nothing that we could point directly to. I know there's been some chatter about it, especially in Europe, but nothing that I would say is meaningful to raise with you. Thank you. Okay. Thank you very much. No, thank you. Thank you. Great. Thank you, everyone. Thank you. Bye, Varun. Bye. Nice to meet you. Thank you.