Aptiv PLC Q4 2025 Earnings Call Transcript

Aptiv PLC (NYSE: APTV) Q4 2025 Earnings Call dated Feb. 02, 2026

Presentation

Operator

Good day and welcome to the Aptiv Q4 2025 earnings call. Today’s conference is being recorded at this time. I would like to turn the conference over to Betsy Frank, Vice President, Investor Relations. Please go ahead.

Betsy Frank — Vice President, Investor Relations

Thank you. Jess Good morning and thank you for joining Aptiv’s fourth quarter 2025 earnings conference call. The press release and related tables along with the slide presentation can be found on the Investor Relations portion of our website@aptiv.com Today’s review of our financials exclude amortization, restructuring and other special items and will address the continuing operations of aptiv.

The reconciliations between GAAP and non GAAP measures are included at the back of the slide presentation in the earnings press release. Unless otherwise stated, all references to growth rates are on an adjusted year over year basis. During today’s call we will be providing certain forward looking information that reflects aptiv’s current view of future financial performance and may be materially different for reasons that we cite in our form 10k and other SEC filings. We will begin today’s call with a strategic update from Kevin Clark, APT of’s Chair and Chief Executive Officer. Then Veron La Roya, APT of’s Chief Financial Officer, will cover our results and guidance in more detail.

We’ll then have brief remarks from Joe Liatine, Versigent’s Chief Executive Officer before Kevin and Varan take your questions. With that, I’d like to turn the call over to Kevin.

Kevin Clark — Chair and Chief Executive Officer

Thanks Betsy and thanks everyone for joining us this morning. Starting on slide three, we capped off 2025 with another solid quarter in which we seamlessly navigated ongoing changes in the macro environment. Our resilient operating model, which leverages our industry leading engineering innovation, integrated global supply chain and manufacturing footprint and best in class commercial capabilities, enables us to execute flawlessly in this dynamic environment. As we discussed at our recent Investor day, we’ve been successfully leveraging our product portfolio and operating model to penetrate non automotive markets where the shared secular trends of automation, electrification and digitalization are aligning customer needs for mission critical applications across automotive, amd, telecom, industrials and other markets.

And our momentum continued during the fourth quarter across all segments as reflected by our partnership announcements with two robotics companies, Robust AI and VECNA Robotics, spanning sensing, compute and software in intelligent systems the launch of our Modular Connector series developed jointly by our automotive and aerospace teams and engineered components for multiple end market applications and the New Business Award for Energy Storage and Management in Electrical Distribution Systems. Overall, we posted strong bookings in the quarter, validating customer confidence in our operating model across both geographic regions and end markets. During the quarter, we finalized the leadership team for our electrical distribution systems business, which remains on track to spin out as Versigen on April 1.

Under the leadership of Joe Leah Tine, who you’ll hear from in a moment, we’re confident that Versigen is well positioned to deliver continued value to their customers and create value for their shareholders. Turning to our financial highlights, we reported record fourth quarter revenue of $5.2 billion, an increase of 3% reflecting strength across multiple areas of our business. Adjusted operating income totaled $607 million as flow through on volume growth and strong operating performance helped offset stronger than anticipated headwinds from FX and commodities and combined with lower net interest expense and a lower share count, earnings per share totaled $1.86.

Lastly, we generated 818 million of operating cash flow, more than half of which we deployed towards share repurchases and debt reduction. Varen will discuss each of these in more detail a bit later. I’d like to turn to Slide 4 to touch on our achievements during 2025 and review the progress we made further strengthening our business model and increasing shareholder value. First, we continue to enhance our product portfolio with the launch of a number of new innovations across each of our segments including interconnect product lines that leverage our expertise in both the automotive and aerospace markets, next generation sensing and AI powered software solutions that deliver market leading performance at a competitive cost for applications across a broad range of end markets and lastly high power distribution solutions for applications and energy storage.

Second, we continue to gain new business with Target Automotive OEMs and further penetrate higher growth higher margin non automotive markets as reflected by almost 4 billion of new business bookings with leading local China OEMs, new business awards with non China Asian OEMs that totaled just under 4 billion representing an increase of 20% over the prior year and non automotive new business bookings that reached more than 4 billion. Third, we continue to strengthen our operating model to further enhance our execution capabilities and enable profitable growth including the continued enhancement of our supply chain digital twin with 95% visibility down to at least Tier 3 levels and 99% of our semiconductor supply chain down to Tier 5 levels, the opening of a new Engineering Technical center in Chennai, India to support our growing software and services business and further optimization of our manufacturing footprint through the consolidation of seven facilities in North America, EMEA and Asia Pacific, all which enabled us to deliver record financial performance including the impact of Headwinds associated with tariffs, FX and commodity prices, further complemented by disciplined capital allocation, which Varen will talk about in more detail shortly.

Moving to slide 5 to review our new business bookings as expected, customer awards were strong in the fourth quarter, leading a record second half of the year bookings, bringing full year new business awards to 27 billion short of our target of 31 billion, the result of customer awards shifting in the first half of 2026. As we previewed in the last quarter, customer awards were strong across each of our segments and were highlighted by awards in the China market totaling 5 billion of which almost 4 billion was with the leading local China OEMs. Awards with Japanese and Korean OEMs that totaled 3 billion, representing a mid single digit increase over the prior year and new business bookings in the rapidly growing India market which increased significantly to over 800 billion.

We exited the year with a large and growing pipeline of commercial opportunities and expect 2026 bookings for total aptiv including Versigent to increase to over 30 billion. Let’s now review each segment in more detail. Moving to Slide 6 to review fourth quarter and full year highlights for our Intelligent Systems segment. A couple notable program and product launches in the quarter include numerous launches of local China OEMs across our product portfolio including a Gen 7 radar launch with a time to market of just four months smart camera launch also leveraging WindRiver VX works and launches that leverage LOCA China for China solutions for SoCs and software, the launch of an interior sensing system for a leading commercial vehicle OEM incorporating advanced biometric and intention monitoring software features, the launch of new ADAS software features on an existing system for a leading European OEM and the introduction of next generation radar solutions as well as the Windriver cloud platform for AI ready private cloud applications.

Moving to new business bookings which were principally driven by strong demand for active safety products a Gen 6 ADAS system award spanning multiple models and variants for a leading Indian commercial vehicle OEM that includes the full software stack and Gen 8 radar solution, a next generation high performance compute solution spanning multiple platforms developed in partnership with the top global OEM and a full stack ADAS system for a large Korean OEM incorporating active software and sensors, reflecting the continued expansion of our technology partnership. In addition, we announced multiple new partnerships featuring integration with our innovative sensing solutions such as Pulse Advanced compute and WindRiver’s software suite with Vector Robotics to co develop next generation autonomous mobile robots or AMRs, enhancing safety, intelligence and cost effectiveness across warehouses and factories and robust AI to CO develop AI powered cobots accelerating innovation and warehouse and industrial automation.

We’re encouraged by the momentum we have in the robotics sector and look forward to sharing further developments during 2026. Lastly, Wind river established a strategic partnership with a leading global cybersecurity provider to jointly pursue next gen software tech stack opportunities in the automotive market move to Slide 7 to review the fourth quarter and full year highlights for our engineered components segment. Our product and program launches as well as our new business awards validate the strength of our product portfolio and operating capabilities across multiple end markets. Notable new product program launches during the quarter include the Lightspeed single pair Ethernet technology for applications across increasingly connected and space constrained end markets such as AMD Industrial Automation and NextGen Mobility, a compact connector featuring high speed data interfaces for seamless integration with sensors for Japanese OEM’s SUV models, a next generation safety critical rapid power reserve for a local Chinese OEM’s all electric SUV and a high voltage connector launch for European OEM’s global EV platform.

New business bookings included a modular connector award for a major European OEM enabling scalability across platforms to support next gen architectures, an award from a leading North American OEM on their top selling truck and SUV platform including high speed interconnects, connectors and terminals and a ruggedized high performance interconnect award for use in marine applications validating the lightweight, flexible and highly durable nature of our products. Turning to Slide 8 to review our electrical distribution systems segment. New program launches reflected the strength of our new business awards over the past few years including a launch for a high volume SUV program for the leading North American based global electric vehicle oem, the launch of above and extended range EV for a local China OEM that are planned for export markets, a launch for a major India OEMs premium SUV and a complete low voltage commercial vehicle launch for a next generation high performance agricultural vehicle.

Moving to New business awards would span all major geographic regions and include an award with a leading China based global electric vehicle OEM for production in Europe serving as a key enabler of their regional manufacturing expansion, an award with a leading European based global OEM on their new software defined vehicle architecture, an award for low and high voltage content across brands, models and powertrains for a Korean OEM and lastly an award for a high efficiency energy storage solution engineered for grid optimization. In summary, we executed well throughout 2025 and finished the year with strong momentum in the fourth quarter.

Each of our three segments is enhancing their market positioning, deepening their customer engagement and broadening their revenue mix through the penetration of new end markets and regions. The customer awards we’ve received validate our strategy and the investments we’re making to capture the opportunity ahead. I’ll now turn the call over to Varen to go through our financial results and our full year and first quarter guidance in more detail.

Varun Laroyia — Chief Financial Officer

Thanks Kevin and good morning everyone. Starting with our fourth quarter financials on Slide 9, Aptiv delivered solid financial results in the fourth quarter, reflecting our continued execution focus on driving operational efficiencies and reducing cost across our business. Revenues totaled 5.2 billion, an increase of 5% on a reported basis and up 3% on an adjusted basis. Adjusted EBITDA and adjusted operating income margin rates were in line with with our Q4 outlook and down only modestly on an absolute basis year over year. This was entirely driven by the impact of unfavorable foreign exchange and commodities, which amounted to a 160 basis point headwind to margin in the quarter.

Excluding FX and commodities of Q4 operating income margin would have been up 70 basis points versus prior year reflecting flow through on volume and ongoing performance improvements. Earnings per share totaled $1.86, an increase of 6% from the prior year, reflecting the benefit of share repurchases and lower interest expense from capital deployment initiatives over the course of the year, partially offset by a higher tax rate. Operating cash flow total $818 million, a decrease versus the prior year owing to an increase in net working capital as we continued to invest in semiconductor inventory as well as approximately $80 million in separation costs related to the upcoming spin off of Versigent.

Turning to the next slide and looking at fourth quarter adjusted revenue growth on a regional basis. In North America revenue grew 8% with double digit growth in both Intelligent Systems and EDS. In Europe revenue was down 1% in line with vehicle production in the region and relatively comparable across our segments. And in China revenue was down 5% reflecting the continued impact of unfavorable mix. That being said, our performance versus the market in China improved further this quarter, a positive sign as the team works to further enhance our customer mix. And of note, approximately 80% of our China New Business Awards in 2025 were from the local OEMs.

Moving on to our segment performance on Slide 11, starting with Intelligent Systems, revenue of $1.4 billion increased 2% versus the prior year, predominantly driven by North America and the benefit of new program launches. Intelligent Systems operating income declined 17% reflecting three items first investments across both product and go to market capabilities as we continue to expand into non auto markets, second the timing of engineering credits and commercial recoveries and third, unfavorable FX. For engineered components, revenue of 1.6 billion increased 1% versus the prior year, operating income increased 8% and margin expanded 60 basis points driven by flow through on volume and continued performance improvements.

This more than offset the impact of unfavorable FX and commodities which were driven by higher copper, gold and silver prices. And lastly, for our EDS business, revenue of $2.3 billion increased 5%, principally driven by North America. EDS operating income declined 2% year over year and margin contracted 90 basis points. This was driven by a significant headwind from FX and commodities as well as unfavorable labor economics which were partially offset by performance improvements across manufacturing material and volume. Flow through now let’s turn to cash flow before we discuss guidance. Starting with Slide 12, we generated $818 million of operating cash flow in the fourth quarter.

The decrease versus the prior year was primarily owing to unfavorable net working capital with investments to build semiconductor inventory. In some cases, this inventory build has been customer required or even funded and has yielded dividends with our ability to mitigate supply chain constraints that have emerged in the industry. In addition, as we get closer to the spin, we incurred approximately $80 million of separation costs in Q4, bringing the year to date total to approximately $180 million. Nevertheless, our full year operating cash flow remained robust at well north of $2 billion, which led to an elevated year end cash balance of $1.9 billion.

Our capital allocation efforts in 2025 were twofold, first retiring $1 billion in debt to reduce our leverage and following the accelerated share repurchase program and in Q4 specifically, we retired approximately $150 million in debt through open market repurchases and second deploying $400 million towards share repurchases in the third and fourth quarters. This includes repurchasing 3.9 million shares in Q4, deploying approximately $300 million. As a reminder, since Q3 of 2024 with the accelerated share repurchase program, we have deployed approximately $3.5 billion towards share repurchases, reducing our share count by 20%, and we remain committed to returning excess cash to our shareholders.

Let’s turn now to our 2026 financial outlook. Our full year 2026 financial guidance includes a view on TotalAPTIV, which we believe is important for continuity and comparison, as well as views on each of new aptiv and vestigent on a pro forma basis to provide visibility into our future state following the spin expected to be effective on April 1st. Starting with new Aptiv, we forecast revenue in the range of 12.8 to $13.2 billion, up 4% at the midpoint, reflecting the benefit of new program launches, the abatement of certain headwinds that weighed on 2025 revenue growth as well as improved end market and product mix.

EBITDA and EBITDA margin are expected to be 2.42 billion and 18.6% at the midpoint. This includes approximately $50 million in stranded costs for the full year and 35 million of engineering and go to market investments we are making across our businesses as we continue to grow our non auto revenues. Excluding stranded costs, new active pro forma margin would be up 30 basis points year over year reflecting the benefit of volume flow through performance improvements primarily in manufacturing and material. EBITDA margin will also reflect continued improvement in our business mix, specifically faster growth in software and services.

Adjusted earnings per share is estimated to be in the range of $5.70 to $6.10 which assumes an effective tax rate of 18.5%. Please note that our new Active EPS guidance does not incorporate the benefit of returning shareholders through repurchases. However, it does incorporate the expectation that we will pay down approximately 1.9 billion in debt in 2026, funded principally from the Versigen spin dividend proceeds of approximately 1.6 billion with the remainder funded with cash on hand. Subsequent to this, both New Aptiv and Versigent gross leverage is expected to be in the range of 2 to 2.5 times in line with what we outlined at investor day.

Free cash flow measured as operating cash flow less capital expenditures is estimated to be $750 million at the midpoint. This is net of approximately $250 million in separation costs associated with the EDS spin to be settled in 2026 and a further $200 million investment in semiconductor inventory build. As we mentioned at the beginning of last year, we have worked diligently to strengthen the resiliency of our supply chain and invested to build semiconductor inventory coverage to approximately 12 weeks. This has positioned us well given the heightened concerns over an industry wide DRAM shortage and we see minimal impact to us from a supply perspective in 2026.

While we are confident of our ability to build inventory and work on long term solutions with our customers and suppliers, we do expect to see higher input costs related to semiconductors which we will pass on to our customers. Moving on to Versigent, we forecast revenue in the range of 9.1 to 9.4 billion, an increase of 2% at the midpoint versus a backdrop of vehicle production down 1% in 2026. We expect EBITDA an EBITDA margin of approximately $990 million and 10.7% at the midpoint on a year over year basis. Margin expansion is expected to be driven by flow through on volume and manufacturing and material performance improvements, offsetting headwinds from labor, economics, FX and commodities.

And lastly, free cash flow is expected to be $250 million at the midpoint, reflecting continued investments in footprint rotation and manufacturing automation that we discuss at Investor Day. Moving now to our first quarter guidance and expected cadence through the course of 2026. As a reminder, given the expected effective spin date of April 1st, our first quarter results will be reported as total active. We expect first quarter revenue for total active of $5.05 billion at the midpoint, reflecting adjusted growth of approximately 1% with new APTIF slightly above this range and EDS slightly below Q1. Revenue growth is below the full year range and primarily owing to the cadence of expected global vehicle production in 2026.

IHS forecasts vehicle production to be down 4% in Q1, which equates to down 2% on an active weighted market basis. We expect adjusted EBITDA and ebitda margin of 740 million and 14.7% at the midpoint. This includes a 120 basis point headwind associated with FX in commodities, an earnings per share of $1.65 at the midpoint and this reflects an effective tax rate of 20.5% for totalaptive. The increase in the effective tax rate from 17.2% to 20.5% is attributable to the implementation of the Pillar 2 global minimum tax, though the cash tax rate is expected to be lower than the etr by approximately 300 basis points.

Finally, as I close, I’d like to reiterate that our resilient business model and relentless focus on optimizing performance, we remain confident in our ability to drive strong execution and financial results as well as enhance shareholder value. And with that, I’d now like to hand the call to Joe Liotennet for his thoughts on Versigent.

Joseph Liotine — Chief Executive Officer

Thanks Faren. It’s great to speak with all of you again. Since we last spoke, we’ve continued to work diligently to ensure a smooth transition ahead of our first day of trading as an independent company on April 1st. As Kevin shared, EDS had a very good year. In 2025 we posted solid revenue growth and expanded our EBITDA margins through continued progress on our operational initiatives and drove another year of strong bookings, laying the foundation for future growth. We have momentum heading into 2026 and as an independent company with a strong financial profile, we’re confident in our ability to deliver value for shareholders and I look forward to meeting with many of you in the coming months. I’ll now hand it back to Kevin and Varan to complete the call.

Kevin Clark — Chair and Chief Executive Officer

Thanks Joe. As I wrap up today’s call, I want to provide some additional context on 2025 and our outlook for 2026. Let me start by level setting on where we’ve been during 2025. We continue to enhance the resiliency of our business model with the introduction of a broad range of market relevant products and solutions, the continued increase in bookings with target customers across regions and end markets excuse me and the ongoing enhancement of our supply chain and manufacturing capabilities during the year. We also illustrated our ability to execute in a dynamic environment.

We navigated changes in geopolitical trends and global trade policies as well as customer specific challenges and delivered earnings growth in the face of FX and commodity headwinds that were significantly larger than we had initially anticipated. As we look ahead to 2026, we expect the macro environment to continue to remain dynamic, but with the strength of our operating model, we’re confident that we’re well positioned to execute our strategy. We’re poised to capture commercial opportunities that are higher growth and higher margin across multiple end markets, and we’ll continue to invest in our product portfolio and go to market capabilities to execute on these opportunities while also continue to further optimize our cost structure and eliminate the stranded costs associated with the spin.

2026 is a very exciting year for both Aptiv and Traversigent as we unlock value through formation of two independent, optimally position public companies. Our team remains relentlessly focused on navigating the challenges and opportunities ahead, flawlessly serving our customers and delivering strong financial results that enhance shareholder value. Operator let’s now open the line for questions.

Question & Answers

Operator

Thank you. If you would like to ask a question, please Signal by pressing STAR1 on your telephone keypad. If you’re using a phone, please make sure your mute function is turned off to allow your signal to reach our equipment. We request that you limit your questions to one initial with one follow up so that we may take as many questions as possible. Again, press Star one to ask a question. We’ll pause for just a moment to allow everyone an opportunity to signal. And we’ll go first to Dan Levy with Barclays.

Dan Levy

Hi, good morning. Thanks for taking the questions. Wanted to start first with a question on your memory exposure because I think that’s top of mind for a lot of folks. You said that this wouldn’t really be an issue into 2027. Maybe you could just give us a little more insight into what percentage of your cogs memory is of remainco and when the when your contracts reset in 2027, what magnitude of impact this could be and what is the line of sight to fully recovering all of those higher costs.

Kevin Clark — Chair and Chief Executive Officer

So it’s Kevin, let me start with just sizing it. So to put it in perspective memory the purchase value is roughly $175 million as we sit here 2020, 2026 and the majority of that is a DRAM 3 and DRAM 4. So those are the categories. Pricing or price increases for us in calendar 2026 are low double digits. And that’s the result of the supply chain management strategy that we’ve been implementing over the last couple years that included higher inventory levels as well as longer term contracts with our semiconductor suppliers as we head into 2027 or look at 2027. Those negotiations actually had started months ago.

So we’re well ahead of kind of the current, current outlook for overall price increases. And we’re confident that we’ll be able to come in at a level won’t be consistent with 2020 will be higher, but a level that is certainly below the 100 to 120% price increases that you’re hearing thrown around today as it relates to whatever that price increase ends up being. We’ve been successful in the past obviously pushing through price increases or cost increases associated with various aspects or various inputs including semiconductors. I think this is an area we’ve already had conversations with all of our OEM customers so that they understand the situation and not that we won’t have to have some difficult conversations, but we’re highly confident we’ll be able to push push those cost increases through to our OEM customers.

Dan Levy

Thank you. And just a reminder, you recovered 100% of your semi inflation from the 21 chip crisis.

Kevin Clark — Chair and Chief Executive Officer

Yeah, a little less than 100%, but pretty close.

Dan Levy

Great, thank you. As a follow up, want to ask about the guide for new active into 2026. You’re guiding to an adjusted growth of 4%. It is at the low end of the range of the 4 to 7% that you talked about at Investor Day. Maybe you could just give us a sense of, you know, what’s a little lighter in 26 versus what accelerates into the out years.

Varun Laroyia — Chief Financial Officer

Yeah, hey Dan, good morning, it’s Byron Leroyer. Listen, with regards to Remain co guide, if you go back to investor day, the four to seven points growth that we had talked about through 2028 that remains intact, right? It really starts with RemainCo still has about three quarters of its business in the auto industry. And as you think about where expectations are for global vehicle production in 2026 and then in 2728 which it gets back to some level of growth, that’s kind of the starting point number one. And then the second point I’d like to highlight is with regards to our non auto revenues, those are growing strongly on a full year basis.

2025 non auto grew about 8 points. And in the fourth quarter other industrial revenue growth grew faster than our commercial vehicle revenue grew for new Aptiv. So that continues to grow and grow well. But again it’s about a quarter of the business. So in the outer years with the investments we’re making in both product but also in go to market, we expect that business to come through strongly. And finally our software and services business continues to grow at mid teens which we are pleased with.

Kevin Clark — Chair and Chief Executive Officer

Dan, if I could just augment what Baron just talked about. Really it comes down to vehicle production and assumption. If you look at where we were in IHS was for the 2026 calendar year back in October, November, on an average weighted market basis our outlook was vehicle production up 1%. As we sit here today, our outlook and where IHS actually sits is actually for on a comparable basis for vehicle production to actually be down 1%. So it’s that swinging global vehicle production and the weighting by market.

Dan Levy

Great, thank you.

Operator

We will move next to Emmanuel Rosner with Wolff Research.

Emmanuel Rosner

Great, thank you so much. Good morning. Continuing on this, the outlook for the new Aptif. I was wondering if you could just frame for us some of the puts and takes in the ebitda outlook for 2026. Margins basically stable at midpoint, but obviously pretty decent organic growth. And then you have some puts and takes in terms of one time cost, inflation and some of the offsets. So if you could just give us. A sense of what that walk looks. Like landing you around stable margins.

Varun Laroyia — Chief Financial Officer

Yeah, Emmanuel, it’s Varun Leroy out here. Listen, as we think about new Aptiv 26 vs 25, here are some kind of key elements just to highlight for you. The first is just in terms of revenue growth, the volume that comes through associated with that and obviously the ebitda and that’ll kind of pick up just over a point. Okay. Commodities are expected to be in negative in 2026 for RemainCo. Again it’s a far smaller number associated with RemainCo versus Versigent. So about 50bps is what we currently forecast with regards to EBITDA margin hit associ with that we have our usual net price down.

So think about the one to one and a half points of what we typically have with net price downs. So that’ll be another, that’ll be a negative associated with that. And then we’ve talked about investments to grow our non auto side of the business. This includes go to market and also engineering but again you know, and stranded cost as I mentioned also which is about 40 basis points or about $50 million. Offsetting this are other performance items such as manufacturing material and also labor economics that we see from a RemainCo perspective that will kind of help offset some of those pieces.

So net, net as you think about it outside excluding stranded costs we do expect on a pro forma basis new active margins moving up on a year over year basis.

Emmanuel Rosner

That’s super helpful. And then as a follow up would you be able to provide a similar framework for SpinCo? Yes, yes, most certainly. Listen, from a SpinCo perspective overall 26 versus 25 margins are up and if you were to take them at a midpoint basis on a pro forma basis up about 40 basis points.

Varun Laroyia — Chief Financial Officer

Right. And it really starts with the volume associated with the growth that’s anticipated. So obviously Vessigent Eds had a terrific 2025, finished the year strong, tremendous momentum in the business, great bookings coming through. And so from a growth perspective roughly. About. The volume growth that comes through and the volume flow through that comes through is a positive. On the flip side of it, as I mentioned, commodities are expected to be in negative roughly about 50 basis points. Net price downs about 60 basis points. And then finally some standalone costs which are roughly about 15 million that we talked about at investor day. And again offsetting these elements are performance items such as manufacturing material which will add back the better part of about 130 basis points of positive EBITDA. And that kind of are the key elements to think through from a bridge perspective. 25 to 26.

Emmanuel Rosner

Great, thank you.

Operator

We’ll go next to Etai McKelly with TD Cowan.

Itay Michaeli

Great, thank you. Good morning everybody. Just to follow up on the last question, curious how you’re thinking about just the FX commodity impact on new active kind of beyond 2026. I think the targets for 2028 assumed a minimal impact in the 200bps of EBITDA margin expansion. Do you think that’s kind of recoverable. Beyond this year or how should we. Think about the kind of longer term behavior impact?

Kevin Clark — Chair and Chief Executive Officer

Yeah, definitely. I mean we’re still confident in our ability to expand margins at Romanco by 200 basis points and obviously to do the same in the versa. Jim, business 2026 as it relates to Romanco obviously there’s the impact of stranded cost that Baron talked about. There’s some incremental investment in engineering go to market capability that he walked through. Those are more 2026 related than they are 2027. 2028 stranded costs obviously will come out of the system in 2027 and be gone by 2028. There’s a bit more that comes out in 2027 than in 2026. As you as we sit here today, we remain very confident in our ability to expand margins by 200 basis points.

Itay Michaeli

Terrific, very helpful Kevin. And then as a quick follow up, hoping you give us a little bit of a high level view of how you see your revenue performing regionally this year. That very strong outperformance in North America you mentioned. China also improved sequentially. Hoping to get a little bit more. Color explained kind of how you see regional revenue progress this year. Thank you.

Varun Laroyia — Chief Financial Officer

Yeah Itay, it’s varunat here, great question and really what I’d point you towards is how we performed in 2025. If you think about North America, certainly global vehicle product, well vehicle production versus what our initial estimates were and where it finally ended up certainly provided a tailwind for North America. But I think importantly as you think about our non auto revenue growth software and services predominantly in North America. So from that perspective I would probably share with you that North America will continue to lead the way. And then from a European perspective based on where GDP is expected to be out there roughly flat to slightly down and then from a China perspective our overall mix continues to improve with the China local OEMs.

Number one the second piece I kind of highlight about Asia PAC and China in particular is we will end up lapping the couple of programs and intelligence systems that we had called out in the second quarter those will lap and so we will expect to see a better second half number come through from China. And finally I’d say is and Kevin referenced this in his prepared comments, the growth that we are seeing with the Japanese OEMs, the Korean OEMs and also in India that again is strong coming through. And so as you think about 26 North America, APAC and then I’d say Europe will be flat to slightly down.

Itay Michaeli

That’s very helpful. Thanks so much.

Operator

We will go next to Mark Delaney with Goldman Sachs.

Mark Delaney

Good morning. Thanks very much for taking the question. You cited the S and P outlook for the production cadence this year as being consistent with your view that 1Q growth is slower than growth picks up beyond the first quarter. Can you speak more to what you’re seeing with OEM schedules and how much visibility APTIV has into that Pickup starting in 2Q?

Kevin Clark — Chair and Chief Executive Officer

Yes, it’s Kevin, I’ll start and Darren will provide you with more details. Obviously as you look at the first quarter, at least 4 to 6 weeks out, we’re on customer schedules now. We have forecasts from Most of our OEMs out for the full year.

And as we sit here today, the schedule support a relatively weak year over year market in the first quarter. Right. So vehicle production being down, you know, roughly 4%, we’re seeing weakness or we see weakness in China in line with what, with what IHS is forecasting at this point in time. Beyond that, the forecast we receive of our we see from our customers, we see continued strengthening into Q2, Q3, Q4. Those aren’t schedules that are locked in at this point in time. But as the order continues to evolve, we’ll get increasing visibility and you know, to the extent we’re out communicating in the open market, we’ll share updates to investors in terms of what we’re seeing from a market outlook standpoint. But right now we would say it very closely mirrors exactly what we’re forecasting from a 2026 vehicle production standpoint.

Mark Delaney

Thanks for that Kevin. My other question was on the bookings and you had spoken last quarter about the potential for some timing to shift into 26 which came through. But maybe just talk a bit more on the broader bookings environment in terms of some of the programs that did shift and anything in common that led to that. Is it more regionally driven or any commonality by powertrain type that may be behind some of that shifting? And when you look at your win rates, to what extent is that tracking in mind with your expectations and supportive of that longer term growth that you laid out at the investor day?

Kevin Clark — Chair and Chief Executive Officer

Yeah, win rates continue to be strong.

The shifting we saw in the fourth quarter related to programs in North America and Europe, we’re well positioned. We’re confident that those are programs that will be awarded. It’s just a matter of timing. I think when you’re in markets like We’ve been over the last year or so with the dynamics of trade with tariffs for some products, shortages or tightness for some OEM customers. If they’re having specific unique supply chain issues. The focus of the procurement organization tends to shift to managing those situations versus awarding business. But ultimately if they don’t, they don’t want to impact SOPs. Business needs to be awarded so that engineering organizations can start working on those programs.

Mark Delaney

Thank you.

Operator

We’ll go next to Joe Spack with ubs.

Kevin Clark — Chair and Chief Executive Officer

Hi Joe.

Operator

And sir, your line is open. You may want to check your mute button.

Joe Spak

Sorry about that. Good morning everyone. Just going Back to the 26 Allegon and Vernon, I appreciate all the puts and takes. I just want to maybe dive in on a couple more things specifically on the top line, like for Versigent, like how much is copper helping the top line in that growth number, maybe FX. For each company as well. And then we also saw some big numbers put out by some automakers in terms of cash they’re going to give. To suppliers for canceled programs or lower volumes. Is any of that baked into your outlook? And if not, is that something you are those conversations you’re having and something you think you could expect to receive. Over the course of the year?

Kevin Clark — Chair and Chief Executive Officer

So let me start with the last and then Baron can walk you through your first few questions. Listen, as it relates to commercial recoveries, that’s an active unit dialogue that quite frankly is going out with customers all the time. As it relates to various, whether they’re distinct or unique programs that are canceled or other items. As it relates to some of the larger decisions, principally in North America, as it relates to EV programs, those are discussions that are underway now at this point in time. Certainly the resolution of those is factored into our 2026 outlook.

I wouldn’t consider it upside to our overall operating performance. They still need to be negotiated and finalized. I think some of the larger programs with some of the OEMs that we deal with, especially in North America, I would say there’s strong agreement that the situation needs to be resolved and they need to support the supply base. So I don’t think it’s a matter of negotiating those recoveries. It tends to be how much. So yes, they’re in our outlook at a level that we have high confidence in. But Joe, there’s, you know, the nature of this business is there’s an amount of that activity that goes on year in and year out.

And it could be things like labor economics, program cancellation, program delays, Commodity pricing, things like that that maybe there isn’t a contractual mechanism to deal with that need to be dealt with separately.

Varun Laroyia — Chief Financial Officer

And let me pick up the first part of your question Joe. With regards to commodities and essentially from our perspective for Versigent it’s primarily copper. We expect copper. As of now we’ve budgeted that at $5.50 a pound versus a 451 number in Actuals 2025 that leads to close to $200 million from a top line revenue perspective. Though I do want to share with you and clarify when we talk about a 2% growth at the midpoint for Versigent, that is adjusted growth. So that excludes the impact of any FX or commodities.

Kevin Clark — Chair and Chief Executive Officer

And the other thing just, just from a mechanism standpoint, the way that works Joe, is copper’s index. So roughly 70% of our overall activity where, where we sell copper and principally in the EDS business, it’s index, that price increase is passed on to the customer typically three, sometimes it’s six months but more often than not roughly on a three month sort of delay. So that’s how it, how it effectively plays out from a reimbursement standpoint and pricing standpoint.

Joe Spak

Okay, maybe just one more because I know this sort of changed over the years but it’s something that’s come into more focus of late with investors is the peso. Because I know you used to hedge a lot of that, then I think you started to let more of it flow. Can you just remind us sort of what the current status of that is and maybe the sensitivity to the peso as well.

Varun Laroyia — Chief Financial Officer

Yeah.

Joe Spak

And labor. Yeah,

Varun Laroyia — Chief Financial Officer

yeah, yeah. So Joe. No, thanks for raising that again. Listen, as we think about FX with the weakening US dollar and our lack of a operational hedge primarily for vestigent business, that’s where the peso hurts as that if you’re going to go back to a year ago when we gave guidance for 2025 the peso was just shy of 21 to the US dollar.

I think we had flashed a 20.75. And if you see where it’s currently tracking at sub 18 that certainly causes a ton of OI impact. Having said that, obviously we do have hedges in place and then for 2026 in particular we essentially hedged about 95% below 18. Okay. And so that certainly lessens the impact up to a certain point. But clearly in 2025 from the given the volatility from the start of the year to where it ended up, it certainly was a big driver of the impact that we certainly Called out and you know, were transparent in terms of what that was.

Joe Spak

Yep. Okay, thanks so much for the caller.

Operator

As a reminder, if you did have a question, it is Star One. We will move next to Colin Langen with Wells Fargo. Oh great.

Colin Langan

Thanks for taking my question. I think there was some concern heading into guidance about precision. I don’t know if I’m saying that. Right. Being down, given EVs particularly in North America are expected to be down a lot. I mean what are you assuming in terms of EV volumes and then what is actually keeping that growth positive if EV is sort of an underlying headwind within there?

Kevin Clark — Chair and Chief Executive Officer

Yeah, our outlook for EV growth as a company is roughly 15% year on year. The majority of that growth is driven in China and it’s a mix of bev and slightly faster growth rate in plug in hybrids and in hybrids.

So very low growth here in North America, moderate growth in Europe and then stronger growth in Asia Pacific, principally China. So I think we’re roughly. Colin, I think we’re roughly five or six points from a growth rate assumption standpoint below where IHS sits today.

Colin Langan

Okay, great. And then intelligence systems margins were surprisingly weak in Q4, particularly since normally that’s a quarter where you get a lot of engineering recoveries. Any color on the weakness. And I guess more importantly, how should we think about margins into 26? They kind of bounced back.

Kevin Clark — Chair and Chief Executive Officer

Yeah. On a full year basis. Margins in Intelligent Systems were up 30 basis points if you exclude foreign exchange. So strong year over year growth in the quarter. I think we had three impacts. Veron talked about foreign exchange so that we were impacted from a foreign exchange standpoint very significantly. I think it’s roughly 170 basis points that we show on our chart. And then there are two aspects from a timing standpoint. One, engineering credits actually were not as heavily weighted in the fourth quarter.

I think in our Q3 earnings call we made some commentary with respective timing of engineering credits. And then second thing just Veron mentioned we’ve accelerated the investment in some engineering areas in and around technologies and solutions or bringing technologies and solutions into the robotics market. So we have incremental investment in the fourth quarter that will increase and that will continue into the first quarter of this year and you know, through the balance of 2026. So those are the three, three drivers of the year over year margin degradation for, for the intelligent systems

Colin Langan

and I guess FX and the into Q1 the engineering investment continue. So those would be incremental headwinds as we think about.

Kevin Clark — Chair and Chief Executive Officer

Yeah, there’s, there’s Some, some headwind for FX and commodities much lower based on where we sit today than, than than what we had in the fourth quarter. And then the engineering investment will continue.

Colin Langan

Got it. All right, thanks for taking my questions.

Operator

We’ll go next to James Piccarillo, BNP Paribas.

James Picariello

Hi everybody. I just want to clarify first on the stranded costs that’s embedded in the, in the pro forma, in the pro forma outlook because yeah, adding the EBITDA midpoints of new Aptiv and EDS right. There’s like a 75 million differences. Does that account for both the Romain Cos 70 million in stranded costs? Well, based on the analyst day as well as the stand up cost that EDS will have as a separate entity. Thanks.

Varun Laroyia — Chief Financial Officer

Yeah, James, it’s, it’s Warren Leroy. Yes, you know we call it about 70 million in stranded costs at investor day. What we obviously we’ve made progress both from a headcount and non headcount actions. So those have been layered in. Some of those actions have already begun but $50 million impact in the first full year on a pro forma basis for new aptiv. That’s the 50 small public company setup costs for Versigent roughly about 15 million. And then the other piece as we called out were some of the investments from a go to market perspective and product perspective that we’re making in remain co across both intelligent systems and engineered components. Those are kind of the key elements to think about from that perspective.

James Picariello

Perfect, that’s very clear. And then my follow up is on Wind river and its potential with respect to robotics and just how you foresee that, you know, the future end market demand tied to AI and robotics, humanoid robotics. Does Wind river have you have a TAM there and a place to play? Thanks.

Kevin Clark — Chair and Chief Executive Officer

Yeah. So Wind River I would say is from a software standpoint the tip of the spear. So they serve multiple markets including the robotics markets today with Linux solutions, with rtos solutions and other software products. So it’s a TAM that we estimate to be about $6 billion. When you look at the, you know, comparable to our content per vehicle that we use for the automotive sector, it’s roughly 4 to $5,000 of content on a robot. When we look at sensor solutions, when we look at so that could be vision or camera as well as radar.

When we look at the software tech stack and then when we look at the interconnect and the cable or wire harness solutions. So we view it as a very attractive market. The partnerships that we’ve announced to date, we’re making meaningful progress with. We think during the first quarter, we’ll have more commercial relationships or partnership, the partnerships that we’ll be announcing that will show the traction that we have in place. And that’s what, quite frankly, gives us the confidence to increase the investment targeted that specific market just given the opportunity.

James Picariello

Thank you.

Operator

And that was our final question. That will conclude today’s question and answer session. I will now turn the call back to Mr. Kevin Clark for any additional or closing remarks.

Kevin Clark — Chair and Chief Executive Officer

Thank you, everyone, for joining us today. We really appreciate your time, and we look forward to speaking with you and meeting with you over the coming months. Have a nice day.

Operator

Thank you, Ladies and gentlemen. That will conclude today’s call. We thank you for your participation. You may disconnect at this time.