Aptiv: Solid 2Q26 Results; Lowered FY26 Guidance on Automotive Customer Production Adjustments, Primarily in China

Research evidence excerpt

Aptiv: Solid 2Q26 Results; Lowered FY26 Guidance on Automotive Customer Production Adjustments, Primarily in China

tlook. Separately, the company announced that

it had reached a long-term agreement with a “key memory chip supplier,” which is

encouraging amid still-elevated memory prices and ongoing concerns over supply

shortages.

• Free cash flow was soft, and the return of capital commitment reduces flexibility. Pro

forma free cash flow was negative $33 million in 2Q26, including $125 million of capex

(v. $163 million consensus) and a $45 million pro forma adjustment primarily related to

EDS spinoff fees. Aptiv returned $325 million to shareholders through repurchases in

1H26, and the company intends to return a similar amount in 2H26, targeting an

allocation of more than 50% of free cash flow to share repurchases over the next few years

while also pursuing bolt-on M&A and strategic investments. We view that policy as

manageable at ~1.5x net leverage, a product of the company’s meaningful debt reduction

post spinoff (~$1.9 billion), although we are watchful of potential sizable leveraging

M&A or share repurchases going forward.

OUR TAKE:

• Solid 2Q26 results, but unfavorable FY26 guidance adjustments on customer

production schedule adjustments. Aptiv reported 2Q26 results that were solid overall,

in our view, including in-line revenue and strong margins that drove adjusted EBITDA

above consensus expectations, but free cash flow was weak. The company continued to

emphasize the non-automotive portion of its business that had success in 2Q26, with non-

automotive revenue increasing 12% y/y (v. Automotive revenue -1% y/y) and

opportunities for this portion of the business in battery energy storage systems (BESS),

data centers, satellites, robotics, and drones.