Please ensure Javascript is enabled for purposes of website accessibility

Aptiv PLC (APTV) Q4 2020 Earnings Call Transcript

By Motley Fool Transcribers - Feb 3, 2021 at 1:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

APTV earnings call for the period ending February 3, 2021.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Aptiv PLC (APTV -3.07%)
Q4 2020 Earnings Call
Feb 3, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Aptiv Fourth Quarter 2020 Earnings Conference Call. My name is Simon, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

Elena Rosman, Aptiv's Vice President of Investor Relations, you may begin your conference.

Elena Rosman -- Vice President of Investor Relations

Thank you Simon. Good morning and thank you to everyone for joining Aptiv's Fourth Quarter 2020 Earnings Conference Call. To follow along with today's presentation, our slides can be found at ir.aptiv.com. Today's review of our actual financials exclude restructuring and other special items and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for both our Q4 financials, as well as our outlook for the full year 2021 are included in the pack of today's presentation and the earnings press release.

Turning to slide 2, please see our disclosure on forward-looking statements, which reflect Aptiv's current view of future financial performance, which may be materially different from our actual performance for reasons that we cite in our Form 10-K and other SEC filings, including uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and impacts on the global economy. Joining us today will be, Kevin Clark; Aptiv's, President and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations.

Kevin will provide a strategic update on the business and then Joe will cover the financial results and our outlook in more detail. With that, I would like to turn the call over to Kevin Clark.

Kevin P. Clark -- President and Chief Executive Officer

Thank you Elena and thank you everyone for joining us today. Our 2020 results and our outlook for the year ahead underscore the work we've done to build a stronger and more sustainable business, one that grows faster and more profitably, and generates more consistent earnings and cash flows. I'm proud of how well our teams performed during these difficult times, and it remains challenging to meet recovery demand while managing through the COVID-19 pandemic and the further tightening of the global supply chain. Our continued resiliency, is the result of the passion and the commitment of our team members to deliver for our customers and our shareholders and as a result, we experienced strong fourth quarter financial results.

Revenue increased 14% to $4.2 billion representing 13 points of growth over the underlying market. Operating income and earnings per share totaled $476 million and $1.13 respectively, resulting from strong volume growth, partially offset by incremental manufacturing and logistics expenses associated with ongoing supply chain challenges, which I'll cover in more detail shortly. Our 2020 results further validate our business strategy, including revenue growth of 10 points over market and $18 billion of new business awards reflecting our unique position at the intersection of the safe green and connected megatrends that are accelerating in our industry.

Moving to slide 4, as we enter the start of the economic recovery, we face a new set of supply chain challenges while also continuing to operate safely in the midst of the COVID-19 pandemic. Our outlook for 2021 reflects market share gains and content growth in our key product line, including high voltage electrification and active safety driving 16% revenue growth 6 points over underlying vehicle production and translating into strong margin expansion and earnings growth.

We also are forecasting significant cash flow generation and our ability to reinvest that cash to deliver incremental value creation is a key component of our investment thesis. At the same time, we're closely monitoring and adjusting to the impact that COVID-19 pandemic is having on our operating environment. And our industry is now facing increased pressure from a global shortage in semiconductor chips, impacting virtually all of our suppliers and customers around the world. As a result, we expect the environment to remain challenging for at least the first half of the year and it reflected the uncertainty associated with OEM production schedules and the timing of replenished inventory levels in our full-year forecast for vehicle production, which we now expect to increase 10% in 2021. While our team is doing an excellent job minimizing these effects, as customers idle plants and look to prioritize certain vehicle platforms the costs associated with the related labor and manufacturing inefficiencies and higher logistics expenses have been included in our financial outlook for the full year.

Due to limited visibility to near-term production schedules, this precludes us from providing guidance for the first quarter. However, our confidence in the strength of the underlying economic recovery combined with the planned second half increase in semiconductor capacity does give us a reasonable level of confidence in our full year outlook, which Joe will cover in more detail, shortly.

Turning to slide 5, despite the challenges we currently face, we remain focused on further enhancing our track record of outperformance and long-term value creation. While our business model has been tested over the last several months, our performance has validated our industry-leading position and through cycle resiliency. As we look ahead, we position Aptiv to continue to outperform with focused investments that have enhanced our business model and expanded the addressable markets we served, leveraging our unique brain and nervous system capabilities to deliver even more content on the electrified, software defined vehicles of the future yielding accretive growth opportunities in our two business segments, and presenting incremental value creation opportunities through smart capital appointment and delivering meaningful shareholder returns as the economic recovery unfolds.

As shown on slide 6 fourth quarter new business bookings totaled $7.5 billion, reflecting robust win rates and a ramp up in consumer activity. Full-year 2020 bookings reached $18 billion, roughly flat compared to 2019 levels when you adjust for the current outlook for global vehicle production. Our Advanced Safety and User Experience segment new business bookings totaled $4.7 billion for the year, including $3.7 billion in Active Safety Awards. New business bookings for our Signal and Power Solutions segment totaled more than $13 billion, including another $2 billion of high-voltage electrification awards.

We continue to see an acceleration of powertrain electrification driven by both more stringent CO2 regulations, principally in Europe and China and the increasing momentum of consumer acceptance in the US. Our complementary high voltage distribution and connection systems as well as cable management solutions significantly reduce the weight and mass of the vehicle architecture through smarter, more efficient design; perfectly positioning Aptiv to benefit from the two-fold increase in addressable content on a high voltage electric vehicle.

In summary, the cumulative amount of our new business bookings over the last few years gives us confidence in our ability to sustain strong above market growth across both of our business segments, validating the strength of our portfolio of market relevant technologies, aligned to the safe green and connected megatrends. Turning to slide 7, Aptiv is enabling our customers to accelerate their transition to an electrified software defined vehicle by employing a more holistic engineering and development approach to optimize the software and system solutions to span the full vehicle stack.

Throughout the COVID-19 pandemic, we continue to fully fund strategic growth initiatives and last month we unveiled the latest result of those investments in our Innovation in Motion virtual event which included Aptiv smart vehicle architecture which represents Aptiv's vision for the full, electrical and electronic architecture of the vehicle. SVA represents a scalable approach that lowers the total cost of ownership for our OEM customers while unlocking more value in the vehicle at the point of aggregation creating new hardware and software revenue opportunities for both Aptiv and our OEM customers.

Our industry-leading position in domain controllers and expertise in advanced ADAS solutions provides a terrific launching pad, as we work with our customers on their next-gen architecture solutions. For customers, on the path to SVA, we unveiled our Next-Gen ADAS platform, leveraging our deep systems expertise and learning from deploying the industry's largest most diverse safety installed base over the last 20 years with Active Safety Technology in use by 20 different global automakers. We also highlighted our new approach to zone controllers which leverages insights from our unique position with both the brain and nervous system of the vehicle to safely and efficiently distribute power and up-integrate body functionality while simplifying the vehicle manufacturing process thereby enhancing the scalability of advanced vehicle architecture systems.

Aptiv will be the first to market with zone control with an European OEM in 2022 and we have a robust pipeline of commercial pursuits planned for 2021. Electrification is also an integral part of the SVA roadmap and Aptiv has emerged as a partner of choice capable of providing comprehensive and optimized high voltage solutions to our customers. That agility has led to increased share of wallet with both leading and emerging electric vehicle manufacturers ramping up production globally including a leading US EV company as well as companies such as Rivian, NIO and Volkswagen. Lastly, many of these same advancements apply inside the cabin where we've developed a scalable user experience platform solution enhancing performance, while reducing total systems costs through seamless integration of multiple functional domains.

As we look to 2021 and beyond, the innovation that we have in motion will further expand our competitive moat and take us closer to our mission of delivering a safer, greener and more connected future of mobility. Before turning it over to Joe; on slide 8, I want to take a moment to highlight a number of commercial and technological milestones at Motional, our automated driving joint venture with Hyundai Motor Group. In December, Motional announced an agreement with Lyft to launch a multimarket robotaxi service in major US cities, beginning in 2023, utilizing a scalable, automated mobility on-demand vehicle platform developed in partnership with Hyundai and available to customers beginning in 2022.

Last year, Motional also entered into a partnership with VIA to deploy self-driving vehicles on their network in a city to be announced soon. And in January Motional announced a partnership to deploy Cox Automotive Mobility's, Pivet as their premier fleet service provider. Beginning with Motional self-driving fleet in Las Vegas, this partnership lays the foundation to support the company as it expands the market for robotaxies in other major US cities. These commercial developments are underpinned by rigorous third-party validation and safety assessments, which have allowed Motional to receive approval for testing of fully driverless systems on public roads in Nevada, in early 2021. In summary, Motional made tremendous progress, delivering on its commitments in 2020 paving the way for commercial success in the years to come.

I'll now hand the call over to Joe Massaro for an overview of our financial results. Joe?

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Thanks Kevin, and good morning everyone. Starting on slide 9, the recovery momentum in the fourth quarter generated strong sales, income and cash performance in the quarter despite significant incremental safety, manufacturing and logistics costs associated with operating with COVID and the mounting supply chain constraints. Revenues of $4.2 billion were up 14% year-over-year, significantly ahead of vehicle production, which was up 1% in the quarter. The stronger than expected sales volumes resulted in adjusted EBITDA of $678 million, up 40 basis points compared to the prior year, reflecting stronger volumes and disciplined cost management, partially offset by approximately $70 million of COVID and supply chain related costs.

Earnings per share in the quarter were $1.13 reflecting higher operating income, offset by the Motional JV and higher share count and tax expense. Operating cash flow was strong at $799 million, driven by higher EBITDA and lower year-over-year cash taxes. Lastly, capital expenditures were $95 million, bringing the total to $584 million for the year, just under our $600 million outlook. Looking at fourth quarter revenues in more detail on slide 10. Globally, we benefited from stronger vehicle production as well as increased demand for high-voltage electrical architecture and engineered components, primarily in Europe and China. North America revenues grew 11% despite the market being flat, driven by new launch volume and favorable truck and SUV platform mix. In Europe, the trend of strong double-digit market outgrowth continued as the production rebound benefited Active Safety and high-voltage electrification programs. Lastly, our China growth was 9%, outpacing the market and expectations as a stronger recovery in sales led to production upside with our major customers, including high voltage launch volumes. Moving to the segments on the next slide Advanced Safety and User Experience revenues increased 7% in the quarter reflecting 6 points of growth over underlying vehicle production, including double-digit Active Safety growth in all three major regions.

Segment EBITDA declined 1% excluding the impact of the Motional JV de-consolidation, primarily driven by the COVID and supply chain cost Kevin mentioned earlier. Signal and Power Solutions revenue were up 17%, reflecting 16 points of growth over market. We also saw strong growth across all product lines and regions including demand for high-voltage electrification products in Europe and China, favorable truck and SUV platform mix in North America and industrial end market recovery globally. EBITDA in the segment increased 17% as strong sales growth offset additional costs and FX and commodities in the quarter. Turning now to slide 12 and the 2021 macro outlook. As Kevin mentioned earlier, the worldwide shortage of semiconductors impacting the auto industry is limiting near term production visibility. Based on our discussions with customers and suppliers, we expect the intermittent disruptions to continue during the first half of the year and assume the industry should recover the majority of lost production units tied to these shortages during the second half of the year.

Accordingly, we will not be providing guidance for the first quarter, as there is a high likelihood of vehicle production shifting between the first and second quarters. However, we believe we have adequately reflected the current situation in our guidance for full year 2021 which estimates global vehicle production of 84 million units, up 10%. Looking at the regions, in North America and Europe improved levels of demand should support stronger production rates while a more modest recovery is planned for China, following a sharp bounce-back in demand, starting in the second quarter last year.

While the supply chain remains extremely tight, we are doing everything we can for our customers to meet increased levels of demand and we are confident our leading industry position and technologies aligned to the safe, green and connected megatrends will continue to yield strong growth above market, consistent with the framework we have previously provided. Turning to slide 13, despite the uncertainty that remains near term, we are confident in the guidance range for 2021. For the year, we expect revenue to be in the range of $15.1 billion to $15.7 billion, up 16% at the midpoint with 6 points of growth over market driven by our portfolio of relevant technologies.

EBITDA and operating income are expected to be $2.4 billion and $1.6 billion at the midpoint respectively with margins approaching 2019 levels despite $100 million of COVID related operating costs and given the volatility and customer schedules and supply chain disruptions, we are incurring additional manufacturing and logistics costs which we have estimated at $80 million for the year. Lastly, benefits of our ongoing performance initiatives are more than offsetting the lapping of $150 million of austerity measures taken in 2020, during the pandemic related shutdowns. We expect earnings per share in the range of $3.35 and $3.85 a share or $4.20 to $4.70 per share, when excluding the impact of the equity losses of our Motional joint venture.

High, year-over-year, non-cash operating losses in the Motional JV reflect the finalization of purchase accounting, in addition to higher spending as Motional prepares to meet the commercial milestones, Kevin highlighted earlier. Lastly, we expect operating cash flow of $1.85 billion. Turning to slide 14 and the segments, beginning with Advanced Safety and User Experience we expect growth over market of 13 points translating into approximately $4.4 billion of revenue in 2021 driven by new launches and continued strong Active Safety growth. EBITDA margins of approximately 13% reflect 5 points of expansion off 2020's depressed levels. Signal and Power Solutions revenues of approximately $11 billion reflect 4 points of growth over underlying vehicle production with content accretive growth and high voltage electrification up 50% year-over-year.

Our CV and industrial end markets are also expected to outgrow the industrial market. We expect EBITDA margins approaching 17% up 250 basis points year-over-year and reflect favorable volume growth, partially offset by the dilutive margin rate impact of higher copper prices. We thought it'd be helpful to walk revenue and EBITDA compared to 2019 levels on slide 15; starting with revenue on the left, despite a 10% reduction in industry volumes we expect 2021 revenues to be 7% higher than 2019 at the midpoint. The investments we've made to add scale in our fastest growing product lines like Active Safety, high voltage electrification and engineered components are generating sustained strong growth over market.

And we expect a modest tailwind on FX and commodities, which combined more than offset our normal price downs. Moving to the right hand side of the slide and adjusted EBITDA, the benefits of our flexible and scalable cost structure are driving strong volume flow-through on higher revenues and the benefits of our performance initiatives yielding EBITDA of $2.4 billion at the midpoint. As you can see, we are expected to recover to 2019 EBITDA margins in 2021, despite the ongoing operational impact of COVID and the supply chain disruptions.

This is a true testament to our relentless focus on disciplined and accretive revenue growth and cost structure optimization creating an even more sustainable business with the ability to outperform and in the environment. Turning to cash flow on the next slide, our sustainable business model is enabling us to convert more income to cash generating higher operating cash flow and free cash flow conversion. As we approach a more normalized business environment, we expect operating cash flows of $1.85 billion in 2021 above 2019 levels with free cash flow conversion of greater than 100%.

This assumes approximately $160 million of restructuring cash outflows and capex of $750 million, consistent with our targeted funding levels of 5% of sales. With cash flow growing strong double digits, there is no shortage of attractive reinvestment opportunities. We will continue to maintain a consistent approach to capital deployment aligned to our strategic framework, our M&A strategy remains focused on transactions that enhance our scalability, accelerate speed to market and also provide access to new addressable markets. We believe highly disciplined capital deployment is a major differentiator for Aptiv and an important lever for shareholder value generation.

With that, I'd like to hand the call back to Kevin for his closing remarks.

Kevin P. Clark -- President and Chief Executive Officer

Thanks Joe. I will now wrap up on slide 17 before we open it up for Q&A. As we navigate 2021 and the new challenges ahead, it goes without saying that we remain laser-focused on delivering on our commitments and continuing our track record of outperformance while advancing our vision of the company in 2025 and beyond. This vision is the extension of our business strategy, which is enabled by our industry-leading competitive position and execution capabilities. Delivering our vision results in a more sustainable business defined by an improved and more predictable growth profile, increased profitability through global scale and accretive growth opportunities on the path to electrified smart vehicle architecture, the accelerated compounding of earnings and cash flow generation and additional value creation upside from the disciplined deployment of that cash.

We're well positioned to continue moving forward. A company with a strong financial position, low cost of capital and the flexibility to reinvest in its people, processes and portfolio to create significant value for its customers, for its employees and for its shareholders.

So with that, we'll open up the line for Q&A.

Questions and Answers:

Operator

Thank you very much sir. [Operator Instructions] And we'll now move to our first question over the phone, which comes from Adam Jonas from Morgan Stanley. Please go ahead.

Adam Jonas -- Morgan Stanley -- Analyst

Hey everybody. Hey, look I never to congratulate people on good quarters and I'm not going to do that here because we all know good companies are not made on good quarters, they're made on good strategy and what we're seeing here is really I think a great strategy coming together, so just had to say that.

Kevin P. Clark -- President and Chief Executive Officer

Thank you very much.

Adam Jonas -- Morgan Stanley -- Analyst

Yeah, just on the outset, it really must be said, and more to come. But two questions, first on Motional, OK my first thought is if this thing really works, the Motional JV stake, maybe your -- just your share of it can be worth more than all of Aptiv, OK. Now there is an arms race going on as these autonomous players Waymo, Cruise, etc, kind of get close to deployment and even by your own growth and losses, it looks like you're keeping up with that. So, what's the plan to add capital or to access capital for that unit.

And could we see 2021 be a year where we see greater visibility and tapping different sources of capital that's my first question. And my follow-up is more specific on FPCB or the flexible printed circuit board technology, which I'm sure you're very familiar with, so maybe this is one for Glen, but we're starting to get questions about the role of this technology to really dramatically simplify electrical architecture -- we understand Tesla wants to use it too, but that's not really in production yet -- there's issues it's just not ready for prime time. So, would love your color on is this the kind of -- where is Aptiv on that development path and when could you see that type of technology coming into production. Thanks.

Kevin P. Clark -- President and Chief Executive Officer

Okay great. Those are two great questions. So on Motional, listen, we've made tremendous progress over the last couple of years-- significant progress last year with our partner Hyundai, and as I went through a list of announcements that were made during 2020, you'll see more announcements made as it relates to 2021 from a technology standpoint and from a commercial standpoint, Adam. The business is on track from a resource standpoint, there's been a significant investment in resources in and around technology, in and around areas that are accelerating the underlying technology. As you know, we have vehicles on the road today -- we finished or completed our Gen 1 platform, which you'll see out on the road in Las Vegas soon and we'll have our Gen-2 platform available for sale to customers commercially beginning in 2022.

So, a tremendous amount of progress. As it relates to capital, recall the transaction HMG contributed $1.4 billion of cash back in March of 2020, we're using that cash to make the investments that we've talked about both of us as partners are focused on how do we develop the technology and how do we maximize value, so we're completely aligned on value creation and value creation within that business -- if you know what I mean. So, focused on how do we drive value through Motional. To the extent we -- to the extent we see opportunities where our view on value of the business aligns with one's willingness to contribute capital that's something that we use partners will evaluate and it's something that we'll continue to monitor, but at this point in time, we feel like at this point in time, we have more than enough capital for the foreseeable future to continue to accelerate our investment, but it's something again, that we continue to watch and we watch closely. So, I would not refer to capital as a constraint.

On the flexible printed circuit boards, as you know, we've been very focused on vehicle architecture for the last several years and how do we develop solutions for customers that reduce the constraints associated with traditional vehicle architecture. So how do we remove copper content, how do we replace that with real value-added content like the flexible printed circuit board technology that you're talking about, which overall is a part of our SVA solution, so that's technology that actually is under development, it's actually technology that we're in discussions with multiple OEMs about and as you know, we have relationships with several of the leading OEMs even those who I would say are less traditional OEMs, who've been evolving vehicle architecture and have been most aggressive as it relates to changing a vehicle architecture, so that we can separate software from hardware and there's going to be more to come there. We feel like we're a leader, given our position with the brain and nervous system, we feel like there is a number of opportunities for us. As I mentioned, we've been in discussions and development programs with a number of OEMs and we'll keep you and others updated on our progress.

Adam Jonas -- Morgan Stanley -- Analyst

Thanks Kevin.

Kevin P. Clark -- President and Chief Executive Officer

Thanks.

Operator

We'll now move to our next question over the phone, which comes from Joseph Spak from RBC Capital Markets. Please go ahead.

Joseph Spak -- RBC Capital Markets -- Analyst

Thank you. Good morning everyone. Maybe to start, first question just on the free cash flow, which was really strong this quarter and the guidance 1.1, impressive especially it still has $160 million restructuring in there -- I'm not sure if you consider that an elevated level or more I'd be curious on your thoughts there, but you mentioned the conversion over 100% even if you back out the Motional loss it's still like around 90. So, is that the right new level of conversion that we feel that this company can start converting going forward?

Kevin P. Clark -- President and Chief Executive Officer

Joe, why don't you take that.

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Sure. Yes Joe. That has been the target for a while. We've talked about moving sort of -- even if you go back to the Capital Market Days in 2017 and 2019 about a steady march up to the 90% and that's where we believe we are. You're right, the Motional math gives us a bit of a boost there as well. But yeah, I think that's the right range.

Joseph Spak -- RBC Capital Markets -- Analyst

Okay. And then Kevin, just because this is a question, we've been getting increasingly is there's a lot of headlines flying around and we're seeing different automakers take different software strategy -- you already have Volkswagen trying to move some of them in-house, you have others partnering like -- you saw the Ford and Google announcement I believe that was this week. How do you view the role of a supplier like Aptiv? I mean, I know you ship a lot of software to the OEMs, but to-date they're really more takers and sort of integrating -- integration of software all over the place.

You've mentioned a number of times a change in electrical architecture and moving to a more software-enabled platform. So, it seems like there is an opportunity for a player like Aptiv, but you'd have to get involved even earlier in the work and work more closely with the OEMs. So, there is a role for you is, is that a correct assessment, and maybe you could just update us on what Aptiv is doing and the strategy there?

Kevin P. Clark -- President and Chief Executive Officer

Joe, it's a great question and I think the point -- the point you make is right. So, I think given where we play, given where the industry is going, having a much more strategic relationship with the OEM customer is a must, right? What we deal with, where we operate -- it's a cross-section that's highly complex and that's actually where we play, so we have the benefit of our legacy kind of nervous system vehicle architecture, combined with our newer capabilities in and around software that to your point, started in areas like infotainment, user experience and active safety -- all of those are coming together in merging and what we've been talking about in terms of smart vehicle architecture, all of them and given our capabilities in both areas we've been positioned to have strategic discussions and quite frankly strategic development programs with several of the leading global OEMs and I would say even strategic programs that we're on today, whether it's our Gen 1 ADAS solutions or our Gen 1 integrated cockpit solutions that ultimately lead to -- that lead to the SVA solution.

Clearly, there is an acceleration of the separation of software and hardware it's happening as we speak. It presents a huge opportunity for us. We talked about our Gen 2 ADAS platform where we give -- where we can provide the full stack solution, but also provide OEM customers who want the ability to do more of the software on their own -- the ability to do so for those who don't have the capabilities, we can provide the full solution and we do that today and there will be a -- there'll be a universe of OEM customers who want to do more and we're going to enable that and provide both hardware, software and integration services in those sort of scenarios.

There is going to be other OEM customers who really don't have that capability -- aren't interested in investing in it and we'll do more of a full stack solution and from our perspective, what's important is really to serve both so that we have that revenue opportunity, and make sure that we're the driver of change versus reacting to the change. So, that's why we made the comments in our prepared remarks about continuing to invest during 2020 which was a challenging year, we'll continue to invest during 2021 and beyond on all of the solutions that we're developing -- the platforming of our various technologies and cannibalizing some of our traditional product lines and replacing them with higher tech solutions that take out mass, that take out weight that provide OEM customers with more flexibility and really enables the technology that's going into the car. So it's a long-winded answer, but I hope I've addressed it.

Joseph Spak -- RBC Capital Markets -- Analyst

I know. Appreciate the color. Thank you.

Operator

We'll now move on to our next question over the phone, which comes from Chris McNally from Evercore. Please go ahead.

Kevin P. Clark -- President and Chief Executive Officer

Hey Chris.

Chris McNally -- Evercore -- Analyst

Hey, thanks so much team. So, one long-term question and one Active Safety question. So, if we take the top end of your margin guidance at 10.7% we actually look at some of the analytics, you spoke about roughly $180 million expected in 2021, and we add that back, we get almost 12% bar that we've been talking about for some time, looking out and that's still a couple of billion before back to that $90 million pre-COVID production. I think that's pretty exciting to think about the underlying progress here on margin as we've been waiting for ASUE to come up for some years. Could you talk about sort of the margin progression and when you may actually formalize some of the old margin target and get new ones because it looks like you're about to go into a strong period where you hit those margin targets we've been speaking about for some years?

Kevin P. Clark -- President and Chief Executive Officer

Joe, do you want to handle this one?

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Sure. Chris, listen I think you framed it correctly, you're thinking about it. We've obviously spent a lot of effort over the last couple of years on the cost structure of the business, taking out overhead and I know as we talked about last year, we didn't have any sort of big moment where we said aha because of COVID we can change things. We felt that the business had been structured pretty well and would continue to take advantage from a margin perspective, as those product lines grew -- grew into their own and started to add start increased volume.

And I think you're right, if you take out what are a fair amount of investment around COVID and now these supply chain costs and assume eventually we work out of those over the coming couple of years, and we continue to see the strong accretive product line growth and things like Active Safety, high voltage and engineered components I think we're on that trajectory. As far as a longer-term update that will come as we -- as we -- at our next Capital Markets Day, which we plan on for 2022. But I do think your trajectory and the way you're thinking about it is correct.

Chris McNally -- Evercore -- Analyst

Great. And then I guess, the related question is in Active Safety right, $4 billion of orders sort of on average now, you had a strong year even despite COVID, we're seeing a lot more emphasis on Level 2+ where you have a sort of a higher market share, so a lot of momentum there clearly. Like, 18 months ago you mentioned that you need to have a step-up spend to keep up with the order pace and the bid pace. Could you just give us an update or do we -- will we maybe need to see a second step up if we start to hit $4 billion and $5 billion then in orders or can we start to see some of the scalability, because again, that's really important for driving ASUE margins.

Kevin P. Clark -- President and Chief Executive Officer

Yeah, maybe I'll start. Our real focus Chris, as it relates to our next generation ADAS solution is leveraging the software that's been developed to-date, driving reuse of that software and really driving platforms within the ADAS business and that's really across the various ASUX product lines, right on the journey to ultimately an SVA solution, so it's really about how do we -- how do we drive more leverage -- listen, I don't think we foresee any real incremental step up, like we talked about previously that $90 million which was really about how do we drive additional pursuit opportunities, how do we better position ourselves as it relates to SVA both from a hardware and software standpoint, and now it's taking advantage of that investment opportunity to drive more scale and widening our competitive moat.

Now, there may be within quarters periods where we decide we're going to invest a bit more, given the competitive dynamic or to drive technology advancement. But by and large, given we've introduced Gen 1, we're rolling out or launching on several vehicle programs now as we speak and we're heading into Gen 2, you should start to see a fair amount of scale come through.

Chris McNally -- Evercore -- Analyst

Okay, great, thank you.

Operator

We'll now move to our next question, which comes from Mark Delaney from Goldman Sachs. Please go ahead, your line is open.

Mark Delaney -- Goldman Sachs -- Analyst

Yeah, good morning. Thanks very much for taking the questions. I was hoping to start on the Advanced Safety business and what the company is seeing around Level 2, Level 2+ and Level 3 -- you're guiding for some really nice growth over market in that segment this year, but if we start thinking out to the 2022, 2023 type of time frame there has been an increased number of announcements of deployment of those sorts of ADAS capabilities. So, if you could talk a little bit more on what Aptiv is seeing out over the intermediate term for Advanced Safety and what opportunities there could be to maybe sustain this kind of nice growth over market that you're seeing in advanced safety?

Kevin P. Clark -- President and Chief Executive Officer

Yeah, I'll start with the qualitative and then Joe can walk you through all the growth rates. I mean, our booking activity has remained strong. It was very strong last year in what was a very choppy environment, given COVID, so bookings were close to $4 billion. Advanced Safety for our OEM customers is a solution that sells. So, the focus on driving Advanced Safety solutions from our customers is significant; solutions that reduce the on costs, but provide the sort of performance the consumers are looking for is in significant demand, so it will continue to be a huge growth opportunity for us for the foreseeable future. Joe, you should walk through all the numbers.

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Mark, it's very consistent with what we've talking about. This is a strong double-digit grower. We expect to be a little shy of $2 billion by the end of 2021 in Active Safety revenue, but continue to see that business growing at or above 20% from a CAGR perspective over the next 3 years, and when you get to that 2022, 2023 timeframe we expect to be the largest, from an industry perspective will have active safety content over 20 OEs -- different platforms on 20 OEs, so that strong sort of 20% plus CAGR. We've talked about -- continues to be in place, we obviously feel very good about it. There is a little bit of larger numbers obviously with the growth rate as the business continues to grow, but a very strong compounded growth rate over the next number of years.

Mark Delaney -- Goldman Sachs -- Analyst

That's helpful, thanks. And then my question was on Motional and how to think about this level of equity losses around $240 million for 2021. I mean, should we think about that as a run rate or maybe even increasing in terms of the degree of losses, as you are trying to bring your technology to market and then what -- as these program start to ramp in the 2021 to 2023 timeframe as you articulated in your prepared remarks. I mean, is that going to be enough to get these losses to start to decline or is that really for further out in time before we should think about equity losses and mitigating promotional? Thanks.

Kevin P. Clark -- President and Chief Executive Officer

The real focus now and Joe can walk through the numbers, the real focus now is advancing and accelerating technology adoption, right so that's where our real focus is. We've completed the Gen 1 platform, you'll see that on the roads; Gen 2 for 2022 for-sale to customers in 2022 on the road with Lyft in 2023, so that's where our real focus is. Now, we have more than enough capital to meet our timetable and meet the tech roadmap that the team has mapped out to the extent we need capital -- we view that as something to the extent we need capital, and it reflects the value of the business that's something with our partner will entertain Joe, do you want to add to my answer? Just real quick -- about half of the increase from prior expectations is just the finalization of the purchase accounting, so that's effectively non-cash, obviously coming through the P&L. So, the remaining half is the step-up in investment and to Kevin's point, we'll see that increase over the next couple of years, but it's still well within the plan and the original funding when we formed the JV back at the beginning of last year, so we had 4 years or 5 years of funding in the JV, and that continues to be the case.

Operator

We'll now move on to our next question over the phone, which comes from Emmanuel Rosner from Deutsche Bank. Please go ahead, your line is open.

Emmanuel Rosner -- Deutsche Bank -- Analyst

Hi, good morning everybody.

Kevin P. Clark -- President and Chief Executive Officer

Good morning Emmanuel.

Emmanuel Rosner -- Deutsche Bank -- Analyst

Wanted to ask you about high-voltage electrification bookings; we are seeing obviously announcements from automakers that seem to signal massive acceleration toward electrification some pretty bullish volume targets by 2025, some 100% EV by 2035 from GM. I was curious, should we expect to see inflections higher and do you read [Indecipherable] turning around to be in a year in electrification. And then related to that, I think last quarter you were talking about this fairly high win rate that you have in high-voltage bookings 70% or so, just wanted to see if there is something that you have seen or expect to see continue?

Kevin P. Clark -- President and Chief Executive Officer

Yeah, Emmanuel it's Kevin. So yeah. So, from a win rate standpoint, our win rate continues to be north of 70%. I would say, we have -- to reiterate we've talked about previously, a very focused strategy as it relates to high voltage electrification. So, we're very focused on a select group of OEMs who have a strategy that brings high voltage electrification across multiple platforms, so we get the benefit of -- we get the benefit, they get the benefit of significant volume. A year or two ago, we were basically evaluating 15 programs on an annual basis; this year we'll be evaluating north of 40 programs.

So, bookings activity and dollar value of bookings will certainly kick up in 2021 and beyond. It's important to note, the reason we're so successful is we are the only competitor -- only player out there that has the ability to bring the vehicle architecture, the connector component, the cable management component, the Electrical Center component and the wire harness component together and provide a fully optimized solution to an OEM that takes out mass, it takes out weight. I mean, a significant amount of mass reduction -- Adam asked that question earlier with respect to flexible printed circuit board technology but reducing mass by close to 40% which takes out cost and gives the OEM space. And the value of what we deliver, the packaging and that full systems that has translated into significant win rates and a huge opportunity for Aptiv. Joe can walk through the numbers, but high-voltage electrification will be our fastest growing product line for several years to come.

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Yeah Emmanuel, we're expecting just based on the bookings and increased activity to your point, we had talked about that business growing at 40% through 2020. We expect it now to be growing over 50% in 2021 and that's obviously on a larger number. We'll certainly be above $1 billion of revenue in 2022. Our original target was to sort of get to or get close to $1 billion in 2022, so we'll now be above that and continue to have sort of that same profit profile -- continues to trend above segment margins and is accretive to the SPS segment. So I would say both within the bookings and the revenue trajectory, the trends you're talking about from an OE perspective about greater levels of electrification, we're seeing in the numbers as well.

Emmanuel Rosner -- Deutsche Bank -- Analyst

Okay, great. And then just one point of clarification on your overall outlook for growth over market this year of 6 points, I think back in the third quarter when you were sort of giving sort of an initial view into 2021, I think you were thinking 6 points to 8 points or so. Can you maybe just give us a final point around what has changed. Is it just the uncertainty of the environment and to what extent it would impact the growth over market versus the LTV?

Kevin P. Clark -- President and Chief Executive Officer

Joe, do you want to?

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Yes Kevin, we remain very confident Emmanuel on this in the long term, 6% to 8% growth over market framework. I don't think anything has sort of strategically changed there at all. We are at the lower end as you can imagine, the chip constraints obviously affect the tech-enabled products. So, we are at the lower end of the range, as we go into the year but long term, we still have a high degree of confidence in that -- in that 6% to 8% and as we've talked about a lot that number doesn't shoot straight perfectly straight every quarter, but very confident within that range and I wouldn't say anything material has changed from that perspective.

Emmanuel Rosner -- Deutsche Bank -- Analyst

Okay. Thank you.

Operator

We'll now move to our next question over the phone, which comes from Dan Levy from Credit Suisse. Please go ahead.

Kevin P. Clark -- President and Chief Executive Officer

Hey Dan.

Dan Levy -- Credit Suisse -- Analyst

Hey good morning guys. Thank you. A couple of questions, one on outgrowth and then another on promotional. First on outgrowth and I know you'll mention this in your Investor Day probably next year, but we did see your bookings accelerate in the fourth quarter. Presumably there is more opportunity into 2021 and you get some of this post COVID cash funded and we haven't really been seeing anything related SVA, but I know at the same time it's harder to maintain growth as products mature. So, maybe you can give us a sense of what the bookings say about your ability to meet that 6 points to 8 points of outgrowth beyond the 2020 timeframe that you've talked about. So, how do you think about the bookings in 6 points to 8 points beyond that 2022 timeframe?

Kevin P. Clark -- President and Chief Executive Officer

Yeah, I think, Joe, I'll start. As Joe said last year, and then the first part of this year given the semiconductor challenges or supply shortages creates a bit of a choppy environment and limits the amount of near-term visibility. However, everything that we see going through COVID in dealing with these challenges really underscores our view that you're going to see an acceleration of technology adoption, right, whether that's high-voltage electrification, whether that's ADAS solutions or connectivity that consumers want all those -- want those products, they want more of them, so it gives us a high level of confidence beyond 2022 in the 6 to 8 points of growth over market and that's what's reflected in our bookings, and quite frankly that's what's reflected in our long-term outlook from a revenue standpoint. So, management team is very confident in that level of outgrowth. Joe?

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Yeah, I'd agree completely with that and Dan, as you know, we watch the sort of the longer-term CAGR bookings growth carefully over time because that ultimately has what helped drive the outgrowth, and when you look at the key growth areas around Active Safety, high-voltage, engineered components, the connectors [Indecipherable] business. Those bookings have remained at exactly at or above where we need to be at that 6% to 8%, so we've got again a very high level of confidence in that outgrowth range.

Dan Levy -- Credit Suisse -- Analyst

Thank you. And then the SVA piece when would we see that showing up in bookings?

Kevin P. Clark -- President and Chief Executive Officer

Remember Dan SVA is an evolving solution, right, so it's effectively and we've talked about it previously -- it started with the consolidation of compute, with domain controllers, integrated cockpit controllers items like that it's now evolving or continuing to evolve to zone controllers. We've already booked a program with a major global European based global OEM. We have a number of potential program wins in front of us during 2021, so more to come on that. The program that we were awarded previously will launch on a vehicle in 2022 and then there is a lot of activity that our SVA team has focused on our PDC solution where we separate hardware from software. So, I think over the next 12 months to 24 months, you should get more visibility to the commercial wins, the commercial opportunities and the progression of revenue.

Dan Levy -- Credit Suisse -- Analyst

Great. And then. Thank you. And then maybe a follow-up just on Motional, maybe you could walk us through the key steps or milestones ahead between now and 2023 that we should watch out for [Indecipherable]. And then just broadly on commercialization, I believe that the goal in the past is to really be a systems provider to others rather than -- as we want to operate their own fleet rather than you running the fleet. So, maybe you can just give us a sense of where the business focus is now because it seems like you have some in the Lyft network, but it seems like you are now running their fleets.

Kevin P. Clark -- President and Chief Executive Officer

Yeah, the overall strategy hasn't changed. So, it's really about providing the full systems and software stack for OEMs or fleet providers to put in place on their vehicles. So, that strategy has not changed. To the extent that we are partnering and operating rideshare networks, we get the benefit of validating the technology in real world situations, in understanding -- better understanding, ultimately the customers who operate those networks or are ridesharing providers. So, we have a great partnership with Lyft, there is a lot of sharing of information as it relates to technology, as it relates to consumer experience, as it relates to fleet management solution.

So, it allows them to be better and us to be better and we'll continue to do that. So, it's almost -- it's validation of the underlying technology. The key milestones over the next couple of years are the Gen 1 out on the road doing real-world testing, which you'll see which will happen very, very shortly. Gen 2 out on the road or available for customers in 2022, so we're a little over a year away on that. The team is making significant progress on that vehicle. It's a HMG battery electric vehicle platform and then during calendar 2021, more commercial announcements related to partnership, whether it'd be the purchase of the underlying technology or plugging that technology into other networks. So there is... I'm sorry, go ahead.

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

I was just going to say we've announced one, Kevin, to your comments on the prepared remarks, we expect VIA to be launching this year as well and it's to be determined.

Operator

Due to time ladies and gentlemen, we don't have time for any further questions, I'll now hand the call back over to Mr. Kevin Clark for closing comments.

Kevin P. Clark -- President and Chief Executive Officer

Okay, well thank you everyone. We appreciate you joining our call. We appreciate your support of Aptiv. Have a good day and a good rest of the week. Stay safe.

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Thank you.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Elena Rosman -- Vice President of Investor Relations

Kevin P. Clark -- President and Chief Executive Officer

Joseph R. Massaro -- Chief Financial Officer and Senior Vice President, Business Operations

Adam Jonas -- Morgan Stanley -- Analyst

Joseph Spak -- RBC Capital Markets -- Analyst

Chris McNally -- Evercore -- Analyst

Mark Delaney -- Goldman Sachs -- Analyst

Emmanuel Rosner -- Deutsche Bank -- Analyst

Dan Levy -- Credit Suisse -- Analyst

More APTV analysis

All earnings call transcripts

AlphaStreet Logo

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Aptiv PLC Stock Quote
Aptiv PLC
APTV
$95.12 (-3.07%) $-3.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.