0001521332-25-000051
SEC filingTotal net sales increased 7% in Q3 2025, driven by volume growth in North America and Asia Pacific; operational improvements boosted gross margin despite a goodwill impairment charge.
For the three months ended September 30, 2025, Aptiv reported total net sales of $5.2 billion, a 7% increase over the prior year period. Volume growth of 6% (+$285 million) was the primary driver, reflecting robust demand in North America and Asia Pacific, partially offset by declines in Europe. Favorable foreign currency impacts, mainly the euro, added $63 million, and commodity pass-through contributed $10 million. Gross margin improved by 90 basis points to 19.5%, driven by $43 million in improved operational performance and $108 million in favorable net volume and price, partially offset by $29 million in unfavorable foreign exchange and $17 million in other costs.
Operating income swung to a loss of $175 million from a profit of $503 million in the prior year, largely due to a non-cash goodwill impairment charge of $648 million related to the Wind River reporting unit. Excluding this charge, operating income would have been approximately $473 million. Selling, general and administrative expense increased $102 million to $433 million, driven by $53 million in separation costs related to the pending Electrical Distribution Systems spin-off and the absence of a $25 million credit loss recovery recognized in the prior year.
Net income attributable to Aptiv was a loss of $355 million, compared to income of $363 million in the prior year. The effective tax rate was negatively impacted by a change in valuation allowance on the Swiss tax incentive and the non-deductibility of the goodwill impairment.
Electrical Distribution Systems delivered strong performance, with revenue up 12.3% and adjusted operating income increasing by $67 million to $192 million. Volume growth ($214 million) and operational improvements ($22 million) were key drivers, offset by $16 million in other headwinds.
Engineered Components Group revenue grew 8.3%, with adjusted operating income rising $26 million to $298 million. Volume ($25 million) and operational performance ($28 million) were positive, while other items ($27 million) were a headwind.
Advanced Safety and User Experience revenue increased modestly (1.1%), but adjusted operating income fell $32 million to $164 million. Volume contributed $22 million, but operational performance ($7 million) and other items ($47 million), including unfavorable FX and increased costs, weighed on results.
Management confirmed its intention to complete the separation of the Electrical Distribution Systems business as a tax-free spin-off by March 31, 2026. Additional restructuring charges are expected, with approximately $40 million of approved programs remaining as of September 30, 2025. The company continues to focus on maintaining a low fixed-cost structure, rotating manufacturing to best-cost locations, and investing in advanced technologies. No specific revenue or earnings guidance was provided in this section.
Operating cash flow (CFO) of $1.367B was slightly lower than the prior period's $1.386B, despite net income falling sharply from $1.535B to $34M. The divergence is largely due to a $648M goodwill impairment (non-cash) and a $353M deferred tax benefit, which depressed net income but did not affect cash. Excluding these, CFO remained robust.
Capex of $489M was down 26% year-over-year, reflecting disciplined spending. Free cash flow (CFO minus capex) was approximately $878M, providing ample coverage for the $96M in share repurchases and $6M in dividends to minority shareholders.
Working capital was a net use of cash: accounts receivable increased $452M, inventories rose $277M, and other assets grew $160M, partially offset by a $308M increase in accounts payable. These swings likely reflect higher sales volumes and supply chain dynamics. Overall, cash generation remains solid despite the impairment charge.