Good day. My name is Mary 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.

Thank you, Mary. Good morning and thank you to everyone for joining Aptiv's first 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 our Q1 financials are included in the back of today's presentation and the earnings press release. Turning to the next slide. 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 impact on the global economy. Joining us today will be Kevin Clark, Aptiv's President and CEO; and Joe Massaro, CFO and Senior Vice President. Kevin will provide a strategic update on the business and then Joe will cover the financials in more detail. With that, I'd like to turn the call over to Kevin Clark.

Thank you, Elena. Good morning, everyone. Before I begin, I'd like to first express my hope that everyone listening is staying safe and healthy, along with their family, friends and colleagues amidst the current COVID-19 crisis. Top of mind these days is how our industry and Aptiv are positioned in this much more challenging environment, which Joe and I will attempt to address over the course of today's call. To kick things off, I'd like to start by thanking our 160,000 Aptiv team members globally for their dedication and efforts to ensure the health and safety of our employees and their continued flawless execution for our customers, all while executing additional initiatives to ensure the preservation of our financial strength. It's due to their collective efforts that we're so well positioned to weather this storm. Their unwavering support and commitment to do the right thing the right way have positioned Aptiv to be an even stronger company once this crisis is over. Turning to slide 4. The deliberate actions we've taken over the last few years to transform Aptiv into a global technology company have better positioned us to respond and adapt in this more fluid environment. These actions include optimizing our portfolio of market-relevant technologies to enable a safer, greener, more connected future mobility; exiting lower growth commodity product lines including thermal and mechatronics; and further increasing our focus on the brain and nervous system of the vehicle, continuing to improve our industry-leading cost structure generating roughly $350 million in overhead savings over the last five years, and reinvesting those savings to further strengthen our capabilities in high-growth areas, including active safety, high-voltage electrification, and vehicle connectivity. We deliberately improved our revenue diversification across regions, across our customers, vehicle platforms, and end markets. As we've executed our strategic initiatives,…

Thanks, Kevin. And good morning, everyone. Starting with a recap of the first quarter financials on slide 11. As Kevin highlighted earlier, it was a very difficult start to the year. We began to see the impact of the COVID-19 outbreak at the time government restrictions were imposed across China in late January, lasting into March, at which time the customer shutdowns began across Europe and the Americas. Despite the volatility in the quarter, we had strong execution across our businesses. Revenues of $3.2 billion were down 7%, totaling 13% growth over market, as vehicle production declined 20%. Adjusted EBITDA and operating income were $411 million and $231 million respectively, with adjusted earnings per share of $0.68, which excludes the $1.4 billion gain associated with the closing of the autonomous driving joint venture with Hyundai. Lastly, operating cash flow was $161 million, including a net positive contribution from working capital and lower CapEx in the quarter. Looking at the first quarter revenues in more detail on slide 12. Content gains globally were more than offset by volume declines, largely associated with the adverse impact of the pandemic, price downs of approximately 1% and the unfavorable impact of FX and commodities. Excluding acquisitions, organic growth was down 8%, reflecting 12% growth over market. From a regional perspective, North America revenues were down 8%, representing 3 points of growth over market. We continue to see strength in Europe outgrowth, with revenues up 2%, representing 22 points of growth over market, driven by the continued uptick of several active safety and high voltage electrification programs. And lastly, in China, revenues declined 31%, reflecting 17 points of growth over market. Turning to slide 13, first quarter earnings reflect the lower sales volumes we saw in the quarter, as well as the operational inefficiencies associated…

Thanks, Joe. Let me wrap up on slide 16 before opening up for Q&A. The first quarter of 2020 proved very challenging as the industry has met with unprecedented declines in vehicle production, namely in China. Now, with Europe and North America shutdowns continuing into May, we expect the second quarter to be even more difficult, as Joe just highlighted. Fortunately, we entered this crisis with a market-relevant product portfolio of flexible business model and a strong balance sheet. And as a result, we're in a strong position to weather this storm. The additional actions we're taking puts us on an even stronger footing when we exit this crisis. My confidence in Aptiv and our ability to deliver sustainable value creation is underpinned by the dedication and commitment of our people, our greatest asset. I'd like to restate how proud I am of our 160,000 employees who, through all of these challenges, have continued to think and act like owners, and operate as one team to deliver safely for our customers and our shareholders. Looking ahead, I'm confident we'll emerge from this crisis more unified in our mission, in a stronger competitive position, and financially more resilient. With that, let's open up the line for Q&A.

Thank you. [Operator Instructions]. And we can take our first question from Itay Michaeli of Citigroup. Please go ahead.

Great. Thank you. Good morning, everyone.

Good morning.

Joe, I was hoping you could speak a bit more about – thanks for the color on the EBITDA in Q2. I was hoping you could give us a few more parameters on the cash flow side, particularly around CapEx and working capital. And I’m thinking prospectively in the second half of the year, if you can maybe just talk about various breakeven levels maybe where you are in China right now as well as just components of the cash savings that you announced today that are incremental to Q1.

Yeah. I won't be giving a lot of specifics, Itay, just given the lack of visibility. As I said in my prepared remarks, we're comfortable – we've looked at a number of scenarios and are comfortable certainly from a liquidity perspective. We're well positioned into 2021. As it relates to Q2, I think you could think of the sort of – we'll be negative cash flow. It's certainly within the EBITDA range that I talked about. And then what I'd call almost maybe a like amount as it relates to investment in working capital. We had a very favorable working capital quarter in Q1. As the plants came down, we started shutting things off fairly quickly. The team did a good job on that. I would expect that to ramp up and be a net investment in Q2.

Great. That's helpful, Joe. And then, maybe going back to bookings – maybe for Kevin – could you talk about how much of Q1 was tied to timing? Where you're seeing your win rates? And are you seeing potential market share gain opportunities across the supply chain? If you can comment there, that would be helpful.

Yes. Listen, I think Q1 bookings, just given the amount of uncertainty and the amount of activity from an OEM standpoint, quite frankly, the number of people who were working from home or were on TLO or furlough across our customer base and the supply base, I think Q1 isn't really a normal quarter. We'll see how Q2 and the balance of the year plays out. As it relates to opportunity to pick up market share, our view is – and we'll look at timing – that's our rationale for continuing to invest in some of the advanced technologies that we talked about, whether it's active safety, smart vehicle architecture, so on and so forth. So, we believe there could be an opportunity there. But near-term, just given the lack of visibility and what the industry is going through, it's hard to be precise.

And we can now take our next question from Joseph Spak, RBC Capital Markets. Please go ahead.

Thank you. Good morning. Joe, I was wondering if you could give us an update on your Mexico operations, some of the shelter-in-place policies there and how you're dealing with that as sort of North America production starts to -- looks to restart and how it will impact your operations in the second quarter?

Yeah, maybe I'll start Joe, and you can comment. So, we have close to 30 manufacturing facilities in Mexico. For all intents and purposes, since mid-March, they've been shut down. There have been a few facilities that have been operating to provide product to essential businesses or businesses deemed essential by the Mexican government. We now have employees in all those facilities prepping for relaunch of production for our North American or US customers. So, all of those locations have people in place implementing the safe restart protocols as well as ensuring we're ready to start production once vehicle production schedules start to increase. There are a few of those facilities that are running at, I would say, very, very low capacity levels that again have been providing product to essential businesses and are starting to provide product to some of the OEMs in North America, Joe.

The second question I guess, Kevin, one of the things we've heard from some other companies is that there may have been some element of a little bit of a prebuy or inventory build towards the end of the first quarter as US kept shipping product, but maybe the production didn't occur. Did you see any evidence of that in your business?

Well, Joe, it's Joe. We didn't. We worked very hard to be aligned with our customers. When they started winding down production or shutdown, we got out quick, didn't want to be running facilities that, obviously, had no place to ship to. So, we did not see that to be honest with you. Have heard that as others reported, but we did not experience that in any meaningful way in the business.

Okay, thank you.

And we can now take our next question from Armintas Sinkevicius of Morgan Stanley. Please go ahead.

Great. Good morning. Thank you for taking the question. I wanted to drill in a little bit into the 13% growth over market at Signal and Power. When we look at the CV and industrial end market, that's sort of in line with last quarter. The high voltage performed better, but it really looks like a lot of the benefits came from engineered components and electrical distribution systems. Maybe you could talk about what drove some of that strength during the quarter.

It's a good question. Obviously, within that engineered component, we have HellermannTyton, which is about 50% auto. So, you've got their industrial business as well as Winchester and the mil/aero that effectively stayed operating throughout the balance of the quarter. And actually, in some cases, actually saw some uptick in revenue around certain industries. So, that helped drive the – that really helped drive the outgrowth in Signal and Power at this point. Again, I think on top of what are the normal trends that Kevin referenced of, increased high voltage and just overall that business has continued to see strong content growth just given its size and scale.

Got it. And then, around your comments for China, the weekly data seemed to suggest that sales in April were down about 4% year over year. So, the recovery appears to be pretty decent on the demand side. What are you seeing that's perhaps different?

Yeah. Maybe we're looking at different data. Our data for the end of April is retail sales down 18%. Listen, the market in China is improving. We would agree that. We're seeing that. However, from our perspective, consumer demand, and certainly, vehicle production isn't at levels that it was at last year. So, from a year-over-year standpoint, vehicle production continues to be down. So, it's something we monitor closely. It's something that we hope we see continued strengthening. We've not seen any sort of significant government incentive plans put in place to really drive incremental demand. But it's something that we'll watch very, very closely.

Great. Thank you for taking the questions.

And we can now take our next question from Brian Johnson of Barclays. Please go ahead.

Yeah, two questions. Just a quick housekeeping and then kind of more out midterm outlook. Decremental margins are obviously higher in ASUX and SPS. You mentioned engineering spend. Any way to think about decremental margins going into 2Q?

We've talked really since the beginning of all of this. We're running a little higher than our normal, which would – that sort of 25% to 30%, 35% range is a little bit over 40%. So, I'd continue to use that sort of 40% plus as I thought about q2, partly – and it's per my prepared comments. The balance at the moment is – you send people out on TLO or furlough. There's still some cost associated with those employees as we wait to gauge the timing of the restart and the level of the restarts. In order to carry that workforce is really why we ran very hard at the other austerity measures. But that does wind up in a higher decremental in the short term.

Okay. Second question is what you're thinking about launch activity as we go into second half and even 2021? I don't know if you've had good conversations with your OEMs or they're just scrambling to restart and they are not ready for this conversation yet. But we have heard some talk of – at least some of the 2021 new launches being pushed out – some of the 2020 launches having multiple week delays. And just wondering how you think about, A, that risk and, B, what it would do to your growth over market in each division.

Yeah. It's a good question. I'd say that the dialogue with customers has been extensive. I think, quite frankly, from an industry standpoint, both from a customer on down to supply base, there's been a lot of communication over communication. We've seen some shifting of launch timing based on some of the government requirements with respect to stay in place and other issues, whether it's in the US, Europe or China. So, some shifting. Nothing major. Some programs will shift out of 2020 into 2021, but that'll be based off of when they were originally scheduled to be launched in 2020. Have not seen any real cancellation of programs at this point in time. Have seen shifting schedules. So, I would say, from a schedule standpoint, it has been very fluid. I think there was a desire for OEMs in Europe and in the US to be launching late-April or earlier in May and we've seen those schedules shift out. But the supply chain is adjusting to it. And again, nothing major. From an overall launch activity, back half, we have even adjusted for the shifting schedules a significant amount of activity. It's especially true in the ASUX business. I think critical launch activity is up over 50% back half of this year versus the same period last year. A number of those programs relate to the advanced ADAS programs that we just launched in China. So, they're programs that we're watching very, very closely and making sure we're in a position to execute flawlessly. I think that's one of the reasons when you talk about decrementals in ASUX, you're seeing the decremental levels of the investment in the technology, but also making sure we're positioned to launch well. But again, a lot of activity, a lot of shifting, nothing major, Brian, at this point in time and no cancellation of programs.

Okay, thanks. Okay.

And we can now take our next question from Emmanuel Rosner of Deutsche Bank. Please go ahead.

Hi. Good morning, everybody.

Good morning.

In your prepared remarks about AS and UX, I think you indicated you'll continue to evaluate, I think, engineering spending for potential launch delays and other activities. I know you just addressed the ADAS delays. Can you just elaborate a little bit more about how you're thinking about this spending and what sort of like bogeys would you be looking for to decide whether to dial this back or sort of like maintaining at the current levels? Obviously, this is a big factor in the magnitude of the decremental margins.

Yeah. Emmanuel, it's a very fluid situation. So, again, very limited visibility. We think there are a number of areas that we have a competitive advantage. We think it's important that we can continue to invest in those areas. We have a number of those programs that we're launching over the next few quarters. So, executing those launches flawlessly is absolutely critical. We'll continue to evaluate the market and see what sort of or if there is any sort of rebound and what the back half of this year looks like and what 2021 looks like. And to the extent we need to calibrate or adjust, we will calibrate or adjust. I will tell you, dialogues with several customers where we're either on some of these advanced programs or we're doing advanced development programs in areas like smart vehicle architecture, active safety, a real push from those OEM customers to continue to invest because they're looking for opportunities down the line to reduce manufacturing cost right to enable more technology in the car more cost effectively, among other things. So, certainly, a push from the customer base to continue to invest. But that's something that we'll – again, we'll continue to look at based on our outlook for vehicle production.

That's helpful. And then, still on the topic, so looking at your megatrends. I was curious if you could share some of your longer-term thoughts on the potential for some of these trends to maybe slow down a bit. So, as I'm looking at your slide 9, you have active safety user experience, high voltage, automated driving. I'm particularly curious about high power voltage in regions where it's not mandated, like, let's say, the US, for example, and if there are any potential risk for some of these product rollout. And then, automated driving, sort of not just globally.

Yeah, listen. Our view on the megatrends is they remain intact, that there remains a push and a demand for safer vehicles, for greener vehicles and there may be interruptions for a quarter or two, given macro situations. But there is still going to be demand from a customer standpoint, both end customer as well as OEM. As it relates specific to Aptiv, when you look at bookings in areas like high voltage electrification, 80% of those bookings are with European and Chinese OEMs. So, there is not a significant portion of that business that is in North America. Our view has been that, although there'll be demand for electrified vehicles in North America, it was certainly going to lag Europe and China. As it relates to active safety solutions, active safety has the highest rebuy rate of any option that's out there. Consumers buy vehicles with safety systems. They have a 95% re-buy rate. And you'll continue to see that demand, to the extent you have players like ourselves that can provide a platform that can integrate a number of different features, we feel that's more cost effective and, ultimately, that positions us well for that increased demand. As it relates to autonomous driving, we'll see. Again, our view has always been, the autonomous driving roadmap has been about the broad spectrum of active safety. How do you make vehicles safer? How do you support the driver? And ultimately, how do you eliminate the driver? And our joint venture partner, Hyundai, and ourselves are both of the view that we believe you're going to see autonomous vehicles, you're going to see them in consumer vehicles and mobility on demand that may be pushed out a year or two, we'll see how that plays out. But there are all sorts of other applications where autonomy can be applied, whether it's delivery vehicles, whether it's warehouse vehicles, you can go through laundry list. So, developing the technology remains as important as ever. We're positioned to basically commercially exploit the technology that's developed there and incorporate it into our active safety solutions, which we think is important. And we're using, quite frankly, the slowdown, some of the macroeconomic challenges as an opportunity to go out and hire resources from some of the companies that are out there that maybe aren't in the same financial position that our joint venture is in.

I really appreciate your thoughts.

And we'll now take our next question from John Murphy with Bank of America. Please go ahead.

Hi. Good morning, guys. It's great to hear from you. Kevin, maybe just a follow-up on what you were getting at in the answer to that last question. Obviously, there's been some concern that – particularly on the autonomous side, there's a little bit of overlap between what you're working on and what the automakers are working on. And that, for that reason, might sort of limit the growth on the autonomous side in what you provide to certain automakers. However, given the current crisis, everybody is focusing more and more on what the core competency is and trying to save money. So, it almost seems like this crisis is going to open the door for you to have greater wins with your autonomous technology and your offering there. I'm just curious. I know it's early days. What is your current opinion on that? And as you're over communicating to your customers, is this something you can kind of pitch or we could finally get the economies of scale that you can deliver to them on this technology?

Yeah. Listen, John, I think our view on providing autonomous technology to OEMs, it remains. There's a group of OEMs that will continue to invest in the development of their own solution. And there will be others that buy some or all of it from third parties. And our view is that likely continues. If the economic challenges continue for a protracted period of time, probably those who were on the fence are more likely to buy it from someone else. So, that's something that we'll make sure the joint venture is positioned to do. But I would tell everybody, the big message from Joe and myself on this call is just lack of visibility. Short-term visibility right now is extremely limited. So, it's very, very difficult to draw any conclusions. And our real focus – and Joe and the team has done a great job on the cash conservation initiatives. Hey, cash is kind. And maintaining flexibility is critically important. And that's what we're really focused on doing. And at the same time, there are a couple of areas that are really, really important. One, we have to continue to serve our customers. We need to launch flawlessly. And then two, regardless of the slowdown, we have a strong view that the world is looking for safer, greener, more connected vehicles. And based on that – those are areas, as long as the macros allow us to and as we look at – here is where we can reduce costs to invest in those technologies, we will continue to invest in those technologies. To the extent the market gets to the point where it's a challenge for us to do that, then we'll revisit and we'll reprioritize.

Okay. That's helpful. And then, kind of second question, as you're winding up in China and restarting and getting ready for the restart in Europe, I'm just curious, just going through that process, if there's any opportunities or issues with some of your suppliers. We kind of always think about the potential for M&A and integration perhaps sort of in parallel or horizontal. But is there anything you see that might be opportunistic for vertical integration as far as M&A potentially making yourself sort of stronger and more valuable over time, more to the vertical side as opposed to horizontal?

Yeah. John, it's Joe. I think at the moment, the work has been – really since Q1 in China and now globally, it's the health check and the readiness on the supply base. It's constant communication with them. We've sent surveys out. We're looking at their preparedness. We've shared our safe restart with them to make sure that they can operate the way we expect them to, the way our customers expect them to. So, I would say it's been a very tactical focus. And I would expect that to continue through the second quarter as things start back up. Certainly, dislocation creates opportunities. That's something we'd start to look at, but down the road. But, right now, we're focused on making sure we're staying in touch with the supply base and that we're we're ready to go when things start back up.

Yeah. John, Joe and I were talking about it. Joe's comment, it's tough to get M&A done when there's limited to no visibility, right? So, the reality near term is that's a very low likelihood.

Okay, great. Thank you very much, guys.

Thanks, John.

And we can now take our next question from Ryan Brinkman of J.P. Morgan. Please go ahead.

Hi. Thanks for taking my question. I think Aptiv is a real source of strength in the auto industry. You guys are. It was on display in 1Q, et cetera. It's great. But thought to ask a little bit more around, rather the relative weakness of any of your customers or vendors or something you're presently focused on or your investors should be focused on. I think it was John Murphy just asked on the tier two. So, I guess, maybe still a little bit more on the customer front. Working capital tends to be a source of cash for you when production is declining. Some automakers, though, I have to imagine are probably struggling here with the amount of payables going out the door, particularly in early 2Q without any of the offsetting cash coming in. So, without needing any customers, of course, are there any that you're worried about, their ability to pay or are they maybe leaning into the supply base a little bit for extended terms? Is there room for tier ones to accommodate them? What are you seeing there?

Yeah. I would say, Ryan, by and large, the industry has acted pretty responsibly through this crisis. Based on dialogues we're having with OEMs, I think there's broadly an understanding that believing you can solve your problem by creating a problem for someone in the supply base is not a long-term sustainable solution. Having said that, all of us are focused on cash. We do get calls from customers about extending, which is perfectly appropriate in this sort of environment. We would expect that. That's not a situation or a path that we've decided to go down. When we look at our customer base, we think they're all in pretty strong financial position. I think the question comes down to how long does this last and how long do we go for a period with little to no production and then what does the rebound look like in the back half of this year and into next year. And I think relative to where the industry was in 2008/2009, it's in a much better position. And we'll monitor it closely. And then, lastly, I'd say one of the things that was in my prepared remarks, we've been very focused on the last five years in terms of diversification from a region standpoint, OEM standpoint and vehicle platform standpoint. So, making sure we're with the right customers in the right regions and on the right vehicle platforms, so our view is, that impact, to the extent you'd have one, would be much more muted than what it would have historically been.

Great, thanks. That's really helpful. And then, just lastly from me, I thought to ask about the sort of like rolling phased restart in different geographies, is that going to be problematic for the final assembly plans getting going? Early on in the call, I think somebody asked about Mexico where a lot of your facilities are in North America. But I think some of the state governors, regional cooperatives, maybe that's helpful along those lines, but are there any bottlenecks that you're looking at? And if the industry was willing to go forth and the final assembly plants, those were in jurisdictions allowed to operate, how quickly – what kind of lag factor are you looking at maybe?

So, we have 65,000 employees in Mexico. As an example, we have close to 30 manufacturing facilities, right, all of whom are dependent upon tier twos, tier threes. And as Joe mentioned, as a part of our crisis management team, we have a supply chain management team that's in daily contact with the entire supply base globally and in region and is doing health checks – financial health checks, operational health checks, safe start protocol health checks. And I'd say, we feel reasonably good about where the supply chain sits now. All of our facilities now have employees. All of our manufacturing facilities in Mexico, as an example, has employees in those facilities preparing for launch. I'd say we're a little bit in front of launch activity, to be very transparent. But just given some of the challenges in Mexico, we've elected to be in front of this. We've been in dialogue with the federal government there as well as the state governments to make sure that we can get people in, so that once our OEM customers flip the switch and begin vehicle production, we can do everything on our part to make sure that we satisfy their demands. Having said that, just given the complete shutdown of the industry for a period of time, we're sure they'll be some fits and starts, that there will be some problems. But the industry has done a relatively good job, given some of the global supply chain challenges we had in the past with tsunamis and earthquakes, things like that, are figuring out ways around it. The China shutdown, as an example, I'm not aware of a single OEM assembly plant shutdown that we were tied into directly or indirectly. So, it's something that the industry has done a pretty good job figuring out, with OEM customers adjusting what they produce and folks in the supply chain figuring out alternatives to products where there might be a shortage.

Okay. Very helpful. Thank you.

We can now take our next question from Mark Delaney of Goldman Sachs. Please go ahead.

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Yeah. I don't know if we have exact hours. I think first and foremost, it just starts with inefficiencies in the supply chain and part shortages and other items that create a certain amount of supply chain inefficiencies. The second piece is, in reality, we're operating differently, right? Today, 84% of our salaried workforce works from home. Although we've operated extremely well, surprisingly well, better than what Joe and I would have expected, there still is some inefficiency tied into that. Then when you overlay our protocols and the protocols of others where you think about daily temperature checks, health assessments, PPE, the social distancing, there is a certain amount of inefficiency that gets introduced into the production process and the supply chain, some of which – as we learn, as we're manufacturing at higher volumes, we'll get better at and we'll reduce, but some of which will remain in the supply chain. And this is an industry that's focused on saving nickels and dimes. To the extent every employee has a safety mask or a visor and you have six feet of distancing and you're having to juggle shifts at production facilities, there is a certain amount of negative productivity impact.

Yeah. I think, Mark, just to add. It's Joe. I want to add into just Kevin's lack of visibility comment, right? It's hard to quantify those things when you don't know exactly when folks are coming back to the plants, how many plants, how many employees, how fast is ramp. That's really what we're dealing with. As you think – you go down the P&L, you go down the various cost elements, it sort of starts with when and how fast you come back, and that's obviously going to take some time here during the course of, hopefully, just the second quarter to sort out for not only this quarter, but the balance of the year.

Thanks for those comments. For my second question, I realize this is not a near-term focus of the company, but can you help investors understand what financial metrics Aptiv will be looking to achieve before it's going to resume returning capital to shareholders? Thank you.

Yeah, listen. We're going to be in liquidity preservation mode here, and so we're very comfortable this pandemic is understood. You've got discussions of a potential second wave and such. So, I think you're well into the second half of 2021 before, best case, we'd be able to start to talk about that. We went out, I think, very prudently extended the credit facility because there was an opportunity to do that. It wasn't coming due until August of 2021. But, again, there was a window of opportunity there. We took advantage to bump up for a period of time the debt EBITDA calc to 4.5 times, not because we're necessarily worried about breaching. Again, that's the type of thing you do to maintain flexibility and optionality. As part of that, while we're under that covenant relief period, we will not be able to pay dividends through Q2 of 2021, dividends or buy back stock. But, again, didn't necessarily view us in a position, just given from a liquidity perspective, that we'd be in a position to do that. So, I think that's a longer-term look. I think, philosophically, around capital allocation, doing things like investing in the business organically and inorganically and, ultimately, returning cash to shareholders, philosophically, those views haven't changed. But for an extended period of time, we're going to be very much focused on liquidity first.

Thank you.

And we can now take our next question from David Kelley of Jefferies. Please go ahead.

Hi. Good morning. To follow-up on your discussion regarding visibility to ongoing advancement in advanced solutions investment at your level and by your customers, whether it be active safety or electrification. I guess how are you thinking about RD&E spend and why do those ongoing secular changes, but factoring in that weaker macro backdrop as well.

Yeah. Sorry, you broke up a little bit. Again, we view – not looking at the business quarter to quarter, which we do, but setting that aside, we still have a strong view, as do our customers, that consumers are looking for safer, greener, more connected vehicles. And on a couple of those trends, including safety and green, there's a government regulation overlay as well, that demand for those vehicles from our OEM customers will continue. We have specific data as it relates to consumer rebuy rates on ADAS active safety solutions as well as consumer preference or increasing preference for electric vehicles, especially in Europe and China that basically underscore our overall view that you're going to continue to see demand for that. Third, when you think about areas like ADAS, ADAS is a product that helps our OEM customers sell cars. And it's a product that allows them to sell vehicles at higher profit margins. And especially in times like these, our customers are going to be focused on selling the most profitable vehicles that they can sell, whether they are trucks, SUVs, so on and so forth, that have advanced ADAS systems on. Now, we'll continue to evaluate that. We'll continue to watch it. We'll continue to watch it closely. As I mentioned, flexibility is critically important. We've maintained a real flexible business model and flexible cost structure. And to the extent we see any change to that, we'll course correct.

Great, thank you. And apologize. Hopefully, you can hear me better now. I guess my follow-up, a longer-term question. You've been targeting 25% sales mix outside of light vehicle autos by 2025. Does that change given the current backdrop? And how are you thinking about greenfield opportunity and potential bolt-on acquisitions go forward, assuming the latter is on pause? Go ahead.

Yeah. Listen, Joe answered the question, right? Our philosophy from a capital allocation strategy hasn't changed. But right now, we're sitting in a period, again, where there is very, very limited visibility and flexibility is key. And flexibility is measured today by cash. And we're operating with the constraints of today. As things stabilize, we'll return to the historical strategy. But, right now, it's about maintaining flexibility and accumulating cash to make sure that we're in a position to do that. The reality is, near term, people don't transact when there's a lack of certainty. They don't sell and they don't buy. So, I think, in reality, it's a good theoretical question, but it's not a practical one. And once things settle, we'll continue the strategy of diversifying, being more balanced from a revenue standpoint. Is anyone there?

So, Kevin, I think this concludes the Q&A portion of today's call. I'll hand the call back over to you for your final comments.

Okay. Listen, thank you everyone for your time today. We hope you and your families are safe and healthy. Again, we're really focused on making sure that you understand the situation that we're operating in from a visibility standpoint and we're doing everything we can to ensure that we can operate. We keep a flexible business model and we can operate through this, and we're confident that we'll be able to do so. So, with that, thank you very much.

Thank you. That concludes Aptiv's first quarter 2020 earnings conference call.