Company: APTV
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001521332-25-000027
Chunk: 114

Company: Aptiv PLC
Filing Date: 2025-05-01
Form: 10-Q
Item: Item 2
Chunk 114
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 net sales reflect unfavorable foreign currency impacts, primarily related to the Euro, South Korean Won and Chinese Yuan Renminbi .

Cost of Sales

Cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, fluctuations in foreign currency exchange rates, product engineering, design and development expenses, depreciation, warranty costs and other operating expenses. Gross margin is revenue less cost of sales and gross margin percentage is gross margin as a percentage of net sales.

Cost of sales decreased $118 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, as summarized below. The Company’s material cost of sales was approximately 50% of net sales for both the three months ended March 31, 2025 and 2024.

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 Three Months Ended March 31,Variance Due To: 20252024Favorable/(unfavorable)Volume (a)FXOperational performanceOtherTotal (dollars in millions)(in millions)Cost of sales$3,905 $4,023 $118 $33 $44 $112 $(71)$118 Gross margin$920 $878 $42 $(9)$(20)$112 $(41)$42 Percentage of net sales19.1 %17.9 %

(a)Presented net of contractual price reductions for gross margin variance.

The decrease in cost of sales reflects impacts of improved operational performance, currency exchange and decreased volumes. Cost of sales was also impacted by the following items in Other above:

•$30 million of increased commodity pass-through costs;

•Approximately $20 million of increased depreciation, primarily as a result of a higher fixed asset base, which includes long-lived asset impairment charges of $5 million; and

•$15 million of increased warranty costs.

Selling, General and Administrative Expense

Three Months Ended March 31,20252024Favorable/(unfavorable)(dollars in millions)Selling, general and administrative expense$384 $366 $(18)Percentage of net sales8.0 %7.5 %

Selling, general and administrative expense (“SG&A”) primarily includes administrative expenses, information technology costs, incentive compensation related costs, acquisition and project portfolio costs and selling and marketing expenses. SG&A increased as a percentage of net sales for the three months ended March 31, 2025 compared to 2024, which includes $19 million of separation costs.

Amort