# MESSAGE TO OUR STAKEHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NYSE_APTV_2019/NYSE_APTV_2019.mmd` · pages 2-8_

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MESSAGE TO OUR STAKEHOLDERS

At Aptiv, we envision a world with zero traffic fatalities, cleaner air and connected mobility, and our innovative technologies are helping to make this vision a reality. Our software, hardware and systems integration capabilities are making vehicles safer, greener and more connected. Today, we are delivering the future of mobility.

## RIGHT STRATEGY, RIGOROUSLY EXECUTED, RESULTING IN SUPERIOR VALUE CREATION

In 2019, we continued to build upon our position as the only full systems solution provider, leveraging our brain and nervous system capabilities to deliver the next-gen technologies our customers need. Thanks to the contributions of our 160,000 global associates, we made significant progress executing our strategy, including strengthening our through-cycle resiliency, ensuring we can outperform in any macro environment.

Despite declining industry volumes, we had our eighth straight year of record new business bookings, reaching $22.1 billion. Our revenues for the year totaled $14.4 billion, representing 4% growth, 9 points above underlying vehicle production, reflecting the strength of our product portfolio aligned to the safe, green and connected megatrends.

Over the past few years we have increased the engineering investments necessary to ensure that we have the software, vehicle architecture, and systems integration capabilities required to execute our strategy and help our customers solve their biggest challenges. To help fund the increased investment in the development of these advanced technologies, we continued to reduce our overhead costs.

Our track record of strong operating excellence underlies our superior market performance. Aptiv's 56% total shareholder return for 2019 outpaced our peers and the S&P 500 by 40% and 25%, respectively, over the same period. Our longer-term returns are equally compelling, with a 67% total shareholder return over the past five years, meaningfully outpacing both our peers and the S&P 500.

## PERFECTLY POSITIONED TO ADDRESS OUR CUSTOMERS' TOUGHEST CHALLENGES

Aptiv's unique position as the only provider of both the brain and the nervous system of the vehicle makes us the only technology company capable of conceiving, specifying and delivering the advanced architecture and software solutions that are enabling the future of mobility.

The pace of digitization in our industry is accelerating, and the demand for vehicles to be safer, greener and more connected entails new software-dependent features that in turn, require more advanced technologies, including sensing and compute platforms. In response, we have focused our portfolio on providing innovative end-to-end solutions, putting Aptiv at a meaningful competitive advantage as we deliver:

- Safer vehicles enabled by scalable advanced safety solutions: helping OEMs cost-effectively move to higher levels of active safety and ultimately automated driving;

• Lower  \( CO_{2} \)  emissions delivered through a portfolio of high-voltage electrification solutions: leveraging our design and manufacturing capabilities to help OEMs optimize vehicle architectures to minimize mass and weight, and reduce costs; and

• Improved in-cabin experiences provided through software-enabled functionality: empowering OEMs to introduce more advanced sensing and compute solutions to optimize the vehicle experience.

These advanced technologies position Aptiv to benefit from higher-value content growth opportunities, as well as create new business models for monetization. Given the speed and scale required to develop these differentiating platforms, we have selectively pursued strategic partnerships. In September, we announced our autonomous driving joint venture with Hyundai, a partnership that will advance the development and commercialization of the highest-performing and safest autonomous vehicles. Earlier this year, we invested in and established a commercial partnership with Affectiva, a global leader in human perception AI technology. Together, we are improving perception capabilities, enhancing road safety and redefining the user experience.

Additionally, as the demands for vehicle electrification and the complexity of tomorrow's highly automated vehicles exceed the capacity of today's architectures, Aptiv's Smart Vehicle Architecture \( ^{™} \)  will lower the total cost for our OEM customers while enabling a truly software-enabled, feature-rich, electrified vehicle. SVA \( ^{™} \) , with its Open Server Platform, uniquely delivers the flexibility, scalability and affordable redundancy required for the future applications that consumers will be demanding.

## DISCIPLINED CAPITAL ALLOCATION, INCLUDING INVESTMENTS FOR FUTURE GROWTH

Aptiv's increasingly sustainable business model enables us to convert a significant portion of income to cash. In 2019, we generated $1.6 billion in cash from operations, reflecting the conversion of 85% of Net Income into Free Cash Flow. During the year, we continued to streamline our operations with a focus on increasing efficiency and improving our cost structure, all while focusing our resources on the most attractive opportunities.

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Over the last five years, these efforts have generated $250 million of overhead cost reductions, the majority of which we reinvested in the next-generation advanced technologies that will continue to set Aptiv apart from our competitors and will continue to drive sustainable and profitable growth.

In addition to organic investments, Aptiv's capital deployment priorities include value-enhancing acquisitions and returning excess cash to shareholders. During 2019, we further diversified our revenue base and strengthened our engineered components product line with the acquisitions of Falmata and gabocom, while returning almost $650 million in cash to shareholders through share repurchases and dividends. We have long believed that share repurchases and dividends can be important elements of shareholder value creation, and have returned approximately $7 billion to our shareholders since our initial public offering in November 2011.

## A WINNING CULTURE THAT FOSTERS INNOVATION, COLLABORATION AND CONTINUOUS IMPROVEMENT

Our people play a critical role in executing our vision and strategy, and giving us our competitive edge in the market. Together we embrace Aptiv's mission to deliver safe, green and connected technologies that enable the future of mobility, and each of us comes to work knowing that we are helping to create a world with zero traffic fatalities, cleaner air and connected mobility.

We are focused on attracting and retaining top talent, including our 20,200 engineers and scientists, situated in talent hubs around the world. We focus on providing our employees with holistic incentives, including competitive compensation, personal development and exciting career opportunities. Our world-class human capital allows us to simultaneously transform our existing businesses and to build robust new businesses. In addition, our flat organizational structure results in clear accountability and enables the necessary flexibility to meet local requirements.

A common set of core values and behaviors guides all of our employees to operate as one team and to think and act like owners, allowing us to deliver on our strategy. I am very proud that Ethisphere Institute has now recognized Aptiv as one of the "World's Most Ethical Companies" for the eighth year in a row, reflecting our commitment to always do the right thing, the right way. We continuously invest in Aptiv's differentiating culture to ensure significant leadership commitment and employee engagement. We recognize that thriving in today's challenging environment requires a diverse team with the absolute best talent.

## ADVANCED SOLUTIONS DELIVERED
RESPONSIBLY

Aptiv is committed to delivering advanced technologies and superior shareholder returns in a responsible and sustainable way. The passion our employees share to make the world safer, greener and more connected doesn't stop when they go home at the end of the day. Aptiv actively encourages and supports our employees' efforts by sponsoring community activities during normal working hours and offering paid time off for volunteerism. In support of our mission, Aptiv has been a long-time supporter of STEM education around the world – providing team mentors to high school students, donating funds to support First Robotics teams and granting sponsorships to Greenlight for Girls, an international organization dedicated to inspiring girls of all ages and backgrounds to pursue STEM subjects. I am very proud that Aptiv received a rating of A (on a scale of AAA-CCC) in the 2019 MSCI ESG Ratings assessment.

## PREPARED FOR GLOBAL VOLATILITY

In 2019, we experienced periods of increased market volatility, foreign currency exchange rate fluctuations, and heightened global trade and tariff tensions. Aptiv's long-term strategy to manufacture and source in-region provides us the resiliency to respond effectively to changing market dynamics. While geopolitical uncertainty has increased, I am confident in our ability to adapt quickly to fluctuating market conditions, leveraging our flexible business model and optimized cost structure.

## ON TRACK TO ACHIEVE OUR 2025 VISION AND CREATE SUPERIOR, SUSTAINABLE VALUE FOR APTIV SHAREHOLDERS

We have a long track record of taking the steps necessary to deliver on our long-term vision and to create superior stakeholder value. With our ownership mindset and passion for results, you can expect more of the same sustainable outperformance in the years to come.

I would like to thank everyone on the Aptiv team whose contributions have allowed us to advance our mission to build a safer, greener and more connected world. I look forward to continuing our journey together, and I have never been more confident in our future.

Thank you for your continued trust and confidence in Aptiv. You have my promise that we will continue to strive to earn it every day.

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Kevin P. Clark
President and Chief Executive Officer