Q4 2019 Earnings Call

after this we

Main on the line for Q&A session and of course the slide and earnings release are available through a link on the homepage of our corporate website paged. So if we turn the page here, we took the Safe Harbor statement, which is an integrated part of this presentation, including the Q&A that follow it's here today.

During the presentation we would reference view with guests measures where reconciliation of the figures are disclosed in our quarterly press release and the 10K that will be filed with the SEC. This call is intended to conclude at 2 p.m. CT. So, please leave it yourself to the maximum of two questions. That way we can work everybody in town will now turn it over to our CEO John Carlson. So John, please take over. Thank you very much Thomas. I would also like to say welcome everyone to today's earnings, and then by turning the page, I would like to start out or presentation today to reinforce the Strategic direction of our company as we demonstrate at CES recently.

Our focus is on.

I keep dreaming and for as many like to reference L II plus Solutions or unique offering of the state-of-the-art sensors and software suite along with them censored compute capabilities provide both the system and sub-system solutions the market and our customers needs. We believe that or total addressable Market is not only the largest are also the fastest growing Market segment where we intend it to evolve as a profitable market leader with our scalable architecture of sensors software Mac compute.

If we demonstrated at CS or first L II plus system will be available in the market already during the first half of 2020 with more to come in the quarters Thursday after this is an important Milestone improved point for not only be you near but also for the security software suite before moving on to our business highlights. I would like to pause and extend my sincere. Thank you to the entire view near team for their great support dedication in 2019 with a Relentless focus on quality and at the same type driving strong operational improvements.

No.

Moving to the next page looking first to the underlying market conditions. We ended 2019 at the much lower light vehicle production levels than we expected at the beginning of Life here. This was waiting on our 2019 results looking ahead into 2020. We expect the rate of light vehicle production deterioration to slow down. However it before see a continued weakness in the production environment mostly in Europe and China particular in the first half of 2020 looking at our Market adjustment life. We've made very good progress during 2090 in order to UNI and balance sheet efficiency, and we intend it to carry this momentum into twenty-twenty.

We have now completed the divestiture of our vmbs joint venture which generated approximately $170 billion of net cash. And we continue to make progress with the Strategic review off or remaining brake systems business and seniority joint venture are already booked at the end of 2019 remained at around $19 billion, which 80% is related to our electronic segment. This is despite the downward adjustment in the light vehicle production assumptions of approximately 9% for the. 2020 through 2025 and or lower than expected order intake in 2019, and lastly as we enter 2020 or company faces an unprecedented period of upcoming new customer program and product launches with several important new technologies.

It is.

At least launch is all the long-awaited Catalyst purview near to return to organic sales growth during the second half of 2020 and ramp up and even accelerate into 20 21 22.

Now looking on the next page it's alluded to earlier. We remain in the middle of an industry downturn where it appears that the global light vehicle production has still not reached a flaw we see approximately fifty million fewer vehicles or close to 13% for the time. 2019 through 2022 since the State of the Union.

This is a another four million fewer Vehicles than we recorded last quarter. The entire Auto industry is affected by the Limited light vehicle production grow through 2023 and continues to have an impact on our business and target for you near 100 or expected organic growth kicks in later this year. We foresee a sales rep for our company or close to 19% cagar in 2022 from 2019.

this expect

Add organic sales growth is approximately 17 percentage points of growth above the light vehicle production Market.

And therefore the focus for a company is about successful launches rather than the level of light vehicle production decline while having affected cost control and cash flow management.

Now looking on to our customer development enacted safety on the next slide.

We made Solid progress in expanding or active safety product portfolio across our customer base during 2019. We are pleased to have added or 7th edition customers and motivation program with the major om including sense of future features from the security software suite in addition during the year. We became technically qualified with 3, New Vision customers.

Looking to raid or we have added new business Awards with two new customers and are now on the bad list with 20 customers in all other active safety technology should be expanded or presence as Illustrated here on this short.

The estimate in 2019 that approximately 40% of our active safety order intake was for L2 plus systems and around 45% of the active safety off the intake included features from the security software suite.

And lastly as you have likely heard earlier today, we announced a new business award. We are 8:00 Vision customers this system award includes our motivation cameras Radars along with a fusion software some from security which includes driver assist features, like high-waisted Lane centering control stop-and-go adaptive cruise control automatic emergency braking traffic sign and light recognition and automated high beam control. These are the important building blocks for higher level of automated driving.

Looking now to our order intake on the next page.

On this short we have recast or ordering take to include only the electronic segment which excludes the brake system Fitness or strong motor interest in Restraint control systems and active safety has resulted in approximately 15 billion horrible. The vast majority of the audiobook is expected to be delivered During the period 2020 to 2026.

Keep in mind.

The market lead time of order to launch is generally in the range of 2 to 4 years. However in our current situation due to certain customer delays, we seem closer to four years.

As we mentioned before or best estimate based on current market opportunities is for an order intake of approximately 1 billion of average annual sales for the electronic equipment in 2020. This is 25% higher than our lost three years average Illustrated on this short.

Looking now on two or Twenty twenty technology in customer launches.

On the next page we have summarized dorky new technology launches during 2020 already during the first quarter 2020. We will be launching Our Generation for motivation camera system or generation too smart a disease you and lastly or much-awaited first launch of this annuity software suite for autonomous driving off.

these three

These Technologies represent an important foundation for our expected future customers or sourcing with both existing and new customers.

During the second and third quarter, we will launch for additional camera Technologies, including our thermal nitrogen generation for technology or first generation driver monitoring system or generation for stereo vision camera as well as a customer serialization solution for an asian-based.

In addition, we will launch our first stand-alone software feature with premium paid premium brand based in Europe during the third quarter.

During the fourth quarter. We will launch our first say stop if you module for a US based application and or 77 gigahertz one point, right or which is a cost and performance improvement over the generation one point to which we lost launched last four and lastly we will launch our first roller skate high definition mapping and precision positioning module with the premium brand during the four quarters.

looking

No to our specific customer Launches on the next page.

Uncertain Honda models in China the gross profit decline or thirty-three million for the court tables is five year was used for the volume and product mix impact caused by the organic sales declined and the net net currently effect was minimal or do you need Max of 103 million decreased by Twenty One twenty nine million during the quarter compared to 2018 wage. Did you for the improved engineering reimbursement mentioned earlier in addition SEMA improved three million year-over-year do to lower consultancy and I see KO.

We are pleased that during 2019 or multiple adjustment initiatives are driving underlying cost structure improvement in our company all the internet for the full year. Nineteen was 562 million, which is 70 million below the 1st of 2019 annual run rate while the STNA on your run rate improved by Thirty million When comparing the second. 9 p.m. With the first language Northlake Auto placing test before the 4th quarter was below prior-year mainly due to the time and affecting the working capital mentioned earlier and Thursday, which is mostly related to some favorable adjustment to deferred tax and and asset and long-term liabilities in 2018 looking out for sequential performance on the next slide.

Or sales decline or six million have compared to the third quarter was due to a decline in organic sales as the currency translation effect was minimum wage restraint control systems and brake system that improved sequentially by 12 and 7 million respectively while exercise has declined twenty-five million due to the real ambition mix issues mentioned earlier the gross profit off of 3 million was mainly due to a product and a customer mix impact or they need left and STNA decreased by 41 million and 4 million respectively as compared to the third quarter and that is used or more adjustments initiative as the consequence the lower operating improved operating cash flow, which was upset by the net working capital change.

S Mansion don't know loss our Nicole. We believe the captain extended to a $59 million loss quarter was at the peak level where we have a decline of fourteen million sequentially in the fourth quarter looking now for 2019 John shift on the next slide.

We have some 2093 new program launches and model faceless, although some of these loans.

Just really contribute organic sales development in 2019. They provide a strong base or twenty-twenty Groves in addition to the twenty twenty launches John highlighted am looking out for 2020 outlook on the next slide.

We have based our 2020 Outlook excluding the DMV S Jones answer in Asia operation since we completely divest on February 3rd, 2020 or current, Nicole Austin delivery delivery points a weak first-quarter most in China and Europe both sequentially from the previous quarter and nearly year. This leads us than expected get the client for the first twenty as compared to 2019 as the consequence. We estimate the lvp declined in the low single-digits for the full year 20 as compared to 2019 for full-year 20, you need to return organic sales growth in the mid-single-digit this exact the same cloth is Cleveland buy back program launches, most likely face and brake system during the second half of the year.

You're in the first part of 2020 or Netflix or expected to remain relatively flat sequentially from the second half of 2019 and the ramp up sequentially during the second floor from 12 a.m. We expect the currency translation impact to be minimal in 2020 versus last year during 20 20 or more people government initiatives are expected to generate life structure and balance use Improvement during twenty twenty weeks already net along with our operating loss and cash flow before financing activities to improved from 2019 levels on a comparable basis. All the most of the Improvement is expected during the second half of 2020. I will now turn the call back over to age. Thank you ma'am. So I need to page again. This concludes our formal comments for today's earnings call. But before we open up for Q&A, I would like to make a dog.

comments regarding the unfortunate

We are currently monitoring this and taking appropriate actions on a daily basis related to the effects from the Corona virus outbreak in China and Thursday the health and safety of our employees is our primary focus today. We are not aware of any cases of the virus with our employees. However, it's too early to assess effect on to our China business as this is an ongoing and evolving situation.

And by saying that that would like to turn the call back to our operated summer. Please take over the call.

Thank you. Ladies and gentlemen will now begin the question-and-answer session to ask a question, please press star and one on your telephone keypad. And if you wish to cancel, please press the hash key once again and want to ask a question. We will take our first question and this comes from campus and go from handelsbanken, please go ahead. Thank you very much too questions for me. It's firstly if you could maybe discuss a little bit where you are in the modernization of your product offering and and where we should start to see effect from that on the Courtside Club. Secondly have a question on the order you or guiding for what is wrong 1 billion. I was wondering how much of that is is orders that was pushed out from 2019 to 2020 and should we how should we think about launch cost in the second half of 2017? Thank you start with the second part here with

Said that the majority.

Gap between what we earlier communicated and the 550 was a delay of that if we look to the situation as of right now, you can say that I'm all for it. Approximately a little more than half of that. Push out is still up for grabs. It's still out there for being awarded of the delay that we referred to Thursday. We have a captured that solve it today around a hundred million dollar in order intake and more than half of that is dead is actually coming from new business. So for a round half were more exciting more than half is coming from new business that was planned this year. So that is the information we can give you a call if it's a good start to be able to got to get around a hundred million little more than a month into the year.

have you done take the

Modular situation. Yeah, this is something that we have been talking about and it has taken a big step already when it comes to marketing to do our customers. We expect to of course look into potential order wins on on this design or this concept of life and maybe already this year the financial effect out of it will kick in of course later. So that is nothing that we will see as far as of 2012.

Thank you.

Thank you will not take our next question the line of Brian Johnson from Berkeley.

Hi, thank you for taking the question want to start just kind of understand both the but the performance in 4q as well as the guide for a year every year and would be helpful is to maybe just at least size up the buckets left real numbers. So yeah how much of the reduction am looking for Q and has it changed into a jeep was due to commercial reimbursements how much was due to perhaps rationalizing the Ardine efforts in working on greater IP sharing across project teams. How much was just a piece of it's going to be pay stub launch activity and how much was maybe just off to you know cutting deeper than maybe you'd like to

Maybe

This is marshmello. We can start with a guidance and we're looking into twenty-twenty where we are talking about the lower or the Indian in Albany nest in absolute numbers. Sometimes 8019 which is this regarding looking into the fourth quarter in terms of savings and what we have seen sequentially in in 2019. We have a break in the in the second quarter and third quarter need to the full quote. We have reduced or the journey and we have reduced the run-rate when it comes to 2 or or group or do you need so the reduction in terms of the of the run-rate post on the on the door side? It is contributing to those dating. However, looking in the fourth quarter informative finality point of view. We always had a big impact in the fourth quarter when it comes to engineering income in this Foster. We had more impact than normal s we we had additional reimbursement down for 4 a.m.

feeling. Have been front two in two thousand and

Nineteen, so if you see when you see that net number for the fourth quarter that is not reflecting a kind of a normal run rate due to the engineering income and it is Courtney is more than normal. But saying that we have had the sequential reduction in the growth or the uni Coast every every quarter think that since the second quarter so you have both both sides contributed looking into twenty-twenty. We are what we can pull see if what we are and working with this will reduce the cost and reduce the public school system in China. Frankly. I don't talk for that are also expecting some additional contribution coming from some reimbursement of the higher engineering stand for certain customer the combination but due to the to the intense launch. In 2020. We also need to kind of be prepared to have the engineer resources me dead.

So and the loan shift saying that still left for getting a reduction of the audience and I think it's also worth here that if you look to the dead higher, then normal engineering conversational engineering income is referring to we have also spent more money growth on engineering to prepare for for these launches that we are talking about. So it's somewhat communicating somewhat higher engineering income but also significantly higher engineering stand during the years nineteen.

Okay.

And just a follow-on. Could you frame up the transition headwinds from the radar of bandwidth shift? 2477. How much was the headwind in nineteen wage? You know what's expected for 20 and you know, even beyond that kind of wind visit sort of become a Tailwind.

I mean we will continue to have had when when it comes to this the shifting technology and in the 1st of 2020, but then as you Sue Jones life when it comes to doors if you could see that the the new technology in quite a lot of those launches, so it will gradually improved and in the second group in the second office. We will not believe that this should be over by after 2020. So it will at 8 during the year and the over by year and to the hospital.

Okay. Thank you.

Thank you will not take our next question from the line of Eric go from SCB.

Thank you. I have two questions the first one coming back to the previous one that on the order trans. I didn't fully get everything you said did I read write that that around them you lost around six hundred million orders in nineteen compared to what you originally targeted and that 50% of that or 600 was pushed into twenty-twenty and that 50% has been lost 50% still up for grabs. Is that correct? So I'm always has been awarded and some of it has been lost. But we say that the ballpark cooperate Still Remains programs.

Okay. Thank you. And then the second question also coming back to previous topic on on our DND stand. Would you sort of make a stab at home at saying what the underlying annualized or spending is? Thank you for for the core business. I excluding brake systems.

on an annualized basis for the for the core business

Yeah. Guiding with for for 2020 on the the core business together with the US operation for any time to come take a break control. So the comparable net number looking at the net or the uni that wage.

537 million

Okay to give you to give you the right Baseline and then what do I say that that's an improvement from that level 21. Thank you. And the final question on Thursday. I mean the order delays you experienced in in in 2019. Did you see that other the factors behind that as a stabilizing now, meaning that there's less of a risk that we get further delays in in Iraq or during activity.

I think this is a very fluid situation and it's a lot of discussions and it will be probably more discussions throughout the year. We all have seen that this happening and a 2019. We are trying to make our best estimate what we can win here in 2020, but that is stabilized and getting more easier to forecast. I don't think I can say that still it's still volatile. Thank you.

Thank you on next question comes from the line of James. Piccirillo from keybanc Capital Mark, please go ahead. Hey guys, just to get into the guide a specifically for the first quarter. Are you expecting both sales and ebit to be down year-over-year and sequentially or or is the commentary in the press release just tied to sales?

Yeah, I mean, what was that? I mean if you're looking at the Outlook describing, I mean we will let me over here. I mean, it's definitely a negative thoughts in the in the in the first quarter.

I'm done that what about free bit? Yeah.

And both was second just doing just regarding operating profit for the first quarter. Is that also?

Expected to Trend down. Yeah, I mean if you're comparing to the food court and again from a personality point of view the fourth quarter, it's always the strongest water from a personality point of view and very much you do to the engineering income effect that we see every year in the fourth quarter. So sequentially if it's it's negative development into the service. Yes.

Okay, and maybe just says the Rd any question another wait in the fourth quarter, you cut a hundred eighty employees. Do you expect additional cuts through to 2020 in terms of your targeted headcount reductions, or are you about done?

Well, we are looking into different type of activities, too.

Improve our efficiency in order your needs and to the extent that it's going to affect also the headcount. It's primarily if cost focus and efficiency Focus. Well, we are looking to work with partners and to what extent that is also going to affect their all their head count number. I'm not going to speculate at this point in time because it's also how they call a day for the resources that we have will be applied when we are coming further down the road in the year and just just one clarification regarding the 2022 framework. So your Target and half billion in sales you specifically call out active safety Revenue to double which would imply, you know, one point four billion roughly. So, I mean the implication there is that restraint controls them passes. The 1 billion Mark has has the growth trajectory for RCS improved when looking at the 2022

if you look too

Over over the grocery. Actually, we will see growth in in Orpheus business as well. But as we as you, you know, the the origins business is a business generally that it's dead with the market in line with the light vehicle production market. So the growth coming from for us coming in RTS is coming from better order went through Thursday last three or four years that we have seen in the in the past will be for that.

Okay. Thanks again.

Thank you on next question comes from the line of you know from D&B Market, please go ahead now. Thank you. So just to start off with customers apparently bought some of their investment decisions. What are your view inside the next two years in terms of OEM adoption of Technologies. One more say broader scale versus be more of a comfort features for premium or Williams.

We see a good adoption rate. Then we loaded to in our formal remarks here earlier. We believe that are part of this industry is continuing to see growth. It's not driven by legislation. It's driven by your rank at requirements and sharpening of the urine cap requirements step by step in many parts of the world. And this is drives the features and the contents of the vehicle. So we we believe that in in the world of stress in the automotive industry. We we look to see further improvements of our of our Market.

And finally regarding the girl's profile in in the operations of of brake systems. I mean, there's a larger contract ramping up there I assume but is there anything you want to mention in terms of the growth profile in the US operations as opposed to the Asian one?

No, not really. We have commented a couple of contracts there to Global OEM in the in the US. We have a strong focus and launching this it will launch later on this year the first part of that contract as you know, we have the brake systems on the Strategic you do for the time being we are guiding at this is a horrible come back and strong Focus to launch the commitment that we have. We are guiding including this brake system, but I have no other comments to give besides this for the future. We'll come back to that later throughout the year.

right

And our next question comes from the line of David like from bed, please go ahead.

Good morning. This is Aaron Wilson back on for David. My first question is about the market share of your new contract Awards. I guess I'm wondering where you winning the most new business from a market share standpoint. And maybe where is my name is Cher trending a little bit weaker. And and how does this compare to kind of the prior year.

Well, if you look through our market share and even in the 2019 with the lower-than-expected order intake number, we want more than our market share for for 2019 to point it to that. It's a better when the north market share. We definitely see wins in all product areas. I would say we see wins Envision as we announced here with events in radar. So Monday we are gaining business. I cannot point in in all of our product areas. I cannot say that we are any product areas that is lagging behind particularly. We are seeing a new technology being launched as I mentioned also in my in my remarks here that should improve also a prospect for the future down the road.

Okay.

And my second question is just with respect to your confidence in the revenue ramping conversion to profits, you know, for others. This has been challenging converting the the book of new business profitably suck any any comments on that.

What this will correct itself in the you know, the the overhead numbers and the overheads in relation to sales then returning the traffic will gradually improve down the road when we are ramping up the sales number this this is the cherishing market and it requires a lot of up-front investment. So over time we expect the the numbers, of course to normalize and we have not given any outlook on 2022. We gave the sales out of it not any profit numbers or any other indications of the normal life already in relation to say it's or becoming profitable or so. We'll have to return to you with a desolated states that we expect a growth in 2020. We expect that to accelerate in 2021 and in 2022 and gradually then this will normalize

Taking my question.

Thank you on next question comes to the line of Johan Andersson from danske bank, please. Go ahead.

Do you want the phone down scare? Yeah, I have a question on the brake business and also the financial implications from the divestment of the Asian part. If you can help us out with some further clarification and how how we should look upon the brake business in in the in the first half if that's possible.

Yeah, I mean first of all you need to separate the US port and the Asian part cuz I mean the part that was that was for the next fifty two hundred Seventeen, but the US is it's still in and it's also included in the guy and in the guidance. We are giving them.

So, I mean that's the Baseline is really or corporations meaning active safety together with or Cs and the plus the u.s. Break down corporations. And so that's that's today. And then maybe a Thomas here. Maybe you're still for the historic comparisons. You can also look at the full-year segment report in the press release on page five where we provide a little bit of commentary on the historic sales and and and and or DNA the H apart which I think helps get you some reference numbers and the impact this has happened now.

Yes pillow days ago. Yeah.

Yeah, perfect. Thank you.

Thank you. And our next question comes from the line of Joseph back from RBC Capital Market. Thank you. I wanted to head back to the, about, you know the orders and and you know, what sort of up up for grabs. I guess just to be clear. Are you seeing some more competitive on a portion of that business bidding for that business, then you sort of previously assumed or it it's a little bit unclear to me sort of. You know, what what changed on the part that sort of hasn't been awarded yet.

Yes, we have seen some competitors coming in here. This is a evolving technology and we have seen actually new companies bidding for business off depending on what type of business is this we can see new competitors. We have we have not seen the highest entities in the past coming in and month. Yeah that is related to the active safety piece on the business. We don't see any new competitors that only activities we can see some of the new competitors. I also wanted to clarify here to the person I think came from Marigold. You mentioned the number of the six hundred million being pushed out and then you said off of that being off or something. We have not Quantified how much of the total delay that is pushed out. We said that the majority of the gap between the number we indicated of dead.

between bumper and swamp point two billion dollar and the 550's majority of that Gap was

Not to have any mixed about your qualifications around how much of the is a programmer. So we still see what we defined being delayed behalf of that being up for grabs just to be quite clear to not confuse everyone of the specific numbers.

Okay, and I guess the the second question just back to back to the R&D. I mean, I know you know the fourth quarter sort of not the right run rate, but I guess just more broadly and as you think out here over the next couple of years, how do you think about you know, the R&D spending either growing at or maintaining that no relative to sort of the Ambitions to sort of you know grow grow the Top Line, right? Because there's a there's an element of the Rd any right that that sort of going to, you know have to have to suck Ur as some of that business sort of comes to launch but there's also an element that you know of, you know, I guess more on the the our our site and decide than the east side which is, you know to sort of keep Pace with with with the industry and I think you know, if if that's starved somewhat then it seems like there's there's a corresponding impact to the Top Line growth.

No, I think I mean when you looking at all the I mean the majority.

Application engineering very much driven by the order in place and the pre-launch and Loans meaning that that if you're looking at more on the other side, I mean a while we are cutting down. I mean it's more on the application engineering side and what we have done now in the in 2090 and it's I mean, we recruit life quite a lot of engineers' back in 2018 and into the beginning of 2019 is what we have been talking about this more efficiencies and consolidating the days that we have and I wouldn't say that we are kind of risking any any business from doing that. So when we see the loan rate right now, that's more all the the kind of a consolidation and efficiency gains with wage. I'm done with y'all instead now, we can look into the kind of the next step or what we can do together with partners and so 4.4. But but that is still without jeopardizing the gross also dead.

But but then just to just to be healed.

Federal people here and a lot of good Engineers. What is important is that we use them efficiently for what is unique for us and our algorithm development or architecture development repetitive or were called standard type should be preferably used with Partners things that can be reduced and redone in application engineering that mass is talking about fear could preferably be done outside. But so if if the you know the best sort of indicate if the Rd needed sort of more tied to sort of order intake than you know than eyes that comes online and converts to to revenue. It seems like the are you should also increase I guess I'm just wondering like I you know, and maybe it's difficult to sort put a fine point on it. But like when do you actually start seeing some of the you know greater leverage on that spend because it would seem like you would actually need a couple of years of you know that higher Revenue to sort of wage.

Overtake the you know, our DNA disorder support the order intake. Is that is that fair?

In terms of Leverage. I mean if you're looking at the indication for 2020 when we are saying that we will call you thing is to reduce the or the uni in in absolute numbers and we are talking a mechanic. So from the relative or the rear wheels. Coming down and you will you will see some leverage coming computer, but it's also I mean what we have done and when we have reduced the run-rate thing where we are right now. We also need to remember when we are looking for 2020 and again referring to your flight. I mean, we have five euge launches now coming up Thursday in in twelve to eighteen months. So we also need to be prepared for the ownership and and we need to have the kind of the resources in in in place, even though you see growth in the order intake. I can't imagine that we will have another 12 to 18 months. With with those kind of new technology launches with this time.

It is a little bit of a perfect storm looking on what?

for today

Okay. Thank you very much.

Yeah, but I mean.

Thank you. And our next question comes from the line of least go from Lord are please go ahead.

It's I can just give you a lot and I have a couple of questions and follow-ups. If I may please starting maybe our in D and your guidance when you guys on the comparable basis, can you just bought a specific on and tell us what's the comparable basis for R&D was in 2019. So excluding the brakes Asia things 5367 is the is the Baseline?

Snap Saudi any food year 2019 excluding the joint venture. Okay. Thank you. And then also if I calculated correctly than the brakes business in 2019 contributed with sixty million in sales, and my question here is what's your expectation for the kind of cuttings for the remote control for brakes Us in 2020 is included in your organic growth of guidance. Thank you.

I mean we have and I'm coming back again to what John said. I mean we have one of the big launches all related to the to the brake control, but that is in the later part of the Year 2006. So it's not it's not a significant impact on the on the organic growth guidance for for full year twenty-twenty the bulb and the majority of the grill for coming from from actual safety looking at the grocery.

Right and and then just coming back to active safety sales decline of 20% in Q4. I would appreciate if you could be a bit more specific about the head winds coming from the shifting Radars and also the BMW rampton, could you quantify it? And also could you specify off when exactly decide winds will disappear? I mean the majority if you're looking at the safety overall the majority of of the of the decline that rate of its related to to raise their technology shift and if you are looking at if you are looking forward down on the on the on the change in Trends or to speak with that we will continue to see if negative impact in the first off of of the twenty-twenty button which will gradually improve and you can say that in into twenty Twenty-One we received

To get through the technology shape.

So to see if we launch it and so forth.

Okay, but do you expect the negative impact in H1 will be kind of double digits on sales?

You mean from regular alone or yeah, if it was the majority of the sales decline that was connected to the radar shift in Q4. And if you expect continued in q1 and Q2, will it be as severe impact your own ear?

I wouldn't kind of I wouldn't be that kind of granular looking on the on certain products and technology is that first of all, the the Colts are getting easier looking into twenty-twenty, but the 29th sold the same issue in in in 2019 the but otherwise, I will just kind of stick with with the overall the guidance that we have talking about the subject to a quote and and gradual Improvement and and going into growth in the in the second office on some. Thank you. Thank you.

Okay.

Just mentioned that we have five minutes left. And of course we intend to end on the hour, but will be available of course from investor relations after the qualified.

Thank you. We will now take one more question and this comes from David Kelly from Jeffrey.

Hey, good morning. Just looking at slide nine. The the average dollar content per vehicle of new launches. You referenced $270. I'm assuming that's comparable to the 175 - 2019 that you referenced on flight 13. Could you talk about the drivers of that increase? You know, how much is mix or or is this more tied to the expanding addressable Market is wage level 2 launches start to ramp.

It's affecting the level too. It's affecting the number of feature increase its including and driven by increased and cap requirements found many different factors driving this forward but as you can see from this, it's also including as we mentioned the brake systems that is a part of it off many different factors that driving behind it and Technology improvements and increases

Okay, perfect. Thank you. And then a question on active safety win rates you referenced The increased competition in the space. I guess could you provide some color own and converting the bid list? And I'm not seeing any considerable either differences in win rates across product lines or or changes and and historical rental when rates as well.

Oh, I cannot quantify that as we say that when you look to our key components of our senses weeks and or airbag controllers and also our controller and our software suite. We are in a very good position and we are seeing a strong customer interest and we expect this year of launch as to prove that and to make it even more visible to customers off. Yeah overall development and of our product performance here looking a little bit further down the road. We experienced that same step change in 2016 when we launched a previous generation of our senses. We've now we are coming out with the renewed for that product portfolio of expect that to happen. But as I said, and in this case you see you see new entrance is trying to come in and you see people building on at least some of the product would call you see if not all of it, but some of it off

that is

Yeah, I expected. We have expected that to happen. So I don't think that is any change from our previous opinions.

Okay, great. I appreciate the color.

Thank you, and we will no longer be taking questions. I'd like to hand the call back to you. Thank you very much. Summer. I would like to thank everyone for your participation for interesting questions as of today, and we of course look forward seeing you on conferences and workshops et cetera during the quarter here or next month's quarterly earnings release this plan for end of April and we will revert back to you with the exact date. We are also intending to walk. Yeah hold the business update and more General in between our earnings releases and end of late spring or beginning summer and be back to you with more color on that one as well. So until then, I wish you all the best and hope you are having a good start of the 2020. Thank you very much for attending.

Thank you. This concludes today's conference. Thank you for participating you may now disconnect.

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