Q4 2023 Aptiv PLC Earnings Call

Operator: Good day and welcome to the Aptiv Q4 2020 conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Jane Wu, Vice President of Investor Relations and Corporate Development. Please go ahead, Ms. Wu.

Good day and welcome to the athletes Q4 2023 earnings call. Today's conference is being recorded at this time I would like to turn the conference over to Jean Wood, Vice President of Investor Relations and corporate development. Please go ahead ma'am.

Jane Wu: Thank you, Jenny. Good morning, and thank you for joining Aptiv's 4th Quarter 2023 Earnings Conference Call. The press release and related tables, along with the slide presentation, can be found on the investor relations portion of our website at Aptis.com. Today's review of our financials excludes amortization, restructuring, and other special items and will address the continuing operations of Aptiv.

Thank you Jenny good morning, and thank you for joining after the fourth quarter 2023 earnings Conference call.

Jean Wood: The press release and related tables, along with the slide presentation can be found on the Investor relations portion of our website at <unk> Dot com.

Today's review of our financials exclude amortization restructuring and other special items.

Jean Wood: The continuing operations of actors.

Jane Wu: The reconciliations between GAP and non-GAAP measures for our fourth quarter and full year 2023 results, as well as our 2024 outlook, are included at the back of the slide presentation and earnings press release. During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings. Joining us today will be Kevin Clark, Aptiv's Chairman and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and Joe will cover the financial results in more detail before we open the call to Q&A. With that, I'd like to turn the call over to Kevin Clark.

Jean Wood: The reconciliation between GAAP and non-GAAP measures for fourth quarter and full year 2023 result, as well as our 2020 for outlook.

Jean Wood: At the back of the slide presentation and earnings press release.

Jean Wood: During today's call, we will be providing certain forward looking information that reflects <unk> current view of future financial performance.

Jean Wood: Materially different for reasons that we cite in our Form 10-K, and other S E SEC filings.

Speaker Change: Joining us today will be Kevin Clark after its chairman and CEO and Joe Massaro, CFO and senior Vice President of business operations.

Joseph R. Massaro: And that will provide a strategic update on the business and Joe will cover the financial results in more detail before we open the call for Q&A.

Joseph R. Massaro: I'd like to turn the call over to Kevin Clark. Thank you Jane and thanks, everyone for joining us. This morning, let's begin on slide three.

Kevin P. Clark: Thank you, Jan, and thanks, everyone, for joining us this morning. Let's begin with slide three. Aptiv ended the year on a solid note with fourth-quarter results broadly in line with our expectations, demonstrating our ability to execute in a less predictable market. Touching on a few highlights, new business bookings reached $7.7 billion, the result of continued demand for our portfolio of industry-leading advanced technologies. Revenue was $4.9 billion, with growth over market due to the UAW strike and customer mix, which Joel will go through in more detail later. Operating income totaled $600 million, reflecting a 90 basis point margin increase, the strong flow through on volumes and operating performance, more than offset headwinds from FX, commodities, and the UAW strike. We repurchased $300 million of stock during the quarter, given our share price and cash position. In summary, our team is doing an exceptional job executing in a fast-changing environment, identifying opportunities to provide solutions to our customers, while at the same time working to mitigate headwinds from ongoing cost pressures. Turning to slide four.

Kevin P. Clark: After that as the year on a solid note with fourth quarter results broadly in line with our expectations, demonstrating our ability to execute in a less predictable market.

Kevin P. Clark: Touching on a few highlights our new business bookings reached $7 7 billion. The result of continued demand for our portfolio of industry, leading advanced technologies.

Kevin P. Clark: Revenue was $4 9 billion with growth over market impacted by the UAW strike and customer mix, which Joe will go through in more detail later.

Kevin P. Clark: Operating income totaled 600 million, reflecting a 90 basis point margin increase strong pull through on volumes and operating performance more than offset headwinds from FX commodities and the UAW strike.

Kevin P. Clark: We repurchased $300 million of stock during the quarter, given our share price and cash position in summary, our team is doing an exceptional job executing in a fast changing environment identifying opportunities to provide solutions to our customers. While at the same time working to mitigate headwinds from ongoing cost pressures.

Kevin P. Clark: Turning to slide four.

Kevin P. Clark: We delivered on our commitments and achieved record results in 2023, despite having to navigate through unexpected developments. New business bookings were a record $34 billion, reflecting continued strong demand for our product. As vehicles become higher contented and more software defined, customers are increasingly seeing the value of Aptiv as an important technology partner, particularly across our smart vehicle architecture, active safety, and high voltage electrification portfolio, where we lead the industry in delivering high performance, flexible, and cost-effective solutions. Aptiv is also positioned to benefit from the transition to the software-defined future across several other industries, with opportunities accelerating in the telecom, aerospace, and defense, and Revenue increased 12% to over $20 billion in 2023, a new record level, principally driven by our high-growth active safety and high voltage product line. Strong top-line growth contributed to a record $2.1 billion of operating income.

Kevin P. Clark: We delivered on our commitments and achieve record results in 2023, despite having to navigate through unexpected developments new business bookings were a record 34 billion.

Kevin P. Clark: <unk> continued strong demand for our products.

Kevin P. Clark: Kohl's become higher content and more software defined customers are increasingly seeing the value of App is an important technology partner.

Kevin P. Clark: Particularly across our smart vehicle architecture active safety and high voltage electrification portfolio, where we lead the industry in delivering high performance flexible and cost effective solutions.

After this all position is also positioned to benefit from the transition to the software defined future across several other industries with opportunities accelerating in the telecom aerospace and defense and industrial markets.

Kevin P. Clark: Revenue increased 12% to over $20 billion in 2023.

Kevin P. Clark: A new record level, principally driven by our high growth active safety and high voltage product lines.

Kevin P. Clark: Topline growth contributed to a record $2 1 billion of operating income.

Kevin P. Clark: Operating margin increased 150 basis points to 10.6% as strong volume flowed through and operating performance more than offset the headwinds from FX, Commodities, and the UAW. Lastly, we generated record operating cash flow of $1.9 billion for the year, providing flexibility around capital deployment, allowing us to proactively repurchase shares and pay down debt. Moving to slide five, as I already mentioned, bookings reach $34 billion, our third consecutive year of record new business awards, and includes nine different customers who each award Aptiv over $1 billion in new business. Advanced Safety and User Experience bookings total a record $12 billion, driven by active safety bookings of $3.4 billion, representing a combination of next-gen hardware and perception software building blocks, as well as full-system turnkey solutions, the strength of which is reflected in over 11 billion of cumulative bookings over the last three years, and $5.2 billion of customer rewards for our smart vehicle architecture solutions with three different OEMs, bringing cumulative awards since the launch of our SVA products to over $10 billion with eight different OEMs.

Kevin P. Clark: Operating margin increased 150 basis points to 10 to 10, 6% as strong volume flow through in operating performance more than offset the headwinds from FX commodities and the UAW strike.

Kevin P. Clark: Lastly, we generated record operating cash flow of $1 9 billion for the year, providing flexibility around capital deployment, allowing us to proactively repurchase shares and pay down debt.

Kevin P. Clark: Moving to slide five as I already mentioned bookings reached 34 billion, our third consecutive year of record New business Awards and includes nine different customers, who each award adaptive over 1 billion in new business.

Kevin P. Clark: Advanced safety and user experience bookings totaled a record 12 billion driven by active safety bookings of $3 4 billion, representing a combination of next gen hardware and perception software building blocks as well as a full system turnkey solutions.

Kevin P. Clark: The strength of which is reflected in over 11 billion of cumulative bookings over the last three years.

$5 2 billion of customer awards for our smart vehicle architecture solutions with three different Oems.

Kevin P. Clark: <unk> cumulative awards since the launch of our SBA products over 10 billion with eight different Oems.

Kevin P. Clark: Signal Power Solutions' new business bookings reached a record of over $22 billion, in part due to a record $6.2 billion in high voltage electrification bookings up roughly $2 billion over 2022, representing awards from both traditional and new mobility providers, bringing cumulative high-voltage customer rewards to roughly $14 billion since 2021. Our industry-leading portfolio, combined with our global reach and ability to execute highly complex programs, perfectly positions Aptiv to win new business and gives us a clear line of sight to $35 billion in business awards in 2024. Turn to slide six to review our advanced safety and user experience segments and full year highlights.

Signal and power solutions, new business bookings reached a record of over $22 billion in part due to a record $6 2 billion in high voltage electrification bookings.

Kevin P. Clark: <unk> 2 billion over 2022.

Kevin P. Clark: Representing awards from both traditional and new mobility providers, bringing cumulative high voltage customer award to roughly 14 billion since 2021.

Kevin P. Clark: Our industry, leading portfolio combined with our global reach and ability to execute highly complex programs perfectly positions <unk> to win new business and gives us a clear line of sight to 35 billion of business Awards in 2024.

Kevin P. Clark: Yes.

Kevin P. Clark: Turning to slide six to review, our advanced safety and user experience segment full year highlights.

Kevin P. Clark: We achieved significant commercial success across all our key product lines, further solidifying our position as a partner of choice with our OEM customers. Building on its leading market position, Wind River continues to experience solid commercial traction across a variety of NMARCs. In the fourth quarter, one of Canada's largest communication service providers selected Wind River Studio for their full O-RAN deployment in North America. Amran, a leader in healthcare systems and industrial automation, also chose Winniverse Studio for their Industrial Edge platform development.

Kevin P. Clark: We achieved significant commercial success across all of our key product lines further solidifying our position as a partner of choice with our OEM customers.

Kevin P. Clark: Building on its leading market position wind River continues to experience solid commercial traction across a variety of end markets in the fourth quarter, one of Canada's largest communication service providers selected wind River studio for their full ran deployment in North America.

Kevin P. Clark: I'm Ryan leader in health care systems, and industrial automation also chose winter versus studio for their industrial edge platform development.

Kevin P. Clark: And within the automotive industry, Hyundai Mobis expanded its existing relationship with WinRiver by selecting WinRiver Studio to help reduce development time and costs from product design to system validation and mass production testing. Demand for Aptiv's full system solutions across active safety, user experience, and smart vehicle architecture also remains strong, with major bookings across all geographic regions, including with Japanese OEMs and emerging Chinese local players, bringing a growing pipeline of additional opportunities. To best support our customers while further optimizing our cost structure, we implemented several initiatives across our engineering and supply chain function. For example, to accelerate and streamline our product development process, our ASUX engineers have incorporated Winter River Studios' DevSecOps toolchain into their program.

Kevin P. Clark: And within automotive Hyundai Motor has expanded their existing relationship with wind river by selecting wind River studio to help reduce development time and costs from product design to system validation and mass production testing.

Kevin P. Clark: Demand for after this full system solutions across active safety user experience and smart vehicle architecture also remained strong with major bookings across all geographic regions, including with Japanese Oems in emerging Chinese local players, bringing a growing pipeline of additional opportunities.

Kevin P. Clark: The best support our customers, while further optimizing our cost structure, we implemented several initiatives across our engineering and supply chain functions.

To accelerate and streamline our product development process, our engineers have incorporated winter versus yields Dev ops tool chain into their programs.

Kevin P. Clark: We've also centralized our engineering activities in India to a new and larger technology Center in Bangalore, We're active in wind River teams can better collaborate on our software product platforms, allowing us to double our engineering capacity in the country, thereby enabling a cost effective rotation of our engineering footprint.

Kevin P. Clark: We've also centralized our engineering activities in India to a new and larger technology center in Bangalore, where Aptiv and Wind River teams can better collaborate on our software product platforms, allowing us to double our engineering capacity in the country, thereby enabling the cost-effective rotation of our engineering. From a supply chain perspective, we're on track to fully map our global supply chain into a digital twin by year-end. During 2023, we fully mapped our semi-conductor providers, increasing our visibility and improving our ability to proactively mitigate potential sourcing. Lastly, we've closely partnered with roughly a dozen local Chinese semiconductor suppliers for both Chinese and non-Chinese applications, positioning us to meet increasing demand from our Chinese customers with local sources of supply and increasing the resiliency and flexibility of our supply chain for our global OEM customers. Turning to signal and power solutions, the full year highlights are on slide seven.

Kevin P. Clark: From a from a supply chain perspective, we're on track to fully map, our global supply chain into a digital twin by year end.

Kevin P. Clark: During 2023, we fully mapped our semi providers, increasing our visibility and improving our ability to proactively mitigate potential sourcing risks.

Kevin P. Clark: Lastly, we have closely partnered with roughly a dozen local Chinese semiconductor suppliers for both China and non China applications.

We're positioning us to meet increasing demand for our Chinese customers with local sources of supply and increasing.

Kevin P. Clark: The resiliency and flexibility of our supply chain for our global OEM customers.

Kevin P. Clark: Yeah.

Kevin P. Clark: Turning to signal and power solutions full year highlights on slide seven.

Kevin P. Clark: From a commercial perspective, we've continued to benefit from our industry, leading portfolio and global scale, which uniquely positions us to deliver optimized vehicle architecture solutions for both emerging players and leading global Oems.

Kevin P. Clark: During 2023 were awarded significant vehicle architecture programs by global EV manufacturer, including optimized electrical distribution and 48 volt connection systems.

Kevin P. Clark: From a commercial perspective, we've continued to benefit from our industry-leading portfolio and global scale, which uniquely positions us to deliver optimized vehicle architecture solutions for both emerging EV players and leading global OEMs. During 2023, we were awarded significant vehicle architecture programs by a global EV manufacturer, including optimized electrical distribution and 48 volt connection. In China, while we remain highly selective in our customer and platform choices, we are actively driving increased penetration of a select group of local EMs. In 2023, bookings with Chinese local AMs reached $3 billion, representing approximately 60% of the total SPS bookings in the region. InterCable Automotive won record new business awards and added four new global customers with their industry-leading busbar technology, which enables more efficient power distribution and optimized battery pack.

Kevin P. Clark: In China, while we remain highly selective in our customer platform choices, we're actively driving increased penetration of a select group of local EMS in 2023 bookings with China local Oems reached 3 billion, representing approximately 60% of the total Sps bookings in the region.

Kevin P. Clark: Intercable automotive had record new business awards and added four new global customers with our industry, leading bus fire technology, which enables more efficient power distribution and optimize battery pack design.

Kevin P. Clark: We've also seen an increase in customer demand for our solutions that reduce complexity weight and cost, including our integrated power electronic solutions, which integrate the onboard charger battery distribution unit and DC to DC converter.

Kevin P. Clark: From an operational perspective, we've also implemented several initiatives to improve manufacturing efficiency.

Kevin P. Clark: Within our electrical electrical distribution business, we're launching our first highly automated production line covering all aspects of system Assembly.

Kevin P. Clark: We've also seen an increase in customer demand for our solutions that reduce complexity, weight, and cost, including our integrated power electronic solutions, which help integrate the onboard charger, battery distribution unit, and DC-to-DC converter. From an operational perspective, we've also implemented several initiatives to improve manufacturing efficiency. For example, within our electrical distribution business, we're launching our first highly automated production line covering all aspects of system assembly.

Kevin P. Clark: This new technology, we expect to increase current automation levels to approximately 30% by 2026, putting us on a path to over 50% automation by 2030.

Kevin P. Clark: Which will improve efficiency and product quality, while also reducing labor dependency and the associated exposure to inflationary pressures.

Kevin P. Clark: At the same time, we've been building a more resilient and sustainable business by supporting the trend towards local production and minimizing cross border flows of product.

Kevin P. Clark: With this new technology, we expect to increase current automation levels to approximately 30% by 2026, putting us on a path to over 50% automation by 2030, which will improve efficiency and product quality while also reducing labor dependency and the associated exposure to inflationary pressure. At the same time, we have been building a more resilient and sustainable business by supporting the trend toward local production and minimizing cross-border flows of products. We continue to pursue manufacturing footprint rotations in multiple regions and have successfully established production capabilities for inter-cable automotive in North America to serve in-region customers. Turning to slide eight.

Kevin P. Clark: We continue to pursue manufacturing footprint rotations in multiple regions and are successfully established production capabilities for Intercable automotive in North America to serve in reaching customers.

Kevin P. Clark: Turning to slide eight at this year's consumer electronics show in Las Vegas, we showcased our industry leading portfolio of products through a full range of functional fully integrated solutions, both in our tech theater as well as on the roads with drivable demo vehicles.

Kevin P. Clark: This is best represented by our software defined vehicle demonstrator, which showcased advanced Adas and user experience applications embedded on wind River as cloud native software platform and running on after the smart vehicle architecture hardware.

Kevin P. Clark: At this year's Consumer Electronics Show in Las Vegas, we showcased our industry-leading portfolio of products through a full range of functional, fully integrated solutions, both in our tech theater as well as on the roads with drivable demo vehicles. This is best represented by our software-defined vehicle demonstrator, which showcased advanced ADAS and user experience applications embedded on Wind River's cloud native software platform and running on Aptiv's smart vehicle architecture hardware.

Kevin P. Clark: With our first time driving a vehicle. This was our first time driving a vehicle on public roads supported by FCA further reinforcing our leadership in next generation architectures, we demonstrated critical critical elements of our Gen. Six eight as platform, including our urban point to point hands free driving application as well as in cabin monitoring.

Kevin P. Clark: This was our first time driving a vehicle on public roads supported by SVA, further reinforcing our leadership in next-generation architecture. We demonstrated critical elements of our Gen 6 ADAS platform, including our urban point-to-point hands-free driving application, as well as in-cabin monitoring. We also showcased our high-voltage capabilities with a custom-built 800-volt electric vehicle. This vehicle included optimized high-voltage cabling and busbars, connection systems, and integrated power electronics. We also introduce Aptiv's containerized battery management system running on our central vehicle controller, both of which were supported by Wind River's VXWorks operating system, while telemetric data was visualized through Wind River Studio.

We also showcased our high voltage capabilities with a custom built 800 volt electric vehicle.

Kevin P. Clark: This vehicle included optimized high voltage cabling and bus bars connection systems and integrated power Electronics. We also introduced <unk> Containerized battery management system running on our central vehicle controller.

Kevin P. Clark: Both of which were supported by when rivers VX works operating system, while Telemetric data was vision was visualized through wind River studio.

Kevin P. Clark: Finally, all of these solutions are more were available for deep dive in our technology theater when.

Kevin P. Clark: When taken together the solutions on display represented our full system portfolio by showcasing capabilities from sensor to cloud.

Kevin P. Clark: In total we had over 1000 stakeholders visit our pavilion ranging across customers vendors and industry partners and as a follow up to see us we schedule a wide range of customer engagements, including the mobile World Congress in late February and customer focus tech shows during the balance of this year.

Kevin P. Clark: Finally, all these solutions and more were available for deep dives into our technology. When taken together, the solutions on display represented our full system portfolio by showcasing capabilities from sensor to cloud. In total, we had over 1,000 stakeholders visit our pavilion, ranging across customers, vendors, and industry partners.

Kevin P. Clark: Our industry, leading product portfolio underscores our position as the partner of choice to develop and deliver next generation solutions.

Kevin P. Clark: Moving to slide nine before I turn the call over to Joe to walk you through the financials I wanted to provide some context on our outlook for 2024.

Kevin P. Clark: And as a follow-up to CES, we scheduled a wide range of customer engagements, including the Mobile World Congress in late February and customer-focused tech shows during the balance of this year. Our industry-leading product portfolio underscores our position as a partner of choice to develop and deliver next-generation solutions.

Kevin P. Clark: As our industry has continued to evolve we are experiencing growing demand for a full system capabilities spanning across hardware and edge to cloud software solutions.

This increasing level of strategic engagement is turned into three straight years of record new business bookings and in turn we will continue to drive strong revenue growth and implied growth above market.

Kevin P. Clark: Before I turn the call over to Joe to walk through the financials, I wanted to provide some context on our outlook for 2020. As our industries continue to evolve, we're experiencing growing demand for our full system capabilities, spanning across hardware and edge-to-cloud software. This increasing level of strategic engagement has turned into three straight years of record new business bookings and, in turn, will continue to drive strong revenue growth and implied growth above market. So we'll walk through our outlook for revenue growth in more detail, but we now expect our growth above market to be in the 6 to 8 point range. Reflecting the Changing Pace of EV Adoption and Customer, As I highlighted earlier, we have proactively taken actions to reduce our cost structure, to adapt to the changing market environment, and to help offset ongoing inflationary pressure. We remain disciplined in our capital allocation approach, which will include further strengthening our competitive position with investments in advanced technology and capabilities that drive operational excellence. To that end, while our emotional joint venture continues to make progress on their technology roadmap, we've decided to no longer allocate capital to emotional and are pursuing alternatives to further reduce our ownership interest.

Kevin P. Clark: Joe will walk through our outlook for revenue growth in more detail, but we now expect our growth over market to be in the six to eight point range.

Kevin P. Clark: <unk>, the changing pace of EV adoption and customer mix.

Kevin P. Clark: As I highlighted earlier, we have proactively taken actions to reduce our cost structure to adapt to the changing market environment and to help offset ongoing inflationary pressures.

Kevin P. Clark: We remain disciplined in our capital allocation approach, which will include further strengthening our competitive position with investments in advanced technology and capabilities that drive operational excellence.

Kevin P. Clark: To that end, while our motion will joint venture continues to make progress on their technology roadmap, we've decided to no longer allocate capital emotional and are pursuing alternatives to further reduce our ownership interest.

Kevin P. Clark: Lastly, while we will continue to prioritize organic investments and strategic M&A opportunities that drive profitable growth our stock price presents an attractive opportunity to return capital to our shareholders and we're targeting up to an additional $750 million in share repurchases during 2024.

Kevin P. Clark: The last few years have presented the industry with unprecedented macro challenges, including Covid and supply chain disruptions.

Kevin P. Clark: During this period the management team has remained laser focused on execution enhancing our competitive position and increasing the resiliency of our business model, which is reflected in our 2023 financial results and our outlook for 2024, and our conviction in the long term value of our business is higher than ever and we remain committed to delivering.

Kevin P. Clark: Lastly, while we will continue to prioritize organic investment and strategic M&A opportunities that drive profitable growth, our stock price presents an attractive opportunity to return capital to our shareholders, and we're targeting up to an additional $750 million in share repurchases during 2024. The last few years have presented the industry with unprecedented macro challenges, including COVID and supply chain disruptions.

Kevin P. Clark: That value to our shareholders with that I will now turn the call over to Joe to go through the numbers mortgage.

Thanks for watching. Bye.

Joseph R. Massaro: Thanks, Kevin and good morning, everyone, starting with the recap of the quarter on slide 10.

Joseph R. Massaro: Revenues were $4 9 billion in line with our expectations, including the impact of the UAW strike in October.

Joseph R. Massaro: Adjusted gross in the quarter was 2% over the prior year, representing negative growth over market of 5% in the quarter.

Kevin P. Clark: During this period, the management team has remained laser focused on execution, enhancing our competitive position and increasing the resiliency of our business model, which is reflected in our 2023 financial results and our outlook for 2024. And our conviction in the long-term value of our business is higher than ever. And we remain committed to delivering that value to our shareholders. With that, I will now turn the call over to Joe to go through the numbers in more detail. Thanks, Kevin. And good morning, everyone.

Joseph R. Massaro: As Kevin noted and I will discuss in more detail the growth over market, primarily resulted from the impact of the UAW strike at North American OEM production mix as well as customer mix in China and slower high voltage growth.

Joseph R. Massaro: Adjusted EBITDA and operating income of $772 million and $600 million, respectively in line with our expectations.

Joseph R. Massaro: Operating income margins expanded 90 basis points versus prior year, reflecting strong flow through on incremental volumes and the benefit of customer recoveries of direct material increases and strong operating performance, including the benefit of cost saving actions taken in the second half of 2023.

Joseph R. Massaro: Starting with a recap of the quarter on slide 10, revenues were $4.9 billion, in line with our expectations, including the impact of the UAW strike in October. Adjusted growth in the quarter was 2% over the prior year, representing negative growth over the market of 5%.

Joseph R. Massaro: Offsetting the impact of the strike, which totaled approximately $50 million in the quarter.

Joseph R. Massaro: And foreign exchange was a 20 basis point headwind in the quarter.

Joseph R. Massaro: As Kevin noted, and I will discuss in more detail, the growth over market primarily resulted from the impact of the UAW strike and North American OEM production mix, as well as customer mix in China and slower high voltage growth. Adjusted EBITDA and operating income of $772 million and $600 million, respectively, were in line with our expectations. Operating income margins expanded 90 basis points versus the prior year, reflecting strong flow through on incremental volumes, the benefit of customer recoveries of direct material increases, and strong operating performance, including the benefit of cost-saving actions taken in the second half of 2023, offsetting the impact of the strike, which totaled approximately $50 million in the quarter. And foreign exchange was a 20 basis point headwind in the quarter.

Joseph R. Massaro: EPS was $1 40, an increase of 10% driven by higher operating income, partially offset by interest and tax expense.

Operating cash flow totaled $624 million and capital expenditures were approximately $200 million for the quarter.

Joseph R. Massaro: During the fourth quarter, we repurchased $300 million of stock, bringing full year repurchases to approximately $400 million.

Joseph R. Massaro: Looking at revenue in more detail on slide 11.

Joseph R. Massaro: As noted revenue in the fourth quarter was $4 $9 billion.

Joseph R. Massaro: <unk> sales growth of $188 million or.

Joseph R. Massaro: A favorable $62 million contribution from net price downs in commodities.

Joseph R. Massaro: And foreign exchange tailwind of approximately $29 million.

Joseph R. Massaro: From a regional perspective, North American revenues were down, 7% or 11% below market driven in part by the UAW strike impact, which totaled a $100 million in October.

Joseph R. Massaro: In addition, as we caution during the fourth quarter foreign manufacturers, primarily the Japanese Oems with whom we do not have significant content experienced very strong year over year production growth in the quarter.

Joseph R. Massaro: EPS was $1.40, an increase of 10%, driven by higher operating income, partially offset by interest in taxes. Operating cash flow totaled $624 million, and capital expenditures were approximately $200 million for the quarter. During the fourth quarter, we repurchased $300 million of stock, bringing full-year repurchases to approximately $400 million.

Joseph R. Massaro: Further impacting the relative production mix in the North American market.

Joseph R. Massaro: In Europe adjusted growth was 6% in line with vehicle production driven by active safety growth of 18%, partially offset by slower high voltage growth in that region.

Joseph R. Massaro: And then China revenues were up 12% driven by Sps growth with local Oems.

Joseph R. Massaro: China growth over market was eight points, while vehicle production, primarily impacted by lower production at multinational joint venture customers as well as slower high voltage growth of 4% in the quarter.

Joseph R. Massaro: Looking at revenue in more detail on slide 11, as noted, revenue in the fourth quarter was $4.9 billion, reflecting sales growth of $188 million, a favorable $62 million contribution from net price downs in commodities, and foreign exchange tailwinds of approximately $29 million. From a regional perspective, North American revenues were down 7% or 11% below the mark, driven in part by the UAW strike impact, which totaled $100 million in October.

Joseph R. Massaro: As I will discuss in more detail. Shortly we do expect growth over market to increase in 2024 from the second half of 2023 levels.

Joseph R. Massaro: Moving to the <unk> segment on the next slide.

Joseph R. Massaro: Revenue growth was flat in the quarter.

Joseph R. Massaro: Active safety growth was 11% despite the UAW strike, which primarily impacted the active safety product line in North America.

User experience was down 16% in the quarter driven in large part by the previously noted China customer mix shifts impacting our user experience volumes with multinational joint venture Oems in China.

Joseph R. Massaro: For the full year adjusted revenue growth was 17% with strong active safety growth of 29% and user experience growth of 4%.

Joseph R. Massaro: In addition, as we cautioned during the fourth quarter, foreign manufacturers, primarily the Japanese OEMs with whom we do not have significant content, experienced very strong year-over-year production growth in the quarter, further impacting the relative production mix in the North American market. In Europe, adjusted growth was 6% in line with vehicle production, driven by active safety growth of 18%, partially offset by slower high voltage growth in the region. And in China, revenues are up 12% driven by SPS growth with local OEMs. However, Chinese growth over market was eight points below vehicle production, primarily impacted by lower production of multinational joint venture customers, as well as slower high voltage growth of 4% in the quarter. As I will discuss in more detail shortly, we do expect growth over the market to increase in 2024 from the second half of 2023 level. Moving to the ASUX segment on the next slide. Revenue growth was flat in the quarter.

Joseph R. Massaro: Segment adjusted operating in the quarter was $141 million up 83% over prior year, despite the negative strike impact of $10 million in the quarter.

Operating income margins expanded 440 basis points to 10, 4% as performance and cost savings initiatives offset higher labor costs.

Joseph R. Massaro: Full year operating income and margins were in line with our original expectations as margins improved by almost 40 basis points inclusive of the full year strike impact of $15 million.

Joseph R. Massaro: As we have previously discussed given the nature of the <unk> business and the timing of certain customer reimbursements and engineering credits the quarterly profitability of the business is cyclical and weighted to the fourth quarter.

We would expect this trend to continue in 2024.

Joseph R. Massaro: Okay.

Turning to signal and power on slide 13.

Joseph R. Massaro: Revenue in the fourth quarter was $3 6 billion, an increase of 3% or 4% below vehicle production.

Joseph R. Massaro: Active safety growth was 11% despite the UAW strike, which primarily impacted the active safety product line in North America. However, user experience growth was 16% in the quarter, driven in large part by the previously noted China customer mix shift impacting our user experience volumes with multinational joint venture OEMs in China. For the full year, adjusted revenue growth was 17%, with strong active safety growth of 29% and user experience growth of 4%. Segment adjusted operating income in the quarter was $141 million, up 83% over the prior year, despite the negative strike impact of $10 million in the quarter. Operating income margins expanded 440 basis points to 10.4% as performance and cost savings initiatives offset higher labor costs.

Joseph R. Massaro: As anticipated overall Sps growth over market was impacted in North America by the UAW strike and OEM mix, representing approximately five points of growth in the quarter.

Joseph R. Massaro: Lower high voltage growth, which primarily impacted the European region was lower by two points.

For the full year adjusted revenue growth was 11% despite the impact of the strike.

Joseph R. Massaro: High voltage growth was approximately 20% for the year and segment growth in China was 13%.

Joseph R. Massaro: Segment, adjusted operating income was $459 million in the quarter up 3% from prior year, despite a $40 million or 90 basis points strike impact.

Joseph R. Massaro: Operating performance was strong, including the benefit of lower supply chain disruption costs offsetting the impact of higher labor and other costs.

Joseph R. Massaro: Customer recoveries offset the impact of material inflation and commodities in the quarter and foreign exchange continued to present, a headwind equal to 60 basis points on a year over year basis.

Joseph R. Massaro: Well, your operating income and margins were in line with our original expectations as margins improved by almost 40 basis points, inclusive of a four-year strike impact of $15 million. As we have previously discussed, given the nature of the ASUX business and the timing of certain customer reimbursements and engineering credits, the quarterly profitability of the business is cyclical and weighted to the fourth quarter. We would expect this trend to continue in 2024. Turning the signal and power on slide 13.

Full year operating margins were up 50 basis points, despite the significant headwinds related to foreign exchange and the strike.

Joseph R. Massaro: Turning now to slide 14, and 2024 macro expectations.

Joseph R. Massaro: We are forecasting global vehicle production to be flat for the year, reflecting approximately 93 million units.

Joseph R. Massaro: Regionally, we expect North America to be up approximately 1% at $16 5 million units.

Joseph R. Massaro: Revenue in the fourth quarter was $3.6 billion, an increase of 3%, or 4% below vehicle production. As anticipated, overall SPS growth over the market was impacted in North America by the UAW strike in OEM, representing approximately five points of growth in the core. Polar high voltage growth, which primarily impacted the European region, was lowered by two points.

Joseph R. Massaro: Europe down, 2% or approximately 18 million units in China flat at approximately 30 million units.

Joseph R. Massaro: While we remain cautious about the impact of macroeconomic and geopolitical factors, we do believe that supply chain constraints have improved significantly.

Joseph R. Massaro: And based on what we see today should not have a significant impact on overall customer production levels.

Joseph R. Massaro: Our macro assumptions also assumed copper at $4 Mexican peso at $18 25, a year.

Joseph R. Massaro: For the full year, adjusted revenue growth was 11% despite the impact of the strike. High voltage growth was approximately 20% for the year, and segment growth in China was 13%. Segment-adjusted operating income was $459 million in the quarter, up 3% from the prior year, despite a $40 million or 90 basis point strike.

ROE at 110, and the RMB at seven.

Joseph R. Massaro: Okay.

Joseph R. Massaro: Moving to slide 15, and our 2020 for full year outlook.

Joseph R. Massaro: We expect revenue in the range of 21, 3% to $21 9 billion up 7% at the midpoint compared to 2023, reflecting seven points of growth over market.

Joseph R. Massaro: Operating performance was strong, including the benefit of lower supply chain disruption costs, offsetting the impact of higher labor and other costs. Customer recoveries offset the impact of material inflation and commodities during the quarter, and foreign exchange continues to present a headwind equal to 60 basis points on a year over year basis. All your operating margins were up 50 basis points despite the significant headwinds related to foreign exchange and the strike. Turning now to slide 14 and the 2024 macro. We are forecasting global vehicle production to be flat for the year, reflecting approximately 93 million units. Regionally, we expect North America to be up approximately 1% at 16.5 million units, Europe down 2% or approximately 18 million units, and China flat at approximately $30 million.

Joseph R. Massaro: EBITDA and operating income are expected to be approximately $3 to $8 billion and 255 billion at the midpoint.

Joseph R. Massaro: Reflecting strong flow through on volume growth continue.

Continued margin expansion in higher growth product lines.

Joseph R. Massaro: And operating performance and cost reduction initiatives to offset increasing labor headwinds, including higher than expected labor inflation in Mexico as well as the stronger peso.

Joseph R. Massaro: Adjusted earnings per share is estimated to be between $5 55.

Joseph R. Massaro: And $6 <unk>.

Joseph R. Massaro: EPS growth was 19% is primarily driven by strong earnings and lower interest expense.

Joseph R. Massaro: Partially offset by an increase in the expected tax rate to 17, 5%.

As I will discuss further we are targeting share repurchases of $750 million in 'twenty four and have reflected a full year benefit estimate of <unk> <unk> per share at the midpoint of our guidance.

Joseph R. Massaro: While we remain cautious about the impact of macroeconomic and geopolitical factors, we do believe that supply chain constraints have improved significantly, and based on what we see today, should not have a significant impact on overall customer production. Our macro assumptions also assume copper at $4, the Mexican peso at $18.25, the Euro at $1.10, and the RMB at $7. Moving to slide 15 in our 2024 full year outline, we expect revenue in the range of $21.3 to $21.9 billion, up 7% at the midpoint compared to 2023, reflecting 7 points of growth over the market. EBITDA and operating income are expected to be approximately $3.28 billion and $2.55 billion at the midpoint, reflecting strong flow through on volume growth, continued margin expansion and higher growth product lines, and operating performance and cost reduction initiatives to offset increasing labor headwinds, including higher than expected labor inflation in Mexico, as well as the stronger peso. Adjusted earnings per share is estimated to be between $5.55 and $6.05.

As it relates to emotional as Kevin mentioned earlier active will not participate in future funding rounds.

Despite the continued progress made by the emotional team on their technology roadmap given.

Given the push out of the commercialization of the level four five robo taxi business model, we no longer believe capital allocation.

Joseph R. Massaro: <unk> is appropriate for assets.

Joseph R. Massaro: In addition, we are also exploring steps to reduce a significant portion of our common equity holders.

Joseph R. Massaro: Working within the construct of the joint venture agreement, we will look to sell or otherwise reduce our holdings during 2024, reducing the dilutive earnings per share impact of the emotional losses on assets earnings.

Joseph R. Massaro: Given that the exact timing of the reduction in shareholdings is not yet known we have included the expected full year impact of Moshe was losses in our current outlook and.

Joseph R. Massaro: Our noncash equity loss of approximately $340 million or $1 20 of earnings per share.

Joseph R. Massaro: Moving to cash flow, we expect 2020 for operating cash flow of $2 3 billion driven by higher earnings.

Joseph R. Massaro: Capital expenditures are expected to be approximately 5% of revenues.

Joseph R. Massaro: Finally, although we are not providing quarterly guidance in 2024, we did want to provide some perspective on calendar <unk> during the year as both revenue growth and earnings are weighted towards the second half.

Joseph R. Massaro: Our full year guidance assumes adjusted revenue growth in the first half of the year of 3% to 5%.

Joseph R. Massaro: Adjusted growth in the second half of the year accelerated to 9% to 10% and is weighted towards the fourth quarter.

Joseph R. Massaro: EPS growth of 19% is primarily driven by strong earnings and lower interest expense, although partially offset by an increase in the expected tax rate to 17.5%. As I will discuss further, we are targeting share repurchases of $750 million in 2024 and have reflected a full year benefit estimate of five cents per share at the midpoint of our guidance. As it relates to emotional, as Kevin mentioned earlier, Aptiv will not participate in future funding rounds.

Joseph R. Massaro: With respect to earnings consistent with the higher level of revenue growth and the previously noted cyclicality in the business.

Joseph R. Massaro: <unk> will expand throughout the year similar to 2023.

On slide 16, we provide a bridge of 2020 for revenue and operating income guidance as compared to 2023.

Joseph R. Massaro: Starting with revenue our growth over market combined with flat global vehicle production results in a net contribution of revenues of $1 2 billion.

Joseph R. Massaro: The full year benefit of material cost recoveries will effectively offset changes in commodity prices and price downs and FX is estimated at a positive $100 million.

Joseph R. Massaro: Despite the continued progress made by the Motional team on their technology roadmap, given the push out of the commercialization of the Level 4-5 Robo-Taxi business model, we no longer believe capital allocation to Motional is appropriate for Aptiv. In addition, we are also exploring steps to reduce a significant portion of our common equity holdings.

Joseph R. Massaro: Turning to adjusted operating income, we expect margin expansion of 120 basis points at the midpoint of our guidance driven.

Joseph R. Massaro: Driven by continued strong strong flow through on incremental volumes.

Joseph R. Massaro: Net price in commodities will offset and we expect our strong operating performance in 2023 to continue with the 24 as manufacturing and material performance as well as additional cost reduction actions are expected to offset incremental labor costs and non material inflation.

Joseph R. Massaro: Working within the construct of the joint venture agreement, we will look to sell or otherwise reduce our holdings during 2024, reducing the dilutive earnings per share impact of emotional losses on assets earned. Given that the exact timing of the reduction in shareholdings is not yet known, we have included the expected full-year impact of Moeshel's losses in our current outlook. A non-cash equity loss of approximately $340 million, or $1.20 in earnings per share.

Joseph R. Massaro: In summary, we remain focused on driving disciplined revenue growth, while balancing investment in the business with increased levels of performance and expanding operating margins.

Joseph R. Massaro: Okay.

Joseph R. Massaro: Moving to slide 17, we wanted to discuss our updated growth over market framework of 6% to 8% down from our prior range of 8% to 10%.

Joseph R. Massaro: As we have discussed our growth over market represents app is relative secular growth expectations above global vehicle production.

Joseph R. Massaro: Moving to cash flow, we expect 2024 operating cash flow of $2.3 billion driven by higher earnings. Capital expenditures are expected to be approximately 5% of revenue. Finally, although we are not providing quarterly guidance in 2024, we did want to provide some perspective on calendarization during the year, as both revenue growth and earnings are weighted towards the second half. Our full-year guidance assumes adjusted revenue growth in the first half of the year of 3-5%. Adjusted growth in the second half of the year accelerates to 9-10% and is weighted towards the fourth quarter. With respect to earnings, consistent with the higher level of revenue growth and the previously noted cyclicality in the business, margins will expand throughout the year, similar to 2023.

Joseph R. Massaro: During the second half of 2023, our growth over market was negatively impacted by several factors, including the UAW strike stronger Japanese OEM production in North America, as well as a change in Chinese customer mix as local Chinese Oems grew faster than multinational customers in China.

Joseph R. Massaro: When combined with the direct UAW strike impact.

Joseph R. Massaro: OEM and customer mix reduced our growth over market in 2023 by approximately five points on a full year basis.

Joseph R. Massaro: In addition, a slowdown in high voltage growth driven by lower EV production and the exiting of a relationship with a smaller north American EV only producer accounted for a 2% decrease in growth over market.

Joseph R. Massaro: As we look out into 2024, we believe the impact of the UAW strike in the OEM OEM production mix in North America effectively reimburses.

Joseph R. Massaro: In addition, improved production schedules at our multinational Chinese OEM customers and our continued growth with local Chinese Oems will contribute to higher growth over market in China.

Joseph R. Massaro: On slide 16, we provide a bridge of 2024 revenue and operating income guidance as compared to 2023. Starting with revenue, our growth over market combined with flat global vehicle production results in a net contribution of revenues of $1.2 billion. The full year benefit of material cost recoveries will effectively offset changes in commodity prices and price down, and FX is estimated at a positive $100 million.

Joseph R. Massaro: However, we are forecasting high voltage growth slowed or approximately 20% in 2024 <unk>.

Joseph R. Massaro: Insistent with the 2023 levels, but down from pre 2023 levels of approximately 30%.

Joseph R. Massaro: Our updated framework of 6% to 8% incorporates these changes as well as the continued contribution from our active safety engineered components and commercial vehicle product lines.

Joseph R. Massaro: Slide 18 provides an update on our multiyear margin expansion performance.

Joseph R. Massaro: As noted we saw very strong margin expansion in 2023 exceeding the expectations, we laid out last February.

Joseph R. Massaro: Turning to adjusted operating income, we expect margin expansion of 120 basis points in the midpoint of our guide, driven by continued strong flow through on incremental volumes. Net price and commodities will offset, and we expect our strong operating performance in 2023 to continue with a 24 as manufacturing and material performance, as well as additional cost reduction, are expected to offset incremental labor costs and non-material inflation. In summary, we remain focused on driving disciplined revenue growth while balancing investment in the business with increased levels of performance and expanding operations. [inaudible] As we have discussed, our growth over market represents APTA's relative secular growth expectations above global vehicle production. During the second half of 2023, our growth over the market was negatively impacted by several factors, including the UAW strike, stronger Japanese OEM production in North America, as well as a change in Chinese customer mix as local Chinese OEMs grew faster than multinational customers in China.

Joseph R. Massaro: Operating income margin expanded 150 basis points over 2022.

Joseph R. Massaro: Despite the strike impact of $80 million and foreign exchange headwinds of over $100 million.

Joseph R. Massaro: Strong flow through on sales growth was partially offset by net price in commodities.

Joseph R. Massaro: As a slight headwind and we saw significant reductions in supply chain disruption costs and the operating teams drove incremental material and manufacturing performance.

Joseph R. Massaro: Offsetting the impact of higher labor and operating costs.

Joseph R. Massaro: The account Complishments of last year provide a strong jumping off point for 2024, as we target a 120 basis point margin expansion at the midpoint of our guide.

Joseph R. Massaro: In addition to the ongoing performance initiatives.

During the second half of 2023, we also have several cost reduction actions to help bolster our overall performance in health insurance <unk>.

The 2020 for margin expansion.

Joseph R. Massaro: These additional actions as well as our continued focus on our overall cost structure and footprint are necessary as we expect to see continued labor and operating cost pressures, particularly in our Mexico operations over the coming years.

Joseph R. Massaro: When combined with the direct UAW strike impact, the OEM and customer mix reduced our growth over market in 2023 by approximately five points over a four-year basis. In addition, a slowdown in high voltage growth driven by lower EV production and the exiting of a relationship with a smaller North American EV only producer account for a 2% decrease in growth over market.

Joseph R. Massaro: We are also forecasting the peso to remain at a relatively strong level in 2024.

Speaker Change: Before handing the call back to Kevin I would like to touch upon our continued strong performance as it relates to cash flow generation and capital allocation.

Speaker Change: We generated a record $1 9 billion in operating cash flow, allowing us to continue to maintain a disciplined and accretive track record of capital deployment in.

Kevin P. Clark: In 2023, we continue to invest in the business focusing on longer term growth and innovation.

Joseph R. Massaro: As we look out into 2024, we believe the impact of the UAW strike and the OEM production mix in North America will effectively be reversed. In addition, improved production schedules at our multinational Chinese OEM customers and our continued growth with local Chinese OEMs will contribute to higher growth over the market in China. However, we are forecasting high voltage growth to slow to approximately 20% in 2024, consistent with the 2023 levels, but down from pre-2023 levels of approximately 30%.

Kevin P. Clark: In addition, we opportunistically de levered by paying down our $300 million term loan a.

Resulting in a full year earnings per share benefit of <unk> in 2024.

In addition, we purchased $400 million of stock, including $300 million in the fourth quarter.

Kevin P. Clark: Looking at 2024, we expect operating cash flows increased to $2 3 billion and we will continue to maintain a well balanced approach to capital allocation.

Kevin P. Clark: In addition to both investing in organic and inorganic opportunities. We are forecasting additional share repurchases in 2020 for targeting a total of $750 million in the year.

Joseph R. Massaro: Our updated framework of 6-8% incorporates these changes, as well as the continued contribution from our active safety, engineered components, and commercial vehicle product lines. Slide 18 provides an update on our multi-year margin expansion performance. As noted, we saw very strong margin expansion in 2023, exceeding the expectations we laid out last February. Operating income margin expanded 150 basis points over 2022, despite the strike impact of $80 million and foreign exchange headwinds of over $100 million. Strong flow through on sales growth was partially offset by net price and commodities as a slight headwind.

Kevin P. Clark: While we will continue to maintain our current financial policy as it relates to our balance sheet and leverage profile.

Kevin P. Clark: As we have discussed in the past our sustainable business model and our relentless focus on operating performance enables us to convert more income to cash, allowing <unk> to maintain a well balanced approach to capital allocation.

That we believe helps drive shareholder value.

Kevin P. Clark: With that I'd like to hand, the call back to Kevin for his closing remarks, thanks, Joe I'll wrap up on slide 20 before opening the line up for questions as the management team reflects on 2023, we expect the pace of innovation to continue to accelerate and drive ongoing transformation across industries.

Speaker Change: <unk> is perfectly positioned to benefit from this change having identified the safe green and connected megatrends over a decade ago.

Joseph R. Massaro: And we saw significant reductions in supply chain disruption costs, and the operating teams drove incremental material and manufacturing performance. More than offsetting the impact of higher labor and operating costs, the accomplishments of last year provide a strong jumping-off point for 2024 as we target a 120 basis point margin expansion at the midpoint of our guide. In addition to the ongoing performance initiatives, during the second half of 2023, we also took several cost reduction actions to help bolster our overall performance and help ensure achievement of the 2024 Margin Exchange. These additional actions, as well as our continued focus on our overall cost structure and footprint, are necessary as we expect to see continued labor and operating cost pressure, particularly in our Mexico operations, over the coming years.

Kevin P. Clark: We are a purpose built we have purpose built our portfolio to provide flexible high performance and cost effective solutions that address our customers' greatest challenges all on a global scale the.

Kevin P. Clark: At the same time, we remain committed to flawless execution and operational excellence, enabling us to unlock incremental profitability and deliver value to our shareholders.

Speaker Change: In closing I am proud of what the App. The team accomplished during 2023 and I'm excited about we will about what we will deliver in the years ahead, operator, let's now open the line for questions.

Speaker Change: Thank you.

Speaker Change: We'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Please limit questions to one question and one follow up.

Speaker Change: Press Star one to ask a question.

Joseph R. Massaro: We are also forecasting the pace of the recovery to remain at a relatively strong level in 2024. Before handing the call back to Kevin, I'd like to touch upon our continued strong performance as it relates to cash flow generation and capital allocation. We generated a record $1.9 billion in operating cash flow, allowing us to continue to maintain a disciplined and accretive track record.

Speaker Change: And our first question.

Speaker Change: Is going to come from Joseph Spak from UBS. Please go ahead.

Joseph Spak: Thanks, Good morning, everyone.

Joseph Spak: I guess just to start I appreciate the commentary on the long term growth over market target.

Joseph Spak: Back of the envelope it would seem like the reduced growth would would lower your your longer term margin goals by maybe maybe 2030 bps is that is that sort of reasonable in can you sort of address any other.

Joseph R. Massaro: [inaudible] In 2023, we continue to invest in the business, focusing on longer-term growth and innovation. In addition, we opportunistically de-levered by paying down our $300 million term loan A, resulting in a full year earnings per share benefit of 5 cents in 2024. In addition, we purchased $400 million of stock, including $300 million in the fourth quarter.

Joseph Spak: Factors that may impact the long term margin goals.

Joseph Spak: Yes.

Joseph Spak: Yes, Joe It's Joe I'll start and then Kevin can jump in so yes, obviously, we will see that.

Joseph R. Massaro: Come down a bit as high voltage slows.

Joseph R. Massaro: We tried to lay on slide 18 of the deck, we tried to lay out the progress we've made.

Joseph R. Massaro: Looking at 2024, we expect operating cash flow to increase to $2.3 billion, and we will continue to maintain a well-balanced approach to capital allocation. In addition to both investing in organic and inorganic opportunities, we are forecasting additional sharer purchases in 2024, targeting a total of $750 million in a year. Why will we continue to maintain our current financial policy as it relates to our balance sheet and leverage profile? Why we will continue to maintain our current financial policy as it relates to our balance sheet and leverage profile. As we have discussed in the past, our sustainable business model and relentless focus on operating performance enable us to convert more income into cash, allowing Aptiv to maintain a well-balanced approach to capital allocation, that we believe helps drive shareholder value. And with that, I'd like to have a call back from Kevin for his closing remarks. Thanks, Joe.

Speaker Change: And 23, and 24, which we feel is quite strong.

Speaker Change: If we had to look out and this goes back to that Investor day discussion around 2025 margins.

Speaker Change: I think if we looked at that today, we had about a 14% total margin for active in 2025.

We'd say, we've got about call. It 100 to 150 basis point headwind to that.

Speaker Change: At the moment.

Some of it coming off obviously from the for the lower growth over market.

Speaker Change: Some of it is going to be the higher peso.

Speaker Change: We're seeing just that.

The peso changes of last year, the strengthening as effectively gotten into the cost base at this point.

Speaker Change: And as I mentioned in my prepared comments, we're also seeing particularly for 2025.

Speaker Change: Some additional operating and labor costs in Mexico. So at this point.

Speaker Change: I would say those margin targets are probably pushed out a year round numbers.

Speaker Change: And we'll obviously be working working on that over the course of this year and sort of updating as up as appropriate and I don't Kevin if I.

Kevin P. Clark: I'll wrap up on slide 20 before opening the line up for questions. As the management team reflects on 2023, we expect the pace of innovation to continue to accelerate and drive ongoing transformation across the industry. Aptiv is perfectly positioned to benefit from this change, having identified the safe, green, and connected megatrends over a decade ago. We have purpose-built our portfolio to provide flexible, high-performance, and cost-effective solutions that address our customers' greatest challenges, all on a global scale. At the same time, we remain committed to flawless execution and operational excellence, enabling us to unlock incremental profitability and deliver value to our shareholders. In closing, I'm proud of what the Aptiv team accomplished in 2023, and I'm excited about what we will deliver in the years ahead. Operator, let's open the line for questions now. Thank you. If you would like to ask a question... by pressing star one on your telephone keypad, film. Unknown Speaker, Office Word Document MSWordDoc Word.

Kevin P. Clark: No listen I think you captured I think to the <unk>.

Kevin P. Clark: Point, Joe made we'd say the big the bigger headwind quite frankly is labor inflation, especially in places like like Mexico relative to growth rate from from our high voltage electrification.

Kevin P. Clark: Remind everybody, although it looks like.

Adoption has slowed growth rate is still on a relative basis extremely high. So just wanted to remind everybody that we are believers on the ongoing trend of.

Kevin P. Clark: The penetration of electrification in the automotive space.

Speaker Change: Okay. Thank you for that and then just.

Speaker Change: On the buyback.

Speaker Change: I think.

Speaker Change: That's I think a positive step for for.

Speaker Change: Capital allocation, but you still have $1 6 billion of cash on hand.

Speaker Change: Your free cash flow guidance is like $1 2 billion I think you said minimum cash of six to 700 million. So the 750 I think is.

Speaker Change:

Speaker Change: Within the framework of what you expect to how you expect to sort of use.

Operator: Document.8, Please wait a minute. One question and one follow-up. Again, press star one to ask. And our first question is going to come from Joseph Spak from UBS. Please go ahead. Thanks. Good morning, everyone.

Speaker Change: Cash generation, but how should we think about.

Speaker Change: The total cash on hand.

Speaker Change: Especially.

Speaker Change: I understand you want to leave a little bit of firepower for maybe some some acquisitions, but still seems like there's a good amount of cash on the balance sheet that could be put to work.

Joseph Robert Spak: I guess just to start, appreciate the commentary on the long-term growth over market target. Back of the envelope, it would seem like the reduced growth would, would lower your longer-term margin goals by maybe maybe 2030 BIPs. Is that sort of reasonable? And can you sort of address any other factors that may impact the long-term margin? Yeah. Yeah, Joe, it's Joe. I'll start, and then Temin can jump in.

Yes, maybe I'll start I'll, let Joe.

Joseph R. Massaro: Your observation is a good one listen our primary focus is on continuing to invest in the business for profitable growth.

Speaker Change: I will underscore that we feel like we have a very very strong competitive position, we feel like there are opportunities.

Speaker Change: To further widen the competitive mode.

Joseph R. Massaro: So those are those are opportunities that we will continue to evaluate.

But to the extent those opportunities don't present themselves, we will certainly look at.

Joseph R. Massaro: So yeah, we obviously will see that come down a bit as the high voltage slows. We try to lay out, on slide 18 of the deck, the progress we've made in 23 and 24, which we feel is quite strong. I think if we had to look out, and this goes back to that Investor Day discussion around 2025 margins, you know, I think if we looked at that today, we'd have about a 14% total margin for Aptiv in 2025. We'd say we've got about, call it, a 100 to 150 basis point headwind to that at the moment. Some of it is coming off, obviously, from the lower growth over market. Some of it's going to be the higher peso.

Joseph R. Massaro: Returning incremental cash to shareholders. So we'll strike that balance but it's.

Joseph R. Massaro: It's important that we have some level of flexibility.

Joseph R. Massaro: To react when opportunities present themselves.

Speaker Change: Okay. Thank you.

Speaker Change: And our next question is going to come from Rod Lache with Wolfe Research. Please go ahead.

Speaker Change: Oh I'm sorry, this is going to be Chris Mcnally with Evercore.

Chris Mcnally: Thanks, so much team.

Two questions the first.

Chris Mcnally: Joe I appreciate the.

To help on the cadence first half second half so if it sounds something like the outgrowth, 4% first half maybe 10% in the second half could you help us walk through the <unk>.

Chris Mcnally: Chinese mix I think everyone understands in North America and the strike.

Chris Mcnally: But when we say domestic Chinese it sort of multiple different different things and I guess what people are trying to figure out is why that may improve over the course of the of the year or is it specific active things or is it just the production schedule the way it plays out for your customer base.

Joseph R. Massaro: We're seeing just, you know, the peso changes of last year; the strengthening has effectively gotten into the cost base at this point. And as I mentioned in my prepared comments, we're also seeing, particularly for 2025, some additional operating and labor costs in Mexico. So at this point, I would say, you know, those margin targets are probably pushed out a year, round numbers. And we'll obviously be working on that over the course of this year and sort of updating as appropriate. No, listen, I think you captured the point Joe made. We did a big, a bigger headwind, quite frankly, is labor inflation, especially in places like Mexico relative to the growth rate from high-voltage electrification.

Chris Mcnally: Yes.

Chris Mcnally: Obviously, driven offered production schedules from the customer base, which would include launches.

Chris Mcnally: So we do see higher launch activity and schedules picking up from the multinationals in.

Chris Mcnally: Towards the second half of the year.

Chris Mcnally: In addition to that and I think we're from what we're seeing and I think it's generally consistent at this point with what you see.

Chris Mcnally: IHS is some of the local OEM growth.

The 30 plus percent you saw in the back half of the year in 'twenty three they start to lap some of that so from a growth again that sort of relative growth rate that drives the growth over MAU.

Joseph Robert Spak: I just want to remind everybody that although it looks like adoption has slowed, the growth rate is still, on a relative basis, extremely high. So just want to remind everybody that we're we are believers in the ongoing trend of the penetration of electrification and the automobile. Okay, thank you for that. And then, just, you know, on the buyback, I think, you know, that that's, I think, a positive step for capital allocation. But, you know, you still have $1.6 billion of cash on hand. Your free cash flow guidance is like $1.2 billion. I think you said the minimum cash is $6-$7 million.

Chris Mcnally: Market calculations some of that starts to come.

Chris Mcnally: Come back in a little just given the significant growth in.

Chris Mcnally: In the back half of 2023, and obviously we have.

Chris Mcnally: We tend to concentrate in call it the top 10 or 12 Chinese Oems from.

Chris Mcnally: From a local perspective, so we have their schedules, but also Chris looking yes.

Chris Mcnally: So to some extent of what the forecasting services.

Chris Mcnally: Are saying about that production level as well.

Chris Mcnally: Yes.

Speaker Change: Maybe I'll let.

Speaker Change: Chris a couple of items. So it's just part of it is just the evolution of our business mix if youre speaking.

Kevin P. Clark: So, you know, the $750,000, I think, is probably within the framework of what you expect to how you expect to sort of use cash generation. But how should we think about the total cash on hand? I understand you want to leave a little bit of firepower for maybe some acquisitions, but it still seems like there's a good amount of cash on the balance sheet that could be put to work. Yeah, maybe I'll start.

Is your question specific to China.

Chris Mcnally: So when you look at AD as.

Chris Mcnally: As an example, 2000 22023 bookings in China, roughly 60% of those with local Oems. Our focus is on players like Julie like BYD like China. Unlike some of the <unk>.

Chris Mcnally: The leaders were careful as with respect to overall overall exposure and we want to make sure that we're the players that can grow in China, and then and then highly focused on those that we feel are well positioned to export and are interested in exporting just given the nature of what we're able to bring.

Kevin P. Clark: Listen, Joe, your observation is a good one. Listen, our primary focus is on continuing to invest in the business for profitable growth, and I will underscore that. We feel like we have a very, very strong competitive position. We feel like there are opportunities to further widen the competitive mode. So those are opportunities that we will continue to evaluate. But to the extent that those opportunities don't present themselves, we'll certainly look at returning incremental cash to shareholders. So we'll strike that balance, but it's, you know, it's important that we have some level of flexibility to react when opportunities present themselves. Thank you, from Rye. I'm sorry, but this is going to be Chris McNally with EVA.

Chris Mcnally: When you look at 2023 revenues, we were roughly 40%.

<unk>.

Chris Mcnally: Just under 60%.

Multinational standpoint that moves up 50% in 2024 and continues to kind of increase.

Chris Mcnally: Up north of 60%, 70% over the coming years, so that mix at least from our current list of winter standpoint grows.

Speaker Change: Yes, that's fair.

Speaker Change: Perfect that was my follow up I mean, do you think sort of exiting 'twenty five 'twenty six.

Christopher Patrick McNally: Thanks so much, team. Two questions. The first, Joe, I appreciate the help on the cadence for the first half and second half.

Speaker Change: The timeline that you start to the comp pretty.

Joseph R. Massaro: So if it sounds something like the outgrowth, you know, 4% first half, maybe 10% in the second half, could you help us walk through the Chinese mix? I think everyone understands North America and the strike, but when we say domestic, It sort of means multiple different things, and I guess what people are trying to figure out is why that may improve over the course of the year. Is it specific Aptiv things, or is it just the production schedule, the way it plays out? Yeah, it's obviously driven by production schedules from the customer base, which would include launches. So we do see higher launch activity and schedules picking up from the multinationals towards the second half of the year.

Speaker Change: Agnostic, meaning that the targeted plan that you laid out you should be pretty well adjusted assuming the mix.

Speaker Change: Kind of normalize as we get to 'twenty, five 'twenty six but that metric.

Speaker Change: The turnover happens around the 25% to 26, where we won't be talking about this mix issue as much.

Speaker Change: Yes.

Speaker Change: I think.

Speaker Change: I think we're in a unique <unk> we were in a unique situation in 2023 were right. We saw a significant swing Joe made the point I think he is absolutely right. We as a team like we are absolutely right that youre going to see that more balanced on a go forward basis in terms of year over year change what we're trying to do we just make sure we're balanced across multiple customers, but ensuring that.

Speaker Change: The right customers and.

Joseph R. Massaro: In addition to that, and I think we're, you know, from what we're seeing, and I think it's generally consistent at this point with what you see from IHS, is that some of the local OEM growth, the 30-plus percent you saw in the back half of the year in 23, they start to lap some of that. So from a growth point of view, again, the sort of relative growth rate that drives the growth over market calculation, some of that starts to come back in a little bit, just given the significant growth in and the back half of 2023. And obviously, you know, we have, you know, we tend to concentrate on and call it the top 10 or 12 Chinese OEMs from a local perspective. So we have their schedules, but Chris is also looking, you know, to some extent at what the forecasting services are saying about that production level as well. Yeah, but maybe I'll add a couple more items.

Speaker Change: There are for example, some of the global <unk> that are better positioned than others and there are certainly some very strong local Chinese Oems were doing extremely well in the China market.

Speaker Change: But have come to us with a real focus on how do we assist them how do we enhance our capabilities.

Speaker Change: Take product outside of China into principally Europe at this point in time.

Speaker Change: That's great and then just the last example, I'll come up Joe I think the 2025.

Speaker Change: With 14% to 14, 5% margin of 100 to 150 basis of that can we just kind of take that.

Speaker Change: New 25 is roughly 13% and then like you said pushed the year out there 2006, I just know that will come up after the call yes round.

Joseph R. Massaro: Rob I think round numbers, that's a pretty good Chris if you wanted to it'd probably be closer to somewhere between 12, 5% 13.

Kevin P. Clark: Part of it is just the evolution of our business. Speaking, you know, if your question is about China.

Speaker Change: Perfect. Thanks, so much.

Speaker Change: Yep.

Speaker Change: And our next question is going to come from Rod Lache from Wolfe Research.

Kevin P. Clark: Right. So when you look at, as an example, 2020 and 2023 bookings in China, roughly 60% of those were with local OEMs. Our focus is on players like Geely, like BYD, like Chang'an, like, you know, some of the leaders.

Rod Lache: Good morning, everybody.

Rod Lache: Just first of all to clarify.

Rod Lache: Some of the discussion off of Chris's question.

Rod Lache: Obviously, we've seen some ongoing share shift away from the western Oems over the past couple of years and it sounds like.

Rod Lache: The reason why you don't expect that to reoccur.

Kevin P. Clark: We're careful with respect to overall, overall exposure, and we want to make sure that we're with players that can grow in China and then, and then highly focused on those that we feel are well positioned to export and are interested in exporting, just given the nature of what we're able to bring. When you look at 2023 revenues, you know, we were roughly 40% domestic OEMs, just under 60% from a multinational standpoint. That moves to 50% in 2024 and continues to kind of increase, you know, up north of 60, 70% over the coming year. So that mix, at least from a current list of winners standpoint.

Rod Lache: In two.

Rod Lache: 2024 is.

Rod Lache: The big uptick in.

Rod Lache: In backlog that you have from BYD, Shanghai and some of the other Chinese Oems is that is that essentially it.

Rod Lache: Well I think there's a couple of them.

Rod Lache: I understand that Rod I think theres, a couple of things I think overall.

Rod Lache: You had some 30 plus percent growth quarters by those Chinese, though those local Chinese Oems right, we do think that and again from what we're seeing in our scheduled perspective and when we look at the couple of forecasting services has sort of looked at that market.

Kevin P. Clark: Yeah, that's perfect. That was my follow-up. I mean, do you think sort of exiting 25 into 26? No, you have to get very specific on the timeline that you start to become, Unknown Speaker.

That starts to level off a bit right they catch up to some of their high comps.

Rod Lache: At the same time launch activity with the multinationals, who admittedly have had I think some platform challenges over the last couple of years in China do you have new launches coming up and those launches were on those platforms.

Christopher Patrick McNally: , that the targeted plan that you laid out should be pretty well adjusted assuming you know the mix Unknown Executive, Emmanuel Rosner, Gautam Narayan, Dan Levy, Joseph Spak, Rod Lache. Yeah, I think, um, you know, I think we're in a unique situation. We were in a unique situation in 2023. We're right.

And we expect to see that.

Rod Lache: Sort of take their overall production up our content offer which is which is how we're sort of looking at it starting to balance out and then you obviously have the mix shift inherent within our business that Kevin took you through.

Joseph R. Massaro: We saw a significant, Joe made the point, I think he's absolutely right. We as a team think we're absolutely right, that you're gonna see that more balanced kind of go-forward basis in terms of year-over-year change. What we're trying to do is just make sure we're balanced across multiple customers but ensuring they're the right customers. And there are, for example, some of the global JVs that are better positioned than others. And there are certainly some very strong local Chinese OEMs who are doing extremely well in the Chinese market but have come to us with a real focus on how do we assist them, how do we enhance our capabilities to take products outside of China into principally Europe at this point.

Speaker Change: Okay got it at a high level at a high level, we expect.

Speaker Change: Third a continued shift to the local Oems I think Joe and I were talking about is the magnitude of the shift over a relatively short period of time, we expect that.

Speaker Change: Not to be the same in 2024 as it was in 2023.

Right Okay understood.

Speaker Change: On high voltage it looks like you're implicitly assuming a similar level of EV growth in 2024 versus what you saw in 2023.

As you you've observed there has been some slowing late in the year in 2023, maybe you can elaborate on the models or are factors that you considered debt that lead you to conclude that the growth is pretty similar for evs and.

Joseph R. Massaro: That's great. And then just as a last example, it'll come up, Joe. I think that 2025, you know, was 14 to 14 and a half percent margin, 100 to 150 pages off that. Can we just kind of take that as the new 25, it's roughly 13%. And then, like you said, push the year out to 26. I just, I just know that will come up during the rest of the call. Yeah, round numbers. I think round numbers are pretty good. Chris, if you wanted, I'd probably be closer to somewhere between 12 and a half and 13. Thanks so much.

Speaker Change: Can you maybe also give us any color on the assumptions that you make behind those high voltage both bookings.

Speaker Change: Do you have a penetration assumption or is there some.

Speaker Change: So some color you can provide that.

Speaker Change: Helps you underwrite that that level of revenue associated with the bookings.

Speaker Change: Yeah, Yeah. So obviously it looks much like the rest of us.

Speaker Change: The other parts of our business, we're looking at customer schedules.

Speaker Change: Which include customer launches and you're right, we're right around that 20%.

Speaker Change: The growth rate for.

Rod Avraham Lache: Yeah. [inaudible] Good morning, everybody. Just, first of all, to clarify some of the discussion based on Chris's question. Obviously, we've seen some ongoing share shift away from the Western OEMs over the past couple years. And it sounds like the reason why you don't expect that to reoccur in 2024 is because of the big uptick in backlog that you have from BYD, Chang'an, and some of the other Chinese OEMs. Is that essentially it? Well, I think there's a couple of things. I'm not sure I understand that Rod. I think there's a couple of things.

Speaker Change: For 24, which was consistent with 23, there are some new program launches.

Speaker Change: Again that business is 80%, China Europe right. So.

Speaker Change: Clearly seeing some weakening in North America, we've seen schedules come down I think thats.

Well understood at this point.

Speaker Change: But the combination of sort of some new product launches and.

Speaker Change: Where we see customer schedules, and then really that sort of a concentration we have in that business around.

Speaker Change: Around China, and Europe, I think penetration rates, we have always been lower on a relative basis.

Joseph R. Massaro: I think overall... You know, you had some 30 plus percent growth quarters by those local Chinese OEMs, right? We do think that, and again, from what we're seeing in a scheduled perspective, and when we look at the, you know, there's a couple of forecasting services that sort of look at that market, that starts to level off a bit, right? They catch up to some of their high comps.

Speaker Change: At this point, where we have not looked out to 2030 to update what we talked about in February, possibly that's lower than 30% I think we were sort of well behind everyone else.

But I think over the next few years, youre, moving and within that sort of call it that 10% to 15% range.

Speaker Change: Is what our numbers would extrapolate out to.

Speaker Change: Okay alright, thank you.

Yep.

Speaker Change: Okay.

Speaker Change: And our next question is going to come from the tolling Mccauley. Please go ahead.

Mccauley: Great. Thank you good morning, everyone.

Mccauley: Just a first question on the long term growth over market.

Joseph R. Massaro: At the same time, launch activity with the multinationals, who admittedly have had, you know, I think some platform challenges over the last couple of years in China. Do you have new launches coming up? And those launches, we're on those platforms. And we expect to see that. [inaudible] Okay.

Mccauley: Yesterday last year, there was an expectation of some acceleration beyond 2025, obviously life changing here in the near term, but the bookings are still strong and growing. So just a question did you still think there is scope for some.

Mccauley: Acceleration in the second half of the decade.

Joseph R. Massaro: At a high level, at a high level, we expect share to continue to shift to the local OEMs. I think what Joe and I were talking about was the magnitude of the shift over a relatively short period of time. We expect that to not be the same in 2024. Right? Okay, understood. On high voltage, it looks like you're implicitly assuming a similar level of EV growth in 2024 versus what you saw in 2023. As you've observed, there was some flowing late in the year in 2023. Maybe you can elaborate on the models or factors that you considered that led you to conclude that the growth is pretty similar for EVs? And can you maybe also give us any color on the assumptions that you make behind those high-voltage bookings? Do you have a penetration assumption, or is there some other one?

Kevin P. Clark: Got it it's Kevin.

Kevin P. Clark: Listen.

Kevin P. Clark: As it relates to is there an opportunity for accelerated growth.

Speaker Change: If you look at the last three years.

Kevin P. Clark: We've booked roughly the same amount of business as we booked the prior five years to the start of that three year period.

Kevin P. Clark: So the growth opportunity revenue growth opportunity is significant.

There are certain items as we look at growth over market and we use that as a proxy for for.

Kevin P. Clark: The strength of our competitive position, we're not on every OEM across the globe and when you look at that that calculation, although certainly indicative of the strength of growth its not perfect.

Speaker Change: So would we tell you.

Speaker Change: Should there be a biased based on bookings of stronger growth accelerating growth absolutely.

Joseph R. Massaro: Some some color you can provide that you know helps you underwrite that level of revenue associated with the booking. Yep, yep. So obviously, much like the rest of you know, the other parts of our business, we're looking at customer schedules, which include customer launches, and you're right, we're right around that 20% growth rate for for 24, which was consistent with 23. There are some new program launches. Again, that business is, you know, 80% China and Europe, right? So we're clearly seeing some weakening in North America. We've seen schedules come and go.

Speaker Change: In light of kind of the current environment and and discussion about.

Speaker Change: On EV penetration rates as an example can see things shift a bit quarter to quarter or maybe a year or two a year it's possible.

Speaker Change: But as we look at where the environment is today as we look at where investor expectations are we think the 6% to 8%.

Joseph R. Massaro: I think that's, you know, well understood at this point. But the combination of sort of some new product launches and where we see customer schedules and then really that sort of the concentration we have in that business around, around China and Europe. I think penetration rates, you know, we've always been lower on a relative basis. At this point, where we have not looked out to sort of 2030 to update what we talked about in February, possibly that's lower than 30%. I think we were sort of well behind everyone else.

Speaker Change: Both over market is the right sort of framework for.

Speaker Change: Folks to consider for investors to consider.

Speaker Change: That sounds very helpful. Thanks, Kevin and just a quick follow up on the Adas business I was hoping you could share what you're expecting <unk> growth. This year, maybe and also maybe a bit more color on the wins with the Japanese Oems whether that provides further opportunities to penetrate with those Oems.

Speaker Change: Yes, let me start with the growth rates and then Kevin can comment on the nature of the wind so.

Joseph R. Massaro: But you know, I think over the next few years, you're moving in within that sort of call it that 10 to 15% rate, which is what our numbers would extrapolate out to. Okay, all right. Thank you. Yep. Great. Thank you. Good morning, everyone.

Speaker Change: We continue to see strong growth in active safety.

Speaker Change: We would expect 2024 to be north of 20% again as it was this year.

Kevin P. Clark: I do think listen one of the things we talked about just to put it in perspective. There is a large active safety business in North America with with a couple of the <unk> that was obviously impacted this year by the strike right. So it is not immune to things like the strike.

Itay Michaeli: Just the first question on long-term growth over market. I know that at investor day last year there was an expectation of some acceleration beyond 2025. Obviously, a lot is changing here in the near term, but the bookings are still strong and growing. So just a question, do you still think there's scope for some GOM acceleration in the second half of the decade? Itay, it's Kevin.

Kevin P. Clark: But the underlying fundamentals of that business the take rates and the growth, we'll keep it above 20% again again next year.

Kevin P. Clark: Yeah as it relates to the wounds with the Japanese Oems.

Kevin P. Clark: They were in and around radar.

Kevin P. Clark: They are global wins, so for the Japanese Oems in Japan, as well as in Europe.

Kevin P. Clark: Listen, I you know, as it relates to whether there is an opportunity for accelerated growth? If you look at the last three years, we've booked roughly the same amount of business as we booked the prior five years to the start of that third year. So the growth opportunity, the revenue growth opportunity, is significant. There are certain items, as we look at growth over market, and we use that as a proxy for, you know, the strength of our competitive position. We're not on every OEM across the globe. And when you look at that calculation, although certainly indicative of the strength of growth, it's not perfect.

Kevin P. Clark: Europe, China and North America.

<unk>.

Kevin P. Clark: To be transparent the first time, we've been able to penetrate in a meaningful way.

Kevin P. Clark: That customer base with our <unk> solutions part of that reflects where we are from a from an overall technology standpoint versus.

Itay Michaeli: So, would we tell you, should there be a bias based on bookings of stronger growth, accelerating growth? In light of, you know, kind of the current environment and, you know, discussion about EV penetration rates, as an example, can these things shift a bit quarter to quarter, or maybe a year to a year? It's possible. You know, but as we look at where the environment is today, as we look at where investor expectations are, we think the six to eight percent growth over market is the right sort of framework for folks to consider, for investors to consider. That sounds very helpful.

Kevin P. Clark: Their traditional supply chain, which you are all familiar with.

Kevin P. Clark: We're confident that that will present us with incremental opportunities on the Adas side on the user experience side as well as on the vehicle architecture side. So we're very excited about it.

Speaker Change: Terrific. That's all very helpful. Thank you.

Speaker Change: Yes.

Speaker Change: John Murphy from Bank of America. Please go ahead.

John Murphy: Good morning, guys.

John Murphy: Maybe I might just got sort of a different angle on sort of that the growth change here.

Kevin you guys have obviously, great technology, and great product and almost seem to be far more than the one step ahead of the industry.

Joseph R. Massaro: Thanks, Kevin. And just a quick quick follow-up on the ADAS business. I was hoping you could share what you're expecting ADAS growth this year, maybe, and also maybe a bit more color on the winds with the Japanese OEMs, whether that provides further opportunities to penetrate those OEMs. Yeah, let me start with the growth rates. And then Kevin can comment on the nature of the wind.

John Murphy: I guess the question is as we look at the R&D spend spleen and have gross I think you guys $1 2 billion net when you get.

John Murphy: Your recoveries or sharing with your business partners.

John Murphy: Is your question that you may be spending too much on R&D and getting too far out in front of the growth curve here and maybe that might be an opportunity in the near term to skinny back on R&D and drive better better margins and cash flow and returned to shareholders.

Kevin P. Clark: So we continue to see strong growth, and active safety would expect 2024 to be north of 20%, again, as it was this year. You know, I do think, listen, I, you know, one of the things we talked about, just to put it in perspective, you know, there is a large active safety business in North America with, with a couple of D3, that was obviously impacted this year by the strike, right? So it's not immune to things like that. But the underlying fundamentals of that business, the take rates, and the growth, will keep it, you know, above 20% again, again, next year. Yeah, as it relates to the wins with the Japanese OEMs, they were in and around the radar. They're global wins.

John Murphy: Once again the product portfolio is great. It just seemed like the industry has an inability to absorb all the good tech you bring to the table.

Speaker Change: Listen John I think that's.

Good question, it's something that we watch very closely.

Speaker Change: Our advanced development spending as a percent of total engineering.

Speaker Change: As.

Speaker Change: Higher was higher in 2023 than it's been in the past I would say the bulk of that quite frankly has been working to product ties our portfolio.

Kevin P. Clark: So for the Japanese OEMs in Japan, as well as in Europe and, China and North America. It's to be transparent, the first time we've been able to penetrate in a meaningful way that customer base with our ADAS solutions. Part of that reflects kind of where we are from, from an overall technology standpoint versus, you know, their traditional supply chain, which you are all familiar with. We're confident that that will present us with incremental opportunities on the ADAS side, on the user experience side, as well as on the vehicle architecture side. So we're very excited about it. Terrific, that's all very helpful, thank you. John, America.

Speaker Change: Which means.

Speaker Change: Significantly more reuse of existing technology on new platforms, which is is what the industry needs, it's driving a significant.

Speaker Change: Amount of of interest from Oems in areas like electrification like battery management systems like Adas like software, which we think is going to translate into continued growth in bookings.

Speaker Change: We talked about the $35 billion is kind of our estimate as we sit here today for 2024.

John Joseph Murphy: Please go. Good morning, guys. Maybe I might take a sort of different angle on sort of that, you know, the growth change here. You know, Kevin, you guys have obviously great technology and great products and almost seem to be far more than one step ahead of the industry. I guess the question is we look at the R&D spends, a billion and a half gross. I think you guys will 1.2 billion net when you get your recoveries or share with your business partners.

I would say that number could be higher.

Speaker Change: So it's important that we continue to invest and we continue to position our ourselves for growth.

Speaker Change: I would say we've doubled down our focus though on how do we make engineering more efficient.

Speaker Change: How do we get more out of engineering and again, how do we drive more reuse, which allows us to be more efficient in developing higher margin solutions.

Kevin P. Clark: You know, is there a question that you may be spending too much on R&D and getting too far out in front of the growth curve here? And maybe that might be an opportunity in the near term to scale back on R&D and drive better better margins and cash flow and then return to shareholders. I mean, I mean, once again, the product portfolio is great. It just seems like the industry has an inability to absorb all the good tech you bring to the table. Yeah, listen, John, I think that's a good question. It's something that we watch very closely.

Speaker Change: And allows us to deliver them to our customers at much lower cost and I would say equal focus on cost effective solution now as there is on innovation.

Speaker Change: Okay, Let me reshape, but appreciate the question, but I appreciate the question.

And just one quick follow up on the.

Speaker Change: On the volume outlook.

Speaker Change: Flat globally variances.

Speaker Change: <unk> between regions. What are you seeing in schedules right now I know you are using some of your internal work and external forecast, but is that driving with the early read on schedules are actually seeing schedules running above or below that in any meaningful way.

Kevin P. Clark: Our advanced development spending as a percent of total engineering is higher, and was higher in 2023 than it has been in the past. I'd say the bulk of that, quite frankly, has been working to productize our portfolio, which means significantly more reuse of existing technology on new platforms, which is what the industry needs. It's driving a significant amount of interest from OEMs in areas like electrification, like battery management systems, like ADAS, like software, which we think is going to translate into continued growth in both the. You know, we talked about the $35 billion, kind of our estimate as we sit here today for 2024. But I would say that number could be higher.

Speaker Change: No.

Speaker Change: Generally jives, although to my comments, it's a build throughout the year. So my comments around revenue growth in the calendar as Asian very much tied out too. So what we're seeing in schedule. So total totals connected I would say this year. Unlike the last couple of years.

Speaker Change: We actually don't see much schedule disconnect between we don't see much disconnect between the schedules in the broader forecasting services, we did see some differences.

Speaker Change: Related to supply chain and stuff over the past couple of years, but theyre pretty much in line, but it is backend weighted that it's just not us that's backend weighted it is the customer production schedules at this point.

Speaker Change: Okay, great. Thank you very much guys.

Kevin P. Clark: So, it's important that we continue to invest, and we continue to position ourselves for growth. I would say we've doubled down our focus, though, on how do we make engineering more efficient? How do we get more out of engineering?

Speaker Change: Yeah.

Speaker Change: And our next question is going to come from Mark Delaney from Goldman Sachs. Please go ahead.

Mark Trevor Delaney: Yes, good morning, and thanks very much for taking the question incremental EBIT margins and providing guidance for 2024 I think are in the mid 20% range, even adding back for the strike impact that you had in 2003, the extra margin leverage this year relative to the historical roughly 20% due to capturing the remaining COVID-19 disruption costs.

Kevin P. Clark: And again, how do we drive more reuse, which allows us to be more efficient and develop, you know, higher margin solutions? And allows us to deliver them to our customers at much lower costs. And I'd say there is equal focus on cost-effective solutions now as there is on innovation. But I appreciate the question.

Mark Trevor Delaney: And then maybe you can talk a little bit more on how much visibility you have into pricing and how firm that is for 2024 at this stage.

Mark Trevor Delaney: I know with the Oems dealing with a lot on their plate.

Mark Trevor Delaney: Hear from investors that can push more on margins.

John Joseph Murphy: Yeah, and just one quick follow up on the volume outlook, you know, flat globally. I know there's, you know, variances between regions. What are you seeing in schedules right now? I know you're using some of your internal work and then, you know, external forecasts. But is that jiving with the early read on schedules? Are we actually seeing schedules running above or below that in any meaningful way? It generally jives, although to my comment, it's a build throughout the year.

Mark Trevor Delaney: So the visibility you have into achieving that higher margin leverage but going forward would be helpful.

Mark Trevor Delaney: Yes, Mark it's Joe similar to 'twenty three we have those bigger step downs in <unk> on a year over year basis supply chain disruption costs. So that is helping keep.

Joseph R. Massaro: Keep that incremental flow at the EBIT line, a little higher than normal I think that sort of 18 to 22 range that we usually talk about is still good and normalized times, but it is a little higher much like it was last year.

Speaker Change: And then listen I think from a pricing perspective, there has been a lot of activity as we've talked about over the past couple of years as we've worked through.

Joseph R. Massaro: So my comments around revenue growth and calendarization very much tie out to what we're seeing in schedules. So totals connected, I would say this year, unlike the last couple of years. We actually don't see much schedule disconnect between the schedules and the broader forecasting services.

Speaker Change: Direct material inflation stuff I think whereas as settled as we normally are audit, there's obviously ongoing discussions with customers.

But I think we're in a when we're in a relatively good place in a consistent place with where we've where we've historically been this time of year.

Joseph R. Massaro: You know, we did see some differences related to the supply chain and stuff over the past couple years, but they're pretty much in line, but it is back-end weighted. It's just us that's back-end weighted.

Speaker Change: That's helpful. Jordan. The second question was just around <unk>.

Speaker Change: Shifting EV plans, a number of Oems have talked about trying to do more with hybrid and plug in hybrid maybe you can remind us what your content opportunity is it a hybrid and plug in hybrid compared to bad or ice vehicles, and how well positioned do you think active as to potentially capture some of that.

John Joseph Murphy: This is the customer production schedule. Thank you very much, guys. In our next lesson, this is going to come from Mark. Yes, good morning.

Mark Trevor Delaney: Thanks very much for taking the question. Incremental EBIT margins and Biden guidance for 2024, I think, are in the mid 20% range, even adding back for the strike impact that you had in 23. Is the extra margin leverage this year relative to the historical roughly 20% due to capturing the remaining COVID disruption costs? And then maybe you can talk a little bit more around how much visibility you have into pricing and how firm that is for 2024 at this stage. You know, I know with OEMs dealing with a lot on their plates, there was a fear from investors that they could push more on margins. So the visibility you have into achieving that higher margin leverage for 24. Yeah, Mark, it's Joe.

Speaker Change: Higher intermediate term production around hybrid and plug in hybrids.

Speaker Change: Yes.

Speaker Change: Kevin.

Speaker Change: Battery electric vehicles are about <unk>, the content opportunity as an internal combustion engine.

Vehicle plug in hybrids or two X.

Speaker Change: Roughly <unk>.

Speaker Change: Continent internal combustion engine when you look at our our mix of high voltage bookings in roughly the same from a revenue standpoint, roughly 25% to 30% of that relates to plug in hybrid hybrid view.

Speaker Change: So.

Speaker Change: Hopefully that gives you a bit of context, so we feel like we're very well positioned whether.

Oems are producing plug in hybrids battery electric vehicles.

Speaker Change: Thank you.

Speaker Change: And our next question is come from Dan Levy with Barclays. Please go ahead.

Joseph R. Massaro: Similar to 23, you know, we have those bigger step downs in COVID on a year over year basis for supply chain disruption costs. So that is helping keep that incremental flow at the even line a little higher than normal. I think that sort of, you know, 18 to 22 range that we usually talk about is still good in normalized times, but it is a little higher, much like it was last year. And then, listen. I think from a pricing perspective, there have been a lot of activities we've talked about over the past couple years as we've worked through direct material inflation and stuff. I think we're as settled as we normally are on it. There are obviously ongoing discussions with customers. But I think we're in a relatively good place and a consistent place with where we've, you know, where we've historically been this time. That's helpful, John.

Dan Levy: Hi, good morning, Thanks for taking the question.

Dan Levy: I wanted to just.

Dan Levy: Go back to the EBIT bridge and.

Dan Levy: A point on.

Dan Levy: <unk>.

Dan Levy: On the economics here and specifically I know in the past you had.

Lot of inflation from chips, you've obviously heard.

Dan Levy: A number of accounts now that on the chip side, there was excess inventory just wondering to what extent you are embedding.

Dan Levy: Chip deflation.

Dan Levy: In the guidance if not is that is it all upside and then maybe you could just comment briefly on the FX piece because we're under the.

Dan Levy: Understanding that your hedges.

Dan Levy: Unwinding that are reset would derive some peso headwinds so maybe just to comment on the FX than the group as well.

Mark Trevor Delaney: The second question was just around, you know, shifting EV plans. A number of OEMs have talked about trying to do more with hybrids and plug-in hybrids. Maybe you can remind us what your content opportunity is on a hybrid and plug-in hybrid compared to BEV or ICE vehicles. And how well positioned do you think Aptiv is to potentially capture some of that higher intermediate term production around hybrids and plug-in hybrids? Yeah, it's Kevin.

Speaker Change: Yes, I'd start with I mean, there is and again, we said as Kevin mentioned.

Speaker Change: Ted there most of them supplier meetings and see yes, I mean, there is no automotive chip.

Speaker Change: Provider at the moment, that's talking about price downs.

Speaker Change: Still have a couple that are talking about increased prices based on wafer cost increases.

Speaker Change: And that they are saying well, obviously pushed back hard on those and deal with them if and when they come in.

Speaker Change: But we're not we're not seeing anything from from a price down perspective, nor would expected. So at this point theres nothing nothing in there from an opportunity perspective in the guide.

Kevin P. Clark: So better electric vehicles are about 3x the content opportunity as an internal combustion engine vehicle. Plug-in hybrids are 2x, roughly 2x the content of the internal combustion engine.

Speaker Change: Listen as it relates to peso.

Last year, we were obviously hit well above $100 million by transaction.

Kevin P. Clark: When you look at our mix of high-voltage bookings, and roughly the same from a revenue standpoint, roughly 25 to 30% of that relates to plug-in hybrid vehicles. Hopefully, that gives you a bit of context. So we feel like we're very well positioned, whether OEMs are producing plug-in hybrids or battery-electric cars. The End. Please, please go ahead.

Speaker Change: And translation impacts right the FX moving significantly.

Speaker Change: <unk>.

Speaker Change: This year.

Speaker Change: Mentioned this in my prepared comments, Dan we've assumed a a stronger peso in the basically in the in the underlying.

Speaker Change: Forecast right, which makes our peso denominated costs more expensive. So if you look at that bridge, it's not showing up on the FX line because it is now forecasted at that level.

Dan Meir Levy: Hi, good morning. Thanks for taking the time to answer the question. I wanted to just go back to Epoch Ridge and make a point about the economy here. And specifically, I know in the past, you had a lot of inflation from chips. You've obviously heard from a number of accounts now that on the chip side, there's excess inventory. I'm just wondering to what extent you're embedding chip deflation in the guidance. If not, is that upside, and then maybe you could just comment briefly on the FX piece, runner, this understanding that your hedges unwinding at a reset would drive some peso. Yeah, I'd start with, and again, we say as Kevin mentioned, I mean, we and I've attended most of them, supplier meetings, and CES, and there is no automotive chip provider at the moment that's talking about price doubts.

Speaker Change: But you do have about $100 million round numbers going into the primarily labor going into the cost structure, which would appear and that which would appear in that other bucket and is really the amount that's rolling through into my 2025 comments.

Speaker Change: Great. Thank you.

Speaker Change: And then just based on the peso.

Speaker Change: Sorry, I got.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: I was just going to say peso assumption just to remind folks that at Investor Day was 2050. So you got about <unk>.

Speaker Change: 10, plus percent strengthening in the peso go ahead sorry.

Speaker Change: Great. Thank you and then just as a fall.

Speaker Change: All I wanted to go back to the bookings and appreciate a another strong year of bookings in other outlook, maybe we could just and I think this touches on some of the prior question.

Dan Meir Levy: We still have a couple that are talking about increased prices based on wafer cost increases. That they're saying will obviously, you know, push back hard on those and deal with them if and when they come in. But we're not, we're not seeing anything from them from a price down perspective, nor would we expect it. So at this point, there's nothing in there from an opportunities perspective and a guide. Listen, as it relates to the peso, Last year, we were obviously hit well above $100 million by transaction This year, you know what, and I mentioned this in my prepared comments, Dan, you know, we've assumed a stronger peso in basically the, in the underlying forecast, right, which makes our peso-denominated costs more expensive. So if you look at that bridge, it's not showing up on the FX line because it's now forecasted at that level.

Speaker Change: To reconcile the strong bookings with.

Speaker Change: Seemingly common.

Speaker Change: Commentary from the Oems.

Speaker Change: Reduced gross spend in a variety of areas I mean, I think we hear about evs, most notably, but even just some of the challenges or push out.

Speaker Change: Executing software defined vehicle.

Speaker Change: Active safety, we saw there was.

Large OEM that pushed out one of their advanced Adas programs. So.

Speaker Change: Maybe you could reconcile the strong bookings activity with some of the challenges that the automakers that pace just broadly on executing a megatrend.

Speaker Change: Yes I'll.

Speaker Change: I'll take it listen.

Speaker Change: It's kind of it's an interesting it's an.

Speaker Change: An interesting question right the question.

Speaker Change: We get two years ago was kind of reconcile the strong bookings with Oems comments regarding in sourcing all their activities.

Joseph R. Massaro: But you do have about $100 million in round numbers going into the primarily labor going into the cost structure, which would appear in that, which would appear in that other bucket. And it's really the amount that's rolling through into my 2025, Great. Thank you. And then just- Hey, so for just, sorry, go ahead.

Speaker Change: And I think now you hear from Oems and we experienced directly firsthand all the challenges associated with attempting to do things that.

Speaker Change: You don't have the history of doing or don't have the capabilities, which quite frankly is presenting perfect opportunities for us.

Dan Meir Levy: Go. I was just going to say, the peso assumption, just to remind folks that investor day was 2050. So you got about a 10 plus percent strengthening in the peso. Go ahead, Dan.

Speaker Change: It's the reason why we've invested in the areas.

Speaker Change: We've invested in its reason why we're building kind of a full platform solutions that are open they are scalable that provide flexibility and importantly.

Dan Meir Levy: Sorry. Great, thank you. Just as a follow-up, want to go, [inaudible] and appreciate another strong year of bookings with another outlook. Maybe we could just, and I think this touches on some of the prior questions. Reconcile the strong bookings. Commentary from the OEM. Gross spend in a variety of areas.

Speaker Change: Lower cost like we fully recognize that we need to deliver lower cost options and solutions to our customers.

Speaker Change: All the way from software and hardware development and delivery of the solution.

Dan Meir Levy: I mean, I think we hear about EVs most notably, but even just some of the challenges or push out, you know, executing software defined vehicles. Active Safety, we saw there was, a large OEM that pushed out one of their advanced ADAS programs. So maybe you could reconcile some of the challenges that the automakers have faced just broadly. Yeah, I'll take it.

Speaker Change: And that's what we're focused on and I would say that's the reason for the trend in bookings that you've seen.

Speaker Change: Value proposition that economically makes sense for the cut for our customers.

Speaker Change: As well as it does for active and then you augment that with the question about.

Speaker Change: Soc.

Kevin P. Clark: Listen, I it's an interesting question, right? The question we got two years ago was kind of reconciling Strong Bookings with OEM's comments regarding insourcing all their activities. And I think now you hear from OEMs, and we experienced directly firsthand all the challenges associated with attempting to do things that either you don't have the history of doing or don't have the capabilities, which, quite frankly, has presented perfect opportunities for us. And it's the reason why we've invested in the areas that we've invested in. It's the reason why we're building kind of full platform solutions that are open, that are scalable, that provide flexibility, and importantly, lower cost. We fully recognize that we need to deliver lower cost options and solutions to our customers, all the way from software and hardware development to delivery of a solution.

Speaker Change: <unk> inflation just to underscore Joe's point, we have not heard that from any of our western Soc suppliers.

Speaker Change: In fact, some are talking about additional constraints beginning in 'twenty late 2025 going into 2026.

Speaker Change: So we have deployed engineering assets and doing a couple of things.

Speaker Change: One.

Speaker Change: Dual validating our qualifying additional alternatives. So there's more flexibility to move from one to another and bringing that to our OEM customers as a part of our overall value proposition.

In my comments I talked about the 12, Chinese Soc pulp suppliers, who were working closely with and making significant traction.

In the China market with we believe are meaningful opportunities outside of China, especially in Europe.

Kevin P. Clark: And that's what we're focused on, and I would say that's the reason for the trend in bookings that you see, a value proposition that economically makes sense for our customers, as well as it does for Aptiv. And then you augment that with the question about SOC material inflation. Just to underscore Joe's point, we've not heard that from any of our Western SOC suppliers. In fact, some are talking about additional constraints beginning in late 2025 and going into 2026. So we have deployed engineering assets to do a couple of things. Um, one is, dual validating or qualifying additional alternatives. So there's more flexibility to move from one chip to another and bring that to our OEM customers as part of our overall value proposition.

Speaker Change: Providing lower cost at roughly equal performance.

Speaker Change: And that goes from Soc technologies to radar technologies.

Speaker Change: Peripherals.

Speaker Change: And by virtue of providing.

Speaker Change: Providing again like I said, those leading technologies at more cost in a more cost effective way that again provides flexibility and choice to our customers.

Speaker Change: That holistic package is attractive.

Speaker Change: And it helps solve the challenges that there.

Speaker Change: That you are aware of that they are dealing with.

Great. Thank you.

Speaker Change: Okay.

Speaker Change: And our next question is going to come from Tom Narayan from RBC. Please go ahead.

Tom Narayan: Thanks for taking the question.

Kevin P. Clark: In my comments, I talked about the 12 Chinese SOC suppliers who we're working closely with to make significant traction in the Chinese market with, we believe, our meaningful opportunities outside of China, especially in Europe, providing lower cost at roughly... Foreman. And that goes from SOC technologies to radar technologies to peripherals. And by virtue of providing, again, like I said, those leading technologies at a higher cost, but in a more cost-effective way, that again provides flexibility and choice to our customers. That holistic package is attractive, and it helps solve the challenges that you're aware of that they're dealing with.

Tom Narayan: Maybe onetime emotional I understand that the industry is kind of capitulating on level four but just love to hear kind of your thoughts on this seemingly very promising enterprises are very long term I understand but.

Tom Narayan: What specifically kind of has changed your thoughts is it just the fact that the industry is moving the market is moving away from it maybe financing using capital markets as difficult or is there something more fundamental.

Tom Narayan: Youre not liking about this level for business.

Tom Narayan: Yes, it's Kevin listen we should start with.

Dan Meir Levy: I think speaking of questions, maybe one on, I understand that. We'd just love to hear kind of your thoughts, you know, seemingly very promising. Surprise. Very long.

Tom Narayan: Motion is on track to deliver the tech roadmap, that's been that's been laid out and.

Kevin P. Clark: Should underscore that.

Dan Meir Levy: You know, what specifically kind of has changed? Thoughts, the fact that the industry is moving, the market's moving away from it, or is there something more fundamental? But you're not liking about Yeah, it's Kevin.

<unk> has been an absolutely outstanding partner.

Kevin P. Clark: Better than as optimistic as we were at the start.

Kevin P. Clark: Even better.

Kevin P. Clark: As a partner from both operational.

Kevin P. Clark: Our strategic standpoint commercialization of the technology.

Kevin P. Clark: Listen, I should start with saying that Motional is on track to deliver the tech roadmap that's been laid out, and should underscore that HMG has been an absolutely outstanding partner. Better than as optimistic as we were at the start, even better as a partner from both an operational and a strategic standpoint, commercialization of the technology, i.e. The cost related to delivering the tech, principally in and around hardware, really makes it challenging from an adoption standpoint in the mobility on-demand market, and as a result kind of pushes out, ultimately, the revenue stream and the earnings for the biz, and pushes it out to a point where, relative to other options or opportunities that we have to invest in that will deliver, you know, profitable growth, we have to make decisions.

Kevin P. Clark: I E.

Kevin P. Clark: The cost related to delivering the tact principally in and around hardware.

Kevin P. Clark: Really makes it challenging from.

Kevin P. Clark: An adoption standpoint in the mobility on demand market.

And as a result pushes out ultimately the revenue stream in the earning stream.

Kevin P. Clark: For the business.

Kevin P. Clark: And pushes out to a point where relative to other options or opportunities that we have to invest and that will deliver.

Kevin P. Clark: <unk> growth.

Kevin P. Clark: We had to make decisions.

Kevin P. Clark: And again, a tough decision, but given where we sit today.

Kevin P. Clark: Given the benefit that we've gotten to date, which is real which is in and around advanced Adas solutions and we will.

Kevin P. Clark: And again, a tough decision, but given where we sit today, given the benefit that we've gotten to date, which is real, which is in and around advanced ADAS solutions, we'll work to continue to work with Motional commercially in and around bringing their technology into our ADAS platform. But, you know, when we look at ongoing funding for the technology and when it actually gets adopted in the mobility on demand market, it's just pushed too far out to make financial sense for us, given the other opportunities that we have. And just a quick follow up, maybe on some of the others. I know. I think there was a question earlier.

Work to continue to work with with motion commercially in and around bringing their technology into our <unk> platform.

Kevin P. Clark: But.

Kevin P. Clark: When we look at ongoing funding of the technology and when it actually gets adopted in the mobility on demand market. Its just pushed too far out to make financial sense for us.

Kevin P. Clark: Given the other opportunities that we have in front of us.

Speaker Change: Got it and just a quick follow up maybe on some of the other opportunities could include M&A I know I think there was a question earlier on capital return and we've heard this theme with I think tier one and tier two suppliers potentially there could be some M&A in 2024, one obstacles obviously interest rates just curious if you were to.

Dan Meir Levy: We've heard this theme, one obstacle. Curious if you were to pursue this, and you've had some really successful M&A in the past. Where would they be?

Speaker Change: <unk> had some really successful M&A in the past.

Where would they be and.

Joseph R. Massaro: What are some of them? Is there something, are there opportunities you find? Yeah, I mean, the pipeline, like we've always said, the pipeline is very full; we maintain it on a regular basis. Certainly, I don't see anything from a capital markets perspective that would preclude us from doing transactions. I think the balance sheet's in very good shape. We took a lot of care over the last couple of years to push out the tenor of the debt and such. So I feel like we're in good shape from that. And we're certainly not one of the ones that's raised any concerns on that side. I think you'd continue to see us do things like we did in the past, right? You'd have both for ASUX and SPS.

What are some of the kind of.

Speaker Change: Is there something are there opportunities you're quite attractive currently.

Yes, I mean, we've always said the pipeline is very full we maintain it on a regular basis.

Speaker Change: Certainly don't see anything from a capital markets perspective that would preclude us.

Speaker Change: From doing from doing transactions I think the balance sheets in very good shape, we took a lot of care over the last couple of years to push out the tenor of the debt and such so I feel like we're in we're in good shape from that so we're certainly not one of the ones that has raised any concerns on that side I think you'll continue to see us do things like we've done in the past right you'd have both for <unk> and Sps.

Joseph R. Massaro: There are bolt-on opportunities, things that either enhance technology or regional presence. In ASUX, there certainly are some opportunities. You know, it'd obviously be smaller than Wind River, but it would continue to invest in our software capabilities. And then there are the adjacent markets, right?

Speaker Change: There are bolt on opportunities things that either enhance technology regional presence.

Speaker Change: <unk> there certainly are some opportunities.

Speaker Change: I would obviously be smaller than wind river, but continue to invest in our software capabilities.

Speaker Change: And then theres the adjacent markets right, we've done a very nice job over the last couple of years of.

Speaker Change: Excuse me of growing our adjacent market presence, both organically and inorganically and its been accretive to growth rates, it's been accretive to margins.

Joseph R. Massaro: We've done a very nice job over the last couple of years of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of, of [inaudible] Thank you very much. So I appreciate the update on the new growth of the market framework. I was hoping, since it's essentially a refresh of a framework, if we could take a step back and maybe remind us the various components or drivers of the expected growth of a market, not necessarily just 2024, just, you know, as part of the framework, either in terms of What, how much growth of a market comes from, you know, each component or in terms of revenue growth, whatever is easier, but, and is high voltage the only thing that is essentially lower down versus the previous framework?

Tim do you expect us to do something like that.

Tim: Got it thanks.

Tim: Yeah.

Tim: Okay.

Tim: And our next question is going to come from Emmanuel Rosner. Please go ahead.

Alright, Thank you very much.

Emmanuel Rosner: So I appreciate the update on the new growth of the market framework.

Emmanuel Rosner: Hoping since it's essentially a refresh of a framework if you could take a step back and maybe remind us if there is.

Emmanuel Rosner: Components are drivers of the expected growth of our markets not necessarily just 2024.

Emmanuel Rosner: As part of the framework.

Emmanuel Rosner: In terms of what.

Emmanuel Rosner: What how much growth over market comes from each component or in terms of revenue growth whatever is easier for him and his high voltage. The only thing that is essentially a lower down versus the previous framework.

Speaker Change: Yes, the walk we won't go into more components than we've laid out and I think the work sort of indicates within the range certainly the largest piece not to come back is is the high voltage right you could have again and it's a long term forecasting range. So you can have a little bit of movement in customer mix and just.

Emmanuel Rosner: Yeah, the walk, we won't go into more components than we've laid out, Emmanuel. I think the walk sort of indicates, you know, within the range, certainly the largest piece not to come back is the high voltage, right? You could have it again, and it's a long-term forecasting range. You can have a little bit of movement and customer mix. How things play out relative to Kevin's comments on the Japanese OEMs and the Chinese-China mix. I think, you know, speaking to... You know, Kevin's comment. You know, our growth rate, other than EV, which we talked about coming down, you know, to 20 from 30, has been what we've expected, right? I mean, we've hit our revenue numbers, we've hit our growth rates, and our product lines are growing.

Speaker Change: How things play out relative to Kevin's comments on the Japanese Oems.

Speaker Change: And the Chinese China mix I think speaking to.

Speaker Change: Kevin's comments.

Speaker Change: Our growth rate other than EV, which we talked about coming down to 20 from the 30 <unk>.

Speaker Change: Our growth rate has has been what we've expected right I mean, we've hit our revenue numbers, we hit our growth rates our product lines are growing. This. This is there is a denominator element tier two what were seeing take place in the market, particularly in 2023 with the Japanese Oems up.

Speaker Change: 25% round numbers production in North America. So.

Clearly you've talked about HV slowing down I think we've been transparent about that but I just wanted to be clear. This isn't we're missing our growth numbers or were missing our revenue numbers. This growth over market a big piece of that is coming from.

Joseph R. Massaro: This, this is a denominator element here to what we're seeing take place in the market, particularly in 2023, with the Japanese OEMs up, you know, plus 25% round numbers production in North America. So clearly, I've talked about HV slowing down. I think we've been transparent about that. But I just want to be clear, this isn't we're missing our growth numbers, or we're missing our revenue numbers; this, this growth over market, a big piece of that is coming from, you know, the denominator, what I'll call the denominator impact. I don't know, Kevin, if you have anything to add? No, none. Okay, and then one. Additional clarification on Oceanal, please.

Speaker Change: We did not but what I will call the denominator impact I don't Kevin if you have anything to add no. None if you've covered it.

Speaker Change: Okay.

Speaker Change: And then one.

Speaker Change: Additional clarification of emotional pleas.

Speaker Change: Can you just explain a little bit.

Speaker Change: The mechanics of what you will essentially try to achieve like so skipping no further funding rounds is your JV partner.

Speaker Change: Tier two foundries because I believe there is a need for funding in the fairly near term so will that be covered by damages in the interim and then would you be looking.

Emmanuel Rosner: Can you just explain a little bit the mechanics of what you will essentially try to achieve? So, skipping no further funding rounds, is your JV partner okay to fund it? Because I believe there is a need for funding in the fairly near term. So will that be covered by them, at least in the interim?

Speaker Change: At the other options on a go forward basis, you spoke about uncertainty around the timing, but I am not sure how much of it is already decided and it's a timing question versus things that still need to be negotiated.

Speaker Change: Yes no.

Speaker Change: As I said, we have to work through obviously you have a JV construct I won't comment for others involved in the joint and the joint venture.

Joseph R. Massaro: And then will you be looking at other options on a go forward basis? You spoke about uncertainty around the timing, but I'm not sure how much of it is already decided. And it's a timing question versus things that still need to be negotiated. Yeah, no, we're, as I said, we have to work through obviously, you have a JV construct; I won't comment for others involved in the joint venture. Aptiv's intention is to no longer participate in funding, and within the constructs of the joint venture agreement, we are looking at opportunities to reduce our holdings of the common stock.

Speaker Change: <unk> intention is to no longer participate in funding.

Speaker Change: And within the cost structure of the joint venture agreement, we are looking at opportunities to reduce our holdings of the common stock and that.

Speaker Change: That work is in process now.

Speaker Change: Just given the nature of transactions like this and the fact that we're working within the joint venture agreement. We felt it was prudent to put the full emotional impact into the guide.

Speaker Change: Versus trying to take a an educated guess at when something may complete.

Joseph R. Massaro: And that that work is in process now. Just given, you know, the nature of transactions like this and the fact that we're working within a joint venture agreement, we felt it was prudent to put the full emotional impact into the guide versus trying to take an, you know, an educated guess at when something may complete. But obviously, we are working through that now, but the funding decision, a funding decision has been made. Understandable. Thank you. Yep. [inaudible] Hi, thanks for taking the questions. It's been a good call. How much of your CapEx and R&D is being spent to support full BEV architectures? In terms of total advanced engineering, which is the closest in development, which you know, Adam, which is roughly 25% of our total engineering spend, we would say somewhere between five and 10% would be BEV related. Electrification related.

Speaker Change: But obviously working working through that now, but the funding decision a funding decision has been made.

Speaker Change: Understood. Thank you.

Speaker Change: Yep.

Speaker Change: And I will.

Speaker Change: This will be our last question and it is going to come from Adam Jonas from Morgan Stanley.

Hi, Thanks for taking the questions it's been a good call.

Adam Michael Jonas: How much of your Capex and R&D is being spent to support full the EV architectures.

Adam Michael Jonas: And in terms of total advance engineering, which is the close it development.

Adam Michael Jonas: Adam which is roughly 25% of our total engineering spend.

Speaker Change: We would say somewhere between.

Speaker Change: Five and 10% would be.

Speaker Change: Related electrification.

Speaker Change: Electrification related I should say.

Kevin P. Clark: Alright, thanks, Kevin. And just again, I know you're in negotiations, but anything to call out in terms of a breakup or walkaway fee or, or I'd say at a high level, could investors anticipate the potential among your range of scenarios to have a potential payment to wind up your involvement with Motional? No, there are no such requirements in the joint venture agreement, and we wouldn't expect to sign up.

Speaker Change: Yeah.

Speaker Change: Alright, Thanks, Kevin and then just again I know you are the negotiations are ongoing but.

Speaker Change: Any anything to call out in terms of a breakup or.

Speaker Change: Walkaway fee or or I'd say at a high level could investors.

Speaker Change: Anticipate the potential among your range of scenarios to have a potential payments to wind up the your involvement with promotional.

Kevin P. Clark: No. There is no no such requirements in the joint venture agreement and we wouldn't expect to sign up for anything like that.

Kevin P. Clark: Okay.

Speaker Change: Thanks, everybody.

Great: Great. Thanks, Adam.

Great: Okay.

Speaker Change: Our final question today.

Joseph R. Massaro: Okay. Thanks, everybody. Great. Thank them. Is that the final question?

Speaker Change: The answers and I'll turn it back over to.

Speaker Change: Kevin Clark. Please go ahead.

Kevin P. Clark: Great. Thank you. Thank you operator, thank you everybody for your time today.

Kevin P. Clark: Have a nice rest of the day take care.

Great. Thank you. Thank you, operator. Thank you, everybody, for your time. Have a nice rest of the day. Take care. We'll see you next time.

Kevin Clark: Yeah.

And this concludes today's call. Thank you for your participation you may now disconnect.

Speaker Change: Included in this.

Speaker Change: This concludes today's call. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: <unk>.