Aptiv PLC (APTV) Earnings Call Transcript & Summary

Good morning, everyone. I'm Joe Spak, Head of U.S. Autos here at UBS. Very pleased to start off a full day of auto meetings with Aptiv. We've got Kevin Clark, CEO; Varun Laroyia, CFO. We're going to have a little bit of a fireside chat. There's also an opportunity for you to ask questions. You should see a QR code on their table. If you want to ask a question, snap that code, ask questions. Will pop up magically on the sideboard here and ask a question on your behalf.

With that, gentlemen, thanks for coming in. I know you recently had a big Investor Day that talked about the split of the company and the future for both sides of the company, and I want to spend the majority of our time talking about that. But just to get some of the other minutiae out of the way, I guess, we are basically have 3 weeks left in the year. You did give an outlook at the end of third quarter that expressed, I think, a fair amount of caution on some of these industry factors that could impact your results. I was wondering if you just market to market, give us an update on sort of how things have progressed over the quarter.

Sure, sure. Maybe I'll start and Varun could -- so we gave full year guidance or fourth quarter guidance, I guess, effectively in Q3 earnings call -- during Q3 earnings call. Obviously, it's a dynamic environment that all of you know that we're operating through as a part of our guidance, we obviously incorporated what we saw from a customer schedule standpoint, overlays as it related to additional conservatism for potential supply chain disruptions. We would tell you things are playing out as we expected in terms of vehicle production rates across the globe and how that translates into revenue and earnings for us. So high level of confidence in the guidance that we've given and we'll finish the year, we're confident on track.

Yes. No, I think that's comprehensive, pretty much on track with what we had stated apart from the revenue and the EBITDA, OI performing well on cash, and we're certainly deploying that.

So -- but your guidance did assume, I think, an extra level of caution. So would you say that caution ended up being warranted or may -- or there is -- it ended up being more prudent than that.

Yes, I would see an appropriate level of caution. I mean, the Nexperia challenges are obviously something you're all aware of, right, some of the semiconductor potential shortages that are out there. Obviously, there's a large North American OEM that was impacted by a supplier fire in upstate New York related to aluminum. Some of you may be aware of some of the activities going on in Mexico as it related to farmers and agricultural workers and what they were doing in terms of slowing products shipped across the border. So we've encompassed all of that. It's a very -- it is a very dynamic environment that we're operating in. And we've overlaid an appropriate amount of conservatism in there. We have confidence in our guidance. It's -- I'd say sitting here today, I'm sure Varun agrees with me, it's difficult to say that we were overly conservative relative to how things will play out. We think we're appropriately conservative.

So I know at the Analyst Day, you sort of gave midterm views. And when we -- when you report fourth quarter earnings in, I'm assuming, January, maybe early February, you'll give the '26 guide. Is that sort of the approach we should expect you to continue to take sort of this appropriate level of conservatism? Or have you seen some of the uncertainty that has plagued the industry over the past couple of years actually somewhat normalizing?

I think it's fair to say that, listen, over the past year, there's been a lot of dynamism that's taking place. Earlier this morning, as we're talking to, there's a new piece that's kind of coming through. And while we have kind of predicted it and we've poured through this piece in early in the year when we talked about the investment of almost $0.25 billion that we were making on semis, including memory, there were a number of people that were talking about what is it that you were seeing, and we just felt that this was the right thing to do. So I think in terms of as we look forward, this perhaps is the new normal, right? And just being agile, nimble and kind of staying ahead of the curve, we feel good about where we've positioned the company. And then from a bookings perspective, the acceleration versus 2025, we feel good about that.

So let's talk about that topic, saying just we've got a lot of inbound questions about it as it's been picked up and maybe a little bit more about the potential DRAM shortages impacting the automotive industry. Maybe you could just again sort of level set for us how that sort of supply chain works? Are you responsible for getting the memory? Is it sort of direct source -- directed towards you in some cases? How that works? And then how do you actually see this playing out? Is it really a volume and availability issue? Or do you just sort of expect prices to move higher? If they do move higher, what sort of recourse do you have to sort of pass that on through? And if you have any sense of sort of when this pain point from a timing perspective might really?

Yes. Maybe I'll start. So I think we've been very focused. And I think getting back to the kind of new normal. I think the industry -- all industries are doing much better operating in a dynamic environment. I think we're all much closer connected with our suppliers as well as with our customers. So I think from an industry impact, that's part of what you're experiencing. We're able to respond more quickly. As it relates to specific to Aptiv and the recent news regarding memory capacity and availability post the semiconductor crisis back 2021, 2022, we were very conscious in terms of we've been vocal in talking about how do we derisk. And we've done that through investments in inventory. So you'll see that on our balance sheet, especially in the area of semiconductor chips and SoCs on validation of multiple sources of product so that we have optionality and flexibility, and that's both for quantity of product, but it's also price leverage, quite frankly, to push back when you see constraints, localizing in local markets. So we're, by and large, in China, local for local across our supply base. That does two things. One, it makes us more relevant in the China market. But two, it frees up what we have from a capacity standpoint with our Western suppliers to support our Western customers. So we're confident that we're in very good shape as it relates to the balance of this year through 2026 and into 2027. Now is everyone in the same sort of position that we're in? Probably not. Will there be some tightening? There probably will be. Could that impact vehicle production? It could. Our current outlook, and we've predicted this memory shortage actually going back 2 years ago. It could, but we'll see. I think the industry will figure out ways to navigate. I think we're in a much better position today than what we were back in 2021 and to identify alternatives for supply and free up capacity from a product standpoint. I think it ultimately translates less of a supply constraint issue, more of a price issue. Our view, it really doesn't affect anyone until 2027 as we sit here and look at it at the situation today. And again, we've derisked from a pricing standpoint to make sure that we have multiple sources of product contractually, right? And we can play one supplier off another.

Perfect. Let's move to the spin, the Analyst Day, the outlook. For simplicity purposes, well, I'll refer to them as sort of new Aptiv in EDS. So new Aptiv, 4% to 7% organic CAGR through '28. That consisted of 10%, I think, in the nonauto business. So I want to sort of disentangle both sides of that, first of all. So that means our math is correct, it's something about like 4% automotive growth, and you sort of said about 1% LVP. The -- within those businesses specifically, that 3% outgrowth, and I know you don't like talking about outgrowth anymore, but that, let's just call it, low to mid-single-digit revenue growth, what -- is that specifically being driven by programs already won, not yet launched? Is it sort of the continued ramp-up of programs being won? Any color you could give us on sort of what's sort of driving that by either product or region would be helpful.

Yes. Yes, absolutely. So let me answer the auto side first, right? That's where a specific one is because on the nonauto side, the 8% to 10%, that's pretty much where we are currently tracking in any case in 2025, right?

I want to get to nonauto.

We'll get to that in any case. So on the auto side, think of it, one, it starts with bookings. The bookings that we have been able to get across all 3 segments, EDS, ECG and also our intelligent systems business, robust bookings coming through. That's point number one. The other two points that I should highlight, and I will, is active safety. We see that to be a mid-single-digit grower. That's number one. The other piece, which we've talked about in the past is our UX business, which has been lapping for several quarters, certain ramp down of programs. Those essentially abate early in '26. And I think that's the other piece to think about because the UX business is growing outside of the ramp down that's taking place. And that was the piece that I certainly want to clarify because that also gets us to that, call it, mid- to low single-digit upside on -- from an auto perspective. The final one is what we talked about software-defined vehicles, zonal architectures and the entire software side of the auto piece that we've been building up. So as you think of it from an auto perspective, bookings, number one, active safety, mid-single digits, UX lapping and then...

Does UX grow? Or is it the absence of a headwind?

It actually grows, but the growth is being masked by the ramp down. And that's the piece that kind of abates in early '26 and now then you kind of begin to see that.

Yes. And how much of the historical sort of underperformance in China moving to sort of more of an in line-ish number, how much does that sort of contribute to the outlook as well?

So our ECG business is performing incredibly well from a China domestic OEM perspective, by far, the highest penetration across about 3 segments. And it's a sizable business of the almost $4 billion that we do in China, a big business, doing incredibly well. Intelligent systems is the smallest from a revenue perspective. However, they do have a large percentage for China domestic. So if you think of it, penetration of China OEMs starts with ECG, intelligent systems and then EDS. And then EDS, really, I think what we think about is in terms of bookings that are coming through, north of 80% of their new bookings are all with China domestic.

Yes. If I were to break it down into subsets, right, I would say the user experience ADAS business, mid-single-digit growth rate. If you were to look at electrification across our business units, high single-digit sort of growth rate. If you look at China market overall, high single-digit growth rate and solid growth across all the businesses to the point Varun mentioned through very strong bookings with local OEMs over the last 2 years, especially this year, strong growth on export platform, not only in China for China, but export platforms out of China into Europe and Southeast Asia, very strong growth in India on new program launches principally. So I would say it's a mix -- it's a pretty balanced mix between new program launches across all those as well as some -- on certain things like user experience lapping the down -- the drag that we've had over the last couple of years.

Moving on to the nonauto side, 8% to 10%. I know you said that it's been growing about that level. I think -- to be candid, I think this is one of the areas where in conversations we've had with investors, there's a little bit of a question mark uncertainty about the ability to sort of continue to grow at that pace because -- and maybe you could just sort of go through some of the drivers as to what -- why you think that business can still grow high single digits because when you look at some of the end markets you laid out, right, and I think in auto, you went to front -- commercial vehicle, which is really, I think, the closest adjacencies to what you're doing. Then you had A&D and then datacom. Now I think if I just look at those end markets overall, datacom is clearly growing probably faster than that. A&D maybe around there. But again, I think as you sort of go maybe left to right on that chart you put out and sort of I just described it, like your exposure diminishes. So how are you really able to grow at that level when the end markets that you have more exposure to outside of automotive, I don't think are expected to grow that fast. It implies share gains or more content, but maybe you could sort of double-click a little bit.

Share gains content market shift. So on our outlook for -- to your point, on commercial vehicle, our revenue growth outlook for commercial vehicles is roughly in line with what the commercial vehicle market will grow with that perspective over the next 3 years roughly 4% per year, 5% per year is our overall outlook. You look at the balance of our nonautomotive business, the principal markets we serve are aerospace and defense. From a market standpoint, high single-digit growth rate on top of that, a market that we treat separately is space, a market growing much faster than that. On the telco side, across the globe, a lot of support of transition to 5G. So I would refer that to beyond market growth, it's content growth as 5G V-RAN, O-RAN adoption comes into play. So we're benefiting from that from an overall market standpoint. We've seen very strong growth on the industrial side, especially in the interconnect space. That's probably market share gain, quite frankly, but very strong growth there. And then on the software side, it covers markets that include enterprise, that include telco, that include A&D, where our software revenues today at baseline of $600 million are growing roughly 20% per year.

That's all through the Wind River...

Yes. The bulk of that is Wind River. So that's where we've achieved it. I'd say we have a very high level of confidence in our ability on the nonautomotive side to increase our mix of nonautomotive business 2025 through 2028. We made a comment during our Investor Day about -- ideally wanting to get to a target where 40% of our revenues are nonautomotive related. Clearly, that will take a longer period of time post 2030. A part of that will be organic. And then a part of that will be through bolt-on acquisitions, similar to what we've done with Winchester in terms of building out our product portfolio there. I think if you look at our guidance, the cash flow efficiency of the RemainCo business with 100% cash flow conversion, we have -- we can get to that roughly 35%, 40% target 2030, maybe a little bit later and do that pretty efficiently, effectively, while at the same time, returning a fair amount of cash to shareholders.

So since you sort of went there and sort of the cash generation and sort of the M&A strategy, maybe, again, like with the spin, it looks like you're leverage neutral, you'll generate a good amount of cash at RemainCo. So it does seem like you have a true sort of strategic vision here to sort of try to grow that business organically. But maybe you could just sort of talk to us a little bit about how you sort of balance or make the decision between, let's say, a share repurchase or an inorganic.

Yes. No, it's a great question. And listen, we'll do both, right? We definitely have the flexibility to do that. As we look at the M&A opportunities, I would characterize them as bolt-on opportunities in spaces that either strengthen our product portfolio or give us broader market access. I would say those M&A opportunities, quite frankly, more of them sit in that interconnect space. I think from an intelligent system software, those will be more partnerships, maybe investments that we augment our overall portfolio and bring with other partners' products to market. From an acquisition profile standpoint, there's a couple of things. They need to be financially accretive. So they need to diversify our revenues. They need to expand our margins. They need to generate synergies. They need to be easily integrated. They need to increase cash flow generation. So the financial -- they make the financial profile of the RemainCo continue to make it more and more attractive.

Maybe just to close on RemainCo, and then we can move over to EDS for a little bit, right? But you sort of pointed about 200 basis points of margin expansion there. Can we just go through some of those drivers? I know you sort of talked about manufacturing savings, material cost savings. But I guess when -- you also sort of provided some of that subsegment color, if you will, between intelligent systems and ECG. Given that I think that the majority of the software is in that IS business. I was a little bit surprised that maybe some of the incremental margins at least imply one a little bit stronger because I would imagine that has pretty high flow-through. So what -- is that just because there's also further reinvestment in that business? Or maybe you could talk a little bit about that.

Yes. Listen, so the 200 basis points that we talked about from '25 through '28 on new Aptiv, 3 key drivers that is going to keep it very simple. Clearly, driven by manufacturing performance, that includes material performance, right? And it's what we've been doing for years with regards to consolidation, and then also just kind of footprint rotation, right? And we kind of see that come through. So that's kind of one key driver. The second one is what we talked about a couple of minutes ago that Kevin elaborated on is just higher margin flow-through on the nonauto side, which is growing 8 to 10 points. That flow-through comes through. Within that is the software side of it also, which, again, from an intelligent systems perspective comes through. And then the final one is SG&A benefit. Just as we kind of think about the target operating model, how we're kind of working that piece through in serving a new RemainCo business, we're seeing benefits on that. We've got plans already in flight at this point of time. You'll kind of see that through, essentially kind of getting rid of the stranded costs, for example, right, that we called out. The offset to that is the investment in engineering and some additional capabilities to drive the nonauto growth. But that's what kind of clips some of those margins in terms of why is there not a higher flow-through. So manufacturing performance, which includes material that we've been doing in any case, higher flow-through on high-margin revenue and then SG&A benefits offsetting some of the investments we're making.

Just on the stranded cost because I think this was a little bit of a source of confusion in some conversations I've had investors because the 200 basis points you're talking about, right, that's a '25 estimated number versus a '28 number. So -- it's not in the '25 number, but it's also not in the '28 number.

That's right.

So it's not -- so -- but in reality, what's going to happen then is in '26, which I know you didn't sort of guide to, you will have $70 million. So there will be sort of a step down for you to recover.

That's exactly right, Joe. You're right. So essentially, between '26 and '27, we eliminate those $70 million of stranded costs, right? So when you look at the bookends, '25, hasn't taken place, it's clean. '28 will be clean, right? And so what we will do is when we provide guidance, we will give insight in terms of the level of stranded costs that is kind of weighing on the '26 margins, for example, and as to how they tested....

And is that -- and this sort of maybe is a good bridge to sort of EDS as well, but is that $70 million of stranded costs net of any TSA payments you get from?

It's de minimis in terms of -- for the TSA. So the overall TSA piece clearly in terms of separating companies of this size and scale, the vast majority of the TSAs are on the technology side where we're carving out systems. And so that will take about 18 to 21 months to kind of get through. But that's basically providing a service. But our technology team has done an outstanding job just in terms of to ensure we don't end up with stranded costs post the TSA elimination. And given the high level of conveyance that we have with regards to talent, but also systems, we don't see that to be a major problem.

Okay. So let's move on to EDS a little bit here, you pointed to 3%, 4% organic growth CAGR. I'm assuming you had a very similar sort of LVP assumption for that business.

It's the same.

Yes. I imagine that same. This has, I think, a smaller mix of nonauto, but there is some nonauto there. Is that sort of 8% to 10% nonauto growth in EDS also what you expect? Or can it be a different level?

Slightly lower because, again, if you think about 90% of the EDS business is auto, right? And the remaining 9% of the 10%, 90% of the remainder is all commercial vehicles, right? And so as we called out the fact in terms of commercial vehicle production over the planned period is roughly 4 to 5 points. The EDS business and their programs that they have and the bookings that they have, they actually get a higher share from a CV production perspective. So that will be, call it, mid- to high single digits. So that's where that growth is. And then the final point is that push into other industries such as robotics, for example, agriculture, construction, some of the other pieces, battery electric storage systems, nascent business. And so it's growing from a very low base. So on a growth percentage basis, it jumps up, but it's a small book of business.

Well, that could -- that's why I was sort of curious like because you could sort of paint the picture where actually maybe that growth ends up being a little bit faster because it is a smaller number. You have won some businesses like you mentioned on the storage side, which are 0 right now. So it's almost all incremental.

Yes, I would say the opportunity there is significant, right, in reality, I just that we're starting at a low point as it relates to power storage as an example, a low point as it relates to robotics. But we have business in that space, and the trends are positive in those areas. And we have the ability to apply a portion of our product portfolio and expertise into those use cases. So we're excited about it. They're just coming off of a smaller number. So to your point, you can foresee it isn't year 1, but it's year 3 that you have meaningful growth driven outside of the automotive space that...

And the margins that segment also conveniently 200 basis points of expansion. Here, you talked a little bit more about more automation in what's historically been a very labor-intensive portion of the business. You also mentioned, and I think a lot of this is maybe coming from Asia, but correct me if I'm wrong, sort of more full service systems, which I think tend to be a little bit higher margin. So maybe you could just again, Kevin or Varun, sort of walk through sort of the drivers of the margin you see in that.

Yes. I would say the bulk -- so there's an element of mix, to your point, full service solutions, which I would say it's pretty balanced by region, quite frankly, which where we tend to do more of the engineering, more of the development, and we have the ability to design solutions that save our customers' money and actually optimize our product mix and our profitability. So that's an item. The second is, quite frankly, I'd refer to it as self-help. So it's facility consolidation. It's footprint rotation. It's things that we do actually very well and continuing to execute on that plan. And I would say that's probably half, if not a little bit more of the overall margin improvement that we have included in our outlook from 2025 to 2028. Then there's an element of automation. So we're automating some portion of the overall assembly process for wire harnesses, and that's taking place across regions. And then there's our typical benefits associated with overhead reductions, SG&A reduction, things like that, that factor in.

And then maybe the other side of that stranded cost equation, so SpinCo, right, like the 25 estimated number. Obviously, they're getting their share of allocation now. But then again, practice, when some companies they're going to have whole bunch of stand-up costs right?

It's de minimis.

It's not even worth, to be transparent to talk about. Okay. So that's a pretty clean 25.

Yes, it is 25.

Okay. And then capital allocation on the EDS side, you said a competitive dividend. Is that right out of the bat or...

Yes. Yes. So through out of the gates from a balance sheet perspective, I think, as I mentioned, 2.1 gross, 1.8 net. That's what we're targeting through out the gates. The models that we run, the business' ability to do a regular cash dividend right out of the gates. It's cash generative from day 1. Obviously, closer to time with the appropriate timing and stuff, we kind of call that piece out. But we've modeled in a good competitive dividend to the business. That's the thesis of the business, right? It's a steady growth from a revenue perspective, good margins relative to its competitors, but a tremendous cash generator. And as you think about where that cash gets deployed, obviously, organic growth, some of the kind of footprint rotation consolidation side of it, some tuck-ins potentially. But the rest of it, given the balance sheet is going to be -- from a financial metrics perspective, investment grade, but again, given the auto cyclicality and the auto sector and stuff will be kind of high sub-investment grade. And you kind of saw the ratings agencies deliver their evaluation, their assessment on the day of Investor Day. The dividend is something which is easily supported.

It also seemed like part of the rating was nascency of the business, lack of stand-alone sort of track.

Exactly.

But do you -- I guess the question is, over time, then do you expect the rating to sort of be that investment-grade rating? Or is there a desire to sort of stay...

A lot of that have to be kind of decided by the Board and the new management team. The ability for them to kind of step up will certainly be there. I think the question really is, do you really want to be there or not in terms of the flexibility that may be so.

I think what we control and what that Board will control, what do the financial metrics look like? So investment-grade credit statistics without a doubt. And then we'll see how it plays out with the rating agencies.

Okay. Why don't we see if there's any questions. Again, if there are any, use the QR code, and we'll see if anything came in here. It's my first time using, so bear with me. I'm not sure if anyone has a question or I don't know if sorry, if there is anyone in the room that has a question, you could also raise your hand. Otherwise, I'll keep going on. I guess [indiscernible] sort of just alluded to this a little bit on the EDS side, consolidation, right? As you survey the wiring landscape, let's say, right, like you obviously have a good idea about your capacity, right? And you've mentioned some of the footprint rotation you want to do. At an industry level, how would you classify the capacity? Because I think, Kevin, like in the initial call announcing the spin, you sort of alluded to a comment that this is just an area of the value chain that needs probably some industry consolidation. Is that -- maybe you could expand upon that a little bit.

Yes. I think, to be honest, I think there are a fair number of areas in the automotive space that could use some industry consolidation. It's one of them. The EDS business is a leader in electrical architecture across the globe. And in every region that it operates, it's either #1 or #2. And the margin profile of the business really reflects those -- we talked about the full service sort of solution, our ability to design optimized solutions that take weight mass, cost out of a wire harness and improve performance for OEM customers. So it saves them. So they lead and are by far in a way the strongest in the industry. There are a number of players out there who -- when you look at the margin profile, it's different than the EDS business. They tend to be built to print. So OEMs or maybe in some situations, players like ourselves design a wire harness. And from a sourcing standpoint, the OEM decides to go down a build-to-print sort of path with a particular vehicle program. That excess capacity obviously impacts the profile of the industry. And I think there are several of them that if you follow our industry closely over the last 5 years have been financially troubled and have gone through very difficult times and created difficult situations for our OEM customers. So I think in this particular space, it's one where you get a lot of customer support to bring expertise like the expertise our EDS business has to certain of those players.

One housekeeping, which I know has sort of been asked as well. There weren't any -- if I recall, any sort of -- you gave free cash flow guidance, but there was no sort of CapEx guidance. But we've obviously seen the level of CapEx. Any reason to think it should sort of change meaningly from what we've seen in either of those businesses?

No. Pretty much in line with our historical CapEx.

Okay. Maybe to close and turning back to new Aptiv and I guess, specifically with the ECG business, which I know, Kevin, you spent a little bit of time talking about. I'm probably going to oversimplify this, and I don't know if this is how you think about the business. But the way I sort of think about it is you've got maybe 3 groupings. You've got the traditional power and signal business, which, let's be honest, like maybe you win some business, maybe lose some business, but that's probably more or less growing in line with industry, right? Then you've got the, let's say, electromobility part, which is obviously in full effect in China, although given that over half the vehicles are already on EVs, maybe the growth starts to slow. Europe is still -- has some potential. U.S. seems like it's on pause, right? So then the last level is, I guess, the -- maybe let's call it the data connectivity, the high-speed connectivity, and that's where you're sort of talking about the software-defined vehicle, the smart vehicle architecture, the zonal architecture approach. It seems to me like that's got to be -- and again, maybe you disagree with sort of how I bucketed it, but like if you follow along my thinking, it seems like that last bucket has to be the biggest growth driver over the next 3 to 5 years for you to hit this. Is that fair?

Yes. I think -- so high-speed interconnects, product areas like that are amongst the fastest growing. Our general view from a global standpoint is electrification continues. It may not be full battery electric vehicles depending on region. That is a driver of incremental growth. To the extent there's more content going into the car that requires any sort of power, that is more growth for the interconnect business. You're right, there are certain areas now that it's just power distribution that grow at vehicle production. But net-net, I think you look at our -- the growth of our ECG business within automotive is a mid-single-digit sort of grower with 0% to 1% vehicle production growth rate. That's how it plays out. It's a business that -- or a sector that as you transition to what we refer to as smart vehicle architecture, whether that's central vehicle controllers or zonal controllers. The reality is weight mass comes out of copper comes out, but more interconnects actually go in, right? You benefit -- that business benefits from that trend. So whether it's in automotive, we're obviously excited about that business and how it's positioned. It's the #2 player there. I'm sure everyone here knows who the #1 is. We're growing significantly in commercial vehicle. I'd say that's due to focus and expansion of our product portfolio, which will continue. And then we have a number of great opportunities outside of automotive.

And just on that smart vehicle architecture, there's obviously been a little bit of a delay. There's been programs that have been canceled mainly because they were electric, maybe not necessarily because they were smart vehicle architecture. But -- and look, I think some of the companies probably sort of had some challenges even sort of getting some of those first-generation architectures out because it is a big change. But in your conversations with your customers, do they realize the importance of this? Is this still sort of a full force? And as we get to, let's say, 2030 end of the decade, do you expect most of sort of the new programs to come out to sort of have some sort of zonal...

Yes. From an -- so 5 years ago, when we started talking about it, the question was where was the industry going to head in this direction or not. And I think there isn't an OEM that you talk to across the globe that this is a path they're on, some faster than others, some starting and stopping over a period of time. So it certainly is the trend, and we think you'll see the benefits of that in our revenue line. Unfortunately, not as fast as what we had expected 3, 4 years ago. But end of the decade, you'll see some benefits. I think we talked about in our Investor Day in terms of our funnel of opportunities on smart vehicle architecture. Sitting here today, it's over 20 OEMs and I think close to $20 billion of lifetime revenues. So it's definitely. We're working with more OEMs now than what we were 3 years ago. So it's certainly a trend that we benefit from.

And even here in North America, where maybe some of the electrification like the zonal approach or a central approach still is the path they're taking even if they stay combustion engine.

Yes.

Okay. Well, I think we're about out of time. So gentlemen, thanks. Thanks for coming.

Thanks for having us.

Thank you.