Magna International Inc. (MG) Earnings Call Transcript & Summary

Thank you, everyone, for joining day 2 of the Barclays Global Automotive and Mobility Tech Conference. I'm Dan Levy, I lead U.S. autos research coverage at Barclays. Very glad you can join us today. We have a really packed schedule, great set of speakers and a number of industry participants as well. So folks, please pack the room, come to the event and stay for the cocktail party at the end. So we're glad to kick off with Magna International, third largest global auto part supplier.

Third or fourth.

Third or fourth.

Third or fourth, okay, across a number of business lines. We have with us Pat McCann, the company's EVP and CFO; Louis Tonelli, who heads IR efforts. So we're going to go through a series of questions, fireside chat style. For anyone who has questions in the crowd, please raise your hand. We can weave in Q&A. If anyone is listening on the webcast and want to ask questions anonymously, you can e-mail my colleagues, Daniel Lai or Joshua Cho, it's [email protected], and they can ask your questions anonymously. So with that, let's kick off. Pat, Louis, thank you.

Why don't we just kick off with the near term? And maybe we could just talk about strikes over, what are you seeing on near-term recovery? To what extent are you seeing your customers fully up and running? And you gave some commentary on lost revenue, I think, roughly $300 million for the year. How much do you think -- is there any chance any of that could be made up this year?

Yes. I'll start, and Louis can jump in. But we estimate -- we actually now reported our October numbers. So we lost about $315 million of revenue, pull-through on that was at normal decrementals. And we estimate it's about 220,000 units, and it was primarily in Q4. But that was fully reflected in our guidance. As far as production, production has come back up, it came up fairly quickly, I would say. But as far as recovering the 220,000 units, we're really not seeing that recovery in '23, it's mostly -- we're expecting it in '24.

Okay. Great. Europe has been another region where we've obviously seen recovery, but some questions on the order book. So maybe you could just give us a sense, you obviously have a large presence in Europe through your core business as well through Steyr. What are you seeing -- in Europe, to what extent is the LVP -- relative to LVP strength we saw this year an indication? Or is there some question around the order books? What's the forward look that you're giving?

I mean I think in terms of Europe, I guess it depends on what your expectations are to start with. We started the year at 16.2 million, and we've been notching up over the whole year. We're up at 17.6 million now. So I think Europe has been a positive surprise for us this year. I don't think we see anything to be concerned about. I don't -- I haven't seen anything particularly on the order books that concerns us with this thing, so we're feeling okay about Europe.

Okay. And then just one more. And obviously, the key theme that we saw in the last few years was production -- instability in production schedules. I think this was fairly disruptive across the supply base, and now we've seen some recovery. So maybe you can give us a sense of where we are now on recovery of stability in production schedules. I guess it's not at pre-COVID levels, but it's up significantly. What are you seeing there?

A lot of improvement. If we go through the year, the low point was Q3 of 2021, and that's really when the chips really took the industry down, I would say. And when you look at that point, it was -- we're guessing it was probably in the range of about 12 million units lost. This is what's reported, whether they're reallocating chips, but about 12 million in 2021, reduced down to about 8 million last year, and we're expecting this year about 4 million, but primarily it was in the first part of the year. We have seen a real improvement in the beginning of April of this year. It's going to continue, but there's always going to be downtime. There was a flood in Slovenia, fire in Czech Republic. So there's going to always be some issues, but it's nowhere where we've seen it and a lot of stability. And we see it in our Seating segment, for example, you see a lot of that stability coming back in.

Supply chain constraints, is there any gating factor at this point? Or is it just mentioned some one-off issues here or there?

No, we haven't really seen anything on our supply base as far as availability of supply. The chip situation had changed where it was a take or pay. So we do have a little bit of elevated inventory, but we're normalizing that as well. But I haven't heard of any supply issues, no.

And maybe I think one of the themes was that with trough volumes, there was some atrophying of the Tier 2, Tier 3 supply base. What's the relative health you're seeing of the Tier 2, Tier 3 suppliers?

I've been at Magna for 24 years. And I think back to '07, '08 and the health of the supply base just broadly is completely different. There's always going to be a bankruptcy here or there. But we have a dedicated group. It's through our purchasing group. So we look at a supplier, we're evaluating them not only for quality of supply, but actually their financial strength. So we've been able to navigate the whole chip over the last 3 years, knock on wood, relatively unscathed.

Yes, I'd say, we've been far more sophisticated now than we used to prior to the global financial crisis.

Great. Let's pivot just some directional puts and takes on 2024 and unpack some of the factors that you talked about. And let's just start with costs and the recovery environment. You've done actually a good job this year of recovering some of the headwinds that you talked about at the beginning of the year. But if we just zoom out over the last call it, few years, I think it's something like $500 million, $600 million of costs that you've absorbed. So what's the tone and tenor of the discussions with your customers?

Listen, it's always a difficult conversation. So we start with we've absorbed, your numbers are bang on. It was $530 million in '22, another $80 million roughly the year before. So we're in the $600 million cumulative. It's a little bit misleading in the sense because contracts [ were a little ], but let's pick $600 million. We start with the $600 million number. And you're correct. I think our commercial teams have done a fantastic job recovering our spill up here. We're recovering our -- all the headwinds. But we're in a situation where we have to go in. We had a net number of $600 million. It's a much higher gross number, and we're able to recover those. So we've overachieved in 2023. A large portion of that is going to roll into 2024. So we don't have to show back up at the door and ask for more money. And in certain cases, we're taking checks and you're -- it's a combination of things, Dan, where you're looking for a PO change or you're looking to get on an energy index. So you're looking to get on a different steel index so that you're pushing the risk from the supplier back up into the customer.

So this is a mix of lump sum and piece price changes?

Correct. And changing how the piece price reacts in the future relative to an index.

And is there any one set of costs where maybe you had a little more traction getting recoveries?

Relative to prior years, jump in, Louis, I would say our success is on chips. I think we have broad success on the chips across the board. The one that's new to this -- the OEM customers is the energy. And so if I put on a spectrum of where we have the most success, it's chips, I would say the other stream would be labor. That's a hard one to crack with the labor rates trying to recover all those. And that really was the majority of the $100 million increase from '22 into '23, but we've over-recovered in other areas to help offset. So I would say chips to labor in the middle would be energy, I would say. But part of the exercise coming through this is we've now moved to hedging -- sorry, pardon me, is to hedging energy. So again, how do you derisk your bill of materials so that you have cost certainty as you move forward over the life of the program.

We hear about OEM is facing a variety of their own cost pressures. I mean Ford and GM basically just said they'll be absorbing in excess of $2 billion of annual cost through their new labor contracts, and everyone is well aware of the cost challenges and pressures on the EV transition. How does that shape the trajectory of commercial recoveries?

Yes. I've been here 24 years, he's been here 25. There's always a reason that these discussions are never easy, and it's always been going on probably since beginning of time. And the reality is you started with -- we've absorbed $600 million. That's our starting point. We can't -- we have -- you asked a couple of interesting questions. One is, how's the healthy supply base, and we've absorbed a lot of costs. We need us a healthy supply base, so do the OEM customers. And I think there's a solution in there that we have to recover those monies. And part of it is, as we roll forward on the EVs, they need a really healthy, strong, sophisticated supply to help that transition.

I mentioned we're investing as well on top of the labor that we've had to deal with, where we're investing for autonomy and for electrification ourselves with our own costs.

So let me ask about that. It's a good segue, right? So I think it's $900 million a year of spend that you've committed. How fixed should we view that spend? And I think the theme of the year has been really a pullback on EV euphoria. How does that change the way that you spend?

Well, let me back up. So the $900 million we're talking about is the engineering expense that we expense each year on average over a budgeting period. That was prior to the acquisition of Veoneer. We acquired Veoneer, that number is about $1.2 billion now, just to be clear. Of the $1.2 billion, the majority of that, probably 2/3 is not related to EV. It's agnostic. It's primarily whether it's ADAS or other electronics engineering, and that's what we're expensing. And then the balance that's being expensed, that number would be related to eDrive. It's primarily engineering for sophisticated eDrive systems. The other piece that we're investing in related to EVs that's not in that number is our capital. So we do have significant capital spend. So if you look at our capital, we would generally run $1.7 billion, $1.8 billion. This year, we're guiding in the range of about $2.5 billion. And of that $2.5 billion, $500 million alone is related to battery trays. So just to have the data right set. So when you think about the engineering, the engineering, you have to spend. These are awarded programs, and we're marching towards it. In the case of the capital, what we will do, if needed, right, we've worked on a lower volume set than expected, right? We're making staged investments. So we'll work with our customers to say, how do we scale that investment, that if your production volumes are going to be, pick a number, 75% of original, maybe we buy 2 presses instead of 3. And that will be the way we'll stage it, or if they say we're going to permanently reduce it, that's -- we just eliminate the third press. Step 2 would be how do we band some of these investments, whether it's on volume banding or are they -- do they share in the capital spend themselves, they'd be in the OEMs. And then the last piece is, we have commercial settlements for low-volume claims with our customers. And that's regardless of whether it's an EV or any type of low-volume program, we would step up and submit claims.

So the way I read that is maybe the $1.2 billion, that's fairly set. But then on the capital side, that's where there could be variability depending on the underlying environment and your -- the activity of your customers.

Yes. Correct. And the only thing I would add is of the $1.2 billion, 2/3 of it is most likely AV, not EV, 2/3 is probably a fair number. Yes.

Great. Let's maybe unpack some of the segment considerations and just directionally think about how to think of them into 2024. Just some one-liners, BES, it's an underperforming facility. I think that's been improving. So what's the line of sight to that being fully resolved?

Yes. So in '22, we had about a 35 basis point impact. So a fairly significant one facility in Europe. We've -- I would say we've moved in, we have the plant. It takes time to work out. I would say by our run rate by the end of Q4 of '24, we're at a breakeven level. So it's worked through, and it's going to be just -- we've had a little bit of a step improvement this year and then it's going to be linear improvements throughout.

And it's pretty much in line with what we've been saying because we said actually '23/'24 is when we're going to see improvement throughout both of those. And we're pretty much on track so far in '23 and no change in '24.

Good. Seating, very significant recovery in margins this year. I think some of the best margins we've seen in a few years now. What's happened in Seating? How sustainable are these margins?

It's probably a combination of a couple of factors. We talked earlier about disruptions and allocation of chips. Our Seating segment was really punished relative to other businesses. And it was really product mix where we believe OEM customers are reallocating chips to higher-margin vehicles. So for example, our minivan platform. And when you get into a seating facility, they're dedicated, so you can't reallocate your labor within a facility. So you have a facility that's really incurring costs with no sales. So I think they're disproportionately hit. The other issue was we moved forward from last year. This year was one of the big programs launched. So we're seeing the benefit of the full ramp-up of volumes, which is the Jeep Grand Cherokee. And I think lastly, it was some self-help as well. There was an underperformance, not nearly the size of the BES facility. But there was 1 or 2, 2, I guess, 2 underperforming facilities on the vertical integration side that you just see it in the margin, and there's been significant improvements in there. So I would say those were the biggest factors. So I would look at '22 as being unusually low relative to '23 being unusually high.

Complete Vehicles, obviously, the margins currently are compressed because of the launch of one of your customers. What's the path to return to healthier margins there? And then just ramping up that program?

It's ramping up the...

The Fiskers.

Yes, it's the Ocean. So the Fiskers and then -- so it's 2 factors, I would say, Dan. When you look at the Steyr, you lose the BMW X5, it's ramping off as expected. And then you have a period of no activity as you're retooling the line. So you have an impact of lost contribution margin. Second is you have launch costs, as you just -- you have to expense these costs as they're being incurred, and now we're in the middle of ramping up the Fisker Ocean program. So those are the big -- but I don't -- when we look at our Steyr business, it's probably a 3%, 3.5% business, just the nature of the model. A very, very strong return business model, but you're buying a whole vehicle, all the components and you sell it back to the customer. So it's more like to a CD business where you have so many purchase components.

And I'd say the trajectory has been very much as we expected, right? We said that first half of Q3 would be the low point because of the changeover. And then what's implied from our outlook is basically as Q4 improves [ in Q3 ]. So I wouldn't say there's anything out of the ordinary from what we expected in terms of the trajectory.

Maybe we could just talk about your unconsolidated business, roughly $3.5 billion of unconsolidated revenue, $140 million. There's a few pieces in there. Maybe we could just start with maybe some directional comments on how to think about the LG JV.

LG, in 2019, we had about $150 million of sales. So we really was just a start-up. Last year, we had about $600 million of sales. So we had talked about pretty significant ramp-up from the time we did the acquisition, and that's what's happened, really significant ramp-up. So we still expect, based on '23 to '25, like a 40% CAGR in that business. Now we're going to have to look at our business plan processes, what impacts EV delays whatever it might do to that business. But based on what we said earlier in the year, still a significant trajectory from what we had in -- what we have right now.

Is that business profitable?

Breakeven this 2023. So it's -- with more sales comes increased profitability. And our expectations of improved equity income, part of that is related to that.

Okay. And then maybe you could just -- you don't have a lot of China exposure, but there seems to be a little more on the unconsolidated side. Just remind us of what your China exposure split is. I believe that most of the unconsolidated business is on the powertrain side, just legacy GETRAG, is that correct? Just summarize what your China exposure is.

So we do have a lot of unconsolidated business in China, but the majority of our business in China is actually consolidated. So last year, we were just under $4 billion of sales in China. We expect that to grow to about $5 billion by 2025 based on the outlook we had earlier this year, another $1 billion plus of sales in unconsolidated joint ventures. So if we're talking about $5 billion in managed sales in China, that's bigger than some public companies. So you say we're small, but it's relative to the real size of Magna. So if you look at our business there, and I would say, in the earlier days, we had -- the majority of our business was within international OEMs. I think over the last number of years through our developing relationships, the acquisition of GETRAG, all the other acquisitions that we've done, we've done a good job of kind of cultivating the relationships with the domestic OEMs. So now if you look at our managed sales in China, they're looking a lot closer to -- the split between domestic and international is a lot closer than what we see in the marketplace in China. So we've done a good job going from substantially international to a much better -- more balance between the two.

If we could just wrap, anything you could say on currency considerations? Because we've seen, depending on the company, some transactional headwinds this year in addition to all the translational hits, obviously, the Mexican peso and there are some other currencies as well. But to what extent should we be watching out for transactional headwinds to the extent that hedges are rolling off for you?

And now a couple of transactions specifically comes to mind. Translational, I look at where we started the year and where we are year-to-date and kind of what the current rates are. I don't see a lot of impact from translation at least. I think that's going to be kind of a headwind -- a big headwind or tailwind in '24 versus '23. Transaction...

On the transaction, yes, we have a very sophisticated hedging program which has been in place since -- before I started. You mentioned Mexico specifically. The way we treat our operations in Mexico, the economic reality of those operations as they are in U.S. dollars. So the POs tend to be in U.S. dollars. So when you pull it all back, effectively, your peso costs are your labor. So we actually hedge our labor costs in Mexico. So it's an inverse hedge. I would say that's really been the biggest swing. There's been some movement on the RMB, obviously, on the transactional side and that's a harder part to hedge.

And do those hedges unwind at some point and so there's a lag?

There's a lag, so you're rolling. But we're looking forward 4 years on our hedging strategies. And Dan, it comes back to the energy piece where we've looked at currencies as being volatile, and we're trying to derisk our bill of materials. So that's where this hedging strategy on FX came, and we're going to do the same on energy, for example.

Okay. Maybe we could just talk about -- let's pivot a bit on EVs. There's a clear concerted effort to leverage yourself to megatrends and obviously, EVs are a piece of this. Story of the year, obviously, is there's a slowdown in sort of EV excitement. Maybe you could just give us a sense of how we should think about the impact of the different pieces of your business, you have battery enclosures, you have drive units, Steyr. What are the puts and takes on each of these product areas with this slowdown? To what extent is it impacting you?

Yes. It's an interesting -- we've been getting the question a lot. So this is -- it's very interesting. So if you think -- the way our business is, I would say, about 70% of our products are agnostic. So let's focus on, like you said, the battery trays or the EV products themselves, which are in our case, primarily battery trays and eDrives. A lot of the work we're quoting on now is so far out. But the question becomes, we're going to do the battery tray for the electric Silverado, for example. If that -- if -- and EVs are coming, it's just a matter of what's the ramp on them. If that ramp is slower than we expected, our expectation would be that you're going to -- the flip side would be there's more T1 sales happening. Same thing with the Lightning and the F-150. So I think we have a fair number of natural hedges in our portfolio as we move through that. And that would apply as well on some of the eDrive programs we have. It's not perfect. But we do have a pretty broad representation of battery trays. We're on 3 continents, 9 awards, 6 customers. So it's a pretty broad portfolio. So we don't have all our eggs in one basket, number one; two, it's a good regional representation. And what we're focusing on primarily in both cases is the more complex-type products that if you think about a battery tray, they are very capital-intensive programs, but how do you derisk them? But the flip side is, if you're not in on Gen 1, you're never going to get Gen 2 or Gen 3. And you have to be ahead of it. So we look at our product portfolio, and we differentiate between pick something, a mirror. If you think about a mirror, that's a program you can get on Gen 2 or mid-cycle enhancement. Battery tray, eDrives, you have to be in early. And our experience has been that once you have that -- those awards similar to frames that we've been building for 30-plus years, you have it for multiple generations. So this is, in our mind, a 3-, 4-year investment decision.

You have a fair amount of exposure to hybrids. It's actually surprising because we were hearing a lot about DCTs. We actually haven't heard about DCTs a lot. So maybe this is a good time to talk about your -- remind us of your DCT exposure. And to what extent do you think that this is something that's unappreciated, like a quiet unappreciated source of DCT, dual-clutch transmission?

I think slightly, you say that because we talk about our $4 billion of managed sales, that includes dual-clutch or hybrid dual-clutch transmissions, 48-volt hybrid systems. But nobody wanted to talk about that. It was just like, let's talk about EV. But we do have -- it's not quite 25%, so it's between 20% and 25% of our managed sales of $4 billion is going to be in hybrid DCTs. So what we've been able to do is, we have a dual-clutch transmission. We've been a leader in that area for a long time. We develop the hybrid that is package neutral basically in the exact same space that we have, the transmission, we can put a hybrid transmission in there. So it gives the customer some flexibility there. So it's an area we've got program awards with 3 important customers, 2 of them have launched. Mercedes business launches in 2025. So yes, it's certainly an area that could become a little more in the forefront, I guess. We haven't seen it to this point, but we may see more and more of that as maybe they transition away from EVs or should I say at least a delay in the EVs is happening.

eDrive units, I think one of the themes is if automakers are being a little less ambitious on EV volumes, that then [ dense ] the case on vertical integration. There has been a mixed case on drive units going in-house. We've certainly heard of a number of automakers talking about bringing them in-house. To what extent does this volume slowdown all of a sudden make some customers reengage with you? I would have otherwise in-sourced.

I think we've seen a mix of both. There's people who want to do the complete system in-house all the way down to the other extreme where they want to wind motors. I think our portfolio is balanced in the sense that if you want an eDrive system, we can do a complete e-system for you. Through the acquisition of LG, we're able to provide inverters, motors. And long term, I honestly believe that the supply base system with OEMs works in the sense that we have an incredible ability to drive costs out of the system. We can provide tribal knowledge across multiple customers, you get purchasing benefits, you have engineering benefits. And I think even if our experience has been over the last few decades, is even if they start, Dan, with in-house at first, they will eventually move to outsourcing. So I like to pause a little bit. I think with this EV, if we were sitting here this time last year, everybody was talking about you have to be all-in on EVs. And now we're sitting here saying EVs are never coming, EVs are coming.

They're coming.

And it's just a matter of when they come. So I think the OEMs realize that and they're going to look at their portfolio. I don't think it's -- they're going to have a knee-jerk reaction out of this. That would be my -- I don't work at an OEM, but that would be my guess.

One last one on EV, and I guess it's the indirect risk because I think what we've seen is that automakers in general reserving premium content for their EV platforms, right? It's -- we're going to launch an EV. It's not just the selling proposition, not just EV, but you're getting the latest ADAS system. You're getting the best cockpit electronic systems. So to what extent have you seen any indirect impact through? Maybe it's slowing down the pace of the launch of your ADAS backlog or uptake of maybe premium lighting systems that perhaps were being reserved for EVs.

I'll jump in most but I haven't seen it. I think we're -- our ADAS systems are going across, whether it's an EV or an ICE platform. It's been much more agnostic. That being said, there has been a lot of work being done by the OEMs on their architectures. But ours is on an ADAS. We don't really focus on any infotainment or HMI-type systems. Ours is more behind the dashboard, I would say.

Okay. Great. I want to just wrap with one on capital allocation before I open up to the crowd. Maybe you can just give us your latest thoughts on capitalization. I think this one might be a little easier because your focus primarily is on deleveraging. But at what point do share buybacks to come back into the picture?

I think since we get back in our leverage ratio, when we look at our -- our capital allocation strategy hasn't changed. We want to be 1 to 1.5x. Once we're comfortably within that range, we're going to look at growing the business on an appropriate profitability basis. And then we're going to pay our dividend. We've even cut our dividend off. In COVID, for example, it's core to us. So then when you come back to your point is our outlet is the share repurchases. So on the share repurchases, we're going to look at them. We're going through our business plan right now. We're going to -- again, we're looking for 3 years. And if we have capacity, we go in and you go to the markets and you have to apply for a normal course issuer bid and then we'd be considering that as we come through our business plan in February of 2024 with our outlook.

Great. Okay. Folks, questions? Or I can just continue asking questions. Any questions? Okay. Well, raise your hand if you have questions. Let me continue here. Maybe you can just give us a sense on Veoneer. And I think one of the propositions when -- and you highlighted this that your teach-in in September, that the focus of Veoneer was not just to bring in the Veoneer capabilities but it's to broaden the overall opportunity set so that it's not just the hardware, but it's doing more integration, more system sales, more software. The first, call it, 4, 5 months that you've had them, how is this changing the bidding or the types of conversations that you're having with customers?

I think it's -- the reality is it's been so early. Like you said, it's been 3, 4 months. Both companies were moving down that path already. So this isn't a new approach. But currently, right now, the majority of our revenues are related to sensors. But a lot of these sensors are smart sensors. If you have a rearview camera, or if we're fusing together a bunch of signals, there's a significant amount of engineering that goes into it, which is, like I said earlier, a big portion of the $1.2 billion. I think as the industry matures, we're going to see more of this system integration where suppliers specifically Magna, where we have the ability to start bringing systems within the ADAS space together and fusing them together. And I think our door opener is all of the sensors that we have because our sensor suite is second to none.

The synergy target was $70 million by...

$70 million by 2025.

By 2025. Maybe you could just remind us of what that consists of in the gating factors to get there.

It's purchasing, labor, SG&A, some engineering. Again, you don't want to cut in the engineering space, but there's going to be -- and then there's like just product category synergies. No revenue synergies included in that number, which would be outside. But as we're moving through them, the gating, we started working on our synergy execution prior to close, for example. So we were working through clean teams, and it's a lot of blocking and tackling but going down to -- on the employee side and 1 and 2 and 3, looking at all your purchases, all your buys marrying them up. Sometimes, Veoneer's price was better, Magna's price was better. You just go back, and those are the easy ones. Now you start going to step 2, which is how do you get the bulk buys? Is there ways we can redesign coming up with one architecture for radar, for example. Those are the synergies we're going to get. And we've been tracking ahead of expectations. So this has really been a pleasant surprise the way -- I shouldn't say a pleasant surprise, it's executing against plan. And we came in looking to focus on the integration even prior to close. So we announced last December. In January, we're going to be working through clean teams to come up with a very seamless integration. And the #1 priority is executing on synergies.

Yes. I'd just add, I think both sides are -- there's a lot of energy on the team and both sides are very positive about bringing the 2 teams together. There really is a restart to integrating to one team, which is good.

Okay. I will wrap up with one back to Complete Vehicles. And on the EV side, to the extent that automakers are rethinking the types of volumes and the scale calculations are changed, to what extent is this all of a sudden changing the types of conversations you could have with Complete Vehicles on bringing in more customers? And to what extent are there just clear capacity limitations because I think Graz is 200,000 units?

Yes, 180,000, for sure. Yes. I think it is an opportunity. When you think about our Graz facility, it is different than OEM facilities in the sense that it's built for flexibility. And I'm not sure if you had a chance to watch the September video of where we build the 5 Series, we are building the 5 Series. Every car goes through one paint line. On one assembly line, one framing station, we have the 5 Series, the Z4, the Supra and the Fisker. And you have -- it's incredible, but they're built for low volume. So to your point, if volumes come down, there will be an opportunity to build. We're -- these lines are built for sub 100,000 units. And if EV projections go from 150,000 to 50,000, it does create an opportunity for sure.

I'll just squeeze in one more because we want to use the clock fully. Maybe just quickly, just one more back to capital allocation dividend. I assume that should hold fairly steady.

Well, we have a record of increasing it 13 years in a row. So like I said, it's core. We're not looking to reduce it at all. I think we're running about $530 million a year, and it's been offset by share buybacks. So again, we have to get through our 3-year forecast and our cash flows, but it's...

Conceptually, we want to grow the dividend as earnings grow and then maintain it through the tough times. We've -- and that's what we've been able to do, and that we've done that for many years. We said 13 consecutive years of increases.

Want to wrap with CES plug? You got a big booth there.

Yes, we've got a big booth we have for a number of years now at CES, and we're also doing ride and drives, demonstrating some of our active safety technologies. So if anybody is interested, reach out me and we'll get you included in all of those. And we're happy to do that. It's exciting.

Pat, Louis, thank you.

Thank you.

Thank you.