TE Connectivity plc (TEL) Earnings Call Transcript & Summary

Good morning, everyone. My name is Stacy Rasgon, and I cover U.S. semiconductors here at Bernstein. Before we start our session today, I'd like to say a word on how our interactive Q&A is going to work. We're going to be using a service called Pigeonhole. There's a link on the left side of your screen to access Pigeonhole. When you click that link, it will open a new window in your browser. The video will continue to play in the prior browser. You can submit your own questions in the box at the top, and you can vote up questions that have already been submitted by pressing the up triangle next to any one of them. Please do go ahead and click on that link now. You can submit questions for TE Connectivity beginning right now and anytime during the presentation. We will leave time for Q&A at the end. Also, we are working with our partner, Procensus, to do live polling on the presentation after the session ends. A link to Procensus is also on the left of your screen. Again, this will be a live poll with immediate access to results for sentiment on TE Connectivity for those that choose to submit. So please do take a few seconds after the session to fill that out. Now that all the logistics are out of the way, it's my great honor to introduce our guest this morning, the Chief Executive Officer of TE Connectivity, Mr. Terrence Curtin. So what is TE Connectivity? With more than 500,000 different products, TE Connectivity has a pervasive spot in nearly every end market imaginable. It contributes connection technology to a huge number of products and services that you interact with on your own basis every single day. Their presence spans across automotive, industrial, defense, consumer, networking and medical with hundreds of sites, thousands of people and billions of dollars in sales spread out across a global network. I do think investor controversy is focused on a few topics. Certainly, there are the near-term questions around the COVID environment, automotive demand and the like. Beyond the near term, I do think investors ask about the achievability of long-term targets given the high share position in core markets. Where can margins go from here? Given the role that M&A as well as divestitures have played toward their goals, what comes next? What effect is industry consolidation having? And also how an increased focus on harsh environments can allow even greater levels of differentiation versus the competition. So the answer to these and hopefully, many other questions, it is my great pleasure to welcome Terrence. Thank you so much for being with us here today.

Thank you, Stacy. And also, I do want to thank everybody for watching today and showing interest in TE or if you're an owner, I do appreciate it. I hope you're all staying safe. So what I'd like to do is I want to start a little bit differently than we normally do at these conferences. I want to just talk about some key messages that I think we articulated during our earnings, but also just give a little bit of an update as well real time. And when you look at TE, before COVID hit, we were running around $3.2 billion of revenue a quarter. And when we guided, we actually said COVID was going to impact us. If you could go to the next page Stacy, I would appreciate it. And we did say sequentially what we were seeing around -- next one, please. The key messages, there we go. Thanks, Stacy. We did say, we did expect to be down about 25% sequentially as we saw, mainly in the western world, adjustments being made by our customers as they were working through COVID. And when we think about we guided about a month ago, our orders were roughly playing out as we expected. Our April came in as we expected, but we still were in a key period here of our automotive customers which is an important and substantial part of our business, in the West are still ramping up. So the next 5, 6 weeks are still important to see where they ramp to. And I also believe there will be some questions around that as well as we get to Q&A. Another important thing that we shared and also to give an update on is where do we see China. China, our orders remain back to Lunar New Year, pre-Lunar New Year levels, some pre-COVID. One of the things that is interesting, it's broad-based, it's across all of our businesses. We are seeing some businesses well above pre-Lunar New Year levels. Automotive is still marching its way up. But really, the weakness that we're seeing in our business is mainly driven in the Western world, in the U.S. and Europe, as we expected. The other thing that we're very proud of that we shared in earnings, and it continues, is how resilient our manufacturing has been in reacting to this environment. In China, we shared how quick we got back up, that really COVID did not have a material impact on us last quarter. And as our customers work through things, we feel pretty confident that we'll be able to do the same elsewhere in the world with almost all of our sites up and running. Certainly, we have a couple of sites that still are being impacted, ramping up in like Mexico, as Mexico come back online and as you've seen over the past couple of weeks. So that's really a quick COVID update, and we can go in Q&A where -- wherever the questions go. The other key message, as we've all gone through this, is how to see this balance sheet, how is their liquidity, and I'll share a little bit further on. But I think it's important that it all starts with our strong free cash flow generation model. It is a tenet of how this business has been built, how we think about it, and it actually gives us lots of flexibility as we have these comms. So also our balance sheet came into this at around 1.5 debt to EBITDA. And we stay committed to the investments, we need to make sure we make to be -- get those secular trends right. We're committed to our dividend, and we're going to continue to evaluate share repurchases as we see the market going. So we feel very good about where our free cash flow will be this year, and I'll talk about that a little bit, and we're going to ratchet back CapEx on the capacity side because we put a lot of capacity in. And certainly, in certain markets, it comes back and come back down to a lower level. But we are also going to look at accelerating footprint consolidation efforts in those markets where we do see there have been a long-term change. The other thing I'm going to highlight for you today, and I'm going to give you examples by segment, is going to be some of the secular trends we get excited about. And right now, yes, where markets are, we're still all trying to see where production and consumer demand come together. But there are really important secular trends that we've positioned TE around, and I might give you some examples today as I talk through the presentation. And lastly, towards the end of the presentation, I also want to talk about ESG. ESG is something at TE. This is not new. Certainly, the frameworks have been getting a lot of discussion, but it's very important to what TE does, what our employees get excited about, what we get excited about. And our purpose is how -- where our products play that Stacy talked about, they're in the core architecture about things that really make sure the world is safer, more connected, how it gets more productive and also sustainable. And I think when I go through the secular examples, you'll see it, and it's something we're proud of. And certainly, ESG has always been an important part of what we do, and we'll share some of the metrics a little bit later in the presentation. So with that, I want to move forward. And Stacy, if you could flip the slide. For those that may not be as familiar with TE, it is important that, as Stacy said, we are the world leader in interconnect, and we're a leading player in sensors. And we always describe ourselves as an industrial technology company because we get the benefit of the tech trends that drive content opportunity, and it's where the engineering stickiness that we do. Our 7,000 engineers have to design where the architectures of the world are being built, and it's where that -- really, our value creation starts. But then the other element is we make everything we design. And it has -- when you think about TE, we get the content benefit of where we position ourselves, but you also get much more of an industrial cash flow and performance model and sort of those 2 together is why we use that phrase, industrial tech. If you look at the 3 rows, the top row is our transportation business; middle row is industrial; bottom row is communications, and that's how we segment our businesses. Let me spend a little time about what we're seeing in each of those and also our position. So on the top, it's our transportation business. And you can see on the lower left how big that is of total TE. It goes in automotive. It pretty much goes on everything that has 4 wheels, and it is a tremendous position we have, very equally balanced. And what we like about this, and I'll talk about a little bit is, where we're benefiting from content growth above production that relates first to electric vehicle; secondly, to how autonomy continues to roll out over time; and certainly, the other applications that keep your vehicle safe, whether it's a commercial application or a car application. This year, clearly, we're being impacted by COVID. We're all in the middle of the shutdowns that are occurring. And this year on the planet, on our fiscal period, it's probably going to be about 17 million cars made, and that's significantly off the 85 million last year. And in this quarter alone, we only expect about 12 million to be made. So certainly, we're in the deepest part right now, we think. We think we'll get recovery as production comes back up, but certainly, a very dynamic environment. But in an environment where we're going to capitalize on those secular trends, they also, I think, will give share opportunities to us with our great global position that typically in this time, our share strengthens due to us making sure we're there for our customers. If you look in the middle stack, our industrial stack that you see those 4 boxes, like most industrial business, it's a number of markets, and it's always important to understand what markets are you calling industrial. In TE, industrial really comes down to medical applications. It comes into defense and commercial aerospace, and commercial aerospace is about $550 million of revenue a year. And it is a market that certainly had been impacted by COVID, and it's going to be a while before that comes back. You also get into where we play on the energy grid. And one of the things we benefit from there is actually, as you get renewables, wind, solar and so forth, we benefit in that area. And it's an area that's been very solid for us, even in COVID times. And then the last area is industrial equipment, which is really around all the machinery and automation that happen in the factory. And clearly, that's been impacted by the capital plans that people are changing real time. And then lastly, on the bottom is our communications segment. And I think when you think about the communications segment, and we're all no different than this conference, leveraging these tools. It's all about high speed. It's about the cloud. It's about 5G and how our applications really enable that next-generation speed that we need, that whether it's wireless, whether it's wired, that we're all going to continue to need and certainly have been helping us in these times, but how do we partner to really make sure. And I'll give you a secular example on that in a moment, and I'll drill down on that. So we really like the portfolio. Like Stacy said, we've done a lot of portfolio work, but it's really around how do we add bolt-ons into these businesses to continue to create value and get the returns that our owners expect. So Stacy, if you could flip the slide, I do want to drill down on some secular examples in each one of our segments. And the first one I want to talk about is electric vehicle. And we've been saying for over the past year, electric vehicle has become the #1 priority of our automotive customers. If we went back 3 years, you would hear a lot about autonomy. You'd also hear electric vehicle. And clearly, with the regulations of the world, electric vehicle has moved up, and we expect, and even what we see today, that continues to be with where auto production has slowed to. It's going to be something that we're seeing still from our customers with the regulations in places like Europe as well as for China and Asia want to be. That is a key priority. And what's great for us is it creates content opportunity. So if you take a traditional car with a combustion engine and you put in an electric -- electrified engine, you have to realize, you have batteries that need to be connected. You have to have current sensing on those batteries to make sure they can be monitored for range. You also have to get into -- you still have the same core system around the electrical system and as well as the safety system. And then you have things like charger inlets that have to put in, and they have to be safe. And one of the things that is an opportunity just to say where TE skills come in, if you take a charger inlet, one of the biggest concerns of people when it comes to EVs is range anxiety. And when you think about range anxiety, how do I charge quicker? And fast charging, which could be -- happen in 15 minutes versus a couple of hours today is something where our engineers work very closely. So what you worry about is the amount of power coming in the car, how do you keep it safe, how do you make sure the materials you use also can handle the number of cycles that need to be done, and it comes into the overall architecture. And that's the types of things our engineers work on with our OEM customers to really make sure we can drive the content. You can actually see on this slide in an ATV or an EV, our content per vehicle averages around $120 per vehicle versus our core combustion engine that's in the 60s today. So it really creates an opportunity. As that architecture change, content increase for us. You can also see we won about $6 billion of programs, and it is -- they're truly global programs. It is all around the world. You can see the customers' names. And even China, which is an important place, there's customers like Healey, Great Wall, BYD, SAIC, all of them are customers of TE. And it's one of the things that are very important. And this secular driver is probably the biggest secular driver where we position TE around to really drive growth and how our teams are working with our customers on it, not only design it and industrialize it. It's still going to be a big part of our content driving of 4% to 6% above underlying car production, which certainly, we're all waiting to see where that settles out of. So with that, I'd like to move to an industrial example of secular trend, and Stacy if you can move. And it's 1 of the 2 platforms that we've invested in inorganically. One is in sensors that we've been placing bets on how do we grow it in the transportation space, and that's been impacted by some of the auto and industrial transportation impacts that we've seen. But in our industrial space, we've been building out our medical platform. And you can see here, this is going to be about $800 million this year of our revenue. And it's really around therapies that where we focus on have to do with our customers that focus on interventional procedures around the heart. Certainly, they're also looking at things in the brain because they improve outcomes. Certainly lower cost procedures, which are important to make sure more procedures to more people. And you can see the content opportunity, and it's about $150 procedures or average content. And we also see that interventional is going to continue to be a trend in other therapies that we're positioning and doing design work on as well as additional therapies in the heart. So you can see here our customers. You can also see the $1 billion of design wins that we have, and it is something that is another key secular trend. And this is a market that, with what's going on with COVID, while some elected business around our customers is down, these that are critical are still cranking along here on the structural side because these are really life-saving procedures. And to make it real, there's about 120 patients every minute that's being touched by TE's technology in the medical space. So it's really about the secular trend, but it is also very important to how do we help make sure these procedures are more affordable and accessible with our OEM customers. And then the last one I'd like to talk about, I talked about a little bit, and it has to do with the cloud. And I know we're all living in the cloud, but we play in the architecture of the equipment. We don't play in the phones or the consumer elements. We really play in the equipment that the cloud providers are deploying, and certainly, this is an area that has not been impacted by COVID and actually has continued to accelerate post-COVID by both the cloud providers and the equipment providers. And what this really means is when you think about speeds today, speeds today are at 100 gig. They're going to go to 400 gig. We're even working on 800 gig. And those speed that when you get to the signal that needs to pass through the system as well as the thermal and the power it needs to do, all of that comes together and really a hard engineering challenge that our teams work on. And in some cases, you're taking out printed circuit boards and you're having cable bad claims that are important to really make sure you can get to these speeds, and our engineers are working with our customers on it. You can also see what happens to content. It is about a 1.5x content increase for us. This has an example on a switch in a server up there, and you can see our customers. And just in the past 3 years, we have $1 billion in new design wins across these applications that are very important. And it's another trend that we feel very good at how we positioned it. And this was a business that we repositioned about 5 years ago, and we really like the momentum, especially where the high speeds are going. And it's going to be another one of those secular drivers that are going to help us continue to grow content across TE. So there are the 3 quick secular trends I want to talk about. And then I guess there's 2 things I want to get to, and then I'll turn it back to Stacy for Q&A. If you can move to the next slide. Earlier, I talked about our balance sheet and our liquidity. And one of the things I talked about when you think about it is our cash generation model. And this year, we're going to be well in excess of $1 billion of free cash flow, and that is the thing that supports the organic investments that are included in there, our capital. What's important about our capital is we can flex our capital, and about 50% of our CapEx normally is customer programs. As we bring down our capacity investments, our customer programs are not being affected. So when we think about the number of projects we typically have in TE, which is around 10,000 engineering projects at a time, there are things we're going to continue to invest in. But certainly, the capacity capital we're taking now. The other thing that comes into about that is we're focused on maintaining our dividend. And what's nice is in times like this, our traditional capital allocation and how we use our free cash flow doesn't change in the long term. We're going to be a little bit more sensitive evaluating share repurchase until we see where the markets go. But where we've positioned, and you can see the maturity ladder, feel very good. And year-to-date, our free cash flow is up 34%. So the traction is there, and certainly, we're going to continue to drive it. We just want to touch upon that one more time. And then if you could turn to my last slide, and it's something I teed up in front. When you think about ESG, and I hope you get a flavor, whether it's electric vehicle, whether it's next-generation aircraft which I know were pushed out for a while, but how do you work on electric aircraft, our engineers are working on that, what we're doing in medical, what we're doing in high speed as well as what we do around renewable energy and also factory automation. Factory automation is a key element around safety, productivity. All of that is important. And it does start when we think about it as the applications we enable with our customers to really make the world safer, more connected, productive and sustainable. But as you can see up in the upper right, this -- we've measured the impacts that we've had. And in many ways when we think about TE, when you move from what applications we have to inside TE, a lot of our impact comes into how much energy we use, how much water do we use in our processes, greenhouse gases, and you can see the reductions on the slide that we've done. Certainly, training and our employees are important in how we think about engagement is important. And we've been measuring under the GRI, and we -- initiative and we've been sharing this as a part of our CSR report. And we're going to continue to adapt, focus on what's important for our business, but certainly you, as owners or potential owners, we also want to hear from you what's important to you as we move through these frameworks. And it's why things like Dow Jones Sustainability Index as well as being recognized as one of the most ethical companies in the world, they are things that aren't new to us. And so this, we feel, is very well ingrained, and we're going to continue along the continuum because it is a journey. We're never done on this as how do we evolve on it. So I just want to share this quick because I do think it's something that's ingrained in TE, and we have good momentum on, and we want to hear from you on it. So with that, Stacy, I'm going to turn it back to you so we can get into questions from the audience.

Wonderful. Thank you so much for that, Terrence. So in this format, as you know, I do like to try to stay away from near-term questions. This time around, I don't think we're going to be able to avoid it.

That's fine.

So we are going to start there. First, I just want to ask on your visibility that I think on your earnings call, you said that order trends did weaken in late March and in April, especially in transportation and comm. We're at the end of May now. How did May look at least relative to the pace you had exiting last quarter?

Yes. So when you look at it, what I would say is, I think you have to frame it with where our customers work. So in places like auto, there weren't many cars made in Europe and the United States in April, and they're just coming back in May. So our May orders are better than April, but still we're in the middle of that ramp period. I would say industrial and communications have been pretty steady as we expected, but in those areas where you had customers that were completely shut down, you see that ramp coming back up. And May orders have been tracking better than April, but we're right in the middle of that hockey stick. Now I would say we all had you to the production environment. I talked about Asia. China has been very steady and just continuing to ratchet up. You look at areas in industrial, areas in communications around high speed. They've been very strong, and auto in China has continually moved up. It's not quite the pre-Lunar New Year order levels, but it continues to show improvement. So I think the real thing right now, as we sit here today, is how does the Western world continue to improve in places like transportation as the customers get their plants up online. But like I said, it's roughly as we expected, better than it was but still sort of trying to heal.

Got it. Is it fair to say that Q3, probably at least the bottom growth production, we can argue about recovery rates? China is coming back and then, hopefully, the U.S. and some of the Western world will at least start to turn on a little bit. I guess like how do you think about Q4 production and ideally that return back to that sort of 20 million units per quarter kind of automotive run rate?

Yes. I think when you look at the impact we've had coming out of our quarter 2 to quarter 3, and similar to you, I'm sorry to be so short term, but it's sort of how shapes are, the biggest impact we had was around auto. Certainly, comm air and comm air is not going to spring back. We've talked about that. And then you have supply chain effects that we've experienced, where we had -- we could deliver. Some of our automotive customers took more in our last quarter than probably where production was. We think those supply chain effects will work through in those quarters -- this quarter, I mean. And then on top of that, this quarter, there's only going to be about 12 million cars made on the planet. You would expect it would step up. Now I know you mentioned 20 million units. I would tell you, we have to see where consumer activity is versus production. Clearly, there are signs like in China. China sold almost 2 million cars in April. Now I think we all have to understand, is that getting back to a trend line or does that have some pent-up demand in it, and then we have to also see that in the Western world. U.S. sales were very weak. Certainly, Europe sales were weak as well. How do they come back? So I think how the consumer element and the production element dovetail, I think we have to -- that's what we're really trying to look at to say, where does fourth quarter production get to. But it does feel like it should be higher than the quarter we're in, where you had customers shut down 4 to 6 weeks, making nothing. So it does feel like quarter 3, our quarter 3, the June quarter, could be the low point. But certainly, where does it go to, that visibility, we don't have yet.

Got it. I wanted to check also on some of the supply versus demand that you see. So you mentioned the potential for maybe a little bit of pull forward in automotive that we've seen possibly in Q2. I think we said it was something in the, call it, $650 million. Is that the number thrown out?

In automotive, it was about $200 million. Yes.

$200 million. Okay. Are you seeing evidence of potential pull forward either in Q2 or even in Q3 anywhere else? Because I know in my semi coverage, we're seeing evidence of that across many different companies. So what do you see on that kind of supply/demand and potential for pull forward?

No. So what was interesting and maybe to take a little bit of a step back and then go forward, when COVID first hit in China, there was a lot of people that started to scramble. And our orders were extremely strong last quarter. They were -- it was almost unintuitive of how high they were with COVID starting. And I think you did have a scramble around "Hey, I want to secure supply." Then COVID went to the West, and people took it in. The supply chain was prime, and this was primarily in automotive and transportation. We have not seen meaningful pulling elsewhere. So while we do have some areas, I would say, around the cloud area, business levels are very high. Maybe there's a little bit there, but that feels like really real demand. Elsewhere, I would say, there's a lot of stability in what we're seeing in our order patterns. The other thing I would share that might be different than the semi world you cover is our lead times have stayed pretty constant during this time. So there hasn't been areas where we've had lead times extend out. Our lead times have been pretty constant. I think it was really early on people trying to say, "Who can supply me, who can?" It goes back to my earlier comment I made early on around our manufacturing resiliency. When you think not just our manufacturing resiliency but also our supply chain, we did not have any major impacts to that. And I think, certainly, our customers were having some impacts elsewhere, that they were trying to make sure they should -- could secure their supply chain as this was all starting. But we haven't seen meaningful pull-ins at all.

Okay. I guess one final question on this. Just your own manufacturing facility situation. Are you all back up and running?

When you look at it, we have a couple of facilities that are still being impacted by governments, I would say, from the most major ones that are coming back up in line over the past couple of weeks have been our Mexico site. Certainly, there were government shutdown to Mexico due to health and they're coming back up, and the automotive industry is ramping back up in Mexico. So there's no major site of TE that is down right now, and we've been following the government regulations and keeping our employees safe. So they're ramping up, which is good. And I think it shows manufacturing resilience.

Got it. Okay. That's super helpful. I want to move to the business front to the business itself now.

Thank you.

You spent quite a bit of time on the segments and gave some great examples. I want to ask about long-term organic growth targets by segment, and in particular, I'd love to know how your thoughts on those growth targets have changed especially as you've gotten into some of these new areas like EV, like medical, like [indiscernible] and 5G. How has your thoughts on growth potential for the company evolved as you've moved into some of these areas?

And I'm probably right now just due to where the markets are, I'm going to talk probably more around the content opportunities, if that's okay, Stacy. Because you always start with what's the baseline of the market, and I want to be careful with that. When we think about transportation, transportation overall, we're still in a mode when even when we think about how priorities are moving around right now between electric vehicle, autonomy, everything that you have, the 4% to 6% content separation we expect above production has not changed. Electric vehicle was always a bigger element for us than autonomy when it comes to content. And even if you take this year, electric vehicles are going to be pushing 10% of total global auto production. I know we don't always feel that in the United States where most of us sit, but with some of the regulations in Europe and where we see the program, we still feel very good at that. Certainly, the sensor content, it feels good at that. And the other thing that we've gotten more excited about over the past few years is how some of these trends are crossing over and helping us in content, in industrial, transportation applications. And it's an area where historically, while that market will have natural cycles to it based upon how many Class A trucks are happening or emissions, it is something where our content has moved up, approaching where we think it would be in auto with a 4% to 6%. We might be a little bit less than that, but it's something where we're taking those technologies over, and how we've improved our global position is very important. So when you look at transportation overall, that separation versus underlying market we feel good about and actually don't feel it change in this current market crisis that we're in. If you move into our industrial segment, there's moving parts right now. You take comm air that I talked about. That's an area that market is going to be down for a couple of years, so that's a headwind. But what you come into is defense is running higher. You also have medical, which we talked about. That's a high single-digit element of our portfolio. And our energy business has been showing more growth traction due to renewables. It's not a business we talk about a lot. But as we've seen hardening of networks as well as renewables, we're actually more excited about that being more of probably a GDP grower than a sub-GDP grower, which we get excited about. So that's something we continue to see on the sustainability as the electrical infrastructure changes in the room. And then the last area, which is down in communications, we would have normally said we expect that to be a low single-digit growth business with appliance as well as in communications where we did a lot of repositioning. This was an area while I talked about the cloud 5 years ago, we were in consumer products. We organically streamline that about $1 billion of revenue, and we've completely focused that unit on high speed. And when we've done that, I do think that's moved up the growth continuum. So I think that gives a flavor to your question without getting into what is the baseline market, but it is important that these are secular trends. We're going to continue to invest through in these cycles. We're fortunate to continue to invest through. And I think in some cases, some of our competitors won't be, especially the smaller competitors that might be dabbling. That's typically in these markets we get to capitalize on our resources, and that's what we're focused on, not only how do we protect TE financially, but also how we capitalize it with our customers. And they're going to have to make choices, and we feel pretty good they're going to pick TE.

Got it. How does that competitive environment play out, by the way? Like how many -- it's a reasonably consolidated market like at the high level with the big guys with you and your peers. How do customers make those kind of purchase decisions? Is it just looking at the breadth of portfolio? Is it looking at like the global footprint? Why do people choose TE versus?

It's typically engineering -- it's engineering. So if you really think about it, it's how do you cover the design centers globally around the architecture. So you have to bring that innovation as they go through their architecture changes. And to be fair, they make a semiconductor or a power choice and then they say, how does this architecture come together? And that's where whether it's connecting, it's sensing, the brain choice has been made in the architecture on the semi side. And that's where we have to come in and we customize to really make sure there's been some architectural choices made, and that's where we have to do much more design at the customer globally and their design centers or right now virtually in their language, and that's where it starts. So you need to make sure you have that coverage, but then you also need to make sure you have the supply chain that matches it. And one of the things that we've been fortunate about is the journey we've been on to get in region. It's been a big journey on us. It's actually playing out very well. I think it comes back to the manufacturing resiliency. And as our customers make their choices about where do they see cracks in their supply chain, we've also been benefiting as well versus maybe a regional competitor as they say, "Hey, I need something that has much more supply chain resiliency than maybe what they have today." So it comes back to that industrial check, the engineering on the upfront on the architecture, and then we do have to make it for the life of a program and some of these programs go very long. So it is a holistic element, and it comes back to the innovation skills we have or the secular trends we talked about, some of those examples I gave.

Got it. Maybe along that topic around kind of the lifetime of some of these projects. So you mentioned EV in particular, $6 billion in design wins.

Yes.

Over what time frame does that come in? And what's the pace of new design wins layering in on top of that at the level -- the year you pulled in?

That is lifetime value, so that will be over the program life. They layer on platforms all the time. So when you look at that, car platform could be years depending upon it. Some are broader, like if you take how Volkswagen looking at their EV platforming versus others, that might be a little bit more model-specific. It does vary. But you look at how the generations change, sometimes the core platform stays the same. There's minor mods that we would get more design win. But what's been really nice is our EV revenue just continues to ratchet up and it's driving that content element. So it is a little bit different by market, by how the platforms come in. But even when we look at years like this where you have a slowness, the electrical vehicle investment that our customers are making is significant and continue to be their #1 priority.

Got it. I want to ask you about content in autos. I want to follow-up on that a little bit. So you mentioned $120 for EV. What's your overall content? I guess how does EV compare within internal combustion? Where is your overall content sitting right now? And kind of where do you see the overall going over time as the mix is shifting more towards it?