Jerome Dorlack: In terms of a swing factor, I think there’s a couple of things. One is if you look at CapEx as an example, CapEx we ended ’23 at call it a $260 million run rate and we’ll go into ’24 at kind of $310 million level. There was a lot of these cash conservation activities that we had in the business really driven by Doug and the team. As we knew with the UAW strike, we really had to kind of batten down the hatches and get aggressive from a cash conversion standpoint. So there’s that, that element of normalization. We also had from a couple of customers actually just ARAP timing. Nothing we did, they actually timed it out a bit differently. So there is a swing in there that occurred. We won’t necessarily quantify it, but there is a level of swing. So when you think about long term cash conversion, I’d look at that number that we have in ’24, kind of the $300 million on $985 million is the long term cash conversion rate for the business going forward.
Doug Del Grosso: I don’t know, Mark, if there’s anything you want to add.
Mark Oswald: The only other thing I’d say, John, when I think about longer term cash conversion, right, our calls for cash going forward are pretty stable, right? So if you just think about what the drivers for cash is going to be, it’s going to be EBITDA growth, right because I know what my interest is going to be. I know my restructuring is down to a normalized level. My cash taxes, right, thanks to our, plumbing that we’ve set up is very favorable. So really with the calls for cash stabilized, I’d really look at EBITDA growth and use that as a proxy for where you see pre-cash flow going forward.
John Murphy: Okay, that’s very helpful. And then just a second question. You guys snuck this in in one of your slides that, in China you’re going to swing. you have a leading position in China already, but from 40% Chinese domestic, mix in China to 60%, but you didn’t give a timeframe on when that was going to happen. I was wondering if you can maybe talk to that and then also if you’ve got a handle on, at this point and where this will go over time, the sort of the mix of your vehicles that stay in country versus those that get exported, because obviously it’s, China swung to a major export hub in a way over the last two years. So as you’re increasing that mix to the Chinese domestics, that might be helpful in market, but might even be more helpful on the export basis. I don’t know if you can give us some color on that.
Doug Del Grosso: So, first of all, appreciate your comments on the leadership transition. With regard to that mix of customer change, we’re anticipating that’s going to happen over, definitely in our five-year planning period, probably along, the three-year timeline and we’re fairly confident in that because when you look three years out, the bookings are, if not done are, clearly visible. and we view that with high level of confidence. With regard to the amount of vehicles China is exporting right now, as you know, those are lower level vehicles and have not necessarily been on our radar. Our focus certainly has been on the Chinese domestics, certainly the ones that are growing or outgrowing the market. We’re still focused on the luxury segment and still paying attention to our traditional customer base, though we clearly see the mix changing.
I don’t think it’s crystal clear what’s going to play out over the course of the next five years. Certainly there’s indications that Europe’s going to put up some level of resistance that’s probably going to drive domestic Chinese and they’ve already signalled that to reshore in the European market in Eastern Europe, but, if it continues to be an export market and those vehicles shift into the higher end vehicles, we think we’re well positioned there. If they move and reshore into the European market, we think our infrastructure capability there in Europe, particularly in Eastern Europe, puts us in a pretty good position. So we’re pretty confident the way that is going to play out but, as you know, it’s like I say, it’s not crystal clear how that’s all going to come together.
But we do understand, the competitive advantages that the Chinese have, and that’s a compelling case for them to continue to grow market share.
Operator: Thank you. Our next question comes from Emmanuel Rosner with Deutsche Bank, You may ask your question.
Emmanuel Rosner: Thank you very much. So I appreciate your assessment of the shift in industry dynamics that is now taking place and I wanted to hone in a little bit on electric vehicles in particular. So as you mentioned in the slides and in the prepared remarks, there’s a little bit of a push out of some of these launches or reduction of some of the near-term EV volumes, especially in North America. Can you comment to what extent, if any, this is impacting your business? This is impacting your backlog? Does it have an impact on your growth of a market in the near term? And specifically, and maybe second part of this question, when I look at the growth of a market, guided for 2024, which seems to be about a point, maybe a little bit below average, when it seems like you were heading in an above average type of direction, I’m wondering if EV push out is a factor within that.
Doug Del Grosso: Yeah, What’s happening on the EV front, as you correctly point out, is primarily a North America-related issue. I think maybe to a lesser degree, a European issue, but if you look at where the penetration is at right now, it’s not really having a huge impact on us as a company when we look at our backlog and outlook. Characteristic, what happens with our customers if they pull back on one, they extend a nice platform to offset that. So we still see relatively stable level of production. In China, we’re not seeing any pullback. I think we’ve got eight significant launches scheduled for China. This fiscal year, no indication at all that our customers are pulling back on those launches. So I’d characterize it as a North America issue, and I’d just look at EV penetration rates as they exist today, being relatively small, not hugely disruptive to how we look at our outlook in the region.
Emmanuel Rosner: And I guess the second part of the question around this year’s gross of a market, about one point you’ve been running at one and a half, on average for the last three years. I think your comment in last earnings poll suggested that with this success in China, maybe you could run a little bit above average. This seems to be maybe a little bit less than planned. So can you maybe just discuss the factors in that?
Doug Del Grosso: Well, I think one is — one is there’s a significant FX weight because of the RMB and our China growth. So the growth is still significantly there in China, but you’re seeing a really big FX impact on that. Just a comment, and then two, if you look at what we said last call versus this call, or even for the last year, I think it’s really we’ve said our Europe market will kind of grow at or even slightly below because of planned exits in Europe. That’s still holding. North America is kind of at market. That’s still really where it’s running at and China is significantly outpacing, and we still expect China to significantly outpace. So there’s no, I really don’t see any change from that standpoint, Emmanuel, if you would.
Operator: Thank you. Our next question comes from Joe [ph] with UBS. You may ask your question.
UnidentifiedAnalyst: My congratulations to the three of you on the call as well. Maybe just to pick up there, if North America or of America’s is roughly flat, Europe could be down. You have growth in China and then we think about the, some of the detailed EBITDA impacts you talked about, right, the transaction impact in America’s, some of these footprint actions in Europe and China. Maybe just help us understand by region where you still have greater room to drive that business performance because — and maybe a little bit of a color by the regions, because it does seem like at least from a top line perspective and with some of the cost issues you talked about, it almost seems like most of that margin performance has to come out of Asia, unless we’re thinking about that incorrectly.
