Kevin Clark: Yes. It was customer mix across really all regions. And some examples were kind of outsized growth of the Japanese OEMs across North America, across Europe, as well as some significant growth in parts of Eastern Europe that are either products manufactured in Eastern Europe or in places like China that are exported. So areas where we have less customer exposure. So a lot of that, we think is related to semiconductor rebound and availability of chips for select OEMs. And the other piece is the impact of or the opportunity as it relates to the UAW strike in North America for select OEMs to potentially gain share.
Operator: Thank you. And we’ll go to our last question from Dan Levy from Barclays. Please go ahead.
Dan Levy: Hi, good morning. Thanks for squeezing me in.
KevinClark: Hi, Dan.
Dan Levy: Wanted to start with your Slide 10 just the perspectives on 2024 here. And in the bottom half of the slide says continued inflationary environment, geopolitical uncertainty. Maybe you could just unpack the inflationary comment a bit. What is it that you’re seeing that’s incrementally worse? How does potential recovery on semiconductor costs factor in? And maybe you could just talk about the potential for better stability in production schedules to be a potential tailwind next year.
Kevin Clark: Yes. So it’s Kevin, listen, as it relates to stability and production schedules, we’re seeing that now. I mean, there’s some element of disruption in COVID that remains, but we’ve seen a significant improvement throughout the year. We’d expect availability to continue, obviously into 2024. So should see some benefit there. Material inflation was significant in 2023. We expect in some areas, including semiconductors that will remain significant in 2024. We’re doing a number of things to address that. One, changing semiconductor partners, really across all the semi categories from core semis like SoCs, analog power PMICs to peripheral semis. So a lot of work being done by our engineering and sourcing teams, establishing commercial agreements or partnership with the Chinese semiconductor space, which is ramping up capabilities very, very aggressively.
And we’re deep into that and are going to take advantage of that opportunity both to serve the China market as well as to bring some of these into the nine China market. So that’ll free up lower cost alternatives for ourselves and our customers. As it relates to customer recoveries, listen, those are always challenging discussions, but given where we have contracts, given where we are from a financial standpoint, we are passing 100% of those costs on to the customer. Again, it’s not a simple discussion. It’s not an easy discussion, but that’s what the commercial team or how the operating team is operating. And that’s something that will continue to the extent they’re interested in some of these lower cost alternatives. There’s an opportunity for us to jointly benefit and we’ll put those in front of them.
But as of now, that’s kind of the state. So the material inflation is relatively high. And then we’re very focused on labor inflation in places like Mexico, Eastern Europe, North Africa. So those are areas that we’re watching very, very closely. And then last item, I should say, it’s not related to the specific inflation on material or direct labor. We’re very focused on continuing to prune our cost structure to provide additional room and ultimately additional margin.
Dan Levy: Great. Thank you. And then, just as a follow-up on the EV side, just two quick ones there. Can you just confirm I know you said you’re overweight to the European and Chinese? China, we’ve obviously seen a lot of uptake, especially from BYD. How should we think about the mix impact if we see outsized exposure from the Chinese? And then can you just confirm that on SVA that that is powertrain agnostic?
Kevin Clark: Yes. SVA is powertrain agnostic. It makes more sense if an OEM is rethinking and moving to a BEV platform, that is the time to really it’s an easier time to implement and make that architecture change. But it would be powertrain, overall powertrain agnostic. As it relates to mix of BEV customers, I think it’s relatively awash margins might be a little bit higher on our China OEM partners, given we tend to do more system solutions there. So are able to kind of connect a broader portion of our overall portfolio, but it wouldn’t be significantly different.
Joe Massaro: Yes. Dan, just current revenues and it’s got — it’s changed over the last few years, we’re about 60:40 global versus local OEs. From a revenue perspective today, that would have been north of 75% global, back in the 2018/2019 timeframe. Bookings are running 50:50. So we’d expect that to increase in favor of the locals. And obviously, just given what’s being made over there a lot of that EV.
Kevin Clark: Yes. I think actually, you look at our revenue mix I think 2024; it’s almost 50:50 from a local multinational.
Operator: And I’d like to turn the call back to Mr. Clark for any final remarks.
Kevin Clark: Thank you, Operator. Thank you, everyone. We appreciate you taking your time this morning. Please let us know if you have any further questions. Thank you.
Operator: Thank you. Ladies and gentlemen, that does conclude today’s conference. We appreciate your participation. Have a wonderful day.
