James Picariello: Just back to the product, based on the first quarter’s performance and the visibility into the year. Can you just speak to battery systems revenue? I believe this business guidance; call it for $700 million to $800 million in revenue. Just curious if there are any moving pieces tied to this within the product range and can you clarify what portion of this year’s eProducts sales attributes to hybrid?
Frederic Lissalde: So this year’s guidance, $2.65 billion for eProducts at the midpoint, out of which $750 million are battery packs for commercial vehicle. So $1.9 billion is for light vehicle, 40% of which is for hybrids on a global basis. Regarding your first question on battery packs, there is nothing article in Q1. The ramp up is to plan. And what we see in Seneca and the preparation of increasing capacity in Europe is also in line with our expectations.
James Picariello: That is helpful. And then just as we think about foundational profitability versus the product, the rest of the year, and I think this touches on Colin’s question regarding margin cadence given that the first quarter was squarely in line with your full-year range. As your eProducts revenue improved sequentially through the of the year, is it safe to assume that the margin loss rate also improves. And so my question, if that is true. My question is, why would the foundational profitability degrade through the year if the full-year guidance range is the right number, if that makes sense?
Craig Aaron: Yes. I think the way we are looking at it is we are focused on executing mid-to-high teens on an all-in basis, wherever that growth may come from. So I think that is how you should think about it. We are really pleased with our 23% all in, in the third quarter. We think it sets us up quite well to execute for the full-year. So that is how we are looking at it. We are really focused on incremental on an all-in basis regardless of where the revenue growth comes from.
Operator: Your next thing comes from Luke Junk with Baird.
Luke Junk: First, looking at the segments. Just hoping you can maybe unpack the top line strength that you saw year-over-year in Drivetrain and Battery Systems this quarter sounded like that was foundation related in large part, maybe just sustainability of that strength in the margin, they have stepped up nicely sequentially, especially as well. I don’t know if there is anything specific to point to.
Craig Aaron: Yes. I would say it was just overall good performance from a margin perspective. Again, 23% all-in great performance by our business units. When you think about growth, it is really China and Europe both on the foundational side of the business and on the battery side of the business, particularly in that DBS segment. But we also had nice growth overall just in general, both in China and in Europe. But again, you can see most of it in the DBS segment. That is where I would point you to.
Luke Junk: Got it. And then for my follow-up, maybe a bigger picture question, Fred. And just thinking about eProducts, net engineering requirements going forward, both as you think about gross basis and ePropulsion margins going forward here now you can improve those margins. But I’m also wondering, just given some increases in uncertainty in the West, if you can push for more engineering recoveries as you book business or building structures to pay for more of that engineering?
Frederic Lissalde: Yes. I mean we are looking at all this from an engineering recovery. We are also looking at our adjusting costs, especially in those segments for which growth is not happening as fast as we thought in order to improve the margin performance. So in those eProducts segments, we fully expect this business to grow going forward. And with those upcoming cost actions to get to mid-to-high teens, it is incremental when it ramps.
Operator: We have time for one final question, and that question comes from Mark Delaney with Goldman Sachs.
Mark Delaney: I think that a part of BorgWarner’s customer value proposition for eProducts has been that utilizing BorgWarner’s power electronics products can be a more efficient way for OEMs to do business. I’m curious if you think that played a role in some of the wins you were able to announce today. And given the challenges that a lot of the OEMs are dealing with in BEV and a lot of the price competition, might that be an opportunity for your bookings to outperform some of the broader market trends if some of these customers do need to find ways to be more efficient?
Frederic Lissalde: Well, you are absolutely right. Only think is a key strength of the company. BorgWarner has always been focused on efficient systems and efficient mobility. And power electronics is the new front or efficiency in hybrids. Fighting against those switching losses and fighting against those mechanical losses downstream the inverter. So the answer to your question is absolutely yes. We are focused on that and at the system level, at the electronics level, at the power module level. And that is our DNA. That is what we do best.
Mark Delaney: And on eProducts, the company reiterated the $2.5 billion to $2.8 billion eProducts revenue outlook for this year. Of course, we have seen a lot of volatility in light vehicle back plans. And so as we have seen that, I’m hoping to better understand, do you think that the 2025 outlook that you have previously communicated a new products of $4.5 billion to $5 billion. Is that something you still see as achievable? And as you think about the revenue ramp and what maybe for 2025, maybe you could also touch on how you are thinking about your eProducts profitability not only this year but into 2025?
Frederic Lissalde: So you are right. It will absolutely depend upon customer volume, and that will ultimately decide what 2025 will be. We are, as we mentioned, focused on what we can control, which is securing new businesses in new products for hybrids, focusing on strengthening our portfolio for it to remain in a great position and matching our costs in order to overall deliver mid-to-high teens incremental on an all-in basis. That is our focus, and we will give you more color on 2025 closer to 2025.
Patrick Nolan: Thank you all for your great questions today. If you have any follow-ups, you can follow with me or my team. With that, Britney, you can go ahead and conclude today’s call.
Operator: That does conclude BorgWarner 2024 First Quarter Results Conference Call. You may now disconnect.
