Michael Nichols: Great. And then it was really encouraging and good to see all the company’s cutting-edge technology at CES this year, whether it was the thermal imaging or dimmable glass or in-cabin monitoring and then the new direct-to-consumer offering. There’s a number of things the company is working on here in terms of advanced technologies. But I guess, if we’re thinking about what could be the next or nearest-term positive catalysts in terms of monetization and revenue growth, like how would you handicap some of the newer offerings in terms of which one is going to drive more revenue over the next like 12 to 36 months?
Steven Downing: Yes. See, in the shorter term, it’s going to be driver monitoring. We’re working on a couple of launches right now with some OEMs, where we have business awards. So those would be probably creating material revenue in the — of that feature set that you saw at CES. That will be the one driving material revenue the soonest. Following after that, obviously, we still think in the next 3 to 5 years, it’s going to be the large-area devices and from an overall dollar standpoint, still has one of the largest opportunities that we’ve seen as a company. Probably in that same horizon obviously will be the visor project. We’ve only been showing that really for about a year now. So we’ve got a lot of work to do. But the interest at CES in that product, in particular, was very tangible. I mean, it’s — there’s hardly anyone that you show that product to that doesn’t understand the use case and why there could be some consumer value created.
Michael Nichols: Just as a follow-up, I know that Europe is moving towards mandating this type of stuff for in-cabin monitoring. Like any way to quantify the impacts or just some color on what you’re seeing there in terms of the demand uptick?
Steven Downing: Yes. I mean, our first — and that’s kind of what’s happening. So the real regs that are driving it are in the European Union, where some type of an assist, an alert notification is required, especially as we start to move into semiautonomous vehicles. And so that’s where the majority of the business development side has been taking place. But there is a lot of interest even from existing domestic customers that are interested in this type of technology, interested in how we can integrate it, conceal the technology to make it not obvious and help just with the integration being center and high-mounted in a vehicle. There’s some geography advantages to our location and the tech that we bring to the table. So we continue to see the kind of that trend, both a trend in regulation but then also a trend just in OEMs wanting and needing this type of a feature set.
Operator: And our next question is going to come from the line of John Murphy with Bank of America.
John Murphy: A couple of questions. I mean, you exited last year at 34.5% on gross. You called out 100 basis points benefit for pricing actions and then something that seems a small impact, one-time cost recoveries. And I’m just curious, I mean, you’re exiting close to that 35% to 36% gross margin target you’re talking about by the end of this year. What are kind of the big headwinds that would kind of dampen that out? Because I mean, you’re getting pretty close to it already.
Steven Downing: Yes, see, the single biggest one obviously will be there are some pricing concessions to OEMs that are happening at the beginning of the year. So that would be number one. Number two, one of the things that would hurt is, obviously, no one knows for sure what’s going to happen with LVP. Right now, in our primary markets, it’s targeted to be down 1%. We think that our current book of business will more than offset that reduction. But if sales didn’t come in as high as we’re expecting, obviously, that would create the other biggest headwind. On the rest of the business, we feel like we’ve got most of the contracts in place on the supply side. So we don’t view that as a huge risk factor as we head into this year.
Honestly, product mix would be the next one. And so as interest rates, if they stay elevated, do — what is the value of the vehicle that a consumer is going to purchase? And will it or will not contain our technology? And if so, how much of it, right? So our ASPs are largely driven by type and the trim level of vehicles that are purchased by consumers.
John Murphy: I mean, Steve, maybe just a follow-up to that. If I were to tell you that I think you should be modeling the business as plus 2% bare minimum for that global number, a plus 5% bare minimum for the North American production number and IHS is way too conservative, how big an impact would that have on sort of what you’re communicating to us, but maybe even more importantly, how you’re setting up the business? I mean, could you handle something the way you’re capacitized and your OpEx in staffing is set up? Because I mean, IHS is way too low. The reality is we’re going to be up. But how significantly, I think, is more the question mark. I mean, the idea that we’re going to be down in this year is just a little bit preposterous.
So if we were to think about — and I’m not calling you out. I mean, I know you’ve got to run the business. But if you were to have that toggle of global production up at least 2%, North America up at least plus 5%, are you set up to handle it? And how big of an impact would that have the way you’re communicating in this outlook?
