Colin Langan: Got it. Thanks for taking my question.
Jason Cardew: You’re welcome.
Operator: Our next question comes from Dan Levy from Barclays. Please go ahead with your question.
Dan Levy: Hi. Good morning. Thanks for taking the question.
Ray Scott : Good morning.
Dan Levy: Wanted to start first — first, I want to start with a question on E-Systems. And I think you mentioned earlier Jason just that we should think about next year with a six handle on E-Systems margins. You provided some commentary some time ago that the path to 8% by 2025. And I think the biggest piece of this is volume and backlog. And I think that the difference is that we’re now sitting here in an LVP environment that’s hardly much higher than what most of us anticipated call it six to nine months ago. Schedule seems to be much more stable. So should we still think about that path to 8% is being intact especially as now LVP seems to be at least for now outperforming to the upside?
Jason Cardew : Yes, I think that there really isn’t anything that has changed from the time we set that target. I’d say maybe the only exception would be to the last question we had from Colin on foreign exchange a little bit of a headwind on transactional FX. And we have obviously wire is a labor-intensive business. So it’s sort of a dual headwind of FX and wage inflation. Outside of that, I’d say that the story is intact. The performance that we can control has improved consistent with our expectations. The recoveries and commodities are in line with our expectations. Volumes are recovering sort of consistent with what we had anticipated. The backlog is rolling on with margins that we had based that outlook on. And so I think the last piece of that is maybe the stability of the production environment.
And while we’ve seen meaningful improvement this year from last year there still has been disruptions that leads to some inefficiencies in the plants that are a little bit outside of our control. So that would be one other factor to think about. And I think the backlog in 2024 as I mentioned earlier will be negatively impacted by some of the customers revised wash plans and some of the key programs that were embedded in our backlog. As you know the GM BDU and Intercell Connect board for example is a big part the E-Systems backlog and those volumes are going to be lower in 2024 and probably in early 2025 given the current plans there. So that will have a little bit of an impact. But we’ve seen again just a really nice improvement from 2022 to 2023, 110 basis points full year-over-year; 200 basis points full year last year to the second half of this year; 160, 170 basis points first half to second half of this year.
We really have a nice trajectory set up here going into next year and there’s a lot of moving parts, and we’re working through our plans for next year, but we do feel confident that we can continue that momentum into next year and continue working towards that target.
Dan Levy: So we’re just conceptually thinking about that bridge to 25%. Is it fair to say that better LDP slightly more stable LDP more than outweighs Mexican peso and some lighter EV volume on the backlog?
Jason Cardew : Yes, I think, Dan, it’s probably a little bit early to get into that level of granularity. So I’d rather save that for the fourth quarter earnings call.
Dan Levy: Got it. Okay. Thank you. And then as a follow-up I wanted to follow up on Seating and the TCS strategy. And I think one of the points you mentioned from the Seating day back in June was that by having the full vertical integration that you now could see more complete systems or saying this is obviously a bit of a shift from what OEMs have done in the past where much more of a direct sourcing model. In your conversations with customers are you seeing more data points that they are willing to change that sourcing model and sourcing more of a complete system?
Ray Scott : Yes, that’s exactly what we’re seeing. On the programs we’ve been awarded from a competitive perspective we’re in the contract itself the language reads we have the sourcing control over those components. And we’ll in parallel path do the traditional system along with a much more technical system or innovative system with the modularity that we talked about. And now what we’re doing is just taking that across multiple vehicle lines even in the case where we don’t have a just-in-time award. And we’re seeing that trend. And like I mentioned in my portion of the dialogue was, it went from us pushing to now them coming to us and pulling it and saying how quickly can you go across multiple vehicle lines, because they see the real savings when we could take it across significant volumes and so we’re lining up our quotes in a particular way where it was individual to a Seat program.
Now we say, listen, if you take this and extrapolate across multiple car lines, here is your savings and the benefits of what we are talking about with 50% part reductions much more efficient system just from a therapeutic standpoint, from a heat standpoint, from a time to sensation perspective or weight perspective you can then start plugging that into different alternative systems within the vehicle itself where it’s been limited maybe not even offered in rear seats or in other vehicle options within the vehicle itself. And so, I mean that is the plan. That’s exactly what we’re doing. And the important part that we’re focused on is executing the validation and getting that done. And we said sometime midyear next year, we’ll have the validation done and that’s through our customers.
And so that has been validated through their own internal specifications and requirements and that’s a very important part of what we’re focused on.
Jason Cardew: So, there’s been nine customers as we highlighted in the prepared slides for today that have granted us sourcing control. So that’s nearly all the JIT programs that we’ve been awarded since the acquisition of IGB have included sourcing control for us of Thermal Comfort components.
Dan Levy: Great. Thanks and it’s very helpful.
Ray Scott: Thanks.
Operator: And our next question comes from Emmanuel Rosner from Deutsche Bank. Please go ahead with your question.
Emmanuel Rosner: Hi. Thank you very much. A couple of follow-ups around the EV exposure and I guess potential risk from some of the slowdown in near-term investments by the automakers. Would you be able to remind us or quantify your exposure to — your content exposure to Altium specifically? If I’m not mistaken I think that you’ve won a significant amount of business including multiple parts I guess of the vehicle. Can you maybe just quantify this? First remind us what you’re supplying on Altium and how much that’s roughly worth per vehicle?
