Brian Roberts: And Mark, I’d just add a couple of quick additional comments to what Jeff said, specifically within auto. For example, certainly, over the next couple of years, move back to ICE, for example, in Europe helps us. As we’ve talked about, we have approximately 2x the content on an ICE vehicle in Europe as compared to an EV vehicle. I’d also point out that if you think about kind of our safe-and-efficient business, while the revenue number may be a little bit lower. Due to the timing around EV, our profit profile is quite good there. And so it’s what we do. We have lean manufacturing. We have a lot of volume there, and we’ll continue to. So it can help us certainly from a profitability side. And then outside of auto, I would just point to, although this industrial down cycle seems to be lingering longer than any of us would have planned or like, at some point, it’s going to start to turn.
And that turn in ’25 or ’26, again, should certainly benefit the company.
Operator: The next question comes from Christopher Glynn with Oppenheimer.
Christopher Glynn: Thanks Jeff, thanks for the partnership working alongside us for many years, all the best. I wanted to ask about the comment about taking share in the ICE vehicle market, if you could describe that dynamic in a little bit more detail. And also, does the standard historical price down dynamic, does that change at all for your ICE focused sales given the transition away from that technology?
Jeff Cote: Yes. So it’s been a pleasure working with you as well, Chris. On the share question, I can tell you with a high level of confidence that every one of our customers wants to make sure that they’re working with a partner that’s going to be there for the whole time that they’re producing internal combustion engines. And they want to make sure that, that partner is working right alongside them to be there as long as they need them to be there. And that’s been an enormous benefit to us because we’re such a critical supplier in the internal combustion side. Now that we have the capability to serve them on the EV platforms, it creates an advantage for us to be able to serve them on that side. And so as our customers look to narrow their supply base, where they’re a key supplier for their legacy ICE engines and as other suppliers drop off, we’ll naturally get more of that share.
That’s very profitable business, as Brian had mentioned, and then it will provide us that advantage as well to be successful on the new platform. So as this transition occurs, we’re going to win on both sides of that equation, and we’ll just work to make sure that we serve our customers and we’re there for them to be able to balance this as they move forward.
Brian Roberts: Yes. And on your price down question, we certainly expect that as we talked about last quarter, that we’re moving back to that kind of normalized productivity needs to offset a price reduction type environment. This year here, we’ve seen pricing changes mostly in our — last year being able to get additional price that would not repeat in 2024 not necessarily price downs per se this year, but just a year-over-year change. But we certainly expect as we move into ’25 and ’26 that we’ll get back to that normalized environment, we’re certainly taking the steps necessary to make sure we can — we’ll be prepared for that.
Operator: The next question comes from Shreyas Patil with Wolfe Research.
Shreyas Patil: I wanted to dig in a little bit more into the ICE to BEV transition. I think you’ve talked in the past about the odd content opportunity on BEVs being about 2x that on ICE vehicles. And gross margins are pretty similar between the 2 product categories. But I do believe you have a lot of engineering spending on the EV side. So is there an opportunity for you to flex down that engineering spending if we are going to be in a period where EV adoption is slowing? Or is that more of a sticky cost? And then maybe just also thinking about the EV opportunity more broadly, can you talk a little bit about Dynapower, what you’re seeing from a growth perspective there and how we should think about that as well.
Brian Roberts: Yes. So it’s Brian. Let me start with kind of the first part, and then I’ll turn it over to Jeff to speak about Dynapower. Keep in mind, again, a lot of these new business wins that we wind up receiving are long cycles, right? So we’re typically doing — we’re helping them build the product that’s going to be unique to whatever the platform is. And we typically start that 3 to 5 years in advance of when the actual launch of the product is going to happen. So much of the engineering costs that we have today is going to support those new business launches that happen in ’25, ’26 and beyond. So for example, as we quote new business opportunities today, many times those are planned for launch in 2028 at this point.
So I don’t expect a real change in our engineering spend. Certainly, as the company grows and the electrification business does continue to grow, we will be able to kind of spread that cost out over a bigger base and, therefore, gain more efficiency there. But we certainly think the resources that we have are needed to place to help us serve the opportunities that we won as well as the ones that we hope to win here in the coming future.
Jeff Cote: And Patil, let me speak to the Dynapower piece. And it’s important, I apologize for a little bit of a wind up on this, but it’s important to understand what that business is doing. They’re developing industrial-grade power inversion so that whenever grid-related or PV or alternative energy-related installations require a step up or step down of DC to DC or AC to DC, there’s Dynapower equipment in between that. And so if you think of the trend towards more renewable energy, if you look at the need for grid balancing on a global basis so that you’re not having production of gas turbines or other generation capabilities for peak capacity, you need to have distributed generation and distributed storage globally in order to be able to manage that process.
And Dynapower is at the sweet spot of making that happen. They also have some very important inverter products in the military area, which are doing very well, and there are also areas around electrolysis for hydrogen in terms of that process, so making green hydrogen. And so there’s lots of opportunity there. It’s a project-based business in the sense that it’s a very complex ecosystem in terms of what’s going on because we’re part of a major investment in energy infrastructure. And so you’ll see a little bit of lumpiness associated with this business, but we’re very confident in this long-term potential.
Operator: The next question comes from William Stein with Truist Securities.
