Jeffrey Cote: Yes. So the point is taken. I really watching closely to understand what their forecasts look like as we continue to progress forward, right? There’s some outside dynamics that are causing some of the changes in their estimates right now in terms of negotiation with the UAW and other things. Certainly, consumer demand for electric vehicles, specifically as it relates to the truck market, causing our customers to think about that. But I’ll go back to the comments I had made earlier, which is clearly, if EV penetration in the North American market, which is where we have the greatest revenue per vehicle slows, that will be — that will create a challenge in terms of achieving the $1.2 billion of revenue. But the OEMs will need to do other things on those combustion engines to get to the emissions requirements over the next three, five years.
And we’re well suited to go after that, right? So they had stalled and paused all of their combustion engine development. If they change direction, they’ll need to restart some of those, and that will represent opportunity for us and on an accelerated basis to make sure that we’re addressing those issues. And as I’ve also mentioned, there’s an area where we have demonstrated margin profile that’s superior to the electric vehicle component here. Now we have a road map on the electric vehicle-specific components to get to Company margins, but there’s a lot of work that we need to do to get there. So there’s a put and take. The delay or slowing of it will maybe have a little bit of impact on revenue, but it will have a positive bottom line impact.
Hopefully, that addresses your concerns.
Shreyas Patil: Okay. Great. And just one last quick one. I mean anything that you’re seeing on the Tier two supply chain, especially as the industry is starting to ramp back up following the UAW strike, how confident are you that you can — that the Tier two supply base can ramp up as well?
Jeffrey Cote: Yes. So all of our OEM customers have been very — they’ve communicated a lot with us and with all of their suppliers regarding readiness. I can’t speak to what others have done in terms of making sure they’re idling ready to go when that demand comes back. But I can tell you that we’re ready to go. And if some Tiers message not from a lack of communication on the part of their customers regarding being ready for their response. So — and I would also mention where we are directed by or where we serve those tiers, we’re having open dialogue with them as well. So we feel as though this — although we’ll the restart will have some bumps associated with that though it’s been well planned, where we’re able to restart pretty effectively.
Operator: And our next question comes from Joe Giordano with TD Cowen. Please go ahead.
Joseph Giordano: Hey, guys. Good morning. I’m juggling a bunch of calls, so apologies if this was asked. I’m just curious on the guide, right? So like in Investor Day, can you just talk about the thought process and kind of going out of your way and giving a 4Q guide when there was already kind of like an uncertain market right now. And then it almost compounds having to cut it here. So what was the thought process kind of going into that event as to why you feel compelled to put it up then when there was still like the strike going on?
Paul Vasington: Well, we obviously feel good about Q3, which we deliver. And so — and we felt we should give expectations on Q4, which we had pretty good confidence at the time based on our fill. And we obviously put out a three-year guide that would be underpinned based on our 2023 estimate. So it all made sense to put that out. We were clear that our guide for Q4 was based on IHS estimates at the time, which had about $15 million of either lower production because of the strike or that they had built inventory that they would consume and we felt that was a prudent assumption to use, which underpins the guide. And now we’re seeing the strike go on longer. And we’re using IHS’ current estimate, which gives us about a $40 million — $35 million to $40 million round of impact.
So we’re using the third party as a way of developing the guide, and we’re updating it based on new information. I think that’s appropriate, and I felt it helped integrate performance in Q3 with the full year ’23 and then our 3-year expectation that we provided. So I think it was the right thing to do. And I think what’s driving our lower guide is, in fact, the UAW activity and how it’s progressing. No one’s going to be able to know the number, right? I mean whatever we put out there, it’s a best estimate based on the best estimators out there and buy that. But when it’s the end of the quarter, we’ll know for sure. But we feel confident that this is the best estimate that we can put out there for Q4 at this time.
Operator: And our next question today comes from Matt Sheerin at Stifel. Please go ahead.
Matthew Sheerin: Yes, thanks, and good morning. Jeff, I’m hoping you can give us more color on what you’re seeing in the HVOR market, and that was down sequentially and year-over-year for you. And I know that market has been weak, but you’ve also been talking about in recent quarters about continued market outgrowth. So could you share us what you’re seeing in terms of outlook from customers and by region? And are you expecting it to recover any time next year?
Jeffrey Cote: Yes. So in the third quarter, the market was up a little bit, call it, 2% third quarter versus third quarter of last year. When you look at what we’re guiding to, it’s down 1% or 2% versus the fourth quarter of last year. And then on a sequential basis, it’s a decline, but it’s a typical seasonal decline third to fourth quarter in the HVOR market. To your broader question regarding that overall market, it’s disproportionately impacted by China on-road. There is some strength in some of the other markets that we serve. And again, much like the comments that I’ve provided on the Industrial market, it’s been declining for 12 to 18 months at this point. And the expectation would be that it will come back. The seasonality of that business tends to be in that sort of 12 to 24 months time frame.
Operator: And our next question comes from Chris Snyder, UBS.
Christopher Snyder: I wanted to ask on auto, 6% organic but it seems flattish production year-on-year. But let me if you guys see that different. So pretty solid outgrowth, probably one of the better growth quarters we had in the while. Is that just a function of comps? So maybe just kind of talk about why the outgrowth came in better from where it’s been?
