Majdi Abulaban: Gary, that is correct.
Gary Prestopino: So that accounts for a lot of the inefficiencies that we saw here in Q4. One thing I wanted to ask though, your content per wheel was down somewhat dramatically, 20%. And you’re saying that’s primarily due to lower recovery of cost inflation from customers. I’m trying to understand just what is going on there for that number to decline so dramatically. Is that factoring in obviously maybe running the two factories in tandem?
Majdi Abulaban: So it’s a very — Gary, it’s a noisy year, right, with the deconsolidation of SPG, with the mix that’s coming from GM and the UAW strike. Actually, if you just peel the onion on content per wheel, in 2023, average content per wheel has gone up by 3%. Once you adjusted for, okay, we don’t have the revenues in the fourth quarter that we had in Germany and you made the comparison year-on-year and you made other adjustments for FX and such, all content through it. It’s not as impressive as we used to have in terms of what we looked at for the year, but it is 3%.
Tim Trenary: The reason Majdi is suggesting you look at it over a longer period of time is over the last two years as this inflation has occurred and the industry had to deal with it, in many ways, including, by the way, recovering this cost inflation through pricing and one off recoveries, et cetera. The bookkeeping for the recoveries is such that it gets been or booked at in our books and value added sales. So if you look at our content for real, which by definition includes pricing and the recoveries, from quarter-to-quarter it can whipsaw, okay? So it’s sort of better looking at it over a longer period of time. Did you follow that?
Gary Prestopino: No…
Majdi Abulaban: Gary, I think, I just figured out the 20%. I was talking for the whole year, you’re talking for the fourth quarter.
Gary Prestopino: Yes, that’s what I’m getting at. I mean, that’s a rather dramatic decline, and I realized there’s a ton of noise out there. I guess, maybe I should have raised the question, is there anything that has changed in the industry that would cause that to happen, or is that just a function of what’s going on with what you’re doing with the transformation? And I think it’s more of the latter, right?
Majdi Abulaban: It’s more of the latter, absolutely. I mean, we’re always cautious about looking at content per wheel. By quarter, we like to look at the trend. But I can assure you the fourth quarters had so much noise that looking at content per wheel is the last metric you’re going to look at for the fourth quarter.
Gary Prestopino: And then, I would assume you’re using IHS numbers to lead you to your guidance for 2024. Is that kind of correct or at least IHS numbers for your markets?
Majdi Abulaban: Yes, Gary, that’s what we use. But listen, we adjust — with several cases, IHS sometimes tends to be more optimistic. So we take our knowledge of customers and we make some adjustments, but generally the baseline.
Gary Prestopino: So in 2023, I remember at the beginning of last year when you guys reported Q4, it was kind of a surprise that you were a little bit sanguine. We all thought the industry was going to recover, which it did. But you basically said a lot of the recovery was going to be fleet and you don’t participate in fleet. So as you’re looking at 2024, what are you anticipating in terms of — do you anticipate that shifting more to production of consumer passenger cars versus fleet?
Majdi Abulaban: So let me just — let me start with the noise in the ‘23, okay? GM was a big deal for us. And if you look at IHS data, GM is our largest customer, they were down for the whole year. Then you look at the fourth quarter, all of them were down 7%. And for us, especially if you remember, that Silao plant was down every other week last year, right, and we’ve had a lot of content on the GM [indiscernible] and then the aftermarket business as well. So as you go into ’24, we expect to see normalization with our North America customers, normalization on the fleet side. And if you look at our fourth quarter actually and the third, the aftermarket is the entire segment, not just us, and the aftermarket is rebalancing in a very nice way. Don’t forget that that our top line, as Tim mentioned, there is always the lumpiness and the noise of price recoveries.
Gary Prestopino: And then as we look at your numbers on Page 13, which give a long term picture of where you think you can be. You’re looking at value added sales up 4.4% on a CAGR. What kind of market environment are you factoring in there in terms of units produced, growth in units produced over that time period when you aggregate it between North America and Europe…
Majdi Abulaban: Again, Gary, we use IHS. And again within that, there is the mix of what we won, the businesses we won, where the content is coming from and the underlying overlay of that 227 outlook. So if you look at IHS, it’s relatively — it’s marginal growth for the next four years in the industry. And when you peel the onion on our growth we’ve always said 5% to 10% growth above market from content. If you look at the last 16 quarters, 12 of the quarters of our quarter, 12 or 16 were growing over market and the other ones were really just noise. So we’re very comfortable with the narrative. The starting is IHS, you look at IHS the next three or four years, let’s say, 0.5% to 1%, the balance is really content growth and the visibility we have on content from programs we won.
Gary Prestopino: And then lastly, and I’m just trying to flip through the slides here, so bear with me. I think you gave a number of like $20 million to $35 million of costs associated with what you’re doing in Europe. How much of that was taken in 2023 and how much of that remains into 2024? And then as a follow-up to that, you’re talking about another challenging quarter in terms of EBITDA for Q1. Would you expect the EBITDA for Q1 to be on par with Q4, lower or a little bit higher? I mean, can you just give us an idea of what you’re thinking?
