Visteon Corporation (NASDAQ:VC) Q2 2023 Earnings Call Transcript

Sachin Lawande: Yes. So I would not say that there would be anything material. A lot of the engineering that is related to the specific products that are part of this ramp-up has already offered in the past. And so the engineering related to electrification that’s ongoing is for future business. And also at a company level, these numbers are still relatively minor, and I do not expect that to have any significant impact.

Dan Levy: And then, as a follow-up, a question on semiconductor and your sourcing. I know you’ve talked about redesign of some of your architectures, at least in some of the sourcing helping to mitigate some of the pressures. And I think you had sort of the very unique circumstance. You actually have seen a very limited leakage on semiconductors, which is a bit of a contrast versus what we’ve seen from suppliers broadly on material. So maybe give us some type of [Technical Difficulty] that we’ve seen that over the last couple of years, the leakage has been generally minimal. What has driven that? And to what extent have the redesign played into that? How expensive are those? How much effort is there? What’s the – and how much more opportunities from that?

Sachin Lawande: Yes. So, good question. And so, let me try to describe the bigger picture of semiconductors and how the last couple of years have played out. So, one factor that I think we need to also keep in mind is, when supply was very constrained and the industry was really working hard to produce vehicles, our parts, what we supply to the OEMs were one of the more desired set of components that the OEMs wanted to equip their vehicles with to lift the content. If they had only a few cars to build, there were going to build it with as much content as they possibly could. And so that helped us work with our customers to ensure that we were able to get the supply that we needed, whether it was from open market, whether it was from our suppliers themselves, paying the surcharges, which also helped us recover the surcharges from our customers.

So, point number one is, the nature of the products that we offer are very much what the industry needs to be competitive and for our customers to drive their margins. So that’s something that should not be probably lost in the shuffle here. The second was our redesign activity. By doing more redesigns, we were able to reduce the spend on these open-market-related purchases faster than the competition. And I can tell you more anecdotally, some of our customers have told us that our execution in terms of managing this risk and the proactive sort of approach that we took was highly appreciated by them as they had many other challenges to deal with. We were one of the ones that were able to get that under control earlier than many of our competitors.

So, that has in general – that operational focus, execution focus and then the engagement with our semiconductor suppliers that we made proactively was all due to – all of those contributed to us being able to recover quicker and have lower leakage as a result.

Dan Levy: Thank you. Helpful color.

Sachin Lawande: Thank you.

Operator: And we will take our next question from Luke Junk with Baird. Your line is open.

Luke Junk: Good morning. Thanks for taking the questions. First question I have is just on the growth in the back half of the year. I think you had been expecting the second half to be launch-heavy, and I’m just wondering if there’s any metrics you can provide to help animate that in terms of the expected 15% outgrowth. And then specifically I’m wondering just your assumption around the ramp of wireless BMS, just if you could maybe just put a finer point on how much you’ve de-risked that for a potential slow ramp.