Good morning. My name is Jamie, and I'll be your conference facilitator. At this time, I would like to welcome everyone to the Aptiv Q4 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to Elena Rosman, Vice President of Investor Relations at Aptiv. Elena, you may now begin your conference.

Thank you. Good morning, Jamie, and thank you everyone for joining Aptiv's fourth quarter 2017 earnings conference call. To follow along with today's presentation, our slides can be found at ir.aptiv.com. And consistent with prior calls, today's review of our actual and forecasted financials exclude restructuring other special items and will address the continuing operations of Aptiv. The reconciliation between GAAP and non-GAAP measures is included in the back of today's presentation and the press release. In addition, the appendix also includes a number of supplemental tables which provide the historical financials for Aptiv. Please see Slide 2 for a disclosure on forward-looking statements, which reflect Aptiv's current view of future financial performance, which may be materially different from our actual performance for reasons that we cite in our Form 10-K and other SEC filings. Joining us today will be Kevin Clark, Aptiv's President and CEO; and Joe Massaro, CFO and Senior Vice President. As seen on Slide 3, Kevin will provide a strategic update for the business, and then Joe will cover the financial results and our outlook for 2018 in more detail. With that, I would like to turn the call over to Kevin Clark.

Thank you, Elena. Good morning everyone. Thanks for joining us. This is our first quarterly earnings call as Aptiv, and I'm excited to report a very strong finish to 2017. Highlights for the year included; we exceeded our financial commitments, 2017 revenue, operating profit and earnings per share all finished above the guidance we provided at our Investor Day. We completed the spin-off of Delphi Technologies ahead of schedule and received strong customer endorsement of our more focused portfolio of advanced technologies, reflected by the record bookings of $19.3 billion. We made significant progress positioning the Company for the future, through the acquisition of Movimento and nuTonomy, organic and inorganic investments, and the expansion of our automated driving pilots around the globe. In summary, our 2017 performance reflected very strong execution by the entire team. We'll dive a little deeper on a number of key milestones on Slide 4. 2017 marked another year of successfully executing our strategy. We continue to strengthen our operating capabilities which translated into a total revenue and earnings growth and exceeding our commitments to shareholders. Sales increased 5%, that's 4 points over market, operating income increased 7% excluding investments in mobility and services. We acquired Movimento and nuTonomy and made organic investments in our mobility and services businesses that strengthen our competitive position. In addition, minority investments in our otonomo, Valens, LeddarTech and Innoviz enhanced our technology portfolio and helped unlock new commercial opportunities. This past year success is in large part the result of the strong foundation that we've built with leadership position in fast-growing technology areas including active safety, where bookings totaled $3.7 billion, that's 2.5 times greater than 2016 bookings or $1.4 billion, so reporting greater than 40% forecasted revenue growth in the years to come. 2017 active safety revenues actually increased…

Thanks Kevin. Good morning everyone. Starting with the recap of the full year financials on Slide 11. Results were ahead of the guidance we provided at Investor Day with revenue of $12.9 billion, up 5% reflects a 1% market growth we delivered on our commitment of mid-single digit growth above market. Operating income was $1.6 billion with operating margins of 12.4% consistent with what we shared with you at our September Investor Day and we've taken to account the lower flow through from a stronger euro in the quarter. Earnings per share of $4.64 were up 10% and operating cash flow of $1.1 billion which included the $310 million unsecured credit resettlement and approximately $80 million of spin-related costs. Excluding these items, operating cash flow grew faster than operating income primarily driven by improvements in working capital. Turning to Slide 12. The fourth quarter was incredibly busy as we successfully executed the spin of the Powertrain Segment, had near record launch activity in new bookings and delivered ahead of expectations on revenue and operating income. Aptiv revenues of $3.4 billion, up 4%, revolver implied outlook is favorable FX and stronger growth in Europe and China more than offset North American passenger car weakness which was down 17% in the quarter. And underlying global vehicle production was up 0.5%, slightly better than expected. We had good volume growth year-over-year, driven by double digit gains in Advanced Safety and User Experience, despite the unusually strong fourth quarter in China in 2016. Slide 13 walks our operating income and EPS performance in the quarter adjusted for the sale of Mechatronics. Again, these numbers reflect the continuing operations of Aptiv following the spin and are better than we anticipated back in September when we provided a standalone pro-forma financials. Operating income was $450 million,…

Thanks Joe. We'll wrap up on Slide 19. 2017 was another outstanding year. We exceeded our financial commitments and executed the spin-off of our Powertrain Segment flawlessly and ahead of schedule, all while enhancing our portfolio of advanced technologies with the acquisitions of Movimento and nuTonomy and investments in Valens, otonomo, Innoviz and LeddarTech, all which will serve to enhance our competitive position as the demand for ADAS and automated mobility solutions ramps up. Looking ahead to 2018, as Joe just mentioned, our outlook includes mid-single digit revenue growth above market, reflecting the strength of our technology portfolio and execution capabilities and margin expansion in line with the long-term framework we provided back in September with 20 to 40 basis points expansion while continuing to invest for future growth, all which results in double digit earnings and cash flow growth and the ability to sustain long-term shareholder value creation through efficient disciplined capital deployment. So, with that, we'll open up the line for questions operator. Thanks you.

[Operator Instructions]. Our first question comes from the line of Brian Johnson with Barclays. Your line is open.

Yeah. Good morning. A couple of questions. You are first in what we used to call EA in undated signal, can you maybe talk about the new bookings and also just a revenue outlook. Talk about the different trends within which one might call traditional wiring harness and connector business where it might be a new launch, but the platforms aren't radically different versus some of the more advanced data intensive. And in particular, is the core traditional wiring harness business, are you booking less there, when you got like the price or the commodity passwords or other commercial terms?

Yeah Brian, so it's Kevin. I will start and then Joe will follow-up. So, a couple of trends that relate to electrical architecture and it relates to the transition to what we sometimes refer to as is a more sophisticated or smarter architecture. Obviously, more business booked – more business being done with the traditional automotive OEs that have a – let's call a higher component of technology in their overall portfolio. So, who are pushing FP up, the furthest ends of ADAS today, so whether it would be advanced Level 2 approaching Level 3, advanced infotainment, user experience systems, and increased vehicle connectivity. Most of that activity played frankly is in Europe. Second and along a similar lines, but consistently happening both in the North American markets, the European market and beginning in the Asian market is more KSK harnesses which are customized harnesses which are affectively built to match the VIN number and the specific outfitting of the vehicle which is a much more – which is a much more complex architecture and even more complex supply chain as you can imagine. The third piece I would say, there are a few of the what I would call the newer OEs that we've been deeply engaged in more active as it relates to clean sheet of paper architecture and discussions about how we'd optimize that and how you bring that into production sooner rather than later. And then lastly, I apologize for rambling, there are number of other OEs that I think it's approaching close to double digit where we're spending time talking about that clean sheet architecture of the vehicle, but doing it over a longer period of time, a lengthier period of time. Joe?

Brian, within that business, you know I think couple of things to know about that business. One, we obviously – and we've talked a lot about this year. I think the business did a really good job weathering the North American pass car downturn while expanding margins. We see that flipping next year, so that business returns to call it mid-single digit growth. Within there, we also continue to see strong growth in HellermannTyton both on their industrial business as well as their auto. I would expect them to continue with double digits. They have between 10% or 11% growth per year since we bought them and we see that continuing. So, really, I think the story for next year is really just lapsing that, that passenger car volume in North America and you will see it return to mid-single digits.

Okay. Second question is more kind of longer term strategic. With the great progress particularly on the ADAS and kind of the advanced electronic side with BMW, you know, can you maybe help us especially in light of all the acquisitions you put into your effort, kind of where the Intel Mobileye partnership you have is, how it relates to what you are doing in the economy and what we saw in automatic and what we saw in Vegas? And then BMW's own joint venture with Intel Mobileye, where of course Fiat Chrysler has become one of their partner, so, just are those kind of moving on parallel tracks, separate but related, sort of the same thing, or how should we think about that?

There is obviously a lot of activity around autonomous driving. So, let me start with – we continue to progress with our partners Mobileye and Intel in the development of CSLP platform that will be commercially available in 2019. So, let's start with that. Where we are having discussions with other OEs, whether it's their interest in the CSLP platform, or is there interest in doing you know some portion of that activity on their own, like the BMW partnership. We're doing all we can as you can imagine from a financial standpoint, not to recreate, but to reuse the technology and the capabilities that we've established. I can't get into specifics at this point in time, so some OEs want more of that, some want less of that. I think there is a direct correlation between their level of internal technical capabilities what they've had historically and how strategic they view that automated driving stack to be.

Your next question comes from Chris McNally with Evercore ISI. Your line is open.

Good morning team and congrats on the successful spin. Just two follow-up questions on autonomous from me. So, the first one on the robo-taxi front, Kevin as you referenced, you know CS and LYFT was a big positive and you mentioned 2019 as the commercial test deployment in a city. It seems pretty significant you know given that Aptiv will add a lot more automotive grade experience to what nuTonomy could do by themselves. Could you just elaborate and give a little bit more details, how many vehicles, is this, is this highway travel, will LYFT be contributing significant R&D, anything you can add around some of that – the details around the 2019 program.

Yeah, well, listen the 2019 program relates to Aptiv and we're in discussions with multiple players in the Mobility on Demand space as well as cities. With respect to deploying vehicles at Level 4 levels, initially in late 2018, early 2019, by the end of this year, we'll have roughly 150 vehicles plus on the road. I think I mentioned traveling roughly 2 million miles during the year and we'll be doing that through multiple partnership whether they Mobility on Demand players, or they be direct agreements with cities. Now, one thing is important, I think underscore – you've heard Joe and myself say this several times. We're not in the fleet management business. We're not a mobility provider, so it's our objective to partner with others who are. At the same time, it's really important to advance the technology and quite frankly to monetize the capabilities to get as many vehicles out on the road as we can near term. Well those are vehicles we're paying for, our partner is paying for, to enhance our capabilities improve our capabilities.

That's great and just a quick follow-up to Brian's questions on the production car side, I think previously when you first sort of launched CSLP, you mentioned that, if an OEM were to sign up to the program in somewhat of a turnkey solution, it would aid them in getting to market you know with an L4 type car and you know maybe three years, I think you talked about 2019 as the first year. Is it fair to say that some of those discussions have happened? You just can't really announce formal awards. I just think that the investment community sort of was prepped for you know some sort of big award announcements over the last year and that just may not be the case, and maybe discussions that are going behind the scenes, just wanted to get a little bit more color on the award process.

Sure. So, several of those conversations have happened and are happening. As you can imagine from an OE standpoint, there is a strategic aspect to this, there is risk aspect to this, there is a product portfolio aspect to this. Then in reality, it's pretty complex and there is a business mile aspect. So, we continue to be engaged with a number of OEs about both the entire CSLP platform as well as portion of the CSLP platform. We've always said we are about giving our customers what they want. And the benefit of having the platform is for those who don't have the capabilities and want to move more quickly, we can provide more full turnkey solution. On the flipside for those who want a portion, having the ability or the understanding of the whole system allows us to enhance the parts. So, I say that's one. The second thing Chris, one of the things if we've concluded, and it's for obvious reasons that you are going to see the acceleration of autonomous driving with the Mobility on Demand players quite frankly sooner, than you're going to see it with the traditional OEs. And that's purely economic. The cost of an automated driving system is today relatively expensive and the economic are justified by the mobility players to the extent they can either get the driver out of the car or they can have the driver doing things other than just transporting passengers or goods.

Hey Chris, it's Joe. The one other thing I'd add and we've talked about this before particularly on the OE side. As the conversations have evolved, the other thing which we think is very positive from our perspective is they're now becoming discussions around how to move from active safety, Level 2, into Level 3, into Level 4. So they are becoming sort of technology roadmap discussions, which given by 2020 will have over 20 or just about 20 active safety customers providing Level 2 and have the capabilities to do Level 3 and Level 4. We certainly think sort of the technology continuing discussions are going to accrue to our benefit as well.

That's great. And it allows for a sticky customer as well. Appreciate the color guys.

Your next question comes from David Leiker with Baird. Your line is open.

I just want to follow-up on the conversations just having, as you look out, once upon a time there was view we got from Level 1 to 2 to 3 to 4 to 5, and then all of a sudden everybody jumped to Level 4 and 5, and now it seems that Level 3 is becoming more prominent. How internally do you manage that technology roadmap? Are those separate businesses? Are they are parallel paths? How do you manage that?

The answer is a little bit of both. So, our approach is that the Level 4 and Level 5 is actually separate, that fits in our mobility group with [indiscernible] and with our economists driving team from Ottomatika and nuTonomy and they are focused on really Level 4, Level 5 of high solutions, that's where all their focus is. However, we have a system setup where they're able to affectively share their advancements and algorithms and technology with our traditional ADAS business that resides in our Advanced Safety and User Experience segment today. That is having discussions with traditional OE customers principally around Level 2, Level 3 and some around Level 4, but there are separate organizations with the ability to share technology. And the reason they is separate is one to make sure that we are focused on advancing that Level 4 and Level 5 capabilities. And then two is, I mentioned Dave is the mobility on demand players today are moving much faster. And we want to make sure that we have a new organization that effectively focusing on delivering that technology to their customer group.

Yeah. That's two different customer bases there. As we looked out, I don't know that's 2020 is the timeframe, but if you give me, what would be your guess in 2025 about mix for you in terms of revenue contribution between that Level 3, 3 plus like ADAS safety type incremental approach versus the mobility on demand Level 4, 5?

Yeah. David, what we are seeing, so we've been out with our target is $1 billion in revenue related to automated driving/mobility right to services to come around interrupt, that number is $1 billion. The way we see it sliding out right now it's about 50-50. So 50% of that are coming from Level 3 as we migrate our Level 2 plus business in a Level 3 opportunities with ease, and then target $0.5 billion of revenue coming out of mobility on demand group.

And then active safety underneath that or 1, 2?

Active safety by then will be well north of $2 billion probably close to $2.5 billion plus of business.

And that's just Level 1 and 2 or is that include 3?

That's just level of up one and two, that's the existing because.

Okay. And then just one small item here. As we look at user experience on the infotainment side, strong bookings there, strong rev performance there. If you look at what bookings are being done today within that space. What do you think your market share is in that today versus what it is relative to the business that's being delivered today?

With our market share today relative to what it will be in the future?

No, no, what it is currently, near your current revenue base your share there, versus the share on what's your bookings are?

David, that's the hard one. Part of the challenge for that space, is you've got some of the cap sitting there with low end audio. I think if you racked it all up and included low end audio where it's probably seven, I think as you start to focus on the really relevant technologies and where this is going well, the audio display is going away. We think the mid systems are going to push their way down. We clearly see ourselves moving in organically into a top five position over the next couple of years. I mean this MLD booking for us it's hundreds of millions of dollars of bookings from an acquisition we did in 2016 for 50 million bucks. The technology is just phenomenal. So again, it's a little bit about how you racking up that market, but if you put the audio in there we're probably further down, but where we want to play clearly targeting the top five and top three position.

Your next question comes from Joseph Spak with RBC Capital Markets. Your line is open.

The first question is just a little bit more sort of on 2018, so the 20 to 40 bps of margin expansion in line with what you talked about previously, but it does show a big sequential improvement from the first quarter guide. So, I think some of that is the subsiding of the stranded costs, but I was wondering if you can talk about the other sort of puts and takes through the years and maybe what your commodity outlook is as well?

Yeah. So this is Joe. We've got stranded costs. We're going to lap some warranty in Q1, so that's going to help the Q1 number. But our mission here is to get stranded cost out for all intents and purposes by the end of 2019, so it's a fairly deliberate March. We're started the year with about $90 million as we talked about in September about $80 million to $90 million of stranded costs to get out of the system. So that's where a lot of that comes from. However, we continue to do a really good job on the manufacturing of the material performance side as it relates to continued savings. As we've talked about, you know one of the benefits we are getting here is, are these product lines coming to scale. Things like activate safety getting to $600 million of revenue, it's going to continue to grow at 40%. That adds efficiencies into the manufacturing plants, adds efficiencies into the material buy. Very similar with high voltage electrification, we've got that business growing in $300 million of revenue. It's going to grow well above 50% next year. We've already booked about $1.4 billion this year, so very, very strong bookings to revenues. So those product lines coming to scale help, while we continue to bang away at our overall costs footprint if you will, and again, doing this in light of investing and being able to fund those additional mobility investments. Commodities are pretty straightforward. The 2018 guide adds – not real significant changes in their coppers is the biggest one, but again that's mostly passed through. To the extent, we don't pass through copper, we hedge, so that plays around a bit with the top line, but doesn't really impact performance. And then I think from a currency perspective, the thing we're obviously watching, the guide is got a 1.15 euro in there, which was about our average for 2017. Obviously that looks conservative relative to where we are today, but that's been bouncing around a bit, but we'll continue to watch that. But at this point with where the business is post-spin, their really only focused commodity is copper, mindful of resin pricing, but from an oil perspective, but don't see any challenges there.

That's helpful. And then just back on the autonomous discussion, you guys have talked about a couple of times now some non-traditional customers potentially rising up and then you reiterate there you don't want to be sort of the mobility provider. You want to work with them. But what does that really look like from a, I guess from the actual vehicles perspective? Is it something like you showed at CS or you're retrofitting vehicles or is it working with someone else to design and build those vehicles?

Joe, it is effectively both. I think it's an optimized vehicle. It's both an optimized OE vehicle setup for Level 4 and Level 5 autonomous driving, and then it's what I call a custom bespoke vehicle that can transport more passengers and has a more fully integrated architecture, ADAS stack or automated driving stack as well as user experience capability. So we are actually working on both.

Your next question comes from Rod Lache with Deutsche Bank. Your line is open.

I'll ask a couple of things. One is, obviously you ended 2017 with a very strong cash position at $1.6 billion and you alluded to a pretty solid pipeline of M&A opportunities. Can you just remind us at a very high level, how should we be thinking about what your cash target is? So, if we are thinking out a year or so, what do you kind of managing that down to between the various uses of cash?

You know what, to run the business call it $300 million to $400 million of cash, right. So, clearly the cash balance is strong. As I mentioned in my prepared comments, capital allocation philosophy hasn't changed. We do have a good looking deal funnel at the moment. There is a lot of things on both the Signal and Power Solutions side that we are looking at. And I think as well as on the technology side. Those really will unfold over the next couple of quarters. And again, I think we'll build the transactions like HellermannTyton bolt-on type transactions that both deepens the capabilities of the Signal and Power business within auto, but also look at some adjacent market opportunity. Things like PureDepth as we mentioned, that's been a complete home run as it release to the bookings with BMW on that technology, so things like that. And to the extend we get to the point where later in the year those haven't materialized, the target control timing. We understand the importance of returning cash to shareholders. The guide only includes at this point keeping share count flat. So we won't allow creep obviously, so we'll be repurchasing to avoid creep. And anything incremental will really be based on as we get further through the year on what we see from actually materializing from a funnel perspective.

So just to clarify, you would think or suggests to us that we should be thinking to exit the year at $300 million to $400 million , so you have the $1.6 billion plus to free cash flow that you generate this year to deploy between M&A and share repurchases in that kind of thing. Is that correct?

I don't want to call a number that specific. The types of transactions we look at take time, particularly in that electrical architecture space. We are looking at a lot of what I'll call midsized bolt-on. They are typically family-owned businesses. They take some time to cultivate. So I wouldn't want to be on a record of saying, we're going to have it all bundled up by 12/31/2018, but actually think about Aptiv capital deployment hasn't changed from Delphi. Long-term, we need – on average we need $300 million to $400 million of cash and we are going to work really hard to try to find smart uses for that cash.

And just switching gears, the shift from passenger car has actually been a tailwind for the industry broadly is given return mix, but a bit of a headwind for you guys in part because of the Fiat Chrysler situation. Can you give us a sense of what your North American passenger car exposure is now kind of on a run rate basis? And is that still something that you would put in a risk bucket?

FDA we knew about going into the year, GM took a lot out of pass car. That was really what we were working through during the year. That business continues to be or looks to be about 65% SUV and truck in North America, about 35% pass car. As we book business, as we bid on business, we are very mindful of what pass car platforms if any quite honestly we want to be on. So we look to continue to bid – that certainly there are some that distinguishes himself from others. But it's certainly something we watch carefully and are managing through. I think given what happened last year at this point, do we have a big risk associated with it. Next year no, we really see ourselves lapping that, but it's something where we'll continue to manage through and quite honestly it's – again that business – North American pass car probably took 30 to 40 basis points of margin out of Signal and Power Distribution in 2017 and the team was on it. That business was able to expand margins 10% even without 10 basis points, even with that headwind. So we are laser focused on it and we'll continue to manage the business to the extent it comes up short.

Great. And just lastly, could you just talk to us about how you are thinking about conversion on volume going forward as you are currently configured the 21% that you did in the quarter, it's a little bit lower than what the prior configuration was? And for the full year, how should we be thinking about the cost items and saving items like performance and depreciation versus your pro forma 2017?

Yeah. So I think, we used to always talk about volume flowing at 18% to 22% as Delphi HoldCo. I think it's there with Aptiv, we're in the higher end of that range, so call it 20% to 22%. As we see volume flow, I think the one other comment I'll make is you know we are running this business for – from flat to up slight production volume. So when we see, when we see things like we did in China in Q4 2016, will flow higher. And our goal is when we see things like North American pass cars to be able to continue to expand margins, but as a rule of thumb, I'd go to the higher end of the Delphi HoldCo range and call it 20 to 22.

Okay. And performance in cost items like depreciation versus the pro forma is the run rate that we are observing here something that would be sustained into 2018?

Let me talk about, you know some accelerated bit, just given we buy some of the warranty and then get [indiscernible] take us through the detail there, but I'd be focused. I think that would be mindful to tell the thing we're stranded…

Your next question comes from John Murphy with Bank of America-Merrill Lynch. Your line is open.

Good morning guys. If I could, just ask you slightly longer term question in it, it's little bit theoretical. But I mean granted, and you guys have been talking about as we see more L4 an L5 autonomous drive vehicles being developed even on new architecture. Just, [indiscernible] you think it's sort of brains and veins and everything that you guys supply to the automakers. What sort of a magnitude of increase in potential content per vehicle there could be? I mean is it kind of like a 50% number, or is this the kind of thing where it could be a factor of two to three times higher potential contact for you guys.

I don't know if I thought about it from a – content and exact number content per vehicle. I guess the way we would look at it and I think it's reflected in the longer term guidance that Joe talked about at our Investor Day is accelerated growth and growth over market. And it's being driven by more software, more data and solid growth in the vehicle architecture space. So, I don't have content per vehicle factor number. Maybe a way to think about it, I quit backing into it, but when you think about active safety and you think about our spend on Level 4 and Level 5. Joe and I and the team would tell you, we are seeing a factor change in active safety revenues and active safety book. So, we think you'll continue for the next several years to be a run rate from a booking standpoint that's in the range, call it $3 billion plus that in the range that we book this year in active safety. We talked about infotainment it's been a bit lumpy, so we are actually down year-over-year on the infotainment bookings, but up on revenue. You'll see strong revenue growth there as well, and then I think the smart architecture, the vehicle architectural, will be able to see how that plays out.

John, go back to and we will have it revisit you with it offline. As you think about the architecture business, our view between sort of now and call it 2030 is for every $3 of content that goes into the architecture if me moves about $1 from optimization. And so we are not exactly on content per vehicle 10 years out, but as we look at the trend, vehicle architecture has a positive mix that would be higher in connection systems, more complicated materials, going in for the three, maths coming out is the one decrement. And as to Kevin's point, we are going to see additional content from the higher end compute platforms as well Integrated Cockpit Controller, Multi-Domain Controller. But that on the architecture side itself, there is an optimization decrement, but we see the increase of the different materials and technology parts getting in.

So to everyone one of our major product lines of segments are growing over market, growing over here.

Okay. And then maybe just a follow-up to that, I mean I understand you guys are incredibly financially disciplined on margins and returns and great towards the shareholder capital. But there is also sort of a view in the market right now particularly future car technologies that significant growth regardless of exact profitability returns being rewarded with high multiples, whether it be in the private market, you can see some can early stage companies or some stuff even in the public market. Is there any potential that you might drift away from sort of that return in margin targets to get greater growth which might rewards you with higher stock price which might reduce your cost of capital? And then sort of decent whatever virtuous circle is, but there is some confirmation in the market right now just been barbell of, you know where you guys are valued and more some slightly high flyers and higher multiples are valued right now?

Listen, I would tell you there is zero possibility that happen. And that's for multiple reasons including experience seeing over the long term companies too growth for growth taken what ultimately happens. I say the second and maybe more aligned – directly aligned with shareholders near term. From a management team standpoint, over or roughly half our compensation is tied to expanding return on capital. So there is a direct correlation that affects myself, my direct report, their management team, and it's pushed on down tied to our long term incentive plan that really drives a mindset where it's about increasing and enhancing return on capital. And consistent with what Joe has mentioned earlier about is being manically focused on our cost structure and our cost for generation, all these programs, all these major program, size strategic. We take a look at and we review it with the management team before they bid on. And we give them specific guidelines with respect to where they can go. And the discussion about return on capital quite frankly is one of the a biggest discussion and we serve more time on that quite frankly than we even do on the margin expansion discussion.

That's very good to hear. And maybe just one last real quick housekeeping, and I apologize if I missed this Joe. I mean, on roadmap headwinds for 2018 and what you are seeing in sort of the relationship of the automakers on ability of the index pass through and all that kind of stuff with particularly around copper, other walls that you might be facing some inflation or what?

No change here John. I mean our copper is the pass through are for actual copper. So those again they impact, they can move revenue depending on how fast copper moves. There is sometime a little bit of a lag call it quarter and half to give the inventories for this system, but beyond that we are not anticipating any headwinds and have seen no contractual changes certainly. And then we are really down to – again, we watch resin, but that's a distant derivative of oil, so we are able to manage that with the early effect, crude oil got a big resin buy, or buy fairly efficiently. So not a lot of tough commodity headwinds are risked from anything we see.

Your next question comes from David Tamberrino with Goldman Sachs. Your line is open.

Thanks. Active safety bookings looks like they significantly accelerated in the fourth quarter from the $2 billion year-to-date at 3Q. Can you kind of talk about this state of the environment with quoting activity and kind of what your percentage share of wins of business as are looking at is?

Look, I don't have – this is Kevin. I don't have the exact cent share of win. We tend to be focused on the higher end – medium to high end vision radar in the other locations. Active safety activity across the customer base from an opportunity standpoint has picked up as active safety rate – penetration rates have increased. As Joe mentioned, a year or so ago we were at five customers, I think we're at 10 or more in 2017. So we are seeing a significant ramp up post with existing customers as well as new customers. As I mentioned, I just see a factor changing our book on the active safety on a going forward basis, a significant increase relative to markets [indiscernible].

David, our win rate, I mean it's a little bit like my infotainment response David like here. It depends on what you're scoring, we don't low end cameras those types of things. We really don't participate in. So if you're in there, the share would be lower. Out teams have been saying 90% of win rate in the work that we are going after. And we've had our – as you mentioned a very strong Q4 and see why we call it plus $3 billion booking level is in 2018 and 2019. We've got that line of sites for those at this point, so we are feeling very good about that active safety business. And as I mentioned earlier, one of those conversations then lead into Level 3 plus autonomous driving.

Got it. And then as we think about what you've booked so far, almost $10 million cumulatively I think on our account. How much of that is more software related revenue versus hardware? Understanding it's a package together, but just trying to see how much embedded software from active is in that new business bookings for active safety versus software that are come from a Tier 2, Tier 3?

It's hard David. For active safety I would sort of redo it, it's falling there. I would tell you our view is the software capability around things like sensor fusion and such are what's helping us to drive the business. But on the active safety side of the business, it truly is sort of firmware. It's embedded in there and it's in the price. So it's very hard to just put our revenue.

Got it. The second of that from a margin uplift perspective, you mentioned hardware vision and multi-domain controllers. How much of those components you have embedded software that's coming from your software engineers versus the third party?

I mean, all of it had some of our software, but what we incorporate from a customer or a customers' third part, another third party with my customer is platform dependent, but if we can steadfast, that's a lot of our software, Al, you've put some software in there. There is actually some software from two other, way it with someone else, I believe that TT, so it's usually a mix, but in terms of all of our products have some of our software and we are the integrator of other software component. So we tend to be sitting on top and making sure the software all works together and within that control unit.

Your next question comes from David Lim from Wells Fargo. Your line is open.

Hi. Good morning guys. Just quickly on the backlog it looks like where the win rate is, it looks like it declined a little bit for your EA or what you call the EA division in the past. I am thinking maybe it had something to do with passenger cars, but can you guys elaborate on that?

I think year-over-year, David, you got to be careful. As we've said in the past there is lumpiness, but it relates to both. So I wouldn't read a trend into year-over-year small change. I don't underscore, but actually we had a couple very big booking including the GM [indiscernible] that obviously had a positive effect point in 2017?

Got it. So that's what I was thinking was episodic. And finally, can you give us some color on the situation with NAFTA and how that would impact you, you know that there is a lot of moving parts, but some additional color would be very helpful. Thank you.

A lot of moving parts on Aptiv, so I would tell you, you know less concerning and less significant and call it border adjustment tax flows, you know if you go, six or nine months back. Right now, there is really two things we're watching on NAFTA, if that's got a regional valued content and what they do with those percentages, you know they are talking about bumping it up to maybe as much as 85%. That is in the ballpark of what I'd call additional duties, you know, call it maybe $20 million a year. So, we're watching that, but again these are – what I would call manageable amounts, the others, the domestic concept requirement, they put one in. What does it mean? That's a little bit hard to calculate at the moment, because you know it's unlike the RVs there you can sort of adjust the percentages and calculate the number, the domestic content is still wide open. I would tell you though that the extent what they are talking about, to the extent they include intellectual property in the domestic content number, it should really not be big deal for us, because that will allow us counter value of the software and the intellectual property be put into the product that are manufactured in Mexico. So, again, we're way off going forward from a – impact of something like a border adjustment tax. Thought this is manageable and it's naturalistic of plus tomorrow, it's probably nice, but you can, six months, but if it was the lead, it would probably be call it on a full year basis, maybe up to $100 million of additional duty we have to work through.

Your next question comes from Itay Michaeli with Citigroup. Your line is open.

Great thank, good morning. I just wanted to go back to the Mobility on Demand and robo-taxi discussions. So, understanding that you don't want to be kind of a fleet manager or mobility provider, as we think about the race we're seeing by different players to deploy these vehicles relatively quickly to the extent that Aptiv technology enables one of your partners or customers to get into this race fairly quickly for example like next year we plan on deploying. How should we think about the economics to Aptiv ultimately in new business, is it still limited to the content per vehicle or will there be other software other data related revenue that will be part of the growth of that effort?

I think the answer to that is depending on the customer relation with the – nature of the customer agreement, it would be for a customer to use both our AD stack as well as our mobility cloud, right which allows or allows both that customer, after is to monetize data whether it's on vehicle data or its off vehicle data whether data used by the OE to opt for fleet manager to optimize fleet performance or say they basically bundled and sold out to outside third party. So, our objective would be able, would be to target each one of those. That would be the biggest opportunity.

Great. That's helpful. And just quickly on the 2018 outlook, I apologize if I missed it. So, did you provide any kind of directional margin commentary for the segment result from the product base?

Yes, within your specific lines, both will be up excluding that mobility investment, and the Active Safety and User Experience business and that's kind of be about $140 million.

Your next question comes from Emmanuel Rosner with Guggenheim. Your line is open.

Good morning everybody. Just two quick follow-ups from me, the first one is on your bookings and it's a follow-up to previous question. I'm looking at Slide 8, can you maybe just go over again how you think of that metric and how it's related to future organic growth. I think under the old combined Delphi, the old rule of thumb was, look it's growing at a 10% CAGR, therefore we have high confidence we can grow revenues at 5%. Like, is it the same way to think about it at Aptiv?

Yeah, listen these are programs with lifetime revenues, programs typically are at Aptiv for two to three years out, which is at Delphi with the Powertrain business, it would be three to four years out. You know we would assume if you can grow 10%, there is a possibility that there is some leakage in those bookings or adjustments to FX or shifts in program that is of confidence that we can grow it, roughly 5 point over market.

Yeah, Emmanuel, the only thing I would add to that is that's favorable over time, right. So, I wouldn't react too necessarily one year we grow booking 12%, next year we grow bookings 7%. That's over – we did that analysis, you are right, a couple of years ago, and that was over time. So, it's not a – this year that change is over time. We are going to get bookings are very lumpy for us, so it's a good metric as CAGR over – have such good CAGR over a five plus year period.

Understood, and then just one additional follow-up. You are expecting some pretty decent growth acceleration in the – I guess the electrical business. Can you talk about the cadence of that in 2018? Are we going to see it already straight in Q1?

Yeah, it will be lower in Q1 and ramping up throughout the year. I think it's actually Q1 flat to slightly down.

Quite frankly and then ramping up to the kind of mind-single digit growth level for the full year.

Different way to think about is just, it's how we cover the past our comp, and that accelerated towards the back half of 2017, so that's sort of where you see the details are coming.

Your next question comes from Steven Fox with Cross Research. Your line is open.

Just one question from me. Hey, could you, it's good to hear that you are saying disciplined to your profit targets that you laid out in the fall. One of the things that seems to have changed in the last, I don't know, even just the last month or so has been, the ramp up in expectation for vehicle miles for autonomous vehicle miles from Waymo and Uber that are going to be driven this year. You guys are talking about 2 million on a 150 vehicles by the end of the year. Can you just talk about how you manage that profit expectation versus what seems to be sort of a bigger arm raised around getting autonomous vehicle data from road tests as we go through…

Listen, it's a great question, a very good question. We have a specific business plan tied to our mobility group tied to our autonomous driving activity. And that ties to the [indiscernible] vehicles and activity that we're willing to do and based on those dollars spent, their key milestones that need to be delivered as it relates to advancement in technology for interaction. So, you know we are very, very focused on, as Joe mentioned early, managing our cost structure using much of the internal funding as we can through cost reduction to support investment in future growth opportunities and then taking those future growth opportunities where we can and apply those newer technologies to near term commercial opportunities like active safety. So, it's just a very disciplined approach. We've managed it like we manage any other business. We know we have financial commitments, we have margin targets, we have return on capital targets and we operate to those.

So is there possibilities, if say there was pressure on you to gather more data more quickly that you could reach some kind of financial partnerships or would it totally be related to active spend in the near term?

Listen, we're focused on how do we maximize return on capital and shareholder value. So, to the extent opportunities like that made financial sense, those are definitely things that we'd evaluate.

Your next question comes from Colin Langan with UBS. Your line is open.

Any guidance on the $140 million in mobility investment, post 2018, if that's a good run rate or does it continue to incline from there?

Yeah, it will expand and it won't expand at the percentage that it did between 2017 and 2018, but we'd expect that to grow, but again to Kevin's comment, it will grow within that financial framework of the 20 to 40 basis points margin.

Got it and then, just lastly, I know you've already indicated there is no change from the U.S. tax reform to your tax rate, is there any long-term impact? Does this help you at all, would your rate have gone up in the future or essentially there is really no long tax rate? I'm trying to think about it – would have been help if...?

Yeah, there is always gives and takes to tax, because U.S. tax rate – lower U.S. tax rate is helpful, but we're not given the way we're setup or not a big U.S. tax payer, so it just doesn't move it significantly. And the way we're focused at the moment is, how to make sure that 2015 to 2016 stays sustainable and for us, and we treat that like we treat every other cost in the place. We are trying to figure out how to manage it and we think we got better uses for cash. So, we're always working it. So, there is a lot of ins and out there.

There are no further questions at this time. I will turn the call back over to the presenters for any closing comments.

Okay, well, listen, thank you everybody for your time. We greatly appreciate it and have a great day.