Good day. My name is Matthew and I will be your conference operator today. At this time, I would like to welcome everyone to the Aptiv Fourth Quarter 2019 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]. We would like to request that you limit yourself to asking one question and one follow-up question during the Q&A session. Thank you. Elena Rosman, Vice President of Investor Relations, you may begin your conference.

Thank you, Matthew. Good morning and thank you to everyone for joining Aptiv's fourth quarter 2019 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 and other special items and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for both our Q4 financials as well as our outlook for the first quarter and full year 2020 are included in the back of the presentation and in the earnings press release. Please see slide 2 for a disclosure on forward-looking statements, which reflects 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. With that, I'd like to turn the call over to Kevin Clark.

Thanks, Elena. Good morning, everyone. I'm going to begin today's earnings call by providing an overview of our 2019 fourth-quarter and full-year strategic and financial highlights. Joe will then take you through our fourth-quarter and full-year results in more detail as well as provide our financial outlook for 2020. Starting with the fourth quarter, revenues increased 2% to $3.6 billion despite a 7% reduction in global vehicle production, representing 9 points of growth over the underlying market. Operating income and earnings per share totaled $388 million and $1.15 respectively, above the top end of our previous guidance range, due to flow-through on higher volume growth and a lower-than-originally forecasted headwind from the GM labor strike during the quarter, partially offset by weaker exchange rates for the euro and renminbi. For the full year, revenues totaled $14.4 billion, representing 9 points of growth over the underlying vehicle production, reflecting the strength of our product portfolio, aligned to the safe, green and connected megatrends. Despite declining industry volumes, we had our eighth straight year record new business bookings, reaching $22.1 billion, exceeding 2018's record of $22 billion. Our 2020 outlook further validates the strength of our business strategy and the continuing widening of our competitive moat. Based on near-term customer production schedules as well as the midterm macro and geopolitical environment, we expect mobile vehicle production to decline 3% during the year. Despite these anticipated production declines, we're forecasting 4% revenue growth, 7 points over the underlying market, highlighting the fact that our business is built outperform in any environment. In summary, we continue to build on our strong track record of execution and innovation and remain focused on delivering the integrated solutions that are making vehicles safer, greener and more connected. Turning to slide 4, our 2019 performance reflects the efforts…

Thanks, Kevin. Good morning, everyone. As discussed at the beginning of the presentation, our financial framework aligns with our mission to build a more sustainable business with the ability to outperform in any environment. We remain focused on improving our through-cycle performance by enhancing our industry-leading growth portfolio and flexible cost structure, while investing for future growth and executing on our capital deployment strategy, which I'll cover in more detail in a moment. Starting with our fourth-quarter revenue growth on slide 11, revenues of $3.6 billion were up 2% adjusted in the quarter, totaling 9% growth over market as vehicle production declined 7% in the quarter as expected. Excluding acquisitions, organic growth was 1% or 8% growth over market. And as a reminder, the Winchester interconnect acquisition closed early in the fourth quarter of 2018. Strong launch volume and content gains globally were partially offset by price downs of 1.5% in the quarter, the unfavorable impact of FX and commodities and lower North American volume related to the GM strike. From a regional perspective, North America revenues were down 9% on an adjusted basis and approximately flat excluding the GM strike. European revenues were up 8% adjusted with 14 points of growth over market, driven by the uptick of several active safety and electrification programs. And lastly, our China adjusted growth was 11% or 12 points of growth over market, driven by strong launch volume across the portfolio. Turning to slide 12, as Kevin indicated, fourth-quarter operating income and EPS were above the high-end of the guidance we provided back in October. EBITDA and operating income of $566 million and $388 million respectively reflected better-than-expected volume growth in both segments, offset by FX and commodity headwinds and the impact of the GM strike, which totaled approximately $80 million in the…

Thanks, Joe. I'll wrap up on slide 21 before opening it up for Q&A. 2019 was another great year for Aptiv despite an even more challenging macroenvironment. Our operating performance validated the progress we've made strengthening our through-cycle resiliency by having the right portfolio of advanced technologies enabling the safe, green and connected solutions our customers are increasingly demanding; the right cost structure allowing us to continue to invest in future capabilities, while driving earnings and cash flow growth; and the right people and processes to deliver the innovation and execution that's inherent in our strategy. Looking ahead, the team has never been more confident in our competitive position and our ability to outperform through cycle. We believe Aptiv is perfectly positioned to continue capitalizing on the key global Auto 2.0 megatrends to drive market share gains, while continuing to improve our cost structure which gives us tremendous confidence in our outlook for 2020 and beyond. We remain laser focused on both delivering value to our shareholders today, while also strengthening our competitive position in the future, building upon our strong track record of flawless operational execution and value-enhancing capital deployment. As a result, we build a much more predictable and sustainable business, with robust downturn resiliency that's better positioned to perform in any macroenvironment. So, with that, let's open up the line for Q&A.

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

Yes, a couple of things. I have a few questions. But this display roll off of the business, it's not a surprise. We talked about that. But especially in light of all the people selling displays and all the action at CES, could you do two things strategically? Just, one, remind us of when and why you decided to exit that business? And two, when you are still doing user experience, where does that mean you're really focused? Is it hypervisors? Is it software? Is it just the same advanced systems, but outsourcing the screens?

Brian, I'll start and then Joe certainly can add to the comment. On the display side or that portion of the display business that we decided that we're going to exit, it's really on the directed buy aspect – that aspect of the commodities. So, the software behind the display, the hypervisor, all of that sort of value add, as well as the domain controller, that's the activity that we're focusing our efforts on.

And you still get those without hurting the display part of that?

The display part is more often than not – certainly, increasingly it's pass-through or a directed buy from the customer. So, that's the aspect of the display business the we decided that we're going to exit.

Okay. As you look in that segment, are there other mature products that would be wound down, and so they're not going after them just as we think about the revenue walk with all the positive trends we need to keep in mind longer term.

No. I think from an overall portfolio standpoint, we believe the balance of what we call user experience, which is principally for us infotainment, the software, the hypervisor, again, the domain controller as it relates to cockpit controllers and those sorts of things, it's a very attractive business for us and we have a very strong competitive position.

Okay.

Brian, the leg down in 2020 is about $75 million of display revenue round numbers.

Okay. And is any of that closer to 2021, 2022?

It's really small numbers after that. We finished 2019 a little under $100 million.

Okay. Second, around the EU CO2 transition, apart from minus 3% or so of reduction. What are you, A, seeing in terms of production mix between electrified/non-electrified mix? B, how would that change over the year? And then, C, I assume you're fairly fungible between regular wiring, regular wiring plus high voltage for hybrid, regular wiring plus high voltage [indiscernible]. How are you thinking about managing what could be – are you expecting production schedule category volatility and how you're preparing for that?

At least based on what we see today, right, we've been on a path for electrification through some period of time. It doesn't mean at the OE level that you could potentially see a disconnect. From our perspective, what we're seeing from a customer schedule standpoint especially in Europe, again, Joe talked about our outlook for revenue growth next year in high voltage, which is north of 50%. It's extremely strong. Can that growth rate – can it jump around quarter to quarter? That will depend upon launch volume or launch activity and where we're annualizing. So, it's possible that you see some fluctuation quarter to quarter. It's quite likely that's not only OEM generated or schedule generated. It's more likely launch generated. And then, the third portion of your question with respect to high-voltage, again, both on the connector side as well as on the wire harness side, we think we're well-positioned in each region to meet demand. And as we said in the past, it's an attractive product portfolio for us. And as you look at our underlying margin structure margin for the SPS business, the margin on that product line is actually higher than the margin on a traditional product line.

Brian, as we talked about, same plant, same engineers, same supply chain. So, managing volumes will not be overly challenging for that product line.

Yeah. Unlike diesel versus gas injectors of a company you used to own, it's not a major reallocation from plant to plant. It's just different staffing in parts of the plant floor if an OEM decides to ramp up hybrids more than EVs or vice versa. Okay, great. I've got lots of other questions, which I'll do follow-up later. Thanks.

Thanks.

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

Hey, how is it going? I guess, first question people are going to ask about Q1, the weakness. We definitely are starting to hear this from multiple suppliers. You call out China very specifically. Could you just maybe talk about how much you're building in some of the extreme current weakness from things like he virus or is this some of the spillover from excess inventory that we had at the end of 2019?

Chris, I'd say it's more of what we're hearing from delayed startups following the new year. Our schedules are fairly locked; and sort of by the end of December had accounted for any production shifts between Q4 and Q1 from our perspective. So, this is really – we've got customers now that, I'd say, in general are talking about coming back no sooner than February 9 or 10, which is depending on business is anywhere from a week to almost two weeks of delayed production from what we would normally have seen The SPS business tends to go back a little bit earlier in the new year break. So, it's really just adjusting to delayed startup. And it's a fairly fluent situation, as you might imagine. The dislocation of – it's going to be really the dislocation of labor that went home for the holidays and how quickly they can all come back either from a practical perspective or from a government mandate perspective. But that's primarily it. And call that – if you were to look sort of what Q1 year-over-year OI called China, this delayed production may be $15 million or $20 million. Right now, we're expecting to make that up in Q2. So, we don't view this as a full year issue at the moment. And then, we do have some FX that we've talked about before as we catch up in the first and second quarter to the weaker RMB and euro that happened in the second half of last year. We've got another $20 million in Q1 of FX and commodity impacting the OI line. So, those two items are really everything that's in Q1.

Chris, if I can add one thing, I think one item to make sure we're clear that it does not include, if there's a global disruption as a result of the supply chain issues in China, if there's anything meaningful, that's not incorporated into our outlook for the first quarter. So, to Joe's point, it's really focused on the impact in China as it relates to China production.

Okay. Guys, that's very clear. And just a quick second question on the investment for growth in the EBIT walk and, obviously, the investment in ADAS where the bookings are quite strong. Could you just give us a little bit of color to how much this 50 basis points, let's call it, $70 million – I think on slide 4, you give the 8% of sales going to engineering. How much of that is sort of staff engineering hires that occur in 2020, so that you get some leverage on that 2021, 2022 versus we have to think about this drag going on while your ADAS growth is good? So, how much is the step up for this year versus we have to think about this as a continual drag on the walk going forward?

Yeah. I can start, Chris. Again, Joe can certainly comment. Listen, I think it's kind of two things. It's run rate related to the back of last year quite frankly in terms of – we talked about – or I made the comment in my prepared comments with respect to an acceleration of customer opportunities. Clearly, those are things that we've been working on for some period of time. So, it relates to resources associated with the development of technologies, some of which we featured at CES like advancing our radar technology, advancing our algorithm capability, advancing our sensor fusion capability, as well as advancing our – at this point in time – ADAS controller capability, resources associated with the development of that technology and integrating or operating with the customer. And then, lastly, as Joe said, some of it is execution of launch activity. Some portion of it is in the baseline tailwind of 2019, then some step up into 2020. And we wouldn't expect an incremental step up like this based on the opportunities that we see in front of us today in 2021.

I'd agree with that, Chris. This is leverageable spend as we get into the out years.

Okay, great. Much appreciated. I'll follow-up with you guys after. Thanks so much.

Thanks, Chris.

Your next question comes from the line of Dan Galves with Wolfe Research. Your line is open.

Hey, good morning. Thank you. So, just wanted to ask about the China growth over market. That kind of jumped out at me. Only a couple hundred basis points in 2020, like when this has been running like pretty high kind of into the double digits most of 2019. Can you just talk about some of the reasons behind that? Lear the other day really kind of called out some of the US automaker underperformance in 2020 as a reason for them kind of having a lower growth rate than the market. Just wanted to kind of ask about what's happening there.

I'll make the first comment and Joe can go through all the details. Listen, as it relates to OEM mix, we have exposure to some of those customers that have had lower or weaker revenue growth in the China market for the last year or two. So, quite frankly, when you look at 2020, I don't think that story – or we don't think that story is any different. And in 2019, as you know, we had very strong growth over market. Dan, I'd characterize it as just the impact or timing associated with program launches. And in any given quarter or any given year, you see growth relative to market. You can't see swings or adjustments. As you head into 2021, we'd expect that growth over market to return to more normalized levels for us, which tend to be high single, low double digit growth over market.

No, I agree. Fourth quarter was very strong for us. There was a lot of launch activity. So, as we've looked out on 2020, we just assume we lap those launches in Q4 at this point. We don't see launch activity in the back half of the year that would bring us up, Dan. So, we see it coming back on 2021. But from what we'd expect the business to do, as Kevin mentioned, high voltage continued to be very strong in China. Some of the lap launches on are on active safety. But for us, that growth over market doesn't sort of shoot straight every quarter, and I think that's all we're seeing. It's very specific to what we've launched. It's not sort of a broader customer or macro question for us. It's very specific to our launch cadence.

Got it. And just one other one, as I think about the business a little bit longer term, can you talk about the timing of the launches of some of these higher value scalable active safety L2, L2+ awards? Are you seeing launch activity in the back half of 2020 yet? Or are we waiting till mostly 2021?

No. You'll begin to see in 2020 and then each year following that, Dan. So, a significant amount of launch activity, which really reflects that growth rate we talked about, right? It's $1.3 billion to $2.5 billion over the next couple of years. And as I mentioned in our comments, or were mentioned in our comments, we see an opportunity to actually accelerate the growth in the out years, and that's what supports the incremental investment we're talking about this year.

Great. Thanks a lot, guys.

Your next question comes from the line of Joe Spak with RBC Capital Markets. Your line is open.

Thanks. Good morning, everyone. And thanks for all the helpful color on the locks. I guess, on slide 19, if I try to like normalize 2019 margins or pro forma, and I guess, for, let's say, three quarters no mobility, it seems like you're guiding margins pretty flat year-over-year despite the growth. And I get the 60 basis points of investment. You talked about that. I think that's understandable. But it also then implies that, even though you're getting productivity, it might not be fully offsetting some of the price. I know you've taken a lot of action and there's been some tariff mitigation. So, is there something else we need to consider that sort of plugs that algorithm?

Joe, we're close. If you look, adjusted for FX, exclude the JV, we're at about 10 basis points of margin expansion for the year. Our target, as we talked about at investor day last year, was closer to 20 basis points in a flattish market. So, we're at 10 basis points in a down 3% market. So, obviously, we're the type of folks that always want to see more. But there is an element – there is some down vehicle production. We do have to absorb that. There's a lot of other offsets occurring, right? Lot of other projects. So, for us, a 10 basis point in a down 3% production is kind of where we feel like we need the business to be just given the overall investments. And again, when we talked about sort of up 20 basis points in a year, that was much more in a flattish production environment.

Okay, thanks. Just on AS and UX, we always talk a lot about ADAS and zone controllers. Kevin, I heard you mention three driver monitoring wins. It's not something I've heard you talk a lot about in the past, but it's clearly an important feature going forward, especially since I think it's required for your NCAP. Like, how big is that business? How fast can it grow within active safety? It seems like it's maybe underpenetrated versus the rest of ADAS? Like, what's the margin profile versus…?

So, dollars today are extremely small. Market growth rate and our growth rate, extremely fast. So, we think over the next handful of years, market size can get up to $2 billion, Joe. We think we can get to roughly – somewhere between 20% and 40% market share in that market. It dovetails perfectly with what we're doing from an ADAS platform or systems standpoint. It's necessary, to your point, for Euro NCAP. Just as important, though, it's necessary really to optimize when you think about traffic jam assists, highway assists, highway pilot. Those sorts of activities, you need that technology in the car. So, it's an area that we have a significant amount of focus within the traditional ASUX business. And when you think about mobility on demand, it's an area where the folks in our AD business are very focused as they look at additional services that they can provide their ridesharing customers. So, we're excited about it, but it's a very small revenue amount today.

So, then as that grows, presumably that scale similar to just sort of how you talked about other aspects of ADAS in the past as well from a margin perspective?

Yeah. That is a margin rate that is in line with what we've talked about ADAS – when ADAS gets to full scale.

Okay, thank you very much.

Thank you.

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

Good morning, everybody. Good morning. So, I wanted to come back to the engineering investments in AS and UX. If I understand your message, there is this large step up, but it's not sort of – that is not expected to keep stepping up this way beyond sort of 2020. Can you just maybe go over – how should we think about the margin profile, the normalized margin profile of that business? It's taking a decent step back ex mobility investment this year. Obviously, you have a longer-term framework from the various investors days for pretty decent amount of margin expansion. So, is it really just a function of that beyond this year's investment, which sort of like go back to this 30 bps or 50 bps of annual margin expansion or are there any other consideration or ADAS is just a…?

A couple of comments. First, just to put it into context – listen, we focus on every penny we spend. Our guidance is roughly $2.5 billion in EBITDA in 2020. And our view is, given the number of opportunities that are in front of us, given our competitive position and given the chance to, what we believe, really expand our competitive moat, investing in an additional 70-plus-million-dollars is the smart thing to do near-term and long-term. So, I'm going to start with that. Second, our active safety business today has double-digit operating margins. So, it's a profitable business. As we scale – and I think Joe made the comment that you should view this investment as scalable investment. As we continue to scale, given the nature of this business, given how we structured scalable platforms, our ADAS product line is a product line that ought to have margins well in excess of our traditional kind of where we're running at now, low double-digit operating margins, right? We should get strong software. So, you should see something. From an ADAS standpoint, including both hardware and software, that's in the high teens. So, it's a very, very attractive space for us to play.

Okay. That's helpful. And then, I guess, on the -- in S&PS, on the other hand, obviously, extremely strong operating leverage and incremental margins and strong outlook on margin improvement for this year. Can you maybe just walk over some of the drivers of this high incremental margins? I assume electrification being part of the existing footprint is obviously helpful. Anything that's sort of out of the ordinary or can we sort of assume this continues?

I think we're on the trajectory we expect to be on with that business. The team has done a really nice across all the product lines. And I think you hit it on the head. It's important, the high-voltage growth. That's a business that we talked about was – even a relatively small product line that sort of hit segment margins very quickly because of the nature of the business. We really can run that business on the same cost structure as the low voltage. And then, we're getting benefits of the scale in that business. Again, we got content on one out of every three-and-a-half vehicles manufactured globally. So, even if it's not our active safety system or even our high-voltage system, you tend to see more electrical content going into vehicles globally. So, you've got a healthy tailwind at the back of that business helping with the leverage. So, that's playing out that as expected. Again, when we looked at all of the opportunities in ASUX to invest, the performance in the active safety product line itself, as Kevin mentioned, and where we were with SPS margin expansion, that's really what gave us the confidence to continue to invest in the active business.

Yeah. I'd break it down into three big buckets. Share gains in our connection systems business. So, strong growth, as Joe highlighted, right? And as you know, that's an attractive margin profile. Product line execution, so we talked about high-voltage and growth of that particular product area across both our EDS and CS product lines. And then, thirdly, execution especially in the EDS business. Our management team there has done an excellent job, especially in 2019, in terms of just blocking and tackling and operational improvements. I think the best examples there, quite frankly, is China where you know what vehicle production – the decline of vehicle production last year. That China team was able to basically achieve their business plan forecast at much lower volumes. So, the ability to execute on what is a complex manufacturing and supply chain business has translated into the margin improvement that we're talking about. The team there did an outstanding job.

Yeah, definitely. Many thanks.

Your next question comes from the line of John Murphy with Bank of America. Your line is open.

Good morning, guys. Just a first question to follow-up on the incremental $70 million being spent on the active safety side. I would imagine, if this was longer-term R&D, it would be in the JV. So, it's pretty safe to assume that this has real near-term implications for product in this year and probably in the next two to three years? Is that kind of a fair statement?

It is, John. Let me go back. Remember, the JV is really focused on that Level 4 or 5 robo taxi space. So, anything that's Level 2++, Level 3, early-stage Level 4 for consumer fleets, for our normal traditional customers, that stayed with us. So, you're right. This has got an investment across sort of that – what I'd say is really sort of the 2++, 3 type spectrum. And if looked at some of the advanced development Kevin's talked about, that's to make sure we can secure the $5 billion of bookings plus that Kevin mentioned for 2020, continue to grow the business and support the launches of what we're doing currently. So, that's fair.

Yeah. I think, John, as we've talked before, the demand for Level 2, Level 2+ and even Level 3 with some OEMs, we're seeing that activity – over the last 12, 18 months, we've seen that activity significantly increase. So, the investment is in response to pursuing those opportunities.

Okay. So, if we could also dovetail that or sort of put the JV next to that, is there any need to step up spending there that you're seeing just that technology is advancing and might be longer dated as opposed to realization? How much sort of financial control do you have on sort of that decision-making process? And if you can just remind us how the cash flow either works or doesn't work between you and that JV.

Well, the JV is a separate legal entity. Our partner has three board members. We have three board members. So, we still have a significant amount of control and visibility as it relates to the joint venture's strategy and the direction it's going in. The management team running the joint venture entity is the existing management team from our automated driving business headed by Karl Iagnemma and his team. We haven't finalized numbers at this point in time, but I think given the opportunity and given some of the vehicle capabilities that our partner brings that you should expect a ramp-up in spending as it relates to vehicle validation and vehicle integration. It's a 50-50 joint venture, obviously. Half of that, from a P&L impact, flows through our P&L. As it relates to cash, Hyundai is putting a $1.6 billion of cash at close. So, our view is that's enough money or enough cash to fund the development and commercialization of the technology over the next several years. Joe?

Yeah. We've talked before about it being sort of enough to fund four to five years. To Kevin's point, as the JV comes together and we start to look at the vehicle capabilities and the commercialization opportunities of Hyundai, it's possible the JV spends more in 2021 and 2022, but certainly would come from the funding from Hyundai.

But no cash flow from you at all at this point?

No.

No. Not required for the next couple of years.

And then, just lastly, real quickly on SVA. Is there anything that is in the backlog or was still in sort of RFI stage for that? And also, as we think about what you're talking about, growth above market, is there every going to be a period where the Signal and Power actually might have higher outgrowth than Advanced Safety and User Experience? Or was it going to be a facilitator for growth on that side? Just curious if we'll see a flip sometime in 2020 [indiscernible] on that.

John, I don't think we'd envision a flip relative to the growth rates you see in ADAS, I think just given the nature of that market, the market opportunity. Having said that, we fingers there's opportunities, especially with the mix of high-voltage and a mix some of the product portfolio that we have in the connection systems business to grow kind of mid-single digits over underlying vehicle production, including both the impact of a non-automotive as well as our automotive connector portfolio. But by and large, it's an enabler of all the software and other items that we're talking about. As it relates to SVA, our view is there's a portion of this SVA activity that has already started with domain centralization and some of the cockpit controllers, the active safety controller, some of the programs that that we've actually already won. With respect to SVA specific and what we showed at CES, we're working today with – we have three advanced development programs with two automotive OEs. Those programs are going to come forward with RFIs or RFQs in the coming months. So, the commercial opportunity, hopefully, we have something to report in terms of business wins this calendar year and revenue shortly thereafter.

Great, thank you very much.

Thanks, John.

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

Good morning. This is Erin Welcenbach on for David.

Hi, Erin.

So, my question relates to your ability to drive growth in the non-auto businesses this year. Obviously, you've acquired a number of businesses over the last couple of years from an organic perspective at least. Wondering how the opportunity set is developing and your ability to drive growth even in a declining commercial vehicle market this year.

Well, the HellermannTyton business is probably the best business when you think non-auto, overall non-auto. And that's a business that for the last several years, outside of auto, has been growing high-single, low-double digits. And we'd expect it to continue to grow in that sort of a range for the foreseeable future. I think when you look at the other acquisitions we made and given their mix in mill arrow, industrial and some of the other markets, again, those have been solid mid to high-single digit growth rates.

Yeah. That's right. And then, as it relates to commercial vehicle, we're still – just given our just given our relatively low penetration, we're still sort of years away from having a cycle discussion about CV. We still have a lot of content growth opportunities. And it's really sort of a greenfield for when we get into some of the CV markets, particularly around SPS, the connector business, HellermannTyton's focus on CV. So, while it impacts us at some level, we're still able to grow well above CV market at this point.

Yeah. So, Erin, that would equate to low-single digit commercial vehicle revenue growth in a commercial vehicle market that's going to be down high-single digits.

Great. Thanks for taking my question.

Thanks.

Your last question comes from the line of Dan Levy with Credit Suisse. Your line is open.

Hi. Good morning. And thanks for squeezing me in. Just had a quick one on the guidance as it relates to the JV deconsolidation. I believe in the past you noted it's EPS neutral. So, just if you can provide some context on the 10% – EPS would've been up 10% before equity income. And also, I see that you have implied performance JV deconsolidation of a 200 bp benefit on margins. So, it's like $290 million. I assume, of that $290 million, that $130 million of that is a non-repeat of the mobility spend? So, just some color on the guidance.

Yeah. You're about right. We've got about round numbers $40 million, 40-plus-million in Q1. And then, on end of Q1 close, about $130 million sort of geography moves down to the equity income line. And then, that will be augmented by the step up in purchasing accounting that the JV has to go through, which will basically make it EPS neutral. So, the way my comments were – EPS growth is about 2% as reported. If you sort of calculated EPS before the equity income effects of the JV, we're up 10%. So, that's the negative EPS impact from the JV coming in at the equity income line.

Great, thank you. And then, just lastly, I wanted to ask a more strategic question on the JV. And it's obviously focused on Level 4 technology. But I think one of the benefits you cited in the past is an opportunity to use the learnings and tech to really refine your Level 2+ and your Level 3 product. But this is a JV and you do have a partner. So, to what extent are expectations really aligned with your JV partner as it relates to the JV's focus on purely a Level 4 technology versus your expectation to leverage this JV to improve your Level 2+ and Level 3 product?

Yeah. Listen, it's closely aligned. It's very closely aligned. So, we have the opportunity to provide products and services to the joint venture and vice versa. And given our historical relationship and our future relationship, there will continue to be real opportunity to share information, share best practices and, ultimately, we hope at least to create incremental commercializeable opportunities. And that's something that our joint venture partner is very supportive of, as are we. So, that interaction will continue.

Great. Thank you very much.

Thanks.

Okay. Well, thank you, everyone. We appreciate you joining us for our Q4 earnings call. Have a great day.

And this concludes today's conference call. You may now disconnect.