Good day and welcome to the Aptiv Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Elena Rosman, Aptiv's Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, Anna. Good morning and thank you for joining Aptiv's second quarter 2021 earnings conference call. The press release and related table, along with the slide presentation, can be found on the Investor Relations portion of our website at ir.aptiv.com. Today's review of our financials excludes restructuring and other special items and will address the continuing operations of Aptiv. A reconciliation between GAAP and non-GAAP measures for both our Q2 financials as well our full-year 2021 outlook are included at the back of the slide presentation and the earnings press release. Turning to the next slide. During today's call, we will be providing certain forward-looking information, which reflects Aptiv's current view of future financial performance and may be materially different from our actual performance for reasons that we cite in our Form 10-K and other SEC filings, including uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and impact on the supply chain and global economy. Joining us today will be Kevin Clark, Aptiv's President and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and Joe will cover the financials results and the updated outlook in more detail before we open the call to Q&A. With that, I would like to turn the call over to Kevin Clark.

Thanks, Elena. And thank you everyone for joining us this morning. Beginning with slide 3. Aptiv's first half performance, which includes record growth over market and record new business awards, validates the strength of our portfolio of market relevant technologies and our success keeping our customers running in a challenging environment. Revenues in the second quarter were $3.8 billion, an increase of 85%, lapping prior year shutdowns in North America and Europe, and representing 17 points of growth over underlying vehicle production. Operating income and earnings per share in the second quarter totaled $301 million and $0.60, respectively, meaningfully impacted by ongoing COVID-related expenses, as well as the increased supply chain disruption and input costs resulting from material shortages. Despite these headwinds, which we expect to somewhat ease during the balance of the year, we're raising our outlook for the full year, driven by continued strong customer demand for our solutions, continuing our track record of outperformance and value creation for all stakeholders. Turning to slide 4, our updated 2021 outlook also reflects our flexible and sustainable business model, which positions us to support the record number of customer program launches that are driving incremental volume and market share gains this year, while mitigating the supply chain headwinds. As I mentioned, we expect the supply chain tightness to begin easing over the next few months. And we're happy with consumer demand levels, and our customers intend to make up as much of the first half production shortfalls as possible, which is a reason we've made no change to our outlook for growth in global vehicle production, which we still expect to be roughly 10% for the full year. At the same time, the demand for our portfolio of advanced technologies is benefiting from the acceleration of the safe, green and…

Thanks, Kevin. Good morning, everyone. Starting with slide 11, the recovery momentum in the second quarter generated strong results despite the challenging environment Kevin referenced. Revenues of $3.8 billion were up 85%, 17% ahead of vehicle production, with strong market outgrowth in every region. Adjusted EBITDA and operating income were $498 million and $301 million, respectively, reflecting headwinds of $55 million of COVID safety and supply chain disruption costs and $80 million from FX, commodities and other input costs. Earnings per share in the quarter were $0.60 and operating cash flow was strong at $297 million, driven by higher earnings despite increased inventory levels to support customer schedules. Looking at second quarter revenues in more detail on slide 12. Broad demand recovery contributed to strong growth over market across regions. Favorable volumes and the impact of FX and commodities were partially offset by normal price downs in the quarter. From a regional perspective, North America revenues were up 154%, representing 24 points of growth over market driven by the ramp in active safety launch volumes and favorable truck and SUV platform mix. In Europe, strong double-digit outgrowth of 37% was driven by robust customer launch activity and higher volumes in our high voltage electrification and industrial product lines. Lastly, in China, revenues grew by 2% or 9 points over market, lapping last year's strong market recovery with outgrowth driven by the engineering components product line. Moving to the segments on the next slide. Advanced Safety and User Experience revenues increased 83% in the quarter, reflecting 15 points of growth over underlying vehicle production despite the semiconductor supply constraints. Segment EBITDA increased by $113 million, driven by higher sales volume, partially offset by supply chain disruption and higher input costs. Signal and Power Solutions revenue were up 86%. Record growth was…

Thanks, Joe. I'll now wrap up on slide 19 before opening it up for questions. As we reflect on the quarter and outlook for the year, it's clear that our relentless focus on innovation and flawless execution is allowing us to better support our customers and is resulting in stronger new business win rates, record bookings and faster revenue growth over market, further validating our industry leading portfolio of advanced technologies at the intersection of the safe, green and connected mega trends; strengthening the breadth and depth of our customer relationships, and thereby widening our competitive moat; and advancing our vision of the company in 2025 and beyond. This will result in an improved and more predictable growth profile, increased profitability, driven by the leverage of our global scale and the flawless execution of the accretive growth opportunities that are squarely on the path of the electrified software defined vehicle, which results in the compounding of earnings and cash flow generation, and provides additional opportunities for value creation through the discipline deployment of cash. We're well positioned to continue to outperform as a purpose-driven company with a roadmap to create significant value for our customers, employees and shareholders, leveraging our technology relevance, strong financial position, and the flexibility to constantly reinvent, reinvest in our people, in our processes and in our portfolio. So, with that, let's open up the line for questions.

[Operator Instructions]. And our first question comes from Chris McNally of Evercore.

Look, I know there'll be a lot of questions around the margins and production in the current environment. I'll leave that to some of the other guys. I wanted to talk around SVA. The nine disclosure of the initial customers you're working with, that's a pretty big number compared to what you've always talked about. I think it was three to start. So, if you could just give a little bit more detail there. And at one point, when we sort of get revenue associated with SVA, just so we can sort of – everyone's so excited about it, but we have no idea how to size it even for 2025. And there will be some nomenclature because some goes into ASUE, some goes into SPS. But if you could just kind of frame because this is – it seems monumental that you're getting this much traction this quickly on SVA.

We've seen, I would say, post-COVID, with the acceleration on battery electric vehicles and customer demand for an increased portfolio of battery electric vehicles, an acceleration of the work in and around SVA. I think the simple way to think about SVA, and we've always talked about it as a journey, right, starting with domain centralization, then moving to vehicle architecture simplification, and then, ultimately, to kind of encase SVA, which is post 2025. We break that down into three big product areas. And the first is zone controllers, and we've talked about the trend towards zone controllers, we've talked about our work in our actual commercial wins in and around zone controllers. The second is and around advanced development programs for PDCs. The third would relate to the CVC win with Great Wall Motors. And then the fourth is in and around the OSP. So, we feel like we've checked the box on three of the first four stages as it relates to SVA. The four stages, that OSP, we're in discussions with several OEMs regarding advanced development programs in that particular area. And what's really important is all of those ADP programs ultimately translate into real commercial opportunities. And to the extent you're working closely and strategically with your customer, you're doing advanced development programs, you're helping them frame design of the vehicle, design of the architecture, both hardware and software, it puts you in a really good position to effectively be awarded the follow-on business. So, a long winded way of – we've always described this as a journey. Sitting here today, we'd tell you is accelerated from where we thought it would be from a customer demand standpoint a little over a year ago. It's being driven by the trend towards battery electric vehicles and the opportunity to rethink vehicle architecture as you trend towards battery electric vehicles. And we're well positioned just given our history in domain controllers, given our history in vehicle architecture and our capabilities in and around zone controllers and our activities with OEMs. The ADP programs that we we've had in and around PDCs, the award from Great Wall Motors on the CDC, and the discussions we're now having with OEMs in and around the OSP. So, we have wins today, we have revenue today, if you were to think about the transition to SVA, but we think the real revenue opportunity is 2025 and beyond, as you see, multiple OEMs rethinking vehicle architecture and a much bigger push towards battery electric vehicles.

Kevin, just for the summary for a lot of us to understand those four levels, can you just remind us the functionality that a CVC gives you above and beyond as a [Technical Difficulty] controller, so we can understand just the big picture of why many OEMs are going in that direction?

The real drive for the CVC is around two things, the ability to up-integrate a number of the body functions, right? So, you're able to eliminate ECU. So that's one. And then the second piece is the ability to connect from a data standpoint. So it's the point for most OEMs where data will flow from the car to the cloud, from the cloud to the car. So, it really serves those two functions, the up-integration aspect and the data and communication aspect. It's a big step. Overall, the way to think about it, it's a huge step in domain centralization, one, and the ability to have a software defined vehicle, two. Separate software from hardware.

Our next question comes from Adam Jonas of Morgan Stanley.

Rough number, I'm thinking that the legacy OEMs account for round number about 95% of auto sales global, even if I include – and if I include China in there and include their established, let's say, companies as legacy or [indiscernible] guys. I'm curious for your order backlog, whether that mix is materially different? Could you give us maybe a sense of what the non-legacy portion of your backlog is? If it's not 5%, is it more than that? Are you seeing that the front end of that moving materially higher? And then I have a follow-up.

Adam, Joe will take you through specific numbers. If you break down our revenues, a couple of ways to cut it. One, total automotive revenues represent roughly 85% of our total revenues, with 15% being non-automotive, some of which is commercial vehicle, a growing component, which is industrial defense, aerospace, other. When you break down our current revenues and bookings, we've seen an acceleration of both bookings and revenue. And I characterize it in two areas. One, the newer battery electric vehicle manufacturers, some of which are more mature and have been around in North America, some that are a little less mature and are launching vehicles now in North America, and then a significant swing and probably a bigger mix change, quite frankly, in China with our new battery electric vehicle customers that tend to be more domestic. So, to put it in perspective, five years ago, 20% of our revenues and bookings in China were with local OEMs. Today, it's closer to 30%. A big piece of that is in and around some of the new battery electric vehicle companies.

Just a little bit more context. I don't have the exact number. I think at this point, if you think as sort of traditional OEs, it certainly depends on where you put Tesla, obviously, but in that 90% plus. It's obviously concentrated in the newer technology. So, if you think of sort of just a – to look at cumulative bookings over the past five years, there's $10 billion of the total, call it, around $100 million of cumulative bookings over that time period, about $9 billion of it's high voltage, close to $20 billion of that is in active safety. Obviously, just given the way the market is, a strong concentration of the legacy OE, but very much positioned in the newer tech that's going on to those vehicles in a meaningful way from a bookings perspective.

Just one follow-up. I don't expect this is going to be impacting any of your quarters for a very long amount of time, but urban air mobility, EV [indiscernible] you're seeing a lot of development there from car companies and then aviation. It strikes me as if your brain and nervous system and electrical architecture of a car, vehicles has a very high transferability there. I'm just thinking, at a high level, could you tell us, are you devoting resource to this in the aviation electric aviation market at this point? Curious, your thoughts there. Even if it's 10, 20 years out, I don't care. I think it's in alignment with your products and what they can do. Would just love your view on that. Because some of the scenarios we're running, the number of things in the air could exceed the number of vehicles on Earth. So I just wanted to know your opinion on that.

Adam, it's a potential opportunity. A reminder, our Motional joint venture partner HMG, obviously, is very focused and making meaningful investments in air mobility. The team at Motional is evaluating multiple markets in addition to the mobility on demand market. I think the general view is that that's a bit further out. So, in terms of meaningful investment, that hasn't been made at this point in time, but I think the team views it as real and an opportunity for potential future growth and is something that's under evaluation. From an Aptiv standpoint, we do have exposure, as I mentioned, to military aerospace, principally in our SPS segment. Alternative markets is an area that we're certainly pushing in that particular business, and that particular business segment, but I would say the overall exposure today is relatively small.

Our next question comes from Brian Johnson of Barclays.

I want to follow-up on Chris' comments on SVA, but really drill down into other parts of ASUX. So, if we go back to the 2013 Model S, not only was it electric, not only does it have domain controllers, also had advanced digital cockpit and, of course, later on Level 2+. We haven't heard a lot about your kind of advanced digital cockpit user experience side of ASUX. So, kind of a couple questions there. Given there's lots of competition at the low end, how are you thinking about that segment in general? Two, when you sit down with the legacy OEM CEO who wants to get into the modern world with EVs, does that conversation naturally go over to SVA digital cockpit and Level 2+ ADAS and are the synergies there? And then kind of three, related to the whole software overlay in the car, are there acquisitions you might be looking at similar to say what other multi industrials have done, to add a software footprint to their business?

To bring it up, remember, we have a user experience business within our ASUX business that does, in round numbers, $1.7 billion revenues and is growing at a fairly healthy clip this year. Last year was affected by – we exited the display business. So, we had a headwind there. But it's growing very strong. Integrated cockpit controllers and that whole digital experiences is a huge aspect of what we're doing from an SVA standpoint. ICC gets up-integrated as a part of our SVA solution. The whole in-cabin sensing is a very important aspect as it relates to advanced ADAS solutions, Brian. So, in addition to the experience in the car, the user experience in the car, the in-cabin sensor is necessary to advance to L2+, to L3, becomes increasingly important. And I think as we speak today, I think we're about to launch over the next 12 months on three or four in-cabin sensing programs that are tied to effectively ADAS capabilities. And I think in my prepared remarks, I referenced one OEM that, as we are launching their ADAS solution now, the next phase of it is actually that fully integrated in-cabin sensing that allows them to further advance their driver assist capabilities. So, it's extremely important and it's a very important aspect as it relates to SVA. As it relates to software, we're trying to be really smart in terms of where we focus our resources and capital. I think Joe's mentioned in the past that acquisitions in and around the software space are additive to what we do today that help us to either productize software or give us capabilities to develop incremental features. Whether it's inside auto or outside auto is one of the areas that the team is very focused on. It's something that obviously we'd like to do, but it needs to make strategic business and financial sense, obviously.

Our next question comes from Mark Delaney of Goldman Sachs.

The first one is on the increased growth of our market assumption that the company articulated this morning, now looking for about 1,000 basis points compared to 600 basis points previously in your 1,600 basis points longer term target. When you think about that increase you're now expecting for this year, can you talk about whether or not you think that's going [indiscernible] sold through or was potentially some of this going into some of those vehicles that we're hearing OEMs have been partially building and perhaps this is going to be something you're going to have as a headwind for 2022?

At least, for us, the sort of what I'll call the lot hold inventory is not particularly large numbers. So, that's certainly not big enough to move growth over market on the back half of the year. I do think we're seeing very strong product mix, obviously, which is certainly helping growth over market in this year. As well as, as Kevin mentioned, just the high voltage and active safety growth. So, there's certainly elements of that that will carry into 2022. Not clear at this point. Obviously, don't want to get into next year. How much of that margin mix will carry in? So, there's a couple of moving pieces there. It is real. It's not some sort of lot hold that's driving up back half. And we obviously had a very strong first half of growth over market as well. So, I do think certainly we've been confident in that 6% to 8% for a long time. But just given the strength we're seeing again, with the addition of sort of this margin mix that's going on as OEs really decide how best to allocate effectively the semiconductors to platforms, it's obviously been a really good tailwind for us this year.

If I can add two things to it, I think structurally, set aside semiconductor shortages, resin tightness, things like that, the reality is L2, L2+ category with an active safety is the fastest growing segment and was predicted to be pre the current supply chain situation. So, that obviously drives growth. Consumers want safety, they pay for safety. And Joe's point, in a market like today's market where our customers need to be – need to make decisions about vehicle platforms they're building, they're focused on fully contented vehicle platforms. So, I'm sure that's driving some benefit. But the underlying structural trend is towards more advanced ADAS systems, which an L2 system for us goes to an OEM for $1,000, $1,200. So it's a significant amount of revenue. The other piece, though, is high voltage electrification. High voltage electrification revenues will increase 60% this year. And we talked about, in our prepared remarks, going from under a billion dollars of revenues to $2.5 billion in revenues based on our current bookings trajectory. And if you follow what they're driving in Europe from a CO2 emission standpoint, the discussions out of the current administration here in the US in terms of what they'd like commitments from North American OEMs to deliver from a battery electric vehicle standpoint, there will be a significant pull and demand for high voltage electrification, which we're perfectly positioned to benefit from.

My follow-up question was related to the supply chain. And Kevin, in your prepared comments, I believe you said you expect it to start to ease in the next couple of months. That's directionally consistent with what we're hearing from some of the other companies, although it's a little bit more specific. Some of the other companies have said the situation is still very fluid, especially with the rise in COVID cases, unfortunately, impacting Malaysia and a lot of the assembly and testers. So, maybe you can talk a little bit more about what you're seeing and what leads you to that comment of over the next few months you're expecting it to start to use…

It's kind of a multi-layered question. So, when you separate or when you look at the current supply chain constraints, and if you want to say specific to semiconductors, but there are effects in other areas like resins, an example, it's multi-layered. One is just capacity versus demand. And in the semiconductor side and the resin side, we are seeing supply come in, into the market being provided to IDMs. And we're in daily contact with the semiconductor suppliers, the fab folks across the whole supply chain, from a semiconductor standpoint. So, that is improving. You have a situation where, earlier in the year, you had bad weather in southwest. You'll reference that, it impacted supply availability late Q1 and into Q2. You had the Naka fire in Japan in the first quarter that had implications for the second quarter. That situation is improving. Production is coming online. Not as fast as we'd like, but it's certainly improving. However, you're running into situations like today, where you have COVID challenges in Southeast Asia, most specifically today in Malaysia, that's interrupted production with some of the semiconductor suppliers. That is affecting availability of chips over the short term. That will impact schedules. We're watching Indonesia, we're watching Philippines, we're watching Singapore, Taiwan very closely. Those areas seem to be under control. But the supply chain is tight. In any sort of event, you see why COVID in Malaysia has an outsized impact relative to what typically would occur. So, we'd say, structurally, the situation is improving, but there's going to be periodic headwinds that we potentially run into due to things like COVID.

Our next question comes from Dan Levy of Credit Suisse.

So, first, just want to clarify on the guidance. I think you called out in the quarter $55 million of COVID and supply chain disruption costs. Last quarter, you said it was combined $70 million. So that's 125 million year-to-date. And I see on slide 15 here, $110 million. So you're outpacing that amount. So, is that to say that you're expecting some recoveries or efficiencies into the back half? And then, I realize it's way too early to give any sort of definitive color on 2022, but as we're thinking about the supply chain into 2022, how does this influence the type of profile you'd get on incremental margins on any volume recovery?

It's obviously a very fluid situation, right? And to some extent, in this quarter, we're just sort of talking about the COVID and supply chain costs on a combined basis because, to some extent, they're starting to blur. If you're incurring a lot of premium freight getting parts out of the way, getting semiconductors out of Malaysia because a plant has been shut down with COVID, sort of which one do you want to call that? But we actually have seen – have in some cases where we talked about $100 million of COVID costs for the year running at $25 million a quarter. That's coming down a little bit, and it's just in some places, that's come down about $20 million for the back half of the year. Really there, we're still spending what we need to on the personal protection stuff. But some of the just inherent inefficiencies that came with – I'll say the first take on social distancing and spacing out the plants and some of the inefficiencies that's created, the team has found better ways to manage through that. So, some of those COVID costs have sort of eased a bit. We're obviously not going to speak to 2022. We have made the comments before, though. I would expect COVID costs certainly to continue into 2022. And as I said, we're now expecting about $80 million of that for the full year. I think that would continue. You're clearly seeing vaccinations matter. And it's a little hard to call vaccination rates in all of the places where we do business. So, I think out of an abundance of caution, we're certainly going to leave the employee protection costs and spend that money until we're really comfortable where we're not putting employees at risk. The supply chain disruption costs, those are directly tied to, in a lot of cases, premium freight, expedited manufacturing. There's obviously some inefficiencies now creeping into our plants as customers shut down for periods of time. And we're not necessarily causing the shutdowns, but we're obviously impacted by them. And that impacts – think about the indirect impact there. That impacts SPS as well because as customers shut down lines for three or four days, we're obviously shutting down that part of the business as well. So, I think those costs need to – you need to sort of align those with how long you think the supply chain disruptions are going to continue.

I'd break it down because I think it's important. There's an element to the – since supply comes in more normalized into the market, you see a pretty rapid reduction in premium freight and labor inefficiencies, right? Joe talked about. We go through a really choppy production schedule now, given what OEMs are doing from a production standpoint and very near-term announcements, which really don't allow us to flex labor as efficiently. And we're launching a number of programs. And in certain cases, to be honest, we're keeping extra labor to make sure, as programs come back, we have trained hourly employees to actually launch those programs, firstly. The second piece we're doing from an input standpoint, which Joe talked about, is something that we need to work through over a longer period of time. We have a supply chain operating committee that really does two things. One, supply chain and commercial specialists who are focused on, one, day to day, how do we make sure that we keep customers connected with our suppliers, and then, two, longer term, what is it that we need to do strategically working with engineering. And we have a number of engineering initiatives underway. I'd say close to 100, where we're redesigning products, changing out input costs, or inputs to, one, provide additional incremental availability or capacity, but, two, to reduce overall expenses. Now, those tend to take a little bit longer to do. One, they're harder, they're more complex; two, they ultimately need to be validated by the customer. So, that's an area that we're very much focused on. So, although it's going to be a challenge to work through, it's something that we're certainly focused on reducing and ultimately eliminating.

Just to clarify, because I think you've changed some of the factors that you provided, because you are like – on COVID and supply chains, you're already running ahead of the $110 million that you guide. Is there something else that you're netting on that? Does that now include…

The $110 million is the increase year-over-year.

We had some of those costs last year.

So, you have $250 million total spend for 2021. The $110 million is the change.

The COVID costs last year were $100 million. And the supply chain inefficiencies are about $40,000 last year.

The second one, and this is, I guess, more so just to follow up to the electrification teach-in. I think what we've seen over the years, both in your time in Aptiv, but also back to Delphi days, is you're constantly – you seem to be making calls how to allocate resources between the different product areas. So, I think we know high voltage is probably going to be your highest growth product. That and SVA. At a group level, to what extent are you reallocating resources, whether it's sales staff or CapEx or engineering to high voltage and SVA away from other product areas? Or is the resource allocation more incremental?

I would say the resource allocation is more incremental. Fortunately, we feel like we have a portfolio that's perfectly positioned across our two segments to pursue and win very profitable growth, whether that's active safety, whether it's user experience, whether that's high voltage electrification or engineered components. And in certain areas, obviously, we make decisions about where we allocate more or less. I'd say, as a business, we're at a point now, given the portfolio actions we've taken historically, where it's not pulling out of others, out of one product area and allocating to others. It's quite frankly incremental investment in areas where we see more growth. So, high voltage electrification is a great example. Last year, as we saw demand increase within our SPS business, reporting to our SPS leader, we created effectively a high voltage electrification product line that includes a combination of what we do in our EDS business, in our engineered components business, as well as in our HellermannTyton cable management business with a complete go-to-market. And we're aggressively looking for opportunities in and around power electronics, battery management systems, software, other areas that customers are asking us, if we can provide them a more additive full system solution. So, that's an area where we're adding resources in and around smart vehicle architecture, those that sit within ASUX, those that sit within EDS, we're both adding and reconfiguring how we operate, right, so that we have a more coordinated team that can develop products, whether they flow through ASUX and it's an ADAS solution that ultimately fits into – an ADAS platform that sits in our SVA solution. Or it's something in and around battery management systems that gets up-integrated into SVA. So, there are areas we're making incremental investments. There aren't areas other than the normal efficiency drives that we're taking investments away probably from. And a lot of what we're doing, Dan, quite frankly, is reconfiguring how we make sure two separate organizations are cooperating and working together to drive a product or build a product that goes across historical business lines.

Our next question comes from Joseph Spak of RBC Capital Markets.

Maybe if we could talk a little bit about copper. I know you want FX and commodities together for $80 million in the quarter. How much was the copper impact to OI? And what was the associated top line impact? Because I know, usually, there's a margin impact, but I don't think it impacts the dollars as much. So, it seems like there might have been a timing issue here. And I'm wondering how we sort of think about that as we move through the balance of the year.

It's not an issue. It's just the way the escalations work. So, the rate impact was, call it, sort of 60 basis points. We did have a dollar impact of copper, round numbers, $40 million in the quarter. And that's basically the timing of the way our escalations work, right? So, we have to buy copper, obviously. Our price adjustments to customers generally happens on a quarterly basis, some are monthly, a couple are semi-annually, but they average out to be mostly quarterly adjustments. So, we've reset those prices to what we were buying at in Q2, and will obviously have less of an impact going forward, assume there's some reasonable amount of stability in rates. We've had this in the past. You can have it going the other way, too. If you have a big move in price over a relatively short period of time, particularly just given the fact that our volumes have been going up, we've been buying a lot of copper, you get the timing between buying the copper and resetting prices with customers, but that happens automatically, it's contractually for about 80% of the spend. So, that's essentially been passed through or being passed through as we speak.

Of the 150 [ph] input OI impact for the year, as that price pressure comes through, is it fair to assume that maybe resins and semis become a little bit more of an issue in the back half as copper starts to normalize?

I think that's the way to think about it. I think on the full year, we'd expect copper to be probably between $70 million and $80 million of that, with 75% of that impact in the first half of the year because we were going to be resetting prices. And you've got resin ticking in, semiconductor kicking in. There's some other input costs that are going up, but those are the two main ones in that category.

Just quickly, I guess, on the growth of over market in S&PS, the guidance implies it sort of goes down to the low single digits in the back half. Can you just remind us what's really driving that step down from that high teens level in the first half?

Listen, there's a couple of things. I would say, generally speaking, it's sort of just the normal – and I say normal, sort of pre-COVID, the sort of existing business, just the lapping of launch cycles. And we obviously had some strong launch and snapback activity in the back half of last year, particularly in China. And you see some of that ebbing. That's a bit of more of a year-over-year. I'll tell you, the first – and this was primarily isolated in the first quarter. There were a few points of growth, and we talked about it at the time, just related to what I'll call sort of the channel replenishment in the engineered components business. Obviously, creating a favorable mix, we talked about it being worth about 4 points of the outgrowth in Q1. That was really isolated to Q1. We didn't see much of that at all in Q2, and don't expect it in the back half. So, that's another sort of just a first half/second half delta.

And just to clarify, the second half outlook, the implied outlook implies a roughly 7 points of growth over market in the second half.

Thank you. This concludes today's question-and-answer session. I would like to turn the call back to Kevin Clark for any addition or closing remarks. Great. Thank you very much. Thank you, everyone, for joining us today. We appreciate your participating in our call. Have a great rest of the day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.