Please standby. Good day, and welcome to the Aptiv Q3 2023 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jane Wu, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Marjorie. Good morning, and thank you for joining Aptiv's third quarter 2023 earnings conference call. The press release and related tables, along with the slide presentation, can be found on the Investor Relations portion of our website at aptiv.com. Today's review of our financials exclude amortization, restructuring, and other special items and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for our third quarter financials, as well as our full-year 2023 outlook are included at the back of the slide presentation and the earnings press release. During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings. Joining us today will be Kevin Clark, Aptiv's Chairman 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 financial results in more detail before we open the call to Q&A. With that, I'd like to turn the call over to Kevin Clark.

Thanks, Jane, and thanks, everyone, for joining us this morning. Let’s begin on Slide 3. We delivered another strong quarter exceeding our expectations despite some headwinds. Touching on a few of the highlights, new business bookings totaled $6.6 billion, bringing the year-to-date total to a record $27 billion. Revenues increased 7% to $5.1 billion, 2 points over the growth in vehicle production, reflecting double-digit growth in ASUX revenues and S&PS revenue growth in line with global vehicle production, the impact of the UAW strike in North America, as well as customer mix. EBITDA and operating income were both records totaling $727 million and $560 million respectively, reflecting solid flow-through on volume growth and ongoing operating performance initiatives, partially offset by unfavorable FX, timing related to customer recoveries, and the impact of the UAW strike. We expect continued sequential margin expansion as the headwinds related to supply chain disruptions continue to dissipate, customer recoveries are closed and the benefits from further cost structure actions take hold. The team remains laser-focused on continuing this trend in the fourth quarter and into 2024 and beyond. Turning to Slide 4, touching on the key themes and macro trends that have had an impact on our operations this year. Our customer relationships and new business bookings are stronger than ever, driven by robust demand for smart vehicle compute and software, high voltage electrification and ADAS solutions. As automotive OEMs continue on the path toward fully electrified, software defined vehicles, we are their partner of choice, delivering unique full system solutions that provide enhanced features and greater flexibility all at a lower cost. We're also benefiting from the transition to the software defined future across several other industries with opportunities in the commercial vehicle, telecom, AMD and industrial markets. Global automotive vehicle production has been stronger…

Thanks Kevin, and good morning, everyone. Starting on Slide 11, as Kevin highlighted, Aptiv reported another quarter of strong financial results exceeding our expectations, despite the impact of the UAW strike in North America. Revenue was up 7% to $5.1 billion, or 2% above underlying vehicle production, excluding the impact of acquisitions. As I will discuss shortly, our growth over market was negatively impacted by the UAW strike in North America, as well as customer mix and program timing in Europe and China. Active safety and high voltage electrification reported strong double-digit growth of 30% and 13%, respectively, and the UAW strike had a negative impact on revenue in the quarter of approximately $80 million. Adjusted EBITDA and operating income were $727 million and $560 million, respectively, reflecting strong flow-through on increased volumes, continued progress on our ongoing performance initiatives, including reductions in supply chain disruption costs that more than offset higher labor costs. The UAW strike had a negative impact to approximately $30 million, and foreign exchange was a headwind versus last year. Earnings per share in the quarter were a $1.30, an increase of $0.02 from the prior year, primarily driven by the higher operating income, partially offset by higher interest expense. Operating cash was $746 million, a significant increase over prior year, primarily driven by higher earnings and improved working capital levels. Capital expenditures were flat to prior year at $212 million. Looking at revenue in more detail on Slide 12. Revenue in the third quarter was $5.1 billion, reflecting sales growth of $299 million, representing adjusted growth of 7%. The Wind River and Intercable acquisitions added $153 million of revenue and net price and commodities as well as foreign exchange were slightly positive in the quarter. From a regional perspective, North America revenues was up 10%,…

Thanks, Joe. I'll wrap up on Slide 17 before we open the line for questions. As Joe and I have discussed, we experienced strong underlying business performance in the third quarter, driven by further easing of supply chain constraints, which partially offset layering headwinds related to material and labor inflation, unfavorable FX rates, and the UAW strike in North America. We continue to see tremendous momentum in new business awards and are well on our way to reaching our bookings target of roughly $32 billion by year-end. While our teams continue to work tirelessly to mitigate the impact of the UAW strike in North America, including the ramp up of North American production, we're executing on further cost structure actions to enhance our operational resiliency. Our portfolio of advanced technologies and strong operating execution gives us confidence in our ability to further strengthen our competitive position and deliver sustainable value creation for our shareholders. Operator, let's now open the line for questions.

Thank you, Mr. Clark. [Operator Instructions]. While we build that queue, we'll take our first question from Joe Spak from UBS. Please go ahead.

Thanks, everyone. Good morning.

Hi, Joe.

Kevin, Joe, just first on the growth over market for the quarter and I guess the outlook, I know you said it was in part driven by the UAW strike. I think it went from 9% to 5%. But that’s -- that $180 million is like 1 point, I think year-over-year. And part of that's obviously just the industry, not just your sort of growth over market. So can you sort of detail some of the other factors that are driving some of the lower growth over market for the year and in the fourth quarter?

Yes. Joe, that's a good question. So you're right. There is the sort of numerator effect of what we're doing. The bigger impact is the denominator, right? That's a calculation sort of that comes in after the fact relative to everything else that happened in the markets. So not only do we have the slowing of the D3, where we do have about 65% of our North American business, but you have folks like the Japanese manufacturers that we don't have a lot of content on in North America going up significantly. So you get the compounding effect of numerator coming down to the denominator going up. For instance, just the growth and the Japanese OEMs had a very strong Q3. That growth -- that impact was about 4.5, 5 points against our growth over market, Joe. One of the things we look at to double check this math is sort of how did we do against the D3 standalone, where we were up about 14% with the D3 relative to their production. So definitely feel like particularly in North America, it's more of a market mix at the moment. I did caution on full-year because we got to see how quickly that sort of unwinds. The other places to look at, if you looked at Europe and China I mentioned just high voltage is growing more slowly. That was probably worth about a point of growth to us on a growth over market basis. We're still -- it's still contributing to growth over market, but less than the prior quarters by about a point. And then some program mix, particularly in Europe, just infotainments down a bit in the quarter that's some program timing. We expect infotainment to finish the year mid-single-digit growth. So again, it was more of a quarterly impact. But you are right, the relative market component of that drives that growth over market calculation as well.

Okay. And then I guess just to follow-up as we think about some of your mid-term targets and you pointed out some of the slowing BEV penetration in U.S. and Europe, and I think this has been pretty well documented right now. Does that -- I know you've taken a more conservative view of BEV penetration maybe than some third parties over the mid to long-term. So is this -- how does sort of the more recent trends, I guess, compare versus what you laid out back in the February Analyst Day?

Yes. Hey, Joe, it's Kevin. Listen, I think as Joe highlighted walk through the numbers, Q3 has a lot of unique circumstances in it as it relates to growth over market. And as we look at providing perspective on -- more precise perspective on our growth over market in the out years, we need to see how Q3 settles. Having said that, we still strongly believe we're very well-positioned as it relates to growth over market given where we operate. Electrification and ADAS solutions are two of our higher growth areas, which we believe will continue to be high growth. Understand the questions in and around high voltage electrification and future growth rates, certainly Q3 was down relative to Q2 and Q1 this year. I think we would say that is largely related or a significant portion of that impact is the strike issue and some of the other items that Joe talked about. And then, as you highlighted, just a reminder, as we developed our electrification strategy, we very much focused on a select group of customers and had a much more conservative view on the overall market of electrification and the piece of penetration. So long winded way of saying it's too early to answer your question more precisely, but certainly to say we feel very good about where we sit from a growth over market standpoint.

Thanks. I'll pass it on.

Thank you very much. Next we'll go to Rod Lache with Wolfe Research. Please go ahead.

Good morning, everybody.

Hey, Rod.

Just following-up on Joe's question, I know you've been a lot more conservative on high voltage and BEVs than just about everybody in the market, you had a 35% penetration by 2030. But can you just give us a little bit of maybe additional color on what your customer mix looks like within that backlog that was propelling the 30% annual growth? Just to get a sense of is it -- are you more exposed to the companies that are slowing down a bit, or are you sort of more dispersed among the -- amongst the faster growers?

Yes. So I'll start Rod, and Joe can fill in any blanks. So when you look at where the majority of our exposure is, it's with the European and the Chinese OEMs, that's where the bulk of our battery electric vehicle exposure is. When we look at kind of nearer-term and where we have those exposures are by and large on platforms that are BEV platforms. So they're dedicated BEV platforms. When we look out into the fourth quarter and into early next year, we're seeing very stable schedules as it relates to production. There's one exception with a North American OEM who I think has been pretty public about their plan for electrification, so that'll have some impact nearer-term, but offsetting that are a number of OEMs who are in the midst of launching BEV programs that we're on.

So high level, Kevin, when you look at this in its totality, do you feel like there's a material change to that original 30% that you were looking at? Or is it -- I guess our question is not that specific, but how are you kind of viewing the expectation?

Yes. Listen yes, no, it's great. Yes. We feel really good about it. I think there's an element of I don't think we ever guided 30% forever. So there's a law of large numbers, right, that we need to keep in mind. We'll do just under $2 billion of high voltage electrification revenues this year; I think $1.8 billion or $1.9 billion. So that business has grown significantly. Q3 obviously was impacted by some of the dynamics that Joe talked about. Without a doubt, we will see some impact in Q4 and early next year related to the OEM that I referenced who is reducing BEV schedules. On the flip side, we have a number of OEMs where we look at current production schedules, what they have in place for Q4 and early next year where those schedules remain strong. And then in addition to that, we have a number of programs that are coming online during 2024. And the bulk of that activity is in China and is in Europe, two areas where we don't view any easing on CO2 emission regulations, and customers really focused on how do they continue to launch new BEV platforms.

Great. Thanks for that. And just lastly, obviously a lot of controversy around autonomous right now with crews slowing down, just hoping you can give us any updated thoughts on your investment plans there with Motional, whether that's influencing your thinking on that business at all. And then if Joe could just update us, you originally had a like a $1.7 billion performance and lower supply disruption kind of element to your 2022 to 2025 of rich. How much of that are you seeing this year?

Yes. So I'll start, so nothing new to report out. We're actively engaged with our partner Hyundai in terms of future funding. As it relates to Motional, as we said in the past, they're on track from a tech standpoint and commercial standpoint, but we're engaged in discussions at this point in time, certainly well aware of what we're reading about we're seeing in the market. Those are certainly things that we'll consider as we make our ultimate decision. Again, if we were to fund, we would fund half of their cash needs. We haven't determined our plan or finalized our plan at this point in time. We'll be in a position to report that out when we announce earnings in February of next year.

Hey, Rod, it's Joe. Just to answer your question, I think we're tracking well. If you recall, we had that on that walk I think you're referring to in the Investor Day from the end of 2022 to 2025, we had $1.7 billion of performance that was going to work to offset $900 million of labor inflation. We talked about that being fairly ratable over the three years. That wasn't sort of a 2025 thing. We were going to make progress on that through the year. I'd say 2023 is tracking very much to that sort of ratable approach on both the cost side as well as the performance, the price recovery side, so things are tracking well. Obviously, as we sit here today, and it's sort of stated obviously within the comments I made, right, we do have some higher volumes helping offset the strike impact, but for the most part, those performance initiatives are coming through as planned, and we're seeing that particularly on the offset of the labor expense.

Thank you. Next we'll go to John Murphy with Bank of America. Please go ahead.

Hi, good morning, guys. I have another follow-up on this toggle on EVs, and the penetration rate maybe being a little bit slower than people had expected. Kevin, as you look -- Kevin and Joe, I mean, as you look at this, an optimist could say, hey listen, EVs are taking a little bit longer and we're going to run our programs as they exist right now, get better margins and returns in the interim, generate more cash and be able to fund the future more robustly, might be gross over the market a little bit, but our earnings and cash flow might be a bit better. Is that potentially true here? And as you're making these capital commitments to these programs, or do you have the ability to kind of toggle down reasonably quickly so it wouldn't dent your returns and you get that benefit of maybe a slower roll.

Yes. It's a great question, John, and I'll start. Listen, we still are believers in electrification and just want to remind everybody in the second quarter of this year, our high voltage revenue growth on a year-over-year basis was 48%, and this quarter it was 13%. And on a go-forward basis, we think it more normalizes relative to where we were in the third quarter. Having said that, as we stated, we've been very focused on having a -- a EV strategy that focuses on principally Europe and Asia Pacific, China, principally OEMs that have built BEV platforms, those OEMs who are taking global platforms from one region to another region and focusing our investment in those areas, which in reality allows us to scale. I mean that was one of our objectives, John, is to make sure that to the extent we're putting in capital that it scales, that we get significant revenue. On the bulk of those programs, we have scaling price relative to volume. So to the extent, an OEM does not achieve their particular targets, we have the ability to adjust prices and that's contractual. So we've protected ourselves that way. And then to the point you made, our baseline outlook has never been that 50% of the vehicles manufactured in 2030 were going to be battery electric vehicles. We had a much lower outlook. So we think we have it ring-fenced and balanced. Listen; there may be a couple of quarters where I mentioned there's one OEM who is backing off their original schedules, where we'll see an impact on our growth rate. But as things normalize, we're still optimistic about our competitive position here and the growth opportunity and the margin opportunity it presents.

Hey John, it's Joe. The only thing I'd add to, we've talked about this for a while, right? Particularly with the electrical architecture business, we were able to leverage existing facilities, existing equipment, existing supply chain, existing engineers, low voltage, high voltage, the products are different, but they're very complementary. So for us, and we've got obviously, a very large architecture business. So I think leveraging that over the last couple of years has helped that product line get to segment accretive margins very quickly. But it's also helped from a return perspective, right, because we had a lot of that capital and plant and equipment in the ground.

Super helpful. Just one follow-up on the Wind River seasonality, because it did seem to we may have missed this in the quarter in our model and our estimates. Could you just Joe just run through this, how would you think about seasonality for Wind River? I know you talked about it earlier in the year, but just if you can remind us.

Yes. We -- I mentioned it in passing in the guide, they are -- and it's in their business. I think it's somewhat of a software business phenomena, Q3 is just a very slow quarter for them. Q2, Q4 tend to be the highest. It's a highly leveraged model, like a software business would be, right? So software renewals, licenses, new licenses tend to drop at it's an 80% gross margin business, so they tend to drop at pretty high incremental rates. So we had seen this in the prior years. That's why we cautioned in February, and don't -- we're not surprised by this. So I think as you look at this and we talk about just the quarterly progression over the next couple of years, I think this will be something that we see as recurring.

Okay. That's helpful. Thank you very much.

Thanks.

Thank you. We'll next go to Adam Jonas with Morgan Stanley. Please go ahead.

Thanks, guys. So just look and follow-up to Joe's and Rod's and Murphy's question. I want to hit on this theme as well. This EV journey for legacy OEMs has just been an unmitigated disaster so far. I don't think you need to be pragmatic Bostonians to see that, to see through that. With respect to like the inability to generate anything close to a reasonable return on capital. And I don't see a path to it. So just speaking for myself here, guys, but it wouldn't surprise me, and I suppose a lot of people on this call, if GM, Ford, and the Germans pulled back their EV spending a lot, I mean, a lot. And I know you're not going to -- you're not in a position to answer the exact impact yet, so I'll phrase the question this way. If they did, if in a world where the undisputed leader Tesla is dialing back and barely profitable themselves. And others follow and really just reset because they can't sell negative 100% margins forever. Can you tell us how much your those -- the 14.5% mid-decade operating margin target or the over 17% longer-term target? And I realize there won't be a straight pass there, but how much of those targets really depend on the pace of EV adoption to continue the way you outlined, even conservatively outlined in February 14?

Yes. I'll take it, I'll start, Adam. Listen, I -- we can take a look at a scenario like that, just kind of peeling it back. This year, we'll do $1.8 billion in high voltage, or EV revenues out of our roughly $21 billion in revenues. And clearly, the growth rate that we've attached to high voltage electrification is higher than our overall average growth rate. So certainly it would have some impact there. I think as we said, a lot of these EVs are replacing vehicles with internal combustion engines. Most of which -- most of those OEMs where we actually have the vehicle architecture content, so the trade-off isn't dollar for dollar. The high voltage content or margins related to the SP&S base margins is accretive by a couple points from a margin rate standpoint, but it's not a matter where it's 2x. So it's something that I think we would manage through. It would have an impact from a profit standpoint. I don't think it would have a huge impact just given what the margins look like. And we would be going again if these OEMs aren't achieving their targets; their prices are going up to the extent they're significantly reducing. There are one-time payments from the OEM as it relates to us reducing our capacity to produce the product. So that's how I think about it.

Yes. Adam, I'd agree with that. Assuming unit production, total unit production stays in line, right? We'd be swapping back to content on the low voltage platforms. We've got content on one out of every 3.5 vehicles manufactured. And to Kevin's point, you're looking at a point or two of sort of accretive high voltage that we'd have to work through. But it's -- there are going to be dollars that replace that assuming the world continues to build the total number.

Yes. And Adam aside, I kind of I understand your question, and it's a fair one, it's a good one. I do wrestle with the industrial policies and they can always change of Europe, principally maybe U.S. secondarily and that can change. China from an environmental standpoint, but from a national security standpoint, technology standpoint, the push for EVs and the impact on OEM profitability, there's a question I would ask or a scenario that I would throw out where that the OEMs are going to be going to the governments, wherever they are, for support, to continue the rollout so that they can achieve the industrial policies that those particular governments have, right? Because all of this is tied to CO2 emission targets or national security. And if OEMs are uncomfortable or if the investment required is beyond, which they can absorb and be profitable, ultimately, I think they're going to look for some support not too different from the semiconductor industry in the U.S. and Europe.

Yes. Appreciate that, Kevin and Joe. Just one quick follow-up, if I may. Just want to confirm that out of the $1.8 billion or almost $2 billion of high voltage -- sorry, electric portion of the -- was the $2 billion -- sorry, of the $2 billion number that you quoted.

$1.8 billion. So Adam, $1.8 billion, I use round numbers.

Thank you. Just want to confirm that. Tesla is the single largest component of that. I want to confirm that and then labor remind us how much of your sales is labor and what rate of inflation you're seeing in real time. Thanks, guys.

Yes. On the customer piece, listen, we can't talk about -- speak about specific customers, so that's a question we're not going to respond to. As it relates to labor, I think I would focus on labor within the overall business. Joe?

Yes. We've talked about it. Adam, we had in the Investor Day, $900 million of dollar increase between evenly split over the three years, that was about 10% to 11% increase and that's what we're seeing.

Thank you. Next we'll go to Chris McNally from Evercore. Please go ahead.

Thanks so much, team. Maybe we could just do a little housekeeping. Kevin and Joe, maybe I'm missing something, but the $1.8 billion in high voltage, what's the number you're using for 2022? Maybe I -- maybe it's been restated, but I think you had $1.2 billion in some of your old slides. Could you just update those 2022 and 2023?

Yes, that's accurate -- yes, that's accurate $1.2 billion.

Okay. And so that's actually -- is that an increase? I mean because I think the previous number guided to on Q2 was maybe a 30% increase. So it looks more like a 50% increase for high voltage for this year.

Chris, it depends on what you're doing with Intercable, right? We closed Intercable end of last year. So wasn't in last year call that just a little north of $200 million of revenue. So just thought if you pro forma for it, yes, it's growing, yes, and if you didn't, you got to look at that Intercable, yes.

That's exactly. Okay. Thank you, Joe. Intercable was exactly what I was asking for. And the second one, just to follow-up on Adam's, you forget about talking about the customer, but the $1.8 billion is only high voltage, right? So if there was a large EV player that you mostly did low voltage for, that low voltage revenue, even though it goes to an EV, would not be in the $1.8 billion, is that correct?

Yes, that's right. We talked about that. We really wanted to focus on just the high voltage product line, and that's when we started providing that guidance a few years back. So that's just high voltage and the low voltage is what's going in either vehicle, right? So you don't really see a big vehicle difference.

Either vehicle.

Yes.

Absolutely. And then, the last one for Q4, because obviously there's a lot of moving currents in Q3. On ASUX, I think you talked about 8% to 9% rough margins for the year. It sounds like from the commentary, some of the recoveries were pushed from Q3 to Q4. The first is that 8% to 9% still pretty good, even if it's the low end, because it points to a nice material pickup in the ASUX [sic] margins. And I think we've been sort of looking for that because that's a large portion of the drive towards the 2025 goal.

Yes.

Yes. Yes. Full-year, the current guide would have ASUX at 8% and S&PS at 11.6%.

Perfect. Three for three. Really appreciate it, team.

Thanks.

Thanks, Chris.

Next we'll go to Itay Michaeli from Citi. Please go ahead.

Great. Thanks. Good morning, everyone. Just a couple of thoughts for me. First, going back to the Q4 margin outlook, I was hoping you could just kind of dimension the seasonality factors in there. It looks like you'll be exiting closer to 13% ex-strikes just kind of curious how to think about the baseline as we look to bridge into 2024. And then second question, just hoping to talk more about the ADAS wins you had in Q3, maybe content per vehicle, and also any updated discussions with customers for Gen 6.

Yes. Itay, I think as you look at and we'll obviously stay away from 2024 at this point, but I think if you looked at I sort of give our standard cautions, right? I'd focus more on H2 versus Q4, because Q4 can be heavy with things like engineering recovery. So I think it's more H2 adjusted for strike. But listen, as I -- as you just go through the progression here, and as I mentioned to Rod, we're clearly have got the benefit of some volume increases offsetting strike. But our margin rates at the segments as well as total call -- total company are tracking to the original guide and that's tracking to that Investor Day model. And as I mentioned to Rod, the $1.7 billion of performance, the $900 million of labor are falling in. So if you go -- so I think we're on track. If you're going to start to look at back half, I would -- I think H2 is a better proxy than just Q4. And then you obviously have to adjust for the strike.

On conversations with customers about Gen 6 ADAS platform, I would say we're an active dialogue with roughly a dozen Asian, European and North American so interaction there and strategic dialogue is very, very strong, going very well. As it relates to the Q3 bookings, the bulk of those bookings were in and around radar solutions that are being plugged into existing ADAS platforms with OEMs in Europe and in China.

Perfect. That's all very helpful. Thank you.

Thank you. Next we'll go to Emmanuel Rosner. Please go ahead.

Thank you very much. I was hoping you can help us frame and quantify the exposure to electric vehicles either in terms of current revenue or more importantly, actually in terms of future growth of a market or percentage of backlog, not just within high voltage, but generally speaking, because to your earlier point, you're selling low voltage components to like very large EV manufacturer. And obviously a lot of the new programs over the next few years would probably have been on new EV platform. So anyway, to maybe quantify when you sort of like look at this outgrowth expected over the next few years, how much of that would have landed on EV platform.

Yes. Emmanuel, its Joe. Listen, I think Kevin frames sort of how we're thinking about long-term, right? We were conservative. I think we didn't sort of follow everybody down the path is going to be 50% in the next couple of years. So from what we see now remain confident in that outlook. We do expect growth to slow. We just get to the law of larger numbers. You get almost a $2 billion business. You're going to see growth rates slow over time. As I mentioned earlier, if you look just over the past call it eight plus quarters, high voltage has typically provided 2 points of growth over market round numbers, a little bit higher in certain quarters up to 2.5, 3. But on average two, this quarter, it provided a point of growth over market, so meaningful, but not -- certainly not all of it. And then 80% of the business at this point, including revenue and bookings is with the European and the Chinese OEM. So we had not historically gone down the path of the North American products at least the initial products, I think were very niche, right? They were the high end SUVs, sort of more of the unique type vehicles. We have some content on them, but they were by no means the bulk of the business. So I think from -- I think that should help frame it at this point.

I appreciate it. Joe, the reason I'm asking for EV exposure outside of high voltage is, there's a large seating supplier that would be ideally the most powertrain agnostic product you could possibly sell slashing their backlog by 20%, because all these new seats were going to go on new EV platforms, basically, which are either being pushed out or it's sort of like lower volume.

Yes. I can't speak to the seating business, obviously like I said; we're 80% European and Chinese concentration. I'm not sure who you're talking about or what their portfolio looks like.

No, no, no. my comment was EV exposure outside of high voltage, any way to frame that?

No. I think we've provided what we're going to provide, Emmanuel.

Yes. Emmanuel, from our perspective, vehicle architecture just given the fact that we're on one of every three vehicles globally, if they're not building a BEV, they're building a vehicle with an internal combustion engine. And more likely than not, we're on that vehicle. So with that low voltage vehicle architecture. So for us, I would say there's virtually no impact.

That's helpful. My follow-up is on I think you were mentioning your mix impact. That's sort of like a little bit of a headwind in the quarter outside of just the strike, obviously, in North America. Can you just elaborate a little bit more on the other region? Was it sort of like I mean customer mix specifically, and which region?

Yes. It was customer mix across really all regions. And some examples were kind of outsized growth of the Japanese OEMs across North America, across Europe, as well as some significant growth in parts of Eastern Europe that are either products manufactured in Eastern Europe or in places like China that are exported. So areas where we have less customer exposure. So a lot of that, we think is related to semiconductor rebound and availability of chips for select OEMs. And the other piece is the impact of or the opportunity as it relates to the UAW strike in North America for select OEMs to potentially gain share.

Thank you. And we'll go to our last question from Dan Levy from Barclays. Please go ahead.

Hi, good morning. Thanks for squeezing me in.

Hi, Dan.

Wanted to start with your Slide 10 just the perspectives on 2024 here. And in the bottom half of the slide says continued inflationary environment, geopolitical uncertainty. Maybe you could just unpack the inflationary comment a bit. What is it that you're seeing that's incrementally worse? How does potential recovery on semiconductor costs factor in? And maybe you could just talk about the potential for better stability in production schedules to be a potential tailwind next year.

Yes. So it's Kevin, listen, as it relates to stability and production schedules, we're seeing that now. I mean, there's some element of disruption in COVID that remains, but we've seen a significant improvement throughout the year. We'd expect availability to continue, obviously into 2024. So should see some benefit there. Material inflation was significant in 2023. We expect in some areas, including semiconductors that will remain significant in 2024. We're doing a number of things to address that. One, changing semiconductor partners, really across all the semi categories from core semis like SoCs, analog power PMICs to peripheral semis. So a lot of work being done by our engineering and sourcing teams, establishing commercial agreements or partnership with the Chinese semiconductor space, which is ramping up capabilities very, very aggressively. And we're deep into that and are going to take advantage of that opportunity both to serve the China market as well as to bring some of these into the nine China market. So that'll free up lower cost alternatives for ourselves and our customers. As it relates to customer recoveries, listen, those are always challenging discussions, but given where we have contracts, given where we are from a financial standpoint, we are passing 100% of those costs on to the customer. Again, it's not a simple discussion. It's not an easy discussion, but that's what the commercial team or how the operating team is operating. And that's something that will continue to the extent they're interested in some of these lower cost alternatives. There's an opportunity for us to jointly benefit and we'll put those in front of them. But as of now, that's kind of the state. So the material inflation is relatively high. And then we're very focused on labor inflation in places like Mexico, Eastern Europe, North Africa. So those are areas that we're watching very, very closely. And then last item, I should say, it's not related to the specific inflation on material or direct labor. We're very focused on continuing to prune our cost structure to provide additional room and ultimately additional margin.

Great. Thank you. And then, just as a follow-up on the EV side, just two quick ones there. Can you just confirm I know you said you're overweight to the European and Chinese? China, we've obviously seen a lot of uptake, especially from BYD. How should we think about the mix impact if we see outsized exposure from the Chinese? And then can you just confirm that on SVA that that is powertrain agnostic?

Yes. SVA is powertrain agnostic. It makes more sense if an OEM is rethinking and moving to a BEV platform, that is the time to really it's an easier time to implement and make that architecture change. But it would be powertrain, overall powertrain agnostic. As it relates to mix of BEV customers, I think it's relatively awash margins might be a little bit higher on our China OEM partners, given we tend to do more system solutions there. So are able to kind of connect a broader portion of our overall portfolio, but it wouldn't be significantly different.

Yes. Dan, just current revenues and it's got -- it's changed over the last few years, we're about 60:40 global versus local OEs. From a revenue perspective today, that would have been north of 75% global, back in the 2018/2019 timeframe. Bookings are running 50:50. So we'd expect that to increase in favor of the locals. And obviously, just given what's being made over there a lot of that EV.

Yes. I think actually, you look at our revenue mix I think 2024; it's almost 50:50 from a local multinational.

And I'd like to turn the call back to Mr. Clark for any final remarks.

Thank you, Operator. Thank you, everyone. We appreciate you taking your time this morning. Please let us know if you have any further questions. Thank you.

Thank you. Ladies and gentlemen, that does conclude today's conference. We appreciate your participation. Have a wonderful day.