Good morning. My name is Chris and I will be your conference facilitator. At this time I would like to welcome everyone to the BorgWarner 2016 third quarter results conference call. [Operator Instructions]. I would now like to turn the call over to Ken Lamb, Vice President of Investor Relations. Mr. Lamb, you may begin your conference.

Thank you, Chris. Good morning, and thank you all for joining us. We issued our earnings release this morning at around 8.00 AM eastern time. It's posted on our website, borgwarner.com, on our home page and on our investor relations home page. A replay of today's conference call will be available through November 10. The dial-in number for that replay is 800-585-8367. You'll need the conference ID which is 76352046. Or you can listen to the replay on our website. With regard to our investor relations calendar, we will be attending the following conferences between now and our next earnings release. The Baird Industrial Conference in Chicago on November 10, the Barclays Automotive Conference in New York on November 17, the UBS Industrials and Transportation conference in Key Biscayne, Florida on November 18, the Goldman Sachs Global Automotive Conference in London on December 8, and finally, the Deutsche Bank Global Auto Industry Conference in Detroit on January 11 where we will be providing our initial guidance for 2017 and updating our three-year net new business for 2017 through 2019. Now, back to today's earnings call. Before we begin, I need to inform you that during this call we may make forward-looking statements which involve risks and uncertainties as detailed in our 10-K. Our actual results may differ significantly from the matters discussed today. Now moving on to our results, James Verrier, President and CEO, will comment on the industry and provide a high-level overview of our results and expectations for the remainder of 2016 and then Ron Hundzinski, our CFO, will discuss the details of our results and guidance. Please note that we have posted an earnings call presentation to the IR page of the website. You'll find the link at the events and presentation section beneath the notice for this conference call. We encourage you to follow along with these charts during our discussion of our results. With that, I'll turn it over to James.

Thank you, Ken, and welcome to everybody, to the call. Ron and I are really pleased today to share our third quarter 2016 results with you as well as give you some thoughts and outlook for the rest of the year. I'd like to start, actually, by sharing a few thoughts on the macro environment in the industry in general, and you can see that on slide 2 if you're following along. So just a few thoughts on the macro state of the world. I think the word that we think about is still -- there's a level of uncertainty in the macro world. I think the slowing economic growth around the world is still on everybody's mind and that's presenting some challenges. You know, the world is still not without a lot of tenseness around some of the political climate. You think of the Middle East, you think of US election and those types of things, so there's still an environment of uncertainty. But with that said, you know, what we've seen in the auto space is things have been moving along pretty well as anticipated and as expected, particularly in the third quarter. If I turn a little more specifically to the outlook around the auto space, let me start with some comments around light vehicle 2016 calendar year. Generally, our view on the marketplace is well aligned with HIS, which is calling for approximately a 7% growth in China on light vehicle. We see about 2% growth in Europe and the US is somewhere in the 2% to 3% growth. And we, like HIS and I think many on this call, we certainly acknowledge that the US cycle is maturing and in a slower growth mode. If I reflect where we are on commercial vehicle, I think…

Thank you, James, and good day, everyone. Before I review the financial details, I'd like to provide you some of the highlights as I see them for the quarter. First, we saw good growth. Second, we delivered solid operating performance, and third, we continue to see improvement in CapEx spending and free cash flow generation. So now, as Ken mentioned, I will be referring to the supplement financial slide deck that is posted on our IR website. Please follow along. First I'd like to focus your attention on slide 3. Throughout the presentation I will highlight certain non-US GAAP measures to provide a clear picture of how the core business performed, and for comparisons with prior periods. Specifically, we will be excluding the impact of foreign currency, Remy and non-comparable items from certain US GAAP measures. When you hear me say on a comparable basis, that means excluding the impact of foreign currencies, Remy and non-comparable items. When you hear me say on a reported basis, that means US GAAP. So let's turn to slide 4. On a reported basis, which includes the change in sales due to market growth, price, net new business and currency, and the Remy acquisition, sales were up 17.5%. On a comparable basis, our sales are up 6.1% toward the high end of our guidance range. On reported basis, gross profit as a percentage of sales was 21.3% in the quarter, but on a comparable basis, gross margin was 21.9% of sales, up 70 basis points from last year. On a reported basis, SG&A was 9.5% of sales. R&D spending, which is included in SG&A, was 4% of sales. On a comparable basis, SG&A was 9.1% of sales which is up 120 basis points from a year ago. There's three reasons for this increase. First,…

Thanks, Ron. Now let's move to the Q&A portion of the call. Chris, could you please remind everyone of the Q&A procedures?

[Operator Instructions]. Your first question comes from the line of Richard Kwas with Wells Fargo Securities. Your line is open.

So a question -- so on the incremental margin on a core basis, so the 13% to 14%, is the target as we think about longer term in a stable production environment, is that still mid-teens, Ron?

I'd say it's still mid-teens, Rich, but the question is how you define mid-teens, is it 16, is it 14, 15? It's in that range, 14 to 16 is what I would say, all right?

Okay. And then just -- I know you're going to give the outlook for '17 in January, but last year when you updated the backlog, it appeared you took more sane view of the market and your outgrowth over the longer term, and so when we think about '17 and '18, and we think about now that we're 9, 10 months into the year and have a little bit of better view on how '17 may play out at least, anything that we should think about from a macro standpoint as it would potentially effect '17 and '18 for your backlog contribution?

Yes. Let me try to take a shot at that for you, Rich. So I think I would say, you know, maybe a couple of things that may be helpful. Let me say the discipline and the methodology and approach that we used for '16, we feel good about, and the reason we feel good about that is Ron and I both alluded to, we've been hitting our numbers pretty well with some fluctuations in the market. We've seen noise in the market place, we've seen launch noise and macro noise and we've been executing really well in that mid-single-digit organic growth area or range. And so we'll be applying that same approach, that same methodology as we march towards '17 and '18. I would say a general level launch cadence, launch volumes has played out pretty much, you know, there's obviously puts and takes, so that gives me at least comfort that the methodology is solid, the business strategy is very solid, the win rates are very solid. So we'll go through all of that mathematics, as you can imagine, in the fourth quarter as we get ready for January. But I would say at a high level, there's nothing fundamentally there that's different than where we were thinking a year ago, and I would just say you and we should take comfort in the way we've executed this year, both on the top line and the bottom line as we get ready for a net new business in January.

And then James, just one last quick one, thanks for that color, on China, what's kind of the going assumption at this point? Is it that come year end the government goes cold turkey with the subsidize or is there any expectation just internally as you're thinking about it, there may be some additional subsidy or some kind of incentive that continues into '17?

Yes. Our thought Rich right now is that it would continue, you're right, through the fourth quarter. And we're continuing to test and question and evaluate whether that will -- whether there will be any continuation of that into '17. It's a little early, we don't know. Our modeling would probably suggest that it will not continue on into '17, but things can move in that part of the world very quickly, as you well know. But we're more in likely won't continue incentives into '17, but we're watching it closely, Rich, in case that moves

Your next question comes from Brian Johnson with Barclays. Your line is open.

I have two questions, one kind of shorter term and one just revisiting some topics from your Investor Day. On the short to midterm, can you maybe give us a little color within the engine segment? I think a number of investors were braced for even slower growth there given the Ford production pressures and the European diesel shift mix, so can you give us -- as well softish commercial vehicle, can you give us a sense of some of the puts and takes within the drivers of engine revenue?

Yes. I can talk a little bit about that, Brian. So you're right, commercial vehicle is not helping. I mean, frankly, the puts and takes amongst commercial vehicle, but commercial vehicle is essentially no growth, so that's the one that impact on the engine business. I talked a little bit about diesel mix and so if you do it year-to-date comparable, Brian, from '15 to '16, Western Europe it's down a couple of percentage points, and I think we've been fairly consistent through the year that that's not -- that doesn't move the needle for us materially when it moves a percent or two down. The question is you look at will that trend continue down, our view is it will and we feel we're well prepared there with the growth that we're delivering on gas turbos. In the quarter itself, the two big drivers for growth on engine were turbo and Variable Cam Timing, those were strong and I would say that was on a pretty global basis, so it wasn't one region particularly that stood out. And, you know, relative to Ford, Brian, if we go back to the prior earnings call, I know there was a lot of concern on that day of Ford's lowering expectations or lowering projects, what are you going to do. We felt we had that pretty well contained in our guidance and we delivered and I think some of their recent announcements through the last few weeks, we would like to believe that we feel pretty comfortable, we've got that covered as well as we go into the fourth quarter. So hopefully that gives you a little bit of color that's useful, Brian.

Yes. Now on the longer term, a number of investors have remarked, in fact, we have new power train forecasts that have EVs in China in particular as well as Europe well ahead of the IHS projections, Mary Barr [ph] said on the call yesterday said she expects China's EVs to be growing faster than -- be the sresgsion with the most deep penetration in the next decade. I guess a couple things. You know, one, you know, you did talk being neutral to those, but are you seeing any evidence in your quoting activity and any in China vis-à-vis EVs, are they going to skip the hybrid step and go right to EVs, and then kind of within that, as a non-Chinese player given a lot of the market in China tends to -- subsidies tend to favor the hometown players. How do you see kind of playing in the emerging new energy vehicle market in China?

I think if you go back a little bit to Investor Day, and I can maybe use that as a reference point, I would say nothing has materially changed since Investor Day which is not a surprise because that's only a few weeks out. I would say from a China perspective we'll see a combination, it will use hybrids and electrics. I don't think there will no hybrids in China. I think there will be a balance, but I would tend to agree with you that the intensity and the drive towards pure battery electric vehicle is probably strongest in China than any other region of the world. That's not to say it's not going to get adopted in Europe and North America, but there is a strong push for pure electrics in China, and we've been announcing that we're benefiting from that. You know, a single space transmission technology is adopted on a number of those vehicles that are out there and we've got other products going on it, but directionally, I would agree, Brian, that it's the fastest area which is penetrating the most from a pure EV, but I would not say it's without any hybrids because I think there will be hybrids for sure in China.

Okay. And then in terms of your position, you know, is what you're saying maybe even if there's favoritism towards local battery suppliers or at least locally-made batteries, things like the transmission and other elements you might involve with are more of or at least a level playing field?

Yes. We may be just -- to that point, Brian, when we were articulating it at Investor Day, in simple numbers, the compound annual growth rate for pure electric vehicles globally from now through 2023 was in the mid-20% percent and BorgWarner in the 50s. So, yes, we're going to benefit from EV adoption in China and it will be transmission is today where we're shipping those today on electric vehicles, but I feel more management products will play there together with some of the other products we highlighted on Investor Day. So we feel good about the drive to pure electrics in China. It's helpful for BorgWarner, Brian.

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

This is a follow-on to questions on pure electrification. Could you just maybe discuss how you balance the risks given that some of the targets [indiscernible] been thrown out by maybe some of the Germans which I think we all see as somewhat aggressive. There's been a history in the industry of overestimating penetration for electrification, given consumer adoption has seemed to trail what regulators and some of the emissions would call them ideal. It seems like you're taking a very gradual pace, but just how do we think about sort of the pace of investment if, let's say in 2020 some of these volumes are less than expected?

Yes. It's a very good thought, and I would refer us back to the conversations we had at Investor Day, and it goes something like this. BorgWarner has an extremely clear strategy around being the leader in propulsion, in advanced propulsion technology for combustion, for hybrids and electrics. And to your point, Chris, we know that those penetration rates of the different hybrid vehicles and the different electrics are going to move around. Nobody has a crystal ball to know exactly what the penetration rate is on any of those platforms, what we're doing, and we will continue to do is position ourselves to offer product offering for all of those architectures and support the customers as needed and we're putting ourselves in a position with the portfolio that we have that if hybrids accelerate a little faster than electrics or electrics go a little faster than hybrids, we will be great because we're going to grow with any of them. We're going to grow on hybrid content, we're going to grow on electric and we're going to grow on combustion. So I appreciate your point. I think there is some uncertainty out there, and that's what we're looking frankly speaking to take advantage of by offering a broader portfolio than anybody else, that we can participate and it will play out as it plays out. BorgWarner will continue to grow in that mid-to high single-digital growth rate independent of ships with the different propulsion architectures if that helps you.

No, that's great. Is it fair to say from your initial comments about some of the conversations accelerating clearly over the last six months or a year, is that fair to say that’s both in call it mild, hybrid, 48 volt as well as sort of higher voltage plug-in and EV that you’re seeing accelerations in both categories?

Yes. It's a good thought. If I go back, maybe look at a six-month period, Chris to use your reference point, I would say generically the shift away from diesel is intensified and increased. We don't see it as a clip event, but I think it's fair to say the shift away from diesel has probably increased over the last six months. I think that the focus on 48 volt mild hybrid and plug-in hybrids is about the same. I think that's a strong trend and it's continued strong. And I think we've seen a stronger voice in Europe and China around pure electric vehicles, probably the move is if you wish over the last six months and again, we feel very good about that. Again, it reconfirms the fact that there will be these shifts and we're well positioned to take advantage as the shifts occur.

Your next question comes from your Emmanuel Rosner of CLSA. Your line is open.

So I apologize I joined the call a little bit late, so maybe some of this color has been provided before, but so as we see these slightly faster shift away from diesel that you just described, in the near term, I understand in the mid-term obviously you’ve a lot of [indiscernible] hybrids and electric vehicles, but I guess in the near term can you just remind me what sort of the content impact is between if it's an automaker replaces a diesel vehicle with a gas vehicle, what would be sort of that near term content impact?

So you're right. What I alluded to earlier, Emmanuel, I'm not sure if you were on the call. Our view of Europe, is if you look at a '15 year to date versus the '16 year to date, the diesel share or the diesel penetration is down about 2%. Our view is that, that will continue to creep down. We're not seeing a cliff-type event. So we see that trending down. I think fundamentally what we are seeing is those -- so the question is really what are those diesel vehicles being replaced with. And I would say the vast majority in our view are those with turbocharge gasoline vehicles, so that obviously plays well for BorgWarner. We are not seeing a shift from diesel to naturally aspirated [ph] vehicles so much. We're seeing turbo charged gasoline and sometimes turbo charged gasoline hybrids, so near term it's pretty small impact for us, you know, obviously it affects a lot of -- some of our emissions products a little, but net-net for BorgWarner, Emmanuel, it's relatively small impact for us as it shifts from diesel to gas, particularly if it's at a gradually pace that we've seen thus far. And just to reinforce I think your other point is we get to the mid-term, let's say three years plus out, then it's not an issue at all for BorgWarner. So small is kind of the conclusion, Emmanuel, if that helps you.

That definitely helps. So I guess in this context where I guess the mix shift seems manageable, so if you're invested anywhere, essentially suggesting a mid to high single-digital organic growth rate going forward that would imply obviously a bit of acceleration versus your guidance for this year and sort of like 4% to 5% as you look to I guess we're entering 2017 do you feel comfortable about being able to get this acceleration in organic growth even with sort of like some of these small mix head wind?

I think a couple of points, Emmanuel I would point to. First of all, we feel very good about where we're at right now. You know, it's coming towards the end of October, we still will talk to you in January about our guidance and we're delivered on that. We're in four good quarters now. So we feel good that we're hitting our stride on executing that mid-single-digit growth organically which is excellent. I think one of the things that I would say is as we start to think about '17, '18 and '19, one of the things we articulated at Investor Day is I want people to think that we're going to operate in a band of mid- to high single-digital growth rate. So that means that maybe a year or two where we're at high, there may be a year or two where we're at mid. It's not a linear upward curve or arrow if that makes sense to you Emmanuel. I don't want think people we’re going to be running 3, 4 or 5 and then we got a 6 and then we got a 7, then we got an 8, then we got a 9, it's not that way. What we’re saying is we’re confident and comfortable in our strategy, in our portfolio and our technology that we will consistently able to deliver in a mid-to high single-digital band and external factors will move us a little bit in the band, Emmanuel, of that mid to high single-digital band. Does that help a little bit for you?

Yes, absolutely but just to be -- you're not expecting a hockey stick within it, it's essentially any given year, should be in the mid to high single digits, am I right?

That's a good way to think of it, Emmanuel. Yes.

Your next question comes from the line of John Murphy of Merrill Lynch. Your line is open.

I apologize I got on the call a little bit late, so I've got a few questions that you may have talked about a little bit already. Just first on schedules here in the near term, particularly in North America, there appears to be some disparity strategies where some companies like Ford are cutting production pretty quickly, you try to adjust inventory down relative to demand and some companies are not. I'm adjust curious what you guys are seeing as far as schedules and volatility and as you look, you know, on 30 and 60-day releases, are there significant changes that have been occurring or volatility that are tough to handle or is it really pretty consistent and they're giving you a good heads up and seem logical so far?

I would say in general, visibility is about the same as it typically kind of was, if you like, 45, 60 days. I think in general we've been getting good communications and good visibility from all of the OEMs here. We're not getting too much last minute kind of cuts and those types of things. Obviously like you and everybody, we're going to pay a lot of attention to this because as you start to come towards the year-end, but I would say to use a phrase, you know, the discipline around scheduling and releasing has been pretty good. An example for us would be, when we had this exact same call last quarter that was at a time when Ford was kind of suggesting releases, reductions, etcetera and we talked about it then that we believed we had that well contained in our guidance and I think it's fair to say we delivered on that, so that's encouraging. And I mentioned earlier in the call, John, I'm not sure if you were on, the latest news from Ford so to speak, we feel that's contained in our guidance which essentially was unchanged as we went into this quarter. So I think generally, John, it's reasonably well disciplined. We watch it and pay a lot of attention to it, but so far so good.

Then underlying the results, I mean Remy seems to be doing relatively well, maybe little bit ahead of expectations, is there anything that's changed there as you're getting deeper into it or is it really, running in line with your internal expectations?

Yes. I would say, John, generally it's running well. Overall it's running well. The top line has been a little softer through the year. We saw that, but that was pretty much end market driven on commercial vehicle and after markets, so that's just you know the macro driven. But on the OE side pretty much as we expected. I think from an operating point of view, John, it's been running well and I think I would say we're incrementally positive on our dialogue with the customers, particularly around, the combination of Remy's rotating electrics with mechanical know how around P2 hybrid modules that we talked about at Investor Day, I think that continues to go extremely well for us globally, by the way, Europe, Asia and North America. So overall really good Ron gave a couple of comments earlier, John, if you weren't on, you know, it's a really good thing that we can completely this transaction on the light duty retail aftermarket business, that's just not core to us and I think that will allow us to focus more on the core, so I think that's another incremental step forward with Remy. As Ron alluded to, that helps the margin profile as well of the business. So, yes, it's going well, John. You know, a lot of work ahead of us, but it's going well.

Okay. And then just lastly, as we think about cap allocation run, I mean, there's a growing concern that we're getting closer to peak and given how strong items [ph] are, it's hard to argue that, we might have some more upside, but we're getting close, and there's a lot of concern about what the down side could mean here in North America or in Europe with the Brexit risk or China ultimately slowing down. With all of those kinds of, sort of potentially choppy environments that may or may not occur, but thinking about them, would you consider maybe getting a little bit more conservative on capital allocation, meaning maybe building up a little bit larger of a cash cushion to take advantage of whatever opportunities might, you know, prevail themselves as the cycle ultimately does turn?

So, John, you're correct, I can tell you that internally over probably the last four months or so we've had discussions about liquidity. I'll use the term liquidity, right, because that's what it comes down to at the end of the day and how you preserve liquidity through a cycle and how much liquidity do you need going through a cycle and so I think you're absolutely correct. I know inside BorgWarner we are looking at the liquidity numbers and making sure that we're very liquid through a cycle. So, yes, you're correct, we are looking at this.

Okay. But would you favor potentially building that up pretty significantly relative to buybacks now so that you could potentially take care of more advantageous opportunities over time? I'm just trying to gauge how you're going to allocate capital here in the near term, ultimately rather than the longer term.

Yes, I know what you're getting at, John. So let's refresh ourselves here. We are about 2/3 into the $1 billion buyback program, correct? And I think it's safe to say that we're going to give a lot more color here in January as far as what we're thinking, and I think you're right, in the context, I would say that we are considering maybe a more conservative posture, but we have to weigh that against other items, maybe M&A activity potentially and also the peak cycle that we're in, and there's a couple other factors we have to look at as well, so I would say, though in general we're probably more bias to the conservative side right now, but we'll give more color in January.

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

This is Joe [indiscernible] for David. I don't want to steal your thunder giving the '17 updates, but if I use those backlog numbers you provided last January, it would kind of foot to a number that would be closer to 3% after price, and so I just want to make sure your comments on targeting mid to high, is that something that returns talking about revenue growth that returns as soon as '17 and does that imply that maybe the backlog numbers are trending a bit better than what you provided at the beginning of the year?

This is James. Ron can weigh in after me. You're right, we're going to do it in January, so we got a little bit of time here, and we're going to work our way through it. The way I view it strategically, Joe, is we talked a lot at Investor Day that with our propulsion technology, we're comfortable that we're going to be a mid-to high single-digital growth company on an organic basis and we reminded everybody I think at the Investor Day it will fluctuate in that band of mid to high single-digit growth. I would say there's been nothing materially or substantially that's changed for us to change that view. So what that all translates in exact dollars and percentages of organic growth for '17 and '18, Joe, we've got a few more weeks of work to get to that point, but we're comfortable in this mid to high single-digit organic growth for the future.

I'm going to add just a little bit color in the numbers, Joe. I believe the mid-point of the back of 2017 was $500 million of sales. I don't know what your starting point is, but I get quite a bit higher number than the one you just gave us on the call when I did the quick math here. I was not as low as you were, so you may want to fine tune your number crunching here a little bit. You should get a higher number. Maybe, Ken and you can talk about that later, all right?

Okay. And then one more, if I shift back to '16, it would seem like the contribution from new business has to be stronger than those original numbers for just talking this year because you have customers that probably haven't produced what the plan said they would at the beginning of the year of highway markets have been weak. Is that fair? And if it is, can you maybe provide some color on what's tracked better within the new business backlog this year?

I would say, Joe, you're right, the net new business for '16 has run a little better than what we'd expected, and I think you summarized it pretty well. You know we didn’t remember, we didn't factor much in at all for commercial vehicle, so we weren't expecting much, and guess what we didn't get much. You know, if you look at it regionally we've run pretty strongly in North America and Korea has been pretty good and China has been pretty good. So I wouldn't say it's one product or region, but intuitively, you're right, we're running a little better on the net new business for '16 and what we guided to at the beginning of the year.

We have one last question, and that question comes from Joseph Spak of RBC Capital Markets. Your line is open.

Guys, maybe just to elaborate on that last point, so, again you don't sort of provide the backlog today, but if you could sort of back into at least directionally where it's trending and it does seem like it's coming in better. So I was wondering if you could maybe high level sort of critique your own sort of internal approach you've taken towards given the forecasting and whether that should give us confidence in some of the prior or the outer year backlog numbers you gave earlier this year?

I think the way I look at it is from my perspective, Joe, you know, we rolled out what our methodology and discipline was as we went into the year, and you recall, right, we took a more prudent approach to the launches in terms of both the volumes and sales in the cadence of the launch and then we also made the judgment to be a little bit more -- apply a little bit more of a macro factor to the number, our view and where our little bias, Joe, is we think that was a smart call because I think as we have gone through the year we have been consistently hitting our numbers in that just around that mid-single-digit growth rate. That would imply, and I think you're right, the backlog is running a little better than we'd anticipated which is good, and I said earlier on the call, Joe, that we'll be utilizing that same discipline and methodology as we go into '17, and I think if we look at what the three of you of the backlog that we went into this year was, you know, in that mid-single-digit growth. I think 4 to 6 was the range for the three-year period, and we're executing in that range this year, so it gives us comfort as we go into the process for '17, '18, '19. So we got some work to do, Joe, on the detail, but I gain comfort from our strong execution this year in delivering the growth that we set out to do. It helps me get comfort and help you get comfort as we go into the years.

Let me give you some numbers. I believe that in January we gave mid-point guidance of about $315 million of backlog and I think the current guidance is around 355, 360, so we are performing better than we indicated in January, that's nearly a year ago, so we're some $40 million - $50 million higher in numbers.

Right, despite a number of adversity and headwinds.

Yes, despite a lot of puts and takes as James was saying. At the end of the day we still performed better than we anticipated in January.

Okay. A last quick one, there was a report earlier this month which indicated that some automakers, and this gets back to sort of engine shifts in Europe, that they may have to meet real-world emissions scraps smaller engines and upsize engines to help meet those standards. And I always thought that your content generally moves with the size of the engine, so, A, is that true, is that a potential benefit for you, and, B, have you seen any of the future sourcing actually revert back to some larger engines?

That's a good thought, Joe. I'll give you a couple of thoughts. The term that we're hearing a lot is right sizing which is a good way to think of it. So it's right sizing the engines. What I would say is it's not dramatic shift, so it's not like they're taking one liter engine and replacing it with a 2.5 liter engine. So it's subtle shifts they make out from 1.6 to 2 or a 1.8 to a 2 so we’re seeing that. We’re seeing that adjustment is a good word for me, and what we see is fundamentally the technology on the engine is very similar. So if it's a turbo charged direct injection engine with Variable Cam Timing they are shifting that from maybe a 1.6 to 1.8 or a 2 and that's helping us. Generally speaking, your observation is a good one, Joe, the larger engines are generally slightly beneficial for BorgWarner, so this is a net-net a good move for BorgWarner, it's a helpful for BorgWarner, I'll put it that way.

So I'd like to thank you all again for joining us. We expect to file our 10-K before the end of the day which will provide details of our results. If you have any follow-up questions about our earnings release, the matters discussed during this call or our 10-Q, please direct them to me. Chris, please close out the call.

That does conclude the BorgWarner 2016 third quarter results conference call. You may now disconnect.