Good morning. My name is Tasha and I will be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2018 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer period. I would now like to turn the call over to Patrick Nolan, Vice President of Investor Relations. Mr. Nolan, you may begin your conference.

Thank you, Tasha. Good morning, everyone. We issued our earnings release at 6:30 AM Eastern Time. It's posted on our website borgwarner.com both on our Home page and on our Investor Relations home page. A replay of today's call will be available through August 9. The dial-in number for that call is 855-859-2056 and the conference ID is 3496229 or you can simply listen to the reply on our website. With regard to our investor relations calendar, we will be attending several conferences between now and our next earnings release. Please see the Events section of our Investor Relations home page for a full list. 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 for the matters discussed in this call. During today's presentation, we will highlight certain non-GAAP measures in order to provide a clearer picture of how our core business performed and for comparison purposes with prior periods. When you hear us say on a comparable basis, that means excluding the impact of FX, net M&A, and other non-comparable items. When you hear us say adjusted, that means excluding non-comparable items. When you hear us say on a reported basis, that means U.S. GAAP. Now, back to today's call. First, James Verrier, our President and CEO, will comment on the industry followed by a high-level overview of our Q2 results and full year outlook. Then, Fréd Lissalde, our COO, will outline our second half priorities as well as review some of our recent announcements. Finally, Ron Hundzinski, our CFO, will discuss the details of our results as well as our guidance. Please note that we posted our earnings call presentation to the IR page of the website. You'll find a link in the Events & Presentations section beneath the notice for this call. We encourage you to follow along during our discussion. With that, I'll turn it over to James.

Thank you, Pat, and good morning everybody. Thank you for joining us this morning. Fréd, Ron and I are very pleased to share our results from Q2 of 2018 and we're also going to update you a little bit on our progress towards delivering our 2018 targets. I thought a good place to start is for me to share a few thoughts on the macro environment and the industry in general. And for those of you that are following along on the webcast, we're on slide number 6. The way I would characterize the headline summary to start off with is, for us our growth over market was in line with our expectations and that was in an environment with global light vehicle production a little bit weaker than we'd expected going into the quarter. So, let me just give a little bit of color around Q2 industry results. From a global light vehicle production perspective, it came in up slightly less than 4% year-over-year. Now, when you adjust that for a weighted geographic exposure, the market was up a little under 2% year-over-year. And if you think about that from our perspective that was about 150 basis points weaker than our expectation when we provided our Q2 guide. If I break down that a little bit regionally for a moment. First of all, European light vehicle production was up 4% year-over-year. The highlight on diesel gas mix in Europe continues to shift. We saw diesel share declining by approximately 870 basis points year-over-year in Q2. Moving to China. China light vehicle production was up close to 9% year-over-year and that was pretty much in line with our expectations as we went into the quarter. From a North American perspective, light vehicle industry production declined about 2.5% year-over-year which is…

Thank you, Fréd, and good morning, everyone. Before I review the financial details, I would like to provide you with some of the highlights as I see them for the quarter. First, our organic revenue growth was within our guidance range despite close to 200 basis points headwind from weaker production and a customer plant shutdown. Second, incremental margin performance was stronger than our expectations driven by a strong incremental within our Engine segment and corporate cost savings. And finally, we are increasing the low end of our organic growth guidance and lowering our expected tax rate for the year from 28% to 26%. And as a result, our 2018 EPS guide has once again been increased. Now, as Pat mentioned, I will be referring to supplemental financial slide deck that is posted on our website and I do encourage you to follow along. Let's turn to slide 13. On a reported basis, sales were up 12.7%. On a comparable basis, our organic growth sales was up 7.3%. It's a solid performance compared to our weighted average light vehicle industry production for the quarter which is up under 2% year-over-year. We saw a 26% growth in China against a production market that was up 9%. Europe revenue was up 7% compared to 4% industry production growth in the quarter. North America revenue was flat versus the 2.5% percent production decline in the quarter. The outgrowth was despite the impact of the F-Series production shutdown that impacted us about 400 basis points. Commercial vehicle was a benefit contributing about 50 basis points of growth in the quarter. And as James mentioned, diesel gas mix in Western Europe was a headwind. Now, let's look at the year-over-year comparison for operating income which can be found on slide 14. Q2 adjusted operating profit…

Tasha, we're ready to open it up for questions.

Thank you. And our first question comes from Joe Spak of RBC Capital Markets. Your line is open.

Great. Thanks for taking the question. And James, congratulations on your retirement. And Fréd, likewise, congratulations. I guess, Fréd, I wanted to start with you. You focus on – you mentioned some of the priorities for the second half which sound reasonable. I guess, bigger picture, also I wanted to understand your view just broadly of the powertrain industry, how you view it. There's a lot of assets out there, how you think about consolidation, whether that's needed and what BorgWarner's role in all that could be? Frédéric Lissalde - BorgWarner, Inc.: Yes. Thanks, Joe. In the propulsion area, our strategy to be balanced across combustion, hybrid and electric is the right thing, and this strategy will be executed – is executed and will carry on to be executed. We have no missing pieces in our product portfolio to be able to execute this strategy and be growing at mid- to high-single digits year-over-year. So, we are very happy with where we are from a portfolio perspective, from a product perspective. And as I have mentioned before, if we could – we're already very actively growing the organic portion of our power electronics business. And if we come across with some potential acquisition on power electronic, we would certainly look at that, but absolutely no need for us to look at filling and missing product gap that does not exist.

Okay. Thank you. And then just maybe on some of the puts and takes and sort of cadence for the rest of the year. I thought I heard you say a 400 basis point impact from the F-Series in the second quarter, and I assume a good portion of that comes back in the third quarter. But then is the offset maybe some WLTP issues in Europe. And then it also sounded like you said maybe some third quarter business was pulled forward in the second quarter. So, I was just wondering if you could dimensionalize some of those puts and takes, Ron?

Yes. Just to clarify something, Joe. When I said 400 basis point, that was a regional impact in North America. Just want to make sure that's clear, okay?

Okay.

Overall, it's 50 basis points. Yes, I just want to make sure it's clear.

Okay. Perfect. Okay.

All right.

So, that makes a little bit more sense. But then just in terms of some of the other puts and takes. Frédéric Lissalde - BorgWarner, Inc.: So, your question is more around Q3 or...

Yes, the Q3. Because it would seem like some of that F-Series business would sort of come back helping it but then you talked about some of the offsets from the pull forward, and I was wondering your thoughts on WLTP issues in the back half. Frédéric Lissalde - BorgWarner, Inc.: Yes. So, let me give you some clarity on this. So, our organic growth for Q3 is 4.5% to 6.5%. We've seen a lot of pull forward into the first half where we've had a very, very strong backlog. What we see, Joe, is really two market things that are touching us in Q3. One is from a customer mix perspective in China, we see slightly slower growth in the second half. And also from a European customer mix including WLTP certification, we see a little slower numbers too from a market standpoint. On the full year basis, we've upped our guide from 5% to 7% to 6.7% (sic) [6% to 7%] (00:27:10). So, the full year growth is still very, very solid on a [ph] global – on (00:27:16) a weighted market growth of less than 1%.

Okay. Thanks a lot.

And our next question comes from the line of Rich Kwas from Wells Fargo. Your line is open.

Hi. Good morning, everyone. Frédéric Lissalde - BorgWarner, Inc.: Good morning, Rich.

James, congratulations on retirement. Best wishes. It's been a pleasure.

Thanks, Rich.

And Fréd, I look forward to working with you in the future and best wishes as well. Frédéric Lissalde - BorgWarner, Inc.: Great (00:27:49)

So, on diesel, so down significantly more than everybody kind of thought here, at least going back to the beginning of the year. So, how is it playing out in terms of the balance of the year on Europe. It seems like you're making up a little bit with the switch to gas maybe new backlog, et cetera. But in terms of positioning here as you exit 2018, how do you feel about getting to a neutral standpoint? I know – I think, officially, you've talked about 2019, but just how should we think about the cadence in particular larger displacement engines which didn't suffer as much last year that seems to be worsening this year, payback. But just broader comments there in terms of risks here as we think about the back half and into 2019? Frédéric Lissalde - BorgWarner, Inc.: One way to look at it, Rich, is on the year-over-year basis, we drop – the market drops 600 basis points to 700 basis points. And you remember 1% of shift in diesel gas mix is for us, $20 million to $25 million. What we see, and you are right, we see that the headwind declines in 2019 due to our growth in gasoline turbo, EGR, and VCT. What we also see is that overall, as you mentioned, the decline is faster on small diesel than on big diesel and we also see that the pace of the decline is moderating on a month-over-month basis. We've always managed through those diesel headwinds, and we will manage those headwinds going forward.

Okay. So, it sounds like you feel pretty comfortable about it easing and being able to offset that so – as you've been doing, so... Frédéric Lissalde - BorgWarner, Inc.: Yes.

Okay. And then just two for Ron. So, the non-core emissions business, where are you in terms of settling all that? And then second, I know we seem to have a little bit of a respite with regards to tariffs here in the last 24 hours. But just any thoughts around whether how much Section 301 is in the back half from China? And then just any initial thoughts on a Section 232 impact? I realize you may be still going through the numbers, but any color there would be helpful? Thanks.

Sure, Rich. So, let me talk about emissions first. I would say that the headline is basically we're on track. And what I mean by that is we are doing management presentations with some potential buyers, that should finish up here shortly with final bids coming in. We are moving products out of one of the facilities in Europe. And if all goes well, we're looking at probably a end of Q3 or early Q4 close at this point. So, I would say that in general everything's on track. I'm pretty close to the transaction and things are going well there. On the tariffs side, Rich, so I'm going to go through a little more detail here on that. So, the first thing I'd like to talk about the commodity inflation of the Section 232 around steel and aluminum, we have been experiencing already year-to-date. So, this is something that's just not new. When this was put in place we were seeing some headwinds but we were finding ways to mitigate that and that really dragged those issues into our results. So, that's the first thing I want to note and that'll continue through the year. And I think that the operating folks have done a fantastic job mitigating through the Section 232 steels and aluminum. Now, when you get into the Section 301, we have incorporated, and it's already reflected in our guide, but we are seeing some cost inflation of about a $10 million to $20 million headwind in the back half. But again, like I said, we're working through that and we're finding very – we'll find a lot of alternative ways to get around this but it isn't – it's baked in there. Now, you referred to the Section 232 automotive, I would just say that's a big issue. The numbers are easy to apply because if you look at our total purchases coming into the U.S. that we're still sorting through, it's significant. So, those will have significant impacts on us but we're not really finalized with all those calculations but that's a big impact and that's more speculative in going into next year as you know. But it's a big number for everybody, not just for BorgWarner. And then I just want to comment on NAFTA, that's still kind of hanging out there. And then, there's this extra, the $200 billion that's across the board as well that's a little bit speculative because they haven't really identified all the components that would come under the tariff. The Section 301 was – we can identify components that's why we came up – we can identify the $10 million to $20 million. And in fact, in those numbers we know by component pretty much what the headwinds are. So, hopefully, that's a little bit more clarity around that for you.

And then real quick...

And if there's anything that – but maybe I would have Fréd to add anything about that as well. Frédéric Lissalde - BorgWarner, Inc.: Yes, Rich, what I just want to add is that we think that on a relative basis, we're pretty well positioned since we produce our final product in the same region as our customers production facilities are. So, for sure the commodities and tariffs certainly impact the business through our supply base. And as you mentioned, it's I would say fairly fluid, changes every hour. So, our goal is to be agile and monitor those changes and react appropriately going forward.

For your product portfolio you wouldn't be at a disadvantage versus your key competition with regards to the Section 232 automotive.

We don't think so.

Not a disadvantage, no.

Okay. All right. Thanks. I'll pass it on.

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

Hi, gentlemen. James, Fréd, I know it's been echoed a bunch, but congratulations to you, to you both again. Frédéric Lissalde - BorgWarner, Inc.: Thank you.

Two questions. So, one on Drivetrain and the second on just the environment as a whole in Europe. So, when I look at the incremental margin on Drivetrain despite the total incremental margin for the company continuing to be in a pretty attractive mid-teens level, we're seeing Engine move into the 20% range in the first half despite lower growth and Drivetrain with a lower base still in the lower teens. Can you just maybe give some color where we could sort of see that inflection in Drivetrain as clearly there's a longer-term opportunity to drive margins there higher? And then the second can you maybe quantify, you mentioned Europe in Q3 for WLTP as a headwind, would you be able to maybe just put some numbers around that?

So, Chris, this is Ron, and good morning. Let me address the margin question you had on the Drivetrain. If you go back and look at the last six quarters and I could be off a quarter here, Drivetrain margins have actually been outstanding, very high, 15-plus. It was really only Q2 of 2018 that we've seen this 12% in quite a long time. So, this is primarily driven like we were talking the F-Series is having a drag on the incremental margins. So, I would say that the Drivetrain incremental margins have been outstanding in the prior quarters and we fully expect once we get to the transition to F-150, that we'll be back to the mid-high-teens incremental margins again in Drivetrain. So, if we go back and look at a few things, you'll see this was just one of those quarters. But the exciting part for us was actually was the Engine group being up that high 19 (00:36:07) because that was the segment that was lower historically. But again with emissions business improving for us year-over-year and some good cost controls, the segment, the Engine segment did well. And then when you add in the corporate costs, actually we're down, that just leverage us a little bit more for a total company accrual margin. So, the Drivetrain was just a quarter or two (00:36:28) at this point and I don't think it's going to stay in that range. And then WLTP. Fréd? Frédéric Lissalde - BorgWarner, Inc.: Yes. So, Chris, on the WLTP certification, I would say that the impact that we may see is already baked in our market assumption and we don't see any company specific major impact.

Okay. That's great. And just a quick follow-up on the WLTP, if we saw some recovery in Europe in Q4, would you have enough exposure where that could be upside or sort of conservatively baked into your guide. Frédéric Lissalde - BorgWarner, Inc.: It's in the band. It's in the range. It's a bit too early to know exactly what upside we could see in Q4.

Okay. Perfect. Thank you so much, guys.

Thank you. Frédéric Lissalde - BorgWarner, Inc.: Thank you, Chris.

And our next question comes from the line of Noah Kaye from Oppenheimer. Noah Kaye - Oppenheimer & Co., Inc.: Thanks very much. Hey, Ron, with the tax rate moving lower towards 26%, is that the right baseline we should think about for future years? How do you see the potential for that, potentially it can go lower through tax planning as we look at 2019 and 2020?

First, Noah, thank you for asking a question because I'm actually very excited about the tax rate but that hasn't come up yet. Good question. We came into the year, we held our guide at 29%, we did bring it down to 28%. And we knew we can lower the tax rate but we thought it was going be a 2019 event. I'm extremely excited and actually very happy that the tax department was able to move that up a couple of quarters to 26%. They do have a lot of planning ideas to lower that rate. The question is how low and when. And I think you're going to have to wait some more clarity going forward unfortunately, Noah. But I will say this, the rate will come down and I unfortunately cannot give you a number right now because there's a lot of planning activities that we're doing but we're very comfortable it's going to come down. And again, like I said, unfortunately, I can't give you the timing. But for modeling purposes, you're going to have to wait, Noah, all right? Noah Kaye - Oppenheimer & Co., Inc.: Sure. Sure. I think that's helpful directionally. And then a couple of references now to F-Series, margin drag on Drivetrain, would you mind was just telling us what that was so we can actually call it out here?

As far as the amount of sales that we've lost in the quarter or... Noah Kaye - Oppenheimer & Co., Inc.: What the headwind was to margins from that, yes, in Drivetrain?

You can basically take $25 million of sales headwind and we didn't take out the cost. So, I'd have to do some calculations and get back with you as far as what the headwinds were, Noah. But it was about $25 million in the region, in North America region for us which – and if you just tie the standard margin to us, you can get some decent numbers there. Noah Kaye - Oppenheimer & Co., Inc.: Okay. Great. And then if I could ask one more and, James, I'll echo what others have said, pleasure in getting to know you and work with you and the very best wishes on your retirement. And Fréd, much success to you in this new role as well.

Thank you, Noah. Noah Kaye - Oppenheimer & Co., Inc.: I think you talked a bit about power electronic portfolio and it looks like you may be ever so modestly raise the expected 2018 revenue contribution from Sevcon. I guess as we look at the pipeline for power electronics sales, what are you seeing now as more of a driver? Is it 48-volt mild hybrid? Is it growth in plugins? Can talk a little bit about how you see the future growth opportunities there? Frédéric Lissalde - BorgWarner, Inc.: Yes. Noah, we see the use of the power electronic portfolio in all of the above. We see an extended product portfolio, for example, on P2 48 volts, on P2 high voltage, iDM for electric vehicles. So, this power electronic product portfolio is going to be instrumental for our ROE. And not only on Drivetrain, it's also the case for eBooster. So, this is this is part of what we've done already for quite some years and Sevcon only added horsepower behind it. The power electronics is pretty much in everything we do and will be part of our products as you will see in the Investor Day going forward. Noah Kaye - Oppenheimer & Co., Inc.: Perfect. Thanks so much.

Thank you, Noah.

Thank you, Noah. Frédéric Lissalde - BorgWarner, Inc.: Thank you, Noah.

And our next question comes from the line of Brian Johnson from Barclays. Your line is open.

Yes.

Good morning, Brian.

James, been a pleasure working with you. And I guess bienvenue to Fréd. Just a couple questions, first, short term and then more of a longer term one. The shorter term one is what are you seeing in the European marketplace on diesel? The German OEMs are supposedly saying it's reached a floor for maybe perhaps the longer range Autobahn applications and commercial where it makes sense. But what are you seeing and then how's it kind of affecting your thinking this year and next? Frédéric Lissalde - BorgWarner, Inc.: Yes. Brian, I wouldn't say that it reached a floor. But as I mentioned before, the pace of decline is moderating. We still see some decline in the small displacement. So, what I would characterize as below 1.8 or 2 liter. And as far as we're concerned, we're managing the diesel mix fairly well, we have and we will in the future. And by 2019, we'll be totally agnostic in Europe on that mix due to our really good growth on efficient small gasoline engines.

Okay. Second question, as you kind of think about the role you play with the new product lines around motor, electric motors, electric drivetrains and just think about kind the kind of electric content of those as opposed on hybrids and the gas, some of the enhancements in the internal combustion engine part of those, how do you think mid-term and longer term about OEMs potentially insourcing that especially, Fréd, in Europe where – since James' country is no longer part of Europe or the OEMs have substantial engine and transmission employment base in high-cost, unionized plants that they may want to convert into electric motors and electric drivetrains. Frédéric Lissalde - BorgWarner, Inc.: I would say that the – we see many different insourcing, outsourcing strategies and those strategies are fluid. What it will – I think one color I would like to give you is I think the insourcing, outsourcing strategy is going to be volume related. And when we will make and we make motors and depending on the volumes that we produce, when it's made by a supplier the volume is going to be much, much bigger than if an OE does it for his own consumption. We have a lot of different factors that are impacting this make or buy decisions from a motor perspective. What I can tell you is that we have in our portfolio one of the best motor in the world with our S-wind forming process that you will see at the Investor Day. The power density of that motor is one of the best that exists around the world. And in our business it's all about having the right product to drive efficiency in propulsion. And I think we're really well-positioned with the products that we have to offer.

And if an OEM does want to insource some portion of assembly for electric motors and drivetrains as they do for example in transmissions, do you still see a component business there and how would that affect your kind of longer-range growth targets? Frédéric Lissalde - BorgWarner, Inc.: We will never say no for any business.

Okay. Thank you.

And our next question comes from the line of Colin Langan from UBS. Your line is open.

Great. Thanks for taking my question, and congrats, James and Fréd.

Thank you, Colin.

Just my first question is very basic, you raised your organic growth range to the high end, but it seems like the quarter was pretty rough from a market perspective, I mean, what were the factors that gave you confidence to raise it?

Well, one thing, Colin, you got to put in (00:46:05) consideration is that Q1 was actually a very good quarter for us and Q2 was – F-Series is going to kind of get right-sized, going forward. And we're taking a look at a couple other launches that are coming in the back half the year. And year-to-date, we're at 7%, keep in mind, right. So, from what we're seeing in the marketplace, it's shaping up so that we can lower the lower end of the guide and I guess that raises the midpoint is what it does. From what we're seeing, we're pretty confident about it.

Great. And any color on – you mentioned steel, I mean how much is baked in as a headwind for this year and how much – is there any recovery help in the second half that's not going to last (00:46:53)?

Well, yes, so when you talk about the Section 232 steel portion, like I was saying earlier, we've already experienced headwinds but we've also mitigated that. We have plans in place as we took – it came into the quarter for the full year, and we felt that that was not going to significantly impact our operating results on the steel and we looked at alternative ways of mitigating that. So, it's not really a net number at this point. If it is, it's an immaterial portion that's not affecting our operating income. The other one I was mentioning too, was the Section 301 which is a relatively new tariff that's come in that we're still sorting through. But that one is experiencing $10 million to $20 million, and we've found ways to mitigate that that we're working on. But on the steel side, we've done a good job just mitigating it.

Got it. And just lastly, the Sevcon deal gives you sort of the inverter capability and it seems like the trend have taken the (00:47:53) e-motor and merging that. I imagine that might be some of the strategy there. I mean, is that in the product pipeline, a merged e-motor and inverter? Frédéric Lissalde - BorgWarner, Inc.: I don't know exactly what you mean with merge but an inverter is a motor controller. So, having a motor in-house makes the controllability of that motor much easier when you know exactly all attributes of that motor. And our strategy has always been and will always be to position ourselves as being one of the only one in the world from a battery electric vehicle that not only specifies but makes the transmission piece, the motor piece, and the controller, which is the inverter. I hope that answers your question.

I guess I was talking about, I think in certain vehicles, there are two separate actual physical products and then like on recent ones they're actually one large product. Is that... Frédéric Lissalde - BorgWarner, Inc.: Yes, yes, I see what you mean, okay. Again, it's not one size fits all. There is a logic to integrate inverter and motor. I think in a battery electric vehicle what our customers are trying to do is limit the 400 volts or high-voltage cables in the car. And when you combine the motor and the inverter together, that helps you doing that. But we also see other architecture types that would keep those two elements separate. It's not because it's separate that I shouldn't work together like on dual-clutch transmission, the controller and the clutch are separate. Nevertheless, they function jointly. So, whether or not it is one unit or two different units, it has to talk to – both units have to talk to each other seamlessly.

Got it. Thanks for taking my question.

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

Good morning guys. And James, congrats on a long very successful career in transitioning the company for the future. And Fréd, congrats but you've got a lot – you've got some big shoes to fill, so we're looking forward to it, literally and figuratively, right. So, maybe a first question, as you think about all the trade tariffs, everything that's going on right now and the uncertainty, how do you think about capital allocation decisions, right? Ron, you kind of went through the list and it's very helpful and you've obviously thought a lot about this. But I mean if something changes, right, it could change back in two years or six years. So, are you just going to have to follow your customers' lead on this stuff or are there other actions you can take? Because you make long-term capital commitments, not short-term capital commitments.

Yes, the first thing, and Fréd mentioned this, John, is that we typically produce in the region that our customers are in. We don't have a lot of cross-border products going. We don't serve our North American customers with parts coming out of China for example, right. So, that's a benefit for us for the first thing. But with that said, the Section 232 total automotive parts, obviously if that were to be enacted down the road that would significantly alter our decisions going forward about capital allocation and investments and where we put it. I would say that I think the lessons that's being learned here is that you have to remain flexible and balanced as you start to put investments throughout the world. And when you have a policy environment that tends to be unstable that just means that you have to build in more flexibility in the manufacturing footprint is what we're starting to learn.

Okay. And then, maybe a second question as a follow-up to that. I mean, as you look at the rise in the buyback from $100 million to $150 million, does that mean that there are less opportunities sort of internally and as far as acquisitions that you're seeing on the horizon or is this just your prediction looks better – your financial position looks better and the stock looks cheap to you.

It's what you just said the latter, financial position is good and the stock is cheap. It has nothing to do with the outlook on the M&A side. It's just the opportunity to buy stock, cheap, you're right.

Okay. And then just lastly, I mean when we look at slide 19, it looks like the op income forecast went down ever so slightly but the actual operations are better. FX is a little bit less of a benefit. So, net-net it's about the same. I mean given all the puts and takes in the second half of the year that you're looking at, Ron, is this a conservative view just based on uncertainty? Because your first half performance has been very strong and in light of sort of the disruption on Ford's trucks, which should catch up in the third and fourth quarter, it seems like that things might be a bit better than you were initially expecting. But is this a conservative guide? Really how should we think about your positioning on this?

I wouldn't say it's conservative. I would say that there's a lot of risk factors in the back half of the year that we're focused on right now. And because of all those risk factors, things can move around rapidly for us. So, I think we put in all the risk elements that we're aware of and it's a very realistic number that we hope to deliver here. Actually, we will deliver it.

Great. Thanks. Frédéric Lissalde - BorgWarner, Inc.: As I mentioned, we're focused on delivering this guidance, delivering our commitment.

Great. Thank you very much and congrats, James.

Yes. Thank you, John.

And we have time for one final question and that question comes from Armintas Sinkevicius from Morgan Stanley. Your line is open. Armintas Sinkevicius - Morgan Stanley & Co. LLC: Good morning. Thank you for taking the question. When I think about the propulsion agnostic portfolio that James has assembled here and Fréd will be taking over, one of your peers reports a bookings figure for power electronics and I know you just opened up a technical center. And I'm just trying to think through when should we start to see some of these power electronics products from Remy and Sevcon start to flow through the backlog and really start to impact the numbers here? Frédéric Lissalde - BorgWarner, Inc.: First of all, the power electronics is part of a bigger system, a bigger product that we sell. It's either imbedded into hybrid modules or drive module for electric vehicles. So, I don't think you'll see us breaking down the power electronics portion of what we sell. As you will see in the Investor Day, it is embedded in everything that we sell going forward and you'll be able to witness touching the products. But I don't think going forward we'll break it down like we won't break down friction versus mechanical or any other pieces of the system we sell. Armintas Sinkevicius - Morgan Stanley & Co. LLC: Okay. Okay. Got it. And then I guess just how should investors be thinking about getting comfortable with the growth in power electronics? Just what should we be watching for as far as announcements or disclosures? Frédéric Lissalde - BorgWarner, Inc.: Yes. We'd love to announce more but we can't and we are very respectful of the confidentiality that we have with our customers. I think one way to look at it is if you look at our growth on H&E, a certain portion of it will always have power electronics in there. So, that will give you a little bit of light on our growth in this field of product. Armintas Sinkevicius - Morgan Stanley & Co. LLC: Okay. That's helpful. And then one more on the Section 232 automotive tariffs. You said it was a big impact. Is it a big direct impact as far as direct tariff costs? I know you said you produce in country, for country or does it lead to sort of bigger question marks around the supply chain? Just trying to think through how we should be thinking about the big impact comment. Frédéric Lissalde - BorgWarner, Inc.: Yes. As Ron mentioned, we produce where the final product is concerned. So, there will be very, very marginal direct impact, if not any. So, it's going to be – if it comes, it's going to be all indirect. Armintas Sinkevicius - Morgan Stanley & Co. LLC: Okay. Great. Thank you so much for taking the questions. Frédéric Lissalde - BorgWarner, Inc.: Thank you.

Thanks, Armintas.

Thank you.

Thank you all for your very good questions. With that, we'll be ready to close. Tasha, you can close the call.

Thank you. That does conclude the BorgWarner 2018 second quarter results conference call. You may now disconnect.