Good morning. My name is Jerome, and I will be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2022 First 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. [Operator Instructions]. 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, Jerome. Good morning everyone and thank you for joining us today. We issued our earnings release earlier this morning. It's posted on our Web site, borgwarner.com, on both our home page and our Investor Relations home page. With regard to our Investor Relations calendar, we will be attending multiple conferences between now and our next earnings release. Please see the Events section of our IR 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 from the matters discussed during this call. During today's presentation, we will highlight certain non-GAAP measures in order to provide a clearer picture of how the core business performs 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 organic, that means excluding the impact of FX and net M&A. We will also refer to our growth compared to our market. When you hear us say market, that means the change in light and commercial vehicle production weighted for our geographic exposure. Please note that we posted an earnings call presentation to the IR page of our Web site. We encourage you to follow along with these slides during the discussion. With that, I'm happy to turn the call over to Fred. Frédéric Lissalde: Thank you, Pat, and good day, everyone. We're very pleased to share our results for the first quarter 2022 and provide an overall company update starting on Slide 5. I am pleased with the resilience…

Thank you, Fred, and good morning, everyone. Before I dive into the financials, I'd like to provide a quick overview of our first quarter results. First, our revenue came in at the high end of our expectations, despite significantly weaker industry volume in Europe, which is our largest light vehicle market. Second, our margin performance in the quarter was respectable given inflationary pressures that our business is currently facing. Performance was supported by our synergy and cost restructuring actions that we've been executing on for the last couple of years. Let's turn to Slide 9 for a look at our year-over-year revenue walk for Q1. We start with last year's revenue, which was just under $4 billion after adjusting for the disposition of our Water Valley facility this past December. You can see that foreign currencies decreased revenue by about 3% from a year ago, the U.S. dollar strengthened year-over-year and has continued to strengthen beyond the quarter end. Then you can see the increase in our organic revenue, about 1% year-over-year. That compares to a 7% decrease in weighted average market production. That means we delivered another quarter of strong outperformance in the face of a challenging end market environment. This outperformance was driven by Europe, North America and Korea. The sum of all this was just under $3.9 billion of revenue in Q1. Now let's look at our earnings and cash flow performance on Slide 10. Our first quarter adjusted operating income was $389 million, or 10.0%, which compares to adjusted operating income of $464 million, or 11.6%, from a year ago. On a comparable basis, excluding the impact of foreign exchange and the impact of the Water Valley disposition, adjusted operating income decreased $62 million on $30 million of higher sales. This performance includes nearly $50 million…

Thank you, Kevin. Jerome, we're ready to open up for questions.

[Operator Instructions]. Your first question comes from Colin Langan with Wells Fargo. Your line is open.

Great. Thanks for taking my questions. Just to start, I think you mentioned there's about a 60 million increase in the assumption on commodities. Where does that sort of bring your sort of full year headwind for commodity and input costs? And quite frankly, surprisingly not nearly as bad as a lot of other suppliers are talking about, it seems like a pretty relatively small number. And you're doing a really good job offsetting that because the incrementals on the sales cut aren't really that bad. What are the sort of key offsets that are kind of keeping those detrimentals in a pretty low range?

So a couple of things. On the 60 million, if you remember last quarter, we talked about having $50 million to $60 million of net commodity headwind and then we talked about double digit million of additional inflationary pressures. With the 60 million addition where we're actually at on a full year basis for both elements, the commodity piece and the other inflationary pressures, it's about $130 million to $140 million net. That's net of the recoveries. And so that's an increase of $60 million. In terms of managing the incrementals on the sales cut, aside from the $60 million flowing through, keep in mind, the bulk of the sales cut is really driven by foreign exchange. If you look at the production cuts, the math of the production cuts that we're talking about in our guide translates to somewhere around $500 million to $600 million of lower revenue. But the increased outgrowth that we're delivering is kind of in that $450 million range. So it's substantially offsetting the production impact. So the lower revenue is really predominantly driven by the foreign exchange. That's why you're not seeing a huge detrimental on lower revenues, because it's mainly translation.

Got it. Thanks. Any update on the divestitures that you were planning for internal combustion engines? It seems like the recent volatility is probably not helping the market currently. I think the target was to do 1 billion by the end of this year.

Yes. We're still actively involved in our processes. But I'd say it's highly likely that the current market environment is going to have some impact on the timing of that disposition process. I think until there's more clarity around things like the resolution of inflationary cost pressures, the impact of Russia-Ukraine, the impact of COVID lockdowns in China, I think it has the potential to impact certain buyers, making them a little bit more hesitant in different processes that we're undertaking. So I think that's okay. We're not a desperate seller. We're looking at disciplined approaches to selling positive cash flow generating businesses that have a certain value to us. So I would tell you those processes we're involved in right now are continuing to progress. But I think it's fair to assume that this has the potential to impact the market environment for executing these dispositions in the near term, until there's more clarity about the situation. This situation being the market situation.

Okay. Thanks for taking my questions.

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

Good morning, everyone. This is Aileen Smith on for John. Of course, I wanted to start asking the flipside to Colin's question from a longer term perspective and the charging forward plan. You mentioned that there may be some impacts of timing around the divestiture target for this year. But does the volatility in the capital markets and what may be going on with valuations from a public and a private side of things change anything from your perspective in terms of the acquisition opportunities that are available? Frédéric Lissalde: Aileen, I think you need to think about it depending on the attributes or the characteristics of the target. So if you have an acquisition that we're going after that has a substantial current business in production, the current market conditions will have more impact on us looking at it versus a target that would be more of a startup in nature. And that's the way we look at it. The startup in nature, if there is a low level of production and if the bulk of the business comes in the years to come, the impact is way more marginal. In any case, we've always applied a very disciplined approach as far as M&A is concerned, actually MD&A is concerned. This will carry on. And over the past two quarters, we've turned down some acquisitions that we looked at for economical reason. So very disciplined in those approaches.

Okay, got it. That's helpful. And then we've asked this question a few different ways to suppliers on the cost inflation side, but your automaker customers have been pretty successful in passing on cost inflation more recently to their customers in the form of price. And I think we can understand the dynamic of commodities and pass-throughs between you and your customers, the cost inflation is really everywhere. So in the past few months, have automakers been in any way receptive or kind of opened the door to discussions of taking on some incremental cost burden from you beyond commodity as they may be able to pass it down to their customers? Frédéric Lissalde: Yes, I think I am getting encouraged by the discussions that we have with our customers. Those are not easy discussions, but we're making progress. And I think we will have substantially more clarity in the next earnings call to give you more detail. But the discussion is ongoing and encouraged by the tones.

Okay, great. And one quick housekeeping or clarification question, if I may. The battery management system win that you highlighted on Slide 6, is that technology that came from the AKASOL acquisition? Frédéric Lissalde: No. It's a technology that came with the Delphi acquisition that has been enhanced since we're together.

Fantastic. Thank you.

Your next question comes from the line of Noah Kaye with Oppenheimer. Your line is open.

Thanks so much. I just wanted to ask about the pace of quoting and award activity. It feels like from what we can see, it's continuing to accelerate. You've maintained your outlook for R&D spend this year. Any considerations that we should have about maintaining that with activity picking up? Just wondering how to reconcile the two? Frédéric Lissalde: We're very happy with the intensity of discussion with the customers' intensity of quotes and book business, and also very happy with the increase of 130 million to 160 million year-over-year on R&D on E. And we want to maintain that. And again, this increase is linked to application engineering and launch and quoting activities for businesses where we have high confidence. It's not R&D, scratching our heads on what products we're going to develop. It's really concrete, linked to launch activities. And we feel good about those numbers.

Okay, very helpful. Thanks, Fred. And then just to clarify, how much of the anticipated weakness in the European markets have you really started to see here quarter-to-date versus what you're thinking for the back half? Frédéric Lissalde: So I would tell you that I think that the people that have been impacted by the Ukraine war directly, and it's not really our case, have done a pretty good job over the past weeks getting around some of the origin or supply chain that we saw when this conflict arose. And so we've reduced the midpoint of our European forecast by about 1.3 million units. But remember, 40% of that reduction is Russia where we have very, very low exposure. So I think even if Q2 is going to be under pressure still, I think our customers are really doing an effective job managing through those supply issues in Europe.

Very helpful. Thank you.

Your next question comes from the line of Rod Lache with Wolfe Research. Your line is open.

Good morning, everybody. Just first of all, a couple of housekeeping things. You originally at the beginning of the year pointed to 4% to 5% growth of the market. Now it's 7.5% to 8% relative to your weighted production assumption. Within that organic growth, what is the commodity reimbursement? And to Kevin, you mentioned two numbers for net inflation, one was 60 million and one was 130 million to 140 million. Which one is the net for the year?

Yes, so the increase in the outgrowth effectively going up 300 basis points is really a combination of the flow through of what we saw in Q1, the good news, as well as the incremental pricing recoveries that we're anticipating. Now, ultimately, the pricing -- the additional pricing, which is both related to commodities, the contractual commodities, as well as some of the non-contractual things that we're working on, it's really going to be subject to the negotiations that ultimately transpire both with the suppliers, how much of that flows through to us and how much of that passes through to customers? I think you should assume that that of the 3 points of additional outgrowth, that's somewhere in the zip code of plus or minus 2 points of that 3 points and the Q1 outgrowth coming through being the rest of it, so still even without that delivering 5 or 6 points of outgrowth on a full year basis. In terms of that 130 million to 140 million, what I was trying to get at, I apologize if I confused the situation, but 130 million to 140 million represents the total net impact of material cost inflation, inclusive of commodities, on a year-over-year basis. That's a $60 million increase from what was embedded in our prior guide.

Okay. Thanks. And your R&D increase for the year, the definition changed a little bit. Originally, it was R&D. Now it's e-products R&D. I just wanted to see if there's anything there. And it seems like you have a different cadence of margin expectations than we've heard from others that you did roughly 10% margin in Q1, and you've got the midpoint of your margin targets around 10% for the year. Can you maybe give us a little bit of color on how you expect the year to evolve? Does this production look a little bit better or a mix for commodity absorption later in the year?

Yes, so the R&D -- on the R&D, you're right. We changed the wording a little bit. And the main reason we did that is because actually as part of managing our cost structure along with other things that we manage within our P&L, we actually did manage our R&D on the combustion side lower in the quarter than what was implicitly in our guidance. So it was part of our cost management actions. So if you look at total R&D for the company, it was up $8 million year-over-year. But our e-products R&D in the first quarter was actually up over $20 million, which just means combustion-based R&D was down on a year-over-year basis. So we wanted to make sure it was clear that we haven't come off the expectation that we're continuing to invest the same amount of e-R&D on a year-over-year basis. With respect to the cadence of margins, we're obviously not giving quarterly guidance. But what I would suggest to you is Q2 is likely going to come under the most pressure because that's where we're likely to see a lot of the volume headwinds. As Fred talked about with Europe, some of the challenges that we're likely going to see in Europe from a production perspective are going to be most pronounced probably in the second quarter. And we're obviously living right now through the impacts of the China shutdowns. And that's going to have an impact on second quarter revenue as well. So we'll obviously see impacts of that from a conversion perspective. As we then get back to the back half of the year, we would expect those types of pressures to abate as some of the OEMs are working on solutions to navigate the European situation. And we would expect the China situation to recover in the back half of the year, most of the volume that gets lost in the second quarter. And then on top of that, we expect that we'll see significant progress even over the next 90 days or so, as we work with our customers on these recovery mechanisms, which should help to further mitigate some of the headwinds that we're expecting to see there as part of that 130 million to 140 million net.

Okay. And just really quick, Fred, this BMS contract, it seems like it's very short lead timing. Is that going to be typical and any thoughts on the size of that contract? Frédéric Lissalde: Yes, this is a little untypical. We've been working with this customer for quite some time. And we've announced it since they have really spread the volumes to all those platforms. I would still say that for such a product, 18 months would be a good proxy, 18 to 24 months. Usually, we do not start from scratch. We have modular battery management systems available. And this is why we can launch very rapidly. You've seen some of the other launches also in eMotors. eMotors also linked to the modular design, we can be up and running pretty rapidly. So 18 months would be a good proxy.

Thank you.

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

Thank you very much. I was hoping to come back to the topic of commodities. And in particular, can you give us a little bit more color around how some of this recovery mechanisms work for you? How you expect them to play out for the rest of the year? Because, obviously, you seem to be very successful of setting a lot of these costs, but 130 million to 140 million is still less than that for the year. Is there any prospective through this mechanism to get some of it back in 2023? Frédéric Lissalde: Yes, it is ongoing. As I mentioned before, Emmanuel, progress are being made and encouraged by the mindset of the interaction and the discussion with the customers. And so, yes, I am absolutely confident that we're going to get to the target that we set to ourselves, both managing the count [ph] and we're not -- as you know, we're not in the business of making deals. We're in the business of a long-term relationship, and I expect fairness in the relationship in the short term into semi, to volume, to inflation, and also improving and nurturing the relationship on the longer term with great e-products at the lowest total cost of ownership for our customers. We're doing both. And as a side note, I've been in sales-related function for about 20 years of my life. So this is something that I've got a little bit of experience of.

Just to clear, Emmanuel, the 130 million to 140 million is net. It's net of our assumption about pricing recoveries, which is both the normal contractual commodity recoveries which is still working the way they're designed at 50%, but also an assumption that we're going to be continuing to work with our customers to try to recover some of the extra inflationary impacts that we're seeing. And so the 130 million to 140 million is net of the assumption about those recoveries.

No, I understand. But I guess my question is, so at the end of the day you're left by the end of the year with sort of like this headwind to your margin profile of $130 million to $140 million net of recoveries. Do you have either contractual, mechanical or just commercial discussion process to then continue these discussions next year, assuming spot prices stay where they are, and go back to the automakers and say, hey, look, the margins are not where they should be, we were still left holding this amount. Can we do something towards that? Or at this point, this is sort of the result of your negotiations will be seen this year and not necessarily additional upside in 2023? Frédéric Lissalde: It's already difficult enough to get to a resolution for this year. We don't want to speculate for what's happening next year. Next year will be the next year. Right now, the focus is to get to our targets in some fairness this year.

Okay, that's fair. So then second question will be on the e-products R&D and then the overall R&D for the company. So as you mentioned in the remarks, as part of guidance, the margins are under year-over-year pressure, both because of some of this inflation but also because of extra investment in R&D. How should we think about it going forward? I obviously assume e-products R&D will keep growing, but what about the R&D at the company level? Does that remain a headwind to margins? Or does that stabilize on a same level as a percentage of revenue?

Well, we haven't -- we're not giving updated guidance on R&D in total for the company. It's obviously one of the levers that we have to be able to manage our cost structure when we look at the non-e-related R&D. But I think you should continue to expect that we're going to drive the investment and growth in the e-R&D that's necessary to support the launch of our programs and the profitable growth of the future. So we continue to expect that to be growing at $130 million to $160 million this year. I think it's still also overall a good way to think about as being in that 5% to 5.5% range from a total R&D perspective on a full year basis. And that's where we are based on what's underlying our current guidance.

Okay. Thank you.

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

Thank you. Just wanted to talk a little bit about price and particularly plug-in hybrids. A couple of things. When you look at your growth over market, how much is still driven by uptake of your product line on ICE vehicles? Is there perhaps a mix effect there [indiscernible] might have felt better. But secondly, given all the discussion around both costs and shortages of battery materials, it seems like the same amount of minerals that could power one EV could power 10 plug-in hybrids, which for most of the week could be operating in all electric mode. So are you seeing any renewed interest in plug-in hybrids? Are you seeing any uptick? The sales have gone well insofar [ph] in your sales and is that helping drive that near-term performance? And is there may be more upside on the midterm than most investors would think? Frédéric Lissalde: Brian, I think we're focusing charging forward on pure BEV and it's the right thing to do. Hybrid is simply a combination of good combustion product and great BEV product. The dual inverter program in China is a good example of that, and we're seeing high voltage plug-in hybrids, 400 volts and above. Still taking some share of the market. And for us, what's really important to understand is that this is giving us scale. This is giving us launch experience in motors, in those inverters that apply in high voltage plug-in hybrids for now, but would get us really scaling in BEV too. So high voltage plug-in hybrids is a clear trend as well as BEV. And with both, we are able to serve our customers without being painted to whether they want BEV or high voltage plug-in hybrids. And all that converges into getting us scale. I was mentioning 3.3 billion of pure BEV revenue in 2025. If you add the high voltage plug-in hybrids on top of that, I don't have a number today, but it's pretty significant.

And then in terms of the specific outgrowth-related numbers, Brian, I guess if you look at what's embedded in our guidance, that 7% to 8% outgrowth, that translates to more than a $1 billion of outgrowth this year. And separately, we've disclosed that we expect our EV revenue this year to be over 800 million, which is more than double what it was last year. So you can see, hey, there's 400 million plus coming from EVs and the rest of its coming from everything else. So to answer your question, yes, we're still seeing outgrowth in parts of our business other than EV.

Okay. Thanks.

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

Hi. Good morning. Maybe we could just start with the margins in the first quarter. And could give us a sense of the extent to which the China COVID shutdowns and the Ukraine war impact your margins? Meaning, excluding those items, what would we have otherwise seen?

Yes, I think China really started to have an impact very late in the quarter. It's really more of an impact here as we get into Q2. But then in terms of Europe, you can just see the loss production. Obviously, we normally -- as we talked about in the past, we normally convert in the high teens on incremental revenue. And so as we start to lose revenue, it has an impact on our conversion accordingly. If you just cut through the math of what happened to us in the first quarter from a margin perspective, on a comparable basis, when you exclude FX and you exclude the Water Valley disposition, there were really just three things that moved the needle for us. It was the net material cost impacts that we talked about year-over-year, almost $50 million. It was the incremental e-products-related R&D of $20 million, and then a little bit of impact from AKASOL. Other than that, it was pretty normal conversion. So again, if we had more production coming out of different geographies, we would expect to convert on that normally at our typical incremental margins.

And the go-forward guidance, is that assuming any additional supply impacts from Europe or any lumpiness around the China COVID shutdowns?

It assumes a couple of things. We're expecting that Q2 will be the most challenged quarter from a production perspective, because I think some of the lingering impacts of the Russia-Ukraine situation will likely manifest in Q2 and then probably see some recovery in production beyond that. In China, the lockdowns are going on right now. And our expectation underlying our guide is that the situation in China gets resolved in the early part of June and that we see the bulk of those volumes get recovered later in the year. So embedded in the guide is that Q2 will be the most challenge from a production perspective.

Great. And then, as a follow up, I want to understand in this inflationary environment, how costs are trending between EV versus combustion products, and most notably on the EV side inverters? Is there any difference in the input costs on each side for you? And given the likely added margin pressure for EV products, maybe there's margin pressure for everything, are the levers to mitigate those headwinds any different than what you'd have price?

In terms of the input costs, a lot of it goes back to the overall inflationary environment is really having an impact on, I'd say, just about everything. You see it on semiconductors, you see it on a lot of underlying commodities. Take a commodity like nickel; nickel gets used in batteries, nickel gets used in stainless steel. So that's having an impact across both types of propulsion architectures, whether you're talking about EVs or ICE. So the way we go about managing our cost structure is pretty much the same whether it's an ICE-based component or an EV component, except that on the EV side, we're very cognizant of making sure that we're continuing to make the incremental e-R&D investments to support our long-term growth and the launch of the programs that are coming into the P&L over the coming years.

Okay. So the cost pressures aren't any worse for EV products than they are for ICE, correct?

We're seeing cost pressures in both. If you look at the indices, even just in the last 90 days what's happened to stainless steel, to nickel, to aluminum, copper, those types of things, you're seeing 20%, 30%, 40% increases in some of those indices. And so that cuts across that can be ICE-based technology or it can be EV-based technology. And then logistics costs, freight costs, labor costs at some of the suppliers, those are impacting across the propulsion type as well. So I wouldn't say it's limited to one technology or the other.

Great. Thank you.

Your next question comes from the line of James Picariello with BNP Paribas. Your line is open.

Hi. Good morning, guys.

Good morning.

I really appreciate the eMotors detail on Slide 7. From an industry perspective, you provided the average CPV for motors at around $500. Just curious if this is trending in line with what BorgWarner is seeing, what it has in backlog? And then within the 2 million units slated for 2025, can you share roughly what the iDM mix is? And is there any way to think about the margin differential between any more eMotor component sale versus the full iDM system? Thanks. Frédéric Lissalde: I don't have all the detail. Pat, will you please come back to James. What I can tell you at least that on one of your question is most of the 2 million of eMotor volume in 2025 are standalone motors. And a few go into iDM, but by far not the vast majority. For the rest, Pat is going to come back to you.

Okay. And just like at a high level, just the margin differential for the full IBM system versus eMotors, is the IBM system materially margin accretive relative to the component?

Yes, we price our business substantially similar. Whether it's a system or a component, we look at the return on the invested capital or look at the capital that's required. And it tends to be, since we're in the assembly business, whether it's a system or a standalone motor that we likely have relatively comparable capital intensity for that individual sale, which means that the margin profile on a percentage basis tends to look similar. Obviously, if you're selling more content through a system, the dollar amounts might be bigger, but the ROIC in the margin profile tend to look directionally similar.

Okay, understood. And then is there a tally as to how many BMS-related awards you have in backlog? And then you do have five months inorganic contribution from AKASOL this year. So curious if you could share what AKASOL's revenue was in the quarter? And how you're thinking about that business for the rest of the year? Thanks.

So with respect to AKASOL, I'll take that question. AKASOL, we delivered between $40 million and $50 million of revenue this first quarter. And I would say, we tend to be trending stronger in terms of what we're seeing is the longer term prospects for that business from a growth perspective.

Okay. And the tally on the BMS-related awards, is this your first one that you announced or --? Frédéric Lissalde: So this is the first major one that we announced cutting across a lot of volume and a lot of platform for launch globally. There are other BMS businesses in the company that came with the Delphi acquisition. And, of course, we're doing our own BMS as far as commercial vehicle battery packs are concerned. We will not flag that out independently from the battery pack revenue. So that's a little bit of California, James.

I appreciate it. Thanks. Frédéric Lissalde: Thank you.

Your next question comes from the line of Mark Delaney with Goldman Sachs. Your line is now open.

Yes. Good morning. And thank you very much for taking the question. I was hoping to better understand the 2025 booked EV-related revenue. I think last quarter, you talked about 2.7 billion was already booked. This quarter, you talked about over 3.3 billion. I'm a little unclear if those are apples-to-apples, or if there's some differences in how M&A has been treated. But the second part of that question is can you bridge us to what's driving that increase from the 2.7 billion to the 3.3 billion? Frédéric Lissalde: That's easy. The 2.7 billion is organic. It's the first bar of charging forward [indiscernible] that you can see on our Web site. The additional 600 or 700 is coming from acquisition. And it's essentially AKASOL and a little bit of Santroll and 2.7 plus points is a bit more than 0.6, which is 0.6 to 0.7 [indiscernible] 3.3. That's how the math works.

Got it. That's helpful. And I guess the follow up is you got the BMS win you're speaking about today that starts late '23. So I was thinking that might have some contribution to the '25 EV target. So maybe talk a little bit more on what kind of revenue we can be expecting from the BMS program? You spoke a little bit already around what led you to win there. But that's a pretty competitive segment and I thought it was very encouraging that you picked up the BMS win. So if you could also speak to what's differentiating your BMS product line, what allowed you to win? Thanks. Frédéric Lissalde: Yes, so on the 2.7, we're not updating three or four digit after the coma. So this is a rounding. We're not going to dig that each time we book a business. So as far as the BMS, that's a competitive advantage. It is our ability to combine again hardware and software. And this is part of the winning equation that I always alluded to mechanical, hardware and software altogether. And this is what we do very well and starting being absolutely recognized globally for a whole suite of products, including now battery management systems for [indiscernible] independently, but also together with AKASOL commercial vehicles.

Thank you.

All right, we have time for one final question. And that question comes from David Kelley with Jefferies. Your line is open.

Hi, team. This is Gavin Kennedy on for David Kelley. I believe you mentioned that M&A synergies and restructuring savings partially offset the margin headwinds we saw in the first quarter. Can you remind us of your expectations for synergies and restructuring savings for the full year?

For the full year, it's north of $100 million combined.

Great. And then of the major wins you highlight in your presentation today in electrification, two are for China. Do you expect the pace of new business awards and bids to be impacted by the COVID-related shutdowns in that region, or is it business as usual despite the disruption? Frédéric Lissalde: It's business as usual, except when it comes to production. But I'm not expecting any delay as far as new technology and sourcing are concerned.

All right. Thanks, team.

I'd like to thank you all for your great questions today. If you have any follow up questions, feel free to reach out to me or any member of my team. Jerome, you can go ahead and conclude the call.

That does conclude the BorgWarner 2022 first quarter results conference call. You may now disconnect.