Thanks, everybody. Delighted to have, representing Aptiv, Chairman and CEO, Kevin Clark- Hello. -and Chief Financial Officer, Joe Massaro, and who's also Senior Vice President of Business. Thank you. Thanks for joining us. Thanks for having us. Nothing going on in your industry. Just another day at the office, right? Yeah. A lot going on. A lot of good, lot of good things going on. What are you most excited about, you want to convey to the audience at the top? Yeah, I would say, most excited about, the momentum in and around rearchitecture of the vehicle, both from a hardware and a software standpoint, to drive towards software-defined. So what we're most excited about, it's what we're well-positioned for. How are we tracking into the end of the year in terms of, like, relative to your, you know, 3%-4% full-year outlook? Anything you wanted to update us on or, kind of- No, listen, obviously, we're, we're gonna see what happens on the fourteenth here with, with the UAW, and that could obviously impact things. But, apart from that, remain, remain confident in the outlook. And we, you know, took our guidance up in, in August for, increase in vehicle production and some of the changes in macros and some better performance in the business, and, so continue to track well. Again, waiting to see what happens with the strike, but continuing to track well. Okay. So since you brought it up, how do you prepare for this kind of uncertainty around strikes? I mean, not your first rodeo there. You've seen it before. Yeah. But any messages in terms of your exposure and kind of actions that you can take to mitigate disruption? North America is roughly 30% of our revenues, and the Big Three account for roughly, you know, a little bit north of 50% of that overall business. Mm-hmm. We've been through it before. To your point, the important thing is that you're connected and communicating with- Mm-hmm -customers, which we have been, as well as your supply base. So, we feel like we're well positioned to flex either down to the extent there is a slowdown in production or up to the extent we need to ramp up production- Mm-hmm over a period of time. We do that from a labor standpoint as well as from a supply chain standpoint, so. It is gonna bring to point, though, the just the issue of labor inflation, right? And we see these true ups. We've seen them in other industries as well. We made a point to our clients that, you know, the D3 don't live in isolation. If their represented members do see 20%, 30%, 30+% inflation, it's not that Tesla's gonna stand still or the Japanese and Koreans aren't gonna have some inflation, too, right? They share that world together. So as those OEMs see higher costs, they're gonna lean on other areas, including- Yeah -the suppliers, to try to get it. So on the raw material costs, debating in your business clearly, would love your thoughts on the longer tail of labor cost inflation and kind of how significant is labor across your business, and, anything you see changing in the next few years in terms of, cost recoveries into 2023 as well? Yeah. 2024. Listen, inflation for all of us, we went through a protracted period where, in reality, we had no inflation or disinflation, right? I'd say for the last three years, whether it be in material, whether it be labor or others, we've all seen it. We've all experienced it firsthand. I think there's an element of, from an industrial standpoint, that muscle getting reworked, re-recognized. You know, that's obviously taken place. So, you know, we've doubled down on our focus in terms of what do we need to do from a productivity standpoint. Mm-hmm. What do we control within our four walls? How do we partner from a supply chain standpoint, where we source, to the extent where we can't, you know, basically offset that inflation? The conversations with our customers about pricing and price increases, which has been pretty significant over the last two years, and then importantly, for our customer base, just recognizing the fact that they're facing technology change, adoption of new technology, some of which are high cost, and then three, inflation. How do we make sure we bring forward to them solutions that are lower cost, that drive their costs of develop, their costs of introduction down, while at the same time being, you know, margin accretive for ourselves? So when you think about whether it's our high voltage electrification solutions, that we approach those holistically, whether it's our ADAS platforms, how do we approach and deliver solutions that they can adopt, that perform at industry standards, but deliver those at a lower, more attractive cost for our customers? Kevin, how's Wind River integration going? It's going great. It's a light integration. Obviously, it's a software business. So, we've basically given Wind River the support in terms of how do we make Wind River grow, both in the markets where they operate, so their traditional markets, like aerospace and defense, like Telecommunications, the Industrial Markets. Mm-hmm. Those markets where you've seen, you know, mission-critical needs and, at the same time, the desire of customers to virtualize hardware, separate software from hardware. That's taken place in those, in those markets. So we've been very focused on how do we continue to grow in those markets, and then how, at the same point in time, do we introduce them to our automotive customers, which we've been doing, and how do we get customer pull within the automotive industry where, you know, we're trying to enable the exact same thing? How do we separate hardware and software? How do you do it in a way where, just given the nature of our product, the safety certification requirements that are put forward, how do you do that, where a customer is confident that the software is gonna operate when it needs to, just like a telecommunications customer or an A&D customer, and how is the software architected in a way where it gives our OEM customers the most flexibility to update, upgrade, and do things like OTA? So it's going extremely well. From memory, at the time you acquired Wind River, automotive was sub 10%, maybe even. Correct. Yep. Like, just sub 10%. I don't think it's 5%, but it was sub 10%- It- of the business. Has that changed, or is that on the path to changing, or remind us where you see that kind of going to mid-decade, or do you want- Yeah, no, we've talked about it. So, as upon acquisition, it was roughly a $400 million business, in total, less than 10% automotive, so a lot of opportunity. We've talked about Wind River in total being sort of approaching that $1 billion in revenue in the 2027-2028 timeframe. Mm-hmm. And by then, we expect about 30% of the business to be automotive. So we're gonna continue to see really strong growth in the A&D, Telecom, Industrial Markets that they currently serve. But really see an opportunity for accelerated growth in automotive. Thanks, Joe. And for both of you, give us the AI pitch. I mean, and you could giggle, you could chuckle, but like it's, you know, you run a complicated business. Mm-hmm. Tons of data. Mm-hmm. The needs and demands of your customers and the technologies you're focused on, you know, the cutting edge, bleeding edge of, you know, edge compute and AI. You know, you just in your own words, how does from an investor value that, and maybe what are some of the proof points in your business? Yeah, listen, we use AI, some of the obvious places are in and around the product areas. Right, obviously, when you think about ADAS solutions, when you think about autonomous driving, when you, you think about enhancing and developing perception systems and their performance, obviously, that's the most obvious application. And the benefit there is more rapid advancement of the underlying performance of the technology and doing it at lower cost. So that's the area where there's a tremendous amount of focus. Joe and his role as SVP of Business Operations, there's also a real focus on how do we use that, within how we operate, what we do from a process standpoint, what we do from a back office standpoint. How do we make ourselves more efficient, more effective? How do we reduce the dependence we have on people? Mm-hmm ... and doing this manually? Anything you want to add there, Joe? No. Listen, we've looked at it or are looking at it really across the organization. There's certainly some back office functions where, you know, we're continually looking at how to manage the cost structure more effectively, and we think there's some opportunities there. And then, as Kevin said, how to streamline development. And I think one of the areas where we've been most successful over the last couple of years is really using it, AI, ML, in radar development with our next-generation radar and our 4D Radar solutions. Kevin, we've known each other for a long time. Mm-hmm. One of the things I admire about you, one of the many things I admire about you, and in addition to your ability to execute, frankly, and run and work on a great team to execute, is your kind of conservative approach. I find that at times when the world is going through, you know, exogenous shocks or whether it's a credit event or a strike or whatever, or a sea change, you're kind of like, I'm paraphrasing, you come to me saying, "Adam, our business is doing well, but hmm, we are concerned about this. We are looking at this." And you try to stay ahead of it. You know, you kind of put a lot of stress on yourself. The gray hair. It's okay. I'm taking one more than I want. Anything kind of concerning you right now on the edge in terms of if you're seeing the rise of the Chinese or some of the valuations of some of your customers in Europe and just how, just like the market's telling them something, the market's telling Volkswagen that you're not just overearning, but you might be like going, like, becoming Kodak. Like, does this kind of stuff concern you or anything else in the macro environment that's keeping you up at night a little bit? Yeah. I know you sleep well. Yeah. Just a little bit. Yeah. Listen, I mean, I think we're always appropriately paranoid. As a management team, we make sure we are- Amen ... and others that work with us are appropriately paranoid. And we feel like we've positioned the business, we've taken actions, and we've positioned the benefits, the, the business to benefit from the tailwinds that are out there. However, at the same time, we really focus on those things that we control from an execution standpoint. How do we make sure that we have the right management team in place? How do we make sure that management team is executing across our 130 manufacturing facilities across the globe? Mm-hmm ... on a day in and day out basis? So how do we do that? How do we position ourselves from a geopolitics? So one thing out of our control is the geopolitical situation. And obviously, that is an area which I think the world is much more concerned. But how do we offset potential risks, whether it's regional sourcing, supplying China for China, you know, North America for North America, Europe for Europe? How do we position ourselves- Mm-hmm ... to do that? Which we've been on that path for the last four or five years. Just given the complexity of our industry, the transition our customers are going through, the inflation- Mm-hmm ... that Adam talked about, how do we really focus on, in addition to providing technologies that make vehicles safer, make them greener, more connected, the reality is they need to be done at lower costs. Our customers are under tremendous pressure from a cost standpoint, put aside the labor issues in the U.S. right now, and how do we make sure that we're enabling them to deliver these technologies at lower costs, at higher margins to ourselves? I mean, that's obviously the focus that we have. And how do we give them the flexibility to, if they want to do some activities internally, some aspect of the software stack or software development, they have the ability to do that, but it's often off of an Aptiv platform. Do you think some of your customers, OEM customers, maybe overpromised is a wrong description, but let's say in their press releases and statements over the last two or three years on their decommissioning of ICE and the acceleration of EV, you know, maybe need to, like, reexamine that and, recalibrate some of that adoption. Is that, is that something that, that you consider, again, with your-... conservative approach of, of, of planning and execution? And how would that affect your business if EV adoption in some of the Western markets was, you know, 1,000 basis points slower by, by 2030? Yeah, well, we've had this conversation- Yeah ... in the past. We've, you know, change presents challenges. Recognizing all those challenges sometimes is hard. I would say, as it relates to BEV adoption and some of these other big swings, we've been relatively conservative. We've conservative on our overall penetration rates. We've been very selective in terms of the customers that we've partnered with- Mm-hmm. in terms of BEV adoptions and the platforms that we're on. We've contracted in a way where we protect ourselves if volume doesn't show up. And in exchange for that, we've tended to give them, you know, sort of platform solutions. Mm-hmm. So when you think about the wire harness, you think about the bus bars, you think about the engineered component solutions that, again, are accretive to our overall margin but are lower cost to the OEM. And that's been the trade-off. I don't know if our customers should be more conservative. We do know how we should manage the business and the posture- Mm-hmm ... we should take, and, you know, we feel like we've done that pretty well. Do you think IRA helps level the playing field between Tesla and its competition, or does it kind of pad Tesla's lead, given their scale and vertical integration and the amount of content that they have in place onshore relative to their competition? I don't know where you come out on that. Yeah, it's a great, that's a great question. Listen, they're a great company, and they've been focused on how do they build a BEV platform for a number of years, right? Actually, well beyond most of the players out there, a BEV-dedicated platform, and that's presented success. I think IRA, in terms of access to capital and government funding for those- Mm-hmm ... other than Tesla, obviously makes it easier for them to invest, but obviously, they need to develop solutions that, you know, that are competitive with, you know, the overall market. Excellent. I don't think that answers the question. It kind of does, actually. It kind of does. It's easier to invest. Questions from the audience? I didn't say it. Oh, okay. Please. I'm putting words in your mouth then. Forgive me. Any questions in the audience? For Joe or Kevin? I always say I love awkward silences. What's next? What are you looking for next? Yeah, the pipeline's very active. I think we've got a great track record of acquiring and integrating. If you look at where we'll focus, I think you look at where we've been focused, right? I think the add-on type acquisitions that are additive to product line, product line capabilities in both SPS and AS&UX, our two operating segments, we see a lot of opportunities there. So things like Intercable, the acquisition that we did last year, that provided high-voltage bus bars, eighth generation high-voltage bus bars, that have actually seen tremendous customer traction since we closed that deal. Continuing to invest in the interconnect space, both in automotive and non-automotive. You know, as we talked about at Investor Day, the engineered components, our interconnect business within SPS is over $6 billion in revenue. It's a significant business now. We've grown that considerably over the past 10 years, both organically and inorganically, and would continue to expect to do that. Wind River was obviously very strategic. You know, that's something that we think significantly added to the portfolio, and as we look out over the next couple of years, you know, see opportunities to add to those software capabilities. Not necessarily at the deal size of Wind River, but certainly adding capabilities to augment, you know, Wind River's continued success in both automotive as well as the other markets that it serves. Kevin, I mean, you have content on so... It's so diversified geographically and by customer character and quality. What are your thoughts on the Chinese OEMs, the Chinese EV OEMs, specifically? What do they do that's— What's the secret to their success? Well, China, from a policy standpoint, has been focused on new energy vehicles for, I don't know, the last five, six years. So I'd say that was one focus. Two, they move fast, right? Mm-hmm. They move very, very fast, and as they've advanced technologies, they get them on vehicles, they get vehicles on the road much faster than, quite frankly, what's done in the European or North America market. At the same time, they've been able to improve quality to a level where, you know, some are now focused on exporting outside of China. Mm-hmm. Which, you know, will be, it'll be interesting how that plays out. The most that we have business with are focused on Europe versus North America, for obvious reasons. Mm-hmm. And we'll see how that plays out. Do you think there's an on-ramp, for Chinese involvement in the North American market over the long term? In terms of ability to penetrate the market? Either through transplant, the way the Japanese and the Koreans did, or through other ways. You know, possibly. The geopolitics are complex. Mm-hmm. I don't think that's a simple question or a simple answer. Mm-hmm. If our real push is for how do we make the world, you know, more green, reduce CO2 emissions, you know, you wrestle with the path of how do you get more battery electric vehicles on the road? How do you do that quickly? Mm-hmm. Obviously, the Chinese have made a lot of progress over the last decade. They'll continue to make progress. On the flip side, there are, you know, social, political, and other issues that get in front of that. Agreed. More questions? ... More, please, just speak up. We talked about North America, we talked about Canada. Talk a little bit more about Europe, both short term—just speak a little bit more about Europe short term and also the sort of, you know, mix shift as Chinese penetration increases in Europe, how that helps your business. Yeah, sure. Very short term, we've certainly seen improvements in European outlooks in the back half of this year versus where we started this year. I think when we first got our customer schedules and outlooks for customers, sort of this time last year for 2023, there was a lot of concern around energy, energy availability, energy prices, impact on maybe some supply chain impacts from those energy issues, and I think they worked through those, albeit in part because they had somewhat of a mild winter. So I think just in general, they're feeling better about that, and we did see schedules increase in the back half of the year. I think for the European OEs, the China discussions, they're a little bit more complicated, right? Because you do have some of those larger European OEs that still have very big businesses in China, that drive a lot of profitability out of China. So I think they're gonna have to, over time, find a little bit of a balance there. You are seeing some penetration of Chinese EVs into that European market. And we see our European OEs, you know, sort of really sharpening the pencil on how to be more competitive in China. But I do think they're gonna need a bit of a balance there, just given how important that Chinese market is to several of those larger European OEs. More? Please. What's the risk your business, or how do you see it in reports on Ford and GM? Maybe they're not at scale yet, but they're losing a ton of money on EVs. If they can't get there and have an economic product, I mean, the implications for them are really bad, but- Mm-hmm ... how do you see the development of your business if they can't get to either scale or profitability? Well, for us today, from an electrification standpoint, they're a small percentage of our total high-voltage revenues. Their push to get towards electrification and kind of the government mandates as it relates to CO2 emissions and penalties if they don't, obviously, over the longer term, have implications. So, you know, it's something that we're obviously supported, supportive. We're obviously hopeful that they're able to develop those solutions. You know, I know they have on the drawing board some pretty attractive solutions that are out there, some nice car lines, so. I think to Kevin's earlier comment, just to frame it a little bit, we've if you look at sort of our investor day model, through sort of the end of the decade, as you get close to 2030, we, we've assumed about 80% of our EV business comes from, Europe and China. So we've, we've never overemphasized North America, just given we always assume, particularly given some of the products, larger trucks, larger SUVs, they were gonna take time to, to find an electric alternative. And to the comment made earlier, you know, our overall penetration rate are in the low 30s for EVs by 2030. I think we've got it sort of ring-fenced in a fairly sort of conservative way, at least relative to some of the other assumptions that have it, you know, pushing 50% penetration by 2030. And one of the impediments is just onshoring. I mean, it seems like high EV penetration and rapid onshoring might have some conflicting elements to that, right? Yep. To try to replicate those supply chains and diversify- Absolutely. I don't know if you want to elaborate on that, because you see all that. You're seeing that onshoring thesis play out, but you're also seeing the difficulty there. Any of the friction points you'd point out to this audience that maybe aren't appreciated? Listen, I think you'll see some of that in the battery space, probably most pronounced. Right. We are not directly involved with battery manufacturing. That was a strategic decision. That's good. A view that either our, our customers who'd want to be heavily involved with that, or there was an existing battery supply chain that really didn't wasn't something where we could add value. We're certainly seeing sort of nearshoring happening. Now, I think from our perspective, you know, we had... It's in part the way our customers are set up, in part the way our products are. You know, we, from a manufacturing standpoint, if you look at our three big regions, Europe, Asia Pac, and, and North America, we've always been about 95% of what we manufacture in region is region. So from a manufacturing perspective, we had - we're sort of ahead of the, the nearshoring. Doing some work to pull the supply chain in. The supply chain's closer to sort of that 80%-ish for Europe and North America when you look at within region. A lot of that has to do with electronics, and we're working through how to get some of that a little bit closer to the manufacturing operations. More questions? Can I just push back on that? Question. Discovery- Sure. We just had the biggest lithium discovery maybe ever in Nevada, and $45/kWh in cash is a lot of cash that's about to come to the battery space. So what would, what would sort of make you more optimistic about U.S. onshoring and sort of the EV supply chain? Yeah, I don't know if it was inherent bearishness. We just expected the EV market, in the US in particular, to develop more slowly than Europe and China. To Kevin's earlier comments, China, you know, and they're very good at, they set a policy, and people fall in line, and they set that NEV policy about six years ago. Europe's got a tougher regulatory environment, so by no means bearish. We do think it's gonna take longer to develop, and some of that is to the question earlier, at least to my view, you gotta have the right products. ... Yeah, nature of vehicles, application of those vehicles, the, you know, the consumer and the vehicles they buy, the size of those vehicles, range, all those other challenges that from a day-to-day standpoint, unless you're living in an urban setting, may be a little bit different, right? And, so I'd say those are the big, you know, those are the big differences. Listen, we're believers in electrification. Our view is it's coming, and technology will be enabled as long as governments are still focused on- Mm-hmm How do they reduce CO2 emissions? How do they drive CO2 emissions down? But for the average consumer, costs need to come down significantly. Things like range anxiety need to be resolved, right? Infrastructure needs to be put in place. It's not quite as easy here as it is in China to do that, right? That is the reality. And that all needs to play out. And at the same time, our customers are going through a process of, at least as of now, replacing highly profitable cars, trucks, internal combustion engines, with, you know, battery electric vehicles, which at present are more costly, right? And come with certain constraints. How's Karl doing at Motional? Karl's doing great. Yeah. We're actually gonna see Karl later today. Oh, really? Karl's doing fantastic. Oh, tell him I say hello. Motional is doing well. Technology is advancing rapidly. They'll be launching on a couple networks in Las Vegas, fully driverless, a little later this year, so we're excited about that. The partnership with Hyundai is going extremely well. Mm-hmm. So- Just some feedback. I would love to hear more, you know, if your team could get a broader audience for Karl- Okay -to talk, that would be great. We'll do that. Um- Great ... as he's becoming more topical, would love to ask him questions I won't ask you now on like, you know- Sure getting AI chips and GPU clusters from NVIDIA. Yeah. Where are you seeing some bottlenecks and some opportunities? Yeah. Thoughts on just a couple, you know, final thoughts here. Any changes in business you're seeing real-time in terms of, let's say, regionally within the U.S., maybe EV? EV inventory, we've seen kind of going up a little bit. Are you seeing that kind of flow through into schedules, maybe, and hybrids kind of taking up some of the slack? I don't know if you've seen some of those mix shifts at all in the business- Nothing- -call out From a significance standpoint. Okay. Okay. Yeah, no, I agree. Yeah. Anything on the forward, really forward curve on hydrogen, either fuel cell or hydrogen combustion, that you would, you'd highlight? Yeah. A lot of focus in Asia, in and around fuel cell- Mm-hmm ... and hydrogen combustion. Certainly it's an area of focus for Hyundai. I know that from a priority standpoint, challenge is you need a country that's very supportive of putting the infrastructure in place for you to enable that technology. Mm-hmm. Any... I'll—we have one more minute, if there's another question from the audience, Kevin or Joe. Any final thoughts, anything, anything I didn't ask or anything you wanted to like, kind of leave the audience with? No, I'd say what we're most excited about, Adam, setting aside the day-to-day challenge as it relates to chasing semiconductor chips and those sort of items- Yeah -which are, just getting better, you know, labor inflation. You know, as we think about how the company's positioned in enabling a software-defined vehicle, enabling what our OEM customers want to do, need to do, both from a hardware standpoint and a software standpoint, we feel really good about how we're positioned. And, that's reflected in our customer engagements. It's reflected in our, you know, more recently, our bookings, and it's reflected in our ongoing strong revenue growth over market. And, you know, as supply chain continues to improve, you'll see margin trajectory improve along with that. I think over the arc of your careers at leading Aptiv, you've seemed to have been able to stay, you know, current, and then in many cases, way ahead of some of the trends. Not just on a relative basis, but on an absolute basis. Thank you. You've seen the result- Thank you ... and the valuation as well. So keep kicking ass. Thanks. Thanks for coming back. Thanks for having us. Us here at Laguna, and this concludes the Aptiv session. Thanks, Adam. You got it. Thanks. Thank you. Good seeing you. Thanks a lot. Yeah. Thanks.