Good morning. My name is Chelsea, and I will be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2022 second quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, press star two. If you are using a speakerphone, please pick up the handset before asking your question. 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, Chelsea. Good morning, everyone. Thank you for joining us today. We issued our earnings release earlier this morning. It's posted on our website, borgwarner.com, on our homepage and on our Investor Relations homepage. 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 homepage 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 today. During today's presentation, we will highlight certain non-GAAP measures in order to provide a clearer picture of how the 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, "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 vehicle and commercial vehicle production weighted for our geographic exposure. Please note that we've posted an earnings call presentation to the IR page of our website. We encourage you to follow along with these slides during our discussion. With that, I'm happy to turn the call over to Fréd. Thank you, Pat, and good day, everyone. We're pleased to share our results for the second quarter of 2022 and provide an overall company update starting on slide 5. I continue to be impressed with the strength of our revenue relative to the overall industry. With approximately $3.8 billion in sales, we were up about 7% organically, despite global production being down slightly, and we outperformed in North America and Europe. From a margin perspective, our performance was negatively impacted by a planned increase in e-products R&D investment, net material headwinds, and sudden production shutdowns in China during this quarter. That said, we were able to partially mitigate these impacts through overall cost performance and progress on executing customer pricing actions with a number of key customers. You will see that our guidance implies a sequential improvement in margin into the second half of 2022, which is driven by volume improvements and our expectation of continued success in executing our customer pricing actions. We're pleased with the progress we made in Q2 on this front. However, there are still some other ongoing customer discussions that we expect to resolve in the back half of the year. We expect that the successful execution of these actions will position our financials more strongly heading into 2023. While navigating the near-term industry environment, we also took steps to drive our long-term positioning during the quarter. First, we completed the acquisition of Rhombus Energy Solutions. In addition to deploying capital to fund our M&A investment, we opportunistically repurchased $100 million of stock. Lastly, we secured multiple new electrification program awards. Next, I would like to highlight our recent ESG report on slide 6. In June, we released our 2022 sustainability report called Charging Forward Together. I am proud of the work of BorgWarner employees around the globe, delivering on our vision of a clean, energy-efficient world and embodying our beliefs of inclusion, integrity, excellence, responsibility, and collaboration. This comes across in the report. Together, we are accelerating the world's transition to e-mobility by empowering everyone to drive sustainably, by living cleaner, healthier, and safer lives. Our Charging Forward target to generate 45% of our revenue from electric vehicles by 2030 is consistent with our environmental goals. We remain committed to carbon neutrality in Scope 1 and 2 by 2035. In addition, we have now introduced a target to reduce our greenhouse gas emissions by 85% by 2030. We have formalized our commitments to diversity, equity, and inclusion with measurable targets. We continue to advance towards our vision and build our future each day with industry's top talent. Our employees are changing the world's mobility. I invite you to read more in our 2022 Sustainability Report on our website and join us on this journey. Next, I would like to highlight our e-product portfolio for hybrids on slide 7. Over the last quarter, we've been asked about the amount of revenue we were generating from these products on advanced hybrids. As you can see on this slide, it's actually quite sizable. We have a wide range of e-hybrid products that are helping our customers bridge to EVs. To name a few, these include inverters, motors, advanced and efficient drive modules, and High Voltage Coolant Heaters. E-hybrid products help provide the bridge to EVs for many OEMs by pairing efficient gasoline engines with electric drivetrains. In many instances, and as I have mentioned before several times, the technical profiles of these products are very similar to the same e-product used in a full electric vehicle. This is what allows us to drive additional scale and product capabilities that help improve our overall competitiveness in the world of battery electric vehicle. As you can see from the chart, we expect our e-hybrid sales to be close to $1.1 billion by 2025, and this does not include our highly efficient combustion product that will also be used on many of these same hybrid vehicles. This is a substantial revenue opportunity for BorgWarner and one that really reinforces our product leadership in electrification, which goes beyond pure battery electric vehicles. Now let's look at some pure BEV awards on slide 8. First, I'm happy to announce that we have secured two additional high voltage coolant heater programs. One is for a global OEM and the other is for an emerging electric vehicle brand in China. By offering consistent temperature distribution inside the battery pack and its cells, BorgWarner's High Voltage Coolant Heaters can be used for improving battery energy performance. They also allow comfortable cabin temperature to be generated in a short time, improving passenger experience. This is a great internally developed product success story at BorgWarner and one where we've quickly established product leadership. Second, BorgWarner has been selected to deliver battery systems for a European commercial vehicle OEM. This battery system will be utilized in the company's first range of heavy-duty electric trucks expected to launch in 2024. For this exciting new project, our customer will benefit from the latest generation of our ultra-high energy battery system, which provides a 50% increase in energy density over its predecessor. This upgrade increases vehicle range significantly, making it a great solution for long distance electrified commercial transportation. Lastly, I'm excited to share that the first units of the new BorgWarner fast charging station, Iperion-120, have been installed in Italy. We've been working on the organic development of charging capabilities at BorgWarner since 2017, and I'm really pleased to see our investments in this space starting to bear fruit. We will look to accelerate our success in stationary charging with some inorganic investments as well, which I will discuss on the next slide. This quarter's award activity once again highlights our wide range of products available for electrified vehicles and our grid-to-wheel capabilities. Next, on slide 9, I would like to discuss the acquisition of Rhombus Energy Solutions, which we announced this morning. We plan to accelerate the charging business with particular focus on high-value DC fast charging hardware and enabling software. We believe that we can leverage the local knowledge and footprint of Rhombus to complement our existing BorgWarner charging capability to accelerate organic growth. Specifically, Rhombus will add a North American regional presence to our existing European footprint. We plan to leverage BorgWarner synergies across product quality, engineering, supply chain, manufacturing, and global sales. We also see potential synergies with battery system customers. In terms of revenue, we expect Rhombus to add approximately $10 million to our 2022 revenue over the next two quarters. We expect our combined DC fast charging business to approach $175 million-$200 million in revenue by 2025. As a supplier to the auto and commercial vehicle market, we are not only delivering innovative products for electric drivetrain, but we also care about supporting certain key elements of the infrastructure for electric mobility, especially charging. As we look ahead, we believe you will see further success as we continue to strengthen our capabilities in this area. As you can see, we've made progress on key aspects of our Charging Forward strategy, so let's look at what this means in the progress report on slide 10. Starting first with organic electric vehicle revenue growth. With the award secure as of this call, we now have electric vehicle programs that we believe account for about $2.9 billion of booked revenue in 2025. This is a great achievement by the BorgWarner teams. Turning to M&A, we have now completed three acquisitions since the start of Charging Forward, AKASOL, Santroll's light vehicle e-motor business, and Rhombus Energy Solutions. Based on our due diligence, we believe those businesses will generate $800 million of additional EV-related revenue in 2025. We're not done here, though. We expect to take additional M&A steps, and we are actively engaged with a number of potential targets which could enhance various parts of our EV portfolio. Less than 18 months since the announcement of Charging Forward, we're on track to achieve approximately $3.7 billion of electric vehicle revenue by 2025, based on new business awards and actions announced to date. Let me summarize our second quarter results and our outlook. Overall, our second quarter performance was solid. Our revenue once again outperformed the industry volume as we delivered strong organic growth. We also made key progress in the quarter on the pricing actions necessary to deliver our full-year commitments. As Kevin will detail shortly, our full year 2022 outlook is unchanged from a top line and margin perspective, despite industry volume pressure in our largest market in Europe and sizable FX headwinds. Fundamentally, our relative revenue performance outlook has improved, and we believe we are on track to deliver double-digit organic growth this year. As I look beyond 2022, I'm very proud of the continuing progress on Charging Forward. We're booking electric vehicle revenue across our portfolio, and we are successfully executing our disciplined M&A process. Our booked organic BEV business and M&A completed to date puts us on track to achieve $3.7 billion in electric vehicle revenue by 2025. Combined with our E-hybrid business, our total e-product portfolio is now expected to reach approximately $4.8 billion in 2025 with what we've already achieved. To put that in context, this is nearly half the size of the company when I became CEO in 2018, but we're not done. We intend to carry on booking more new business and acquiring great assets to become even stronger as the world continues to accelerate towards electrification. I look forward to sharing that additional progress with you in the future. With that, I will turn the call over to Kevin. Thank you, Fréd, and good morning, everyone. Before I dive into the financial details, I'm gonna provide you with the key takeaways coming out of our second quarter. First, our revenue came in at the high end of our expectations, driven by strong relative revenue performance in North America and Europe. Second, our year-over-year margin performance was impacted by our planned increase in e-products R&D investment, material cost inflation, and the sudden production shutdowns in China. Finally, our guidance reflects more normal underlying incremental margin performance in the second half of the year. Let's turn to slide 11 for a look at our year-over-year revenue walk for Q2. After adjusting for the disposition of our Water Valley facility, last year's revenue was just over $3.7 billion. You can see that the strengthening U.S. dollar drove a year-over-year decrease in revenue of about 6% or more than $220 million. You can see the increase in our organic revenue, about 7% year- over- year. That compares to a 1% decrease in weighted average market production, which means we delivered another quarter of strong outperformance. The sum of all this was just under $3.8 billion in revenue in Q2. Turning to slide 12, you can see our earnings and cash flow performance for the quarter. Our second quarter adjusted operating income was $348 million or 9.3%, which compares to adjusted operating income of $421 million or 11.2% 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 $51 million on $268 million of higher sales. There were three primary drivers of this margin performance. The biggest driver was the planned step-up in e-products R&D, where we increased our investments by $56 million. Second, net material cost inflation was a $25 million year-over-year headwind in the quarter. Finally, COVID-19 drove disruptions and lower overall production in China. All of these items were expected when we provided our guidance in early May, which is why we anticipated second quarter margins being the most challenged for the year. Importantly, excluding these items, our incremental margin would have looked more normal for our business. Although our adjusted operating income was a sizable decline from last year, our adjusted EPS was down only $0.03 in the second quarter. That's because our effective tax rate came in below 20% due to the favorable geographic mix of earnings and the benefits of previous tax planning initiatives starting to materialize. While the Q2 rate isn't sustainable at that sub-20% level, we are expecting to see some improvement in our full year tax rate for 2022 and beyond, which I'll speak about more when I talk about our full year guidance. Finally, free cash flow. We generated $62 million of positive free cash flow during the second quarter. Our cash flow continued to be impacted by elevated levels of inventory, driven by supply chain challenges and the overall choppiness of global production. Let's now turn to slide 13, where you can see our perspective on global light vehicle industry production for 2022. When you look at this slide, you can see that our market assumptions incorporate a range of potential outcomes. That's primarily a result of the ongoing semiconductor supply challenges, European production and demand challenges stemming from the conflict in Ukraine, and the trajectory of the recovery in Chinese vehicle production. With that background in mind, we expect our global weighted light and commercial vehicle end markets to increase in the range of 2.5%-5% this year, which is flat relative to the assumptions underlying our prior guidance. Now let's take a look at our full year outlook on slide 14. First, it's important to note that our guidance assumes an expected $820 million headwind from weaker foreign currencies. While the appreciation of the U.S. dollar is having a significant top line impact, remember that our strategy is generally to purchase and produce components in the same region as our customers. As a result, the impact of currencies on our guidance is predominantly translational in nature. Next, as I previously mentioned, we expect our end markets to be up 2.5%-5% for the year, which contributes to the organic net sales change you see on the slide. The much bigger impact on that line item is the continued revenue growth we expect to generate above growth in end market production. That's about $1.3 billion of our organic revenue growth or about 9% growth above market. That current outlook for outperformance is stronger than our prior outlook, primarily due to the impact of estimated pricing recoveries from material inflation and other costs. Finally, as it relates to our revenue outlook, the Santroll and Rhombus acquisitions are expected to cumulatively add $45 million-$55 million to 2022 revenue. The result of all of this is that even though FX rates have deteriorated our current outlook by $170 million from our prior guidance, our overall revenue outlook is unchanged at $15.5 billion-$16.0 billion. Switching to margin, we continue to expect our full year adjusted operating margin to be in the range of 9.8%-10.2%, which is also unchanged from our prior outlook. While higher material cost inflation continues to negatively impact our financials, we're pleased with the progress we've made in negotiating recoveries of a portion of these costs from our customers, and that's already started to help mitigate the impact on our P&L. We expect that the customer recoveries we're continuing to negotiate and put in place will continue to partially mitigate the impact of the inflationary headwinds that we're facing. For the full year, we now expect net material cost inflation to negatively impact our results by $145 million-$155 million. As it relates to R&D investment, our guidance anticipates a $145 million-$160 million increase in e-products related R&D investment in 2022. This is at the higher end of our prior guidance, driven by continued new business wins. Excluding the impacts of material cost inflation and this e-products R&D investment, our 2022 margin outlook contemplates the business delivering full year incrementals in the high teens. That effectively implies that as volumes recover in the second half of the year, we expect them to flow through at normalized conversion, which supports the sequential step up in the second half operating margin implied by our guidance. Even though our revenue and margin outlooks are unchanged, we're now expecting full year adjusted EPS of $4-$4.40 per diluted share. This is an increase versus our prior guidance reflecting two things. First, we're expecting a lower full year tax rate of 27%, down from our prior guidance of 28%, driven by our mix of earnings and the benefits of previous year's tax planning initiatives. Second, we are benefiting a bit from the lower average share count as a result of the stock buybacks we executed during the second quarter. And finally, we continue to expect that we'll deliver free cash flow in the range of $650 million-$750 million for the full year. That's our 2022 outlook. Let me summarize. Overall, we had a solid quarter. We delivered positive organic growth despite industry volume declines. Our team successfully negotiated pricing recoveries with several key customers, and we're making progress on other key customers, which we believe helps to position us for a sequential margin improvement in the second half. We believe we're positioned to deliver our full year guidance, including a step-up in adjusted EPS despite additional external headwinds. As we said in prior quarters, while we focus on managing the present, we're also working to drive profitable growth and invest in our future. To that end, we had another quarter in which we secured meaningful new business awards for electric vehicles across multiple parts of our portfolio, and we deployed cash to create value for shareholders through the acquisition of Rhombus and the repurchase of $100 million of stock during the quarter. Our ability to balance these near-term commitments with our long-term objectives is the key to our ongoing success. With that, I'd like to turn the call back over to Pat. Thank you, Kevin. Chelsea, we're ready to open up for questions. At this time, I would like to remind everyone, if you would like to ask a question, press star one on your telephone keypad. If you are using a speakerphone, please pick up the handset before asking your question. In the interest of time, please limit yourself to one question and one follow-up question. We'll pause for just a moment to compile the Q&A roster. Your first question comes from John Murphy with Bank of America. Good morning, guys. Just wanted to ask a first question on slide 10. You know, Fréd, as you look at this, you're outperforming on organic EV sales, and not yet underperforming on the M&A. As you look at these two bars together, could you consider if you keep outperforming on organic that you might not need to do the M&A that you have targeted here, and you look at this as sort of a total target as opposed to one that's specifically split between organic and M&A? John, I think the way we look at M&A is very strategic. We look at technology and product leadership and scale. I would say those are independent kind of work streams. We're not looking at revenue for revenue's sake. Even if at one point maybe we collapse those two bars because we're not gonna keep the March 2021 as a jump off, which is the capital market day where we announced Charging Forward, I think those two things are somehow a little different. Okay. If I could ask a follow-up just on the pricing and commercial, you know, settlements or, you know, you're getting from your customers to help out with cost inflation. I'm just curious how those are being structured because we're looking at what might be, you know, peak cost inflation on raws and other input costs, and the automakers are playing ball right now. But if we saw some easing in this inflation or, you know, God forbid, an actual reversal, would that benefit go to them the way things are being structured right now? Or would you be able to capture some of that benefit, you know, as spreads would open up again? Yeah. As we look at the material cost recoveries that we're negotiating with our customers, we're generally trying to drive a meaningful portion of those through price adjustments in the portfolio. Undoubtedly, there's a linkage between those price adjustments that we're making and the material cost inflation that we're experiencing, such that if there's continued movement of inflation higher, then we would expect to have further discussions with our customers. Just like as if we thought or if we experienced inflation starting to unwind, I think it's fair to think that we would expect to have to unwind some of those price increases. I think that's the right way to think about it. It does sound like there could be a period where, you know, if raws actually reversed as volumes were going up, you may actually be able to capture it for some period of time, and there could be a real upward pressure on margins for a period of time. Is that a fair statement that there is some lag that would go on there? I'm not sure. I guess we'll have to see when we get to that point. I mean, I think it's a discussion that we'll ultimately have with the customers. It's not necessarily an automatic mechanism that's in place in terms of how those things adjust additionally upward or downward. It'll lead to further discussions. We'll have to see if and when we get to that point. Okay. Thank you very much. Thank you. Our next question will come from Emmanuel Rosner with Deutsche Bank. Oh, thank you very much. Good morning, everybody. Morning. Morning. Can you make our lives easier and maybe talk a little bit about the first half to second half walk, the way you see it based on what's implied in your outlook? What are sort of like the puts and takes? Assume obviously volume is higher but is gross over markets higher? How does materials play out? And then mostly recoveries, are you expecting more of those in the second half than in the first? Yeah. I think the right way to think about it, big picture, 50,000-foot level, is as you look at the first half versus second half, the material cost headwinds that we're expecting kind of on the year-over-year basis when you look at both the commodity side of the equation and the other inflationary costs coming through from our suppliers and the recoveries we're getting. It's somewhat of a push first half to second half in terms of the total magnitude on a year-over-year basis. Same with ER&D. As you think about, you know, going from first half to second half, I think I would put it in about a similar zip code. It's not a substantial headwind going from one half of the year to the next. Which means what? It means what's happening is, as we continue to drive those pricing recoveries with our customers to mitigate the impacts of what we're seeing coming through inflation, it supports our ability to allow the incremental volume to drive conversion. That's effectively what's happening. Volume is stepping up in the back half of the year. We're getting the incremental conversion on that we would ordinarily expect, and we're managing the rest of the cost structure similar to how we're managing the first half of the year. Then in terms of growth, second half versus first half, I think you mentioned 9% growth of a market for the year. Does that mean sort of like double digit in the back half? Yeah. I think what it implies. I mean, it's somewhere in that high single digit to maybe low double digit zip code when you look at the second half of the year, depending on if you're at the low end or the high end of our guidance. On an overall basis, 9% or so for the full year. Okay. Now, when I look at your implied second half outlook, to what extent is it a good base to try to forecast your 2023 outlook? Like, is the second half in the margin run rate sort of like a clean way to look at it as an exit rate? Yeah. I think what we're trying to do as we negotiate the price recoveries with our customers along with the inflationary impacts we're seeing from the supply base, is get to the point where we have a stable jump-off point using the second half margin profile as we head into 2023. That's really our objective. We go into 2023, and we can have, hopefully, a more normalized year from a conversion standpoint, but obviously we're gonna need inflationary pressures to cooperate with us and not create more noise as we head into next year. Okay. Thank you very much. Thank you. Your next question will come from David Kelley with Jefferies. Hey, good morning, guys. Thanks for taking my questions. Maybe starting with the Rhombus acquisition and meaningful revenue step up to 2025, you know, obviously a lot of charging infrastructure to build out here in North America. Can you talk about, you know, the visibility to their build pipeline, you know, maybe segments where they're winning and kind of the makeup of that revenue trajectory? Yeah. Their focus is essentially right now in North America and especially on commercial vehicle, electric buses, trucks and depots, which, as you can imagine, we see quite some synergies with what we're doing from a battery pack standpoint, kind of the same customer profiles and vectors of growth. We really like the synergies both on top line and bottom line that we can bring with our current footprint in Europe which is more focused on DC fast charging, passenger cars, and here, more commercial vehicle and depots. We're pretty excited about the outlook for this combination. Okay. Got it. Thanks. You know, your core charging expertise in Europe is more light vehicles. North America is more in the commercial space. You know, can you just elaborate on the leveragability of the two businesses? Do you expect to go after the light vehicle charging market in North America? Yeah, we expect to harvest the synergies on the top line and technology on manufacturing. Yes, it's fair to assume that our goal is to be local as far as the demand and the product definition is concerned, but global and leveraging the global scale of the company as far as the back office, the technology, and the modularity of the design is concerned. By the way, there is a supplemental deck on the BorgWarner IR website, where you will see a little bit more granularity around the acquisition of Rhombus. Okay. Got it. Thanks, guys. Thank you, David. Thank you. Your next question comes from Colin Langan with Wells Fargo. Oh, great. Thanks for taking my question. You know, there's been some talk about automakers moving to more of a sole source model for internal combustion engine components in the future as they kinda try to be more sort of focused on their ICE investments. Are you seeing this at all? Does that change any of your view on, you know, what to do with those assets? 'Cause it seems like kind of a positive trend if you're gonna be in position to be a core supplier for those components. I think going forward, you will see a focus on efficiency for those combustion product and also cost competitiveness, i.e., what we call product leadership at BorgWarner. If you are a top buyer at one of the key OEMs, do you need 4 suppliers for one commodity in combustion? Maybe not. Similarly, I think you're gonna see some consolidation in the supplier panel in some of those key OEMs. Again, I think in this case competitiveness forefront of product leadership from an efficiency standpoint and scale will be important to support our customers around the globe with maybe fewer suppliers for that combustion market. Got it. On the target for $3.5 billion in ICE dispositions, I mean, any update on the timeline there? It just seems like a pretty rough market to be trying to divest assets given the uncertainty out there. Yeah. It is. I think it's fair to assume that given the current market environment, our disposition projects right now are temporarily on hold. I mean, simply put, you're alluding to it, Colin, the debt financing markets are not open to finance transactions of this nature right now. That's okay. We're not a desperate seller here. These are cash flow generating businesses that we're happy to hold for the time being. Then when the debt financing markets do reopen, which they eventually will, we'll resume our disposition processes. I think it's fair to think right now it's just not practical to execute those transactions. We'll continue to drive the performance of those businesses and generate the cash flow to continue to support our investment strategies. Got it. All right. Thanks for taking my questions. Thank you. Your next questions will come from Rod Lache with Wolfe Research. Morning, everybody. I believe on the inflation side, you mentioned $60 million in Q1 and then $25 million in Q2. If I'm understanding this correctly, there's another $65 million in the second half. I just was hoping maybe you can tell me if that's about right and just based on just the pricing negotiations, how much benefit kind of spills over into 2023 on a net basis. Then secondly, you mentioned the ER&D increase. Was the overall R&D up similarly, or did you reduce the other R&D? Yeah. On the net in material cost inflation, the cost net of the recoveries, the first quarter, I think we talked about $55 million, if I'm not mistaken, the second quarter, $25. We're actually at about $80 million year-to-date on a year-over-year basis, which implies now that we're saying about $145 million-$155 million for the full year. There's another $70 million year-over-year headwind in the back half of the year. Roughly comparable to the headwind in the first half of the year. That's similar to my comments that I was responding to Emmanuel's question on. That's maybe the first point. In terms of the spillover effect, I mean, our focus is really on addressing the P&L issues we're seeing from the material cost inflation, addressing those with our customers this year. That's what's embedded in our guidance and effectively allows us to mitigate the incremental headwinds that we are seeing in the back half of the year, so we can manage that year-over-year headwind somewhere in that $65 million-$75 million zip code. What that allows us to effectively do is have more normalized conversion as revenue comes back into the P&L in the last 6 months. On the ER&D question, the second quarter, we were up $56 million in e-products related R&D, which means we're up a little over $80 million in the first half of the year, which is right in line with our guide for the full year being up $145 million-$160 million on a full year basis. With respect to the other R&D in the quarter, the other R&D was actually down $15 million. Total R&D was up $41 million, of which e-products was up $56 million, and call it combustion-based R&D was down $15 million. Just, secondly on the M&A side, I was obviously just in light of the challenges and divestitures, I was hoping you might be able to just pass along just high-level thoughts on scenarios. What would the impact be on kind of mid-decade targets if you wound up holding on to some of those businesses that you were considering selling, instead of divesting of them? Just lastly, really quickly, any kind of high-level thoughts on what the competitive moats are for Rhombus? Yeah. I'll have Fréd talk about the competitive moats. Let me take that first question. I mean, to be honest, we view this as a temporary hold in the execution of the disposition strategy. I mean, all of us, including you, have lived through these types of markets before where the debt financing markets can shut down and become cost prohibitive for a period of time, but they're generally not closed for years. You know, from our perspective, we've got multiple years before we really wanna hit our EV objectives and deliver on the priorities that we laid out at our investor day a year and a half ago, and we expect to execute on that. We're not looking at scenarios where we're unable to dispose of these businesses through the middle of the decade. We still have plenty of time, and our process is still ready. I mean, it's ready to go when the debt markets reopen. We'll resume those processes. Maybe I'll turn it to Fréd for your second question. Yeah. What's your question, Rod, on competition? My question was just if you could just describe the competitive moats for this Rhombus acquisition? Okay. Yeah. You know, we know that market. We've been in that market organically since quite some time and we're selling products in Europe. The market is growing dramatically, and in the regions that we're now addressing with both on the footprint, it's around $9 billion in 2030. It's still very fragmented, and I think we shall expect consolidation in this field too. Again, I think technology is important, and Rhombus is one of the first one with bidirectional charging with U.S. certified technologies in this field, which we really like and hopefully help them grow with these products. We think that this market will need a strong local presence, but also a very strong back office in purchasing, in technology, in low volume manufacturing. We also are very used to low volume manufacturing with our commercial vehicle products around the world, and we also see quite some pull from our customers related to CV trucks and buses who want to offer complete solutions for their customers, and we can be an enabler for them to be able to do that. Thank you. Thank you. Our next question comes from Noah Kaye with Oppenheimer & Co. Yeah, thanks for taking the questions. Maybe just a follow-up here. You know, I think, first of all, it's good to see you get deeper into the EV charging space, good growth opportunity. You know, you've already got in-house some, you know, very high quality domain expertise around efficient power conversion, right? And utilizing advanced materials, you know, how electrons, you know, flow into, you know, an EV or an electrified powertrain. And then there's really, as we think about charging, kind of the software, you know, side of it and the, you know, the efficient dispatch, of the charging at certain points in time and reading signals from the grid. From a technology perspective, is what Rhombus brings more the latter or more the former or a combination thereof in terms of augmenting your core competence around power electronics? I think it's both of them, and also they're helping us, and we can help them. We have, I think, a substantial knowledge of the bill of material that goes into those charging devices. We have global reach. We see some trends in power electronics where we can leverage our know-how to those particular products. We see synergies with our sales and government affairs relationship around the globe. Really excited about bringing BorgWarner to this charging business, stationary charging business. I think we can bring a lot of technology and a lot of competitiveness in this field. Okay. Helpful. A financial question, I guess perhaps for Kevin. You know, what's implied in the free cash flow outlook in terms of working capital in the back half? You know, you guys have been paying your bills pretty timely and receivables and inventories have built, you know, here in the first half of the year. Where do you expect that to trend in the back half? Yeah. Fundamentally, we're expecting that the inventory that we've built in the first half of the year, that we were able to unwind that in the back half of the year as we start to see volumes ramp up and consume some of that inventory. We also saw a little bit of elevated receivable balances because with the China shutdowns, we saw some of our China customers paying a little bit later than they ordinarily would and we expect that to reverse as well as we get into the third quarter here. That we're expecting to get back to effectively where we were to start the year from a working capital perspective. Okay, super helpful. Thank you. Thank you. Our next question will come from James Picariello with BNP Paribas Exane. Hey, good morning, guys. Good morning. Just a quick follow on the Rhombus Energy and the charging infrastructure. You know, how much of a factor does scale, you know, play into the competitive landscape in this space? Any color on just what the content per charging unit opportunity is, you know, so that we can maybe start to work through the TAM. Today I would say that it is still very regional. It will still require some regional specificities as far as certification is concerned, as far as sales channel, as far as government contacts are concerned. When the business ramps up, like any businesses related to quite significant electronics and power electronics content, scale will matter, and scale always matter. As far as the TAM, I think, Pat, maybe you. Go ahead, Kevin. Yeah, I was gonna say, I think Pat will come back to you on maybe some ways to think about CPV. As we've dimensioned the market looking out through 2030, we think it's about an $18 billion global market opportunity of which about half of that is in North America and Europe, where we're positioned to play right now. Yep. Pat can give you a little bit more detail on how to think about the different elements of CPV there. Okay. China, the China normalization and ICE programs called out in the quarter. To what extent is this just, you know, tied to weaker commercial truck production? Is this a dynamic that's expected to sustain in the back half? Just how are we thinking about the China normalization? Last year when we were talking about some of our programs actually exceeding our expectations last year because we were having higher customer penetrations on a few programs than we were anticipating as being steady state. We started to see in the back half of last year in particular, that I'll say, outsized penetration unwound a little bit. That's what we're calling the normalization effectively of a key program or two in China. We start to lap that benefit now as we head into the third quarter, you shouldn't see that headwind materially anymore in our outgrowth. Okay, understood. Thank you. Thank you. Our next question comes from Luke Junk with Baird. Good morning. Thanks for taking the question. Wanted to start with your 2025 organic EV revenue outlook. Insofar as you gave us an updated look at that this morning, also provides a window into bookings for the first half of this year. I'm just wondering how you'd characterize the bookings environment right now, especially as it relates to electrification. How do you think the second half sets up on that front? Thank you. I think there is a lot of momentum into the EV-related request and request for quotes and quotation globally. What we also see is an accelerated demand for capacity increase on what we have launched and also funny enough, what we have not launched yet, but where there is higher demand in the coming years. Overall, I see only acceleration in the EV booking and request for quotation second half versus first half. Okay. Thanks for that, Fréd. My follow-up question, you know, several questions about the impact of current market conditions in terms of dispositions, which I understand. I wanna flip it, though, and ask in terms of M&A, to what extent, if any, the volatility that we're seeing in equity markets right now, rising rates and all the things in the current environment. Does that change the quality of assets available to you in the market? Does it change competition for deals? Does the Rhombus deal in particular signal anything different in this regard? Thank you. Yeah, I think generally speaking, if you think about the types of companies we look to acquire, they look generically like one of two companies, either one, a company that has a little bit more mature income statement, or two, one that's in the infancy of its growth trajectory and still doesn't have much in the way of a P&L. Those businesses that have a more mature income statement are much more exposed to the current market environment and the inflationary environment that we're seeing. That creates a lot more uncertainty and due diligence about the ability to recover on some of those from customers, the pricing inflation issues that that business is seeing, which sometimes can create a bid-ask spread between a buyer and seller until there's clarity and resolution around those topics. Those types of companies are a little bit harder to transact on in the current environment. We saw that, like we talked about last quarter, where we walked away from a particular transaction, we simply couldn't close the gap on some of those issues. When you look at companies that are earlier in their growth trajectory, they're really focused on developing their technology, driving new business wins that come into the P&L in say, 2024, 2025, 2026. Those are the types of companies that we're more apt to execute on in the nearer term, given the environment. That's a lot like Santroll, a lot like Rhombus, companies that have more of a profile of that. On the margin, it's helped by the fact that because of the challenging capital markets, there was more limited options for those companies to secure capital to fund their growth objectives, whereas we have the ability to provide that kind of funding. The strategic capital that we can bring to bear actually gives us a bit of an advantage in working with companies like that in this type of an environment. All right, thank you. Our next question will come from Joseph Spak with RBC Capital Markets. Thanks. Good morning, everyone. Sorry, I just wanna go back to charging, which I guess is the theme of the day. You know, you did have the installation in Italy and now the Rhombus acquisition. You know, you talked about how this is still a pretty fragmented segment. You talked about the importance of scale. I mean, should we expect that this will continue to be an area you look to build capabilities? Or do you think between what you have organically and what you're getting via this acquisition, that's enough to sort of really begin to scale in the two theaters you mentioned, North America and Europe? Also maybe if you could add, like, how much of the $3.7 billion do you expect to come from charging? First, yes, you should expect us focusing on both organic and inorganic growth in this field of stationary charging, focusing on high power DC fast charging. The second question was out of the $3.7 billion we expect. I think in my prepared remarks, it was about 150 million for Rhombus and overall, I think $175 million-$200 million overall, including our organic exposure in these devices. Okay. Thanks for that. Secondarily, I'm just curious, Fréd, if you could tell us, you know, sort of almost in real time what your conversations are like with your, particularly with your European customers. You know, everyone's sort of, you know, had been concerned about energy shortages, maybe a little bit less so than sort of at the peak. How you know, they are sort of planning for the balance of the year here, how you are preparing, and are you seeing any evidence of maybe moving some production into the third quarter, maybe fewer summer shutdowns to get ahead of what could be a more difficult winter? I think it's honestly too early to say. I have not been exposed to discussions along those lines. I think this will come when actually Europe comes back after the summer break. I would say early September. End of August, early September, we know more about the profile of production around and in the winter. Okay. Thank you. We have time for one final question, and that question comes from Mark Delaney with Goldman Sachs. Thanks. Good morning. I appreciate you fitting me in here. Question on the EV business, and nice to see the momentum both in terms of the additional M&A as well as the organic bookings. When we start thinking about what that may mean for your prior comments for the EV business reaching breakeven, I believe in the 2023-2024 timeframe, is there any change in when you think you may reach that breakeven when you consider some of these changes in terms of, you know, the M&A, organic revenue and also some of the OpEx comments you made? Yeah, I think at this point we haven't really updated that guidance. I think it's fair to say it's in the same zip code as to where we were from a breakeven perspective. You know, but there's a couple key variables to keep an eye on. One is as we continue to invest more in e-products related R&D, you know, that can become a headwind to that near term breakeven. On the other hand, as our EV revenue grows, like we're seeing now $850 million, our expectation for the full year 2022, that gives us incremental contribution, which is a tailwind. Those are the two key variables to keep an eye on, and how both of those items grow. I think directionally there's no real significant change in our outlook, even though we're not gonna provide a specific update today. The second one's more conceptual on the pricing recoveries. You know, thanks for all the comments you already made around your expectations for net pricing this year. You know, more high level though. You know, a lot of companies are trying to manage expenses more tightly given some of the macroeconomic risks that are out there. You know, are you seeing that all reflected in your ability to get net pricing? You know, is that potentially gonna be harder to the extent some of the macroeconomic challenges do persist? Thanks. Yeah, we always focused on staying lean and looking at any room for cost reductions overall. I think the actions that we've taken two, three years ago really allows us to manage through this, right? If you compute, we have about a $100 million benefit this year from restructuring and cost reduction planning that we've started two, three years ago. I think we're doing that. It's part of what we do in a position of strength without compromising the long-term trajectory in E. We won't do anything that compromises this, and we're not gonna constrain anyone within BorgWarner to grow in the field of battery electric vehicle.