Good morning. My name is Shelby, and I will be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2022 third 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're using a speaker phone, 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, Shelby. Good morning, everyone, and 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 IR calendar, we'll be attending multiple conferences between now and our next earnings release. Please see the invest section of our IR 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 detailed in our 10-K. Our actual results may differ significantly from the matters discussed today. During today's presentation, we'll 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'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 Fred. Thank you, Pat, and good day, everyone. We're pleased to share our results for the third quarter of 2022 and provide an overall company update starting on slide five. I continue to be impressed with the strength of our revenue relative to the overall industry. With about $4.1 billion in sales, we were up over 29% organically. This is approximately 7% better than the year-over-year growth in industry production. This outperformance was in part supported by the execution of the pricing actions with our customers around the world. From a margin perspective, our performance was very strong in the quarter and also benefited from our customer pricing. While navigating the near-term industrial environment, we continued to take steps to drive our long-term positioning during this quarter. Year to date, we have repurchased $240 million of stock. During the third quarter, we announced the acquisition of the charging business of SSE in China, and we secured new electrification program awards. Next, on slide six, I would like to discuss the acquisition of the charging business of SSE, which we announced last month. SSE will add a China presence to our existing European and North American footprint. We have now established global charging capability upon which to build. The SSE acquisition is expected to close in early 2023, so there will be no revenue impact in 2022. However, we now expect our total DC fast charging related annual revenue to be in the range of $225 million-$275 million by 2025. Our charging strategy can be summarized in four points. One, our initial focus will be on high-value DC fast charging hardware, enabling software and services. Two, our objective is to establish product leadership and competitiveness in this category. We will improve the charger's quality that is key to enabling electric mobility. Also, over 50% of the bill of material in a DC fast charger is in components where BorgWarner has existing expertise and global scale. Three, we plan to leverage BorgWarner's regional sales capabilities and government interaction. Four, we want to explore potential sales synergies with our CV customers and especially the customers buying our battery packs. As we look ahead, we believe you will see further success as we continue to strengthen our capabilities in the charging area. Now, let's look at some new electrification awards on slide seven. First, BorgWarner will supply its integrated drive module to a leading Chinese automotive manufacturer. This marks the first time that we have supplied our IDM on a hybrid P4. This is also the first time that this manufacturer has awarded this system to an external supplier. Importantly, this IDM is substantially similar to the IDM used in future EV specific application, which will drive additional scale benefits for this product. Second, BorgWarner will supply electric motors for the e-axles of a European commercial vehicle OEM. This e-axle is designed to equip new electric light commercial trucks ranging up to 7.5 tons. Production is expected to begin in early 2023. It will use our very modular HVH 250 motors, and we can supply them in various stack lengths and winding configuration, either as fully assembled motors or as rotor stator assemblies. Lastly, BorgWarner has been granted a production increase to supply its 800V silicon carbide inverters for premium European OEM. The initial order has now been significantly increased. The suitability of our product has been further endorsed by this uplift. Our power loss reducing silicon carbide inverter technology is helping our customer reach its strategic goals of a high energy efficient drivetrain with exceptional electric driving range. Importantly, the increase of volumes to previously awarded programs is more and more becoming the new normal for many of our EV products. As you can see, we've made progress on key aspects of our Charging Forward strategy. Let's look at what this means in the progress report on slide eight, starting first with organic electric vehicle revenue growth. With the awards secured as of this call, we now have electric vehicle programs that we believe will account for about $3.1 billion of booked revenue in 2025. Turning to M&A, we have now completed or announced four acquisitions since the start of Charging Forward, AKASOL, Santroll, Rhombus, and SSE. Based on our due diligence, we believe those businesses will generate $900 million of additional EV-related revenue in 2025. We're not done here, though. We expect to take additional M&A steps and are actively engaged with several potential targets, which could enhance various parts of our EV portfolio. We are already on track to achieve about $4 billion of electric vehicle revenue by 2025 based on new business awards and actions announced to date. This is a great achievement by the BorgWarner teams and a significant milestone for the company. We believe it puts us well on our way towards our $4.5 billion EV revenue target for 2025. Let me summarize our third quarter results and our outlook. Overall, our third quarter performance was strong. We delivered strong organic growth. We also made key progress in the quarter on the pricing actions with multiple customers. As Kevin will detail shortly, we have increased the low end of our full year 2022 outlook for both organic growth and margins based on our performance year to date, and our full year EPS guide has also increased. Looking beyond this year, I'm very proud of the steady progress on Charging Forward. I'm extremely excited that we're now on track to achieve $4 billion in pure electric vehicle revenue by 2025. It is clear to me that our EV business is accelerating, but I expect more to come. We intend to carry on booking more new business across our base portfolio. We expect to utilize our strong cash generation to acquire great assets to become even stronger as the world continues to accelerate towards electrification. I look forward to sharing with you additional progress in the future. With that, let me turn the call over to Kevin. Thank you, Fred, and good morning, everyone. Before I dive into the financial details, I'm going to provide you the key takeaways coming out of our third quarter. First, we reported strong organic growth driven by customer pricing actions and industry volumes that were at the high end of our expectations going into the quarter. Second, our year-over-year margin performance benefited from normalized conversion on higher revenue and successful execution of our customer pricing actions. However, these benefits were partially mitigated by our planned increase in e-products R&D investment. Let's turn to slide nine for a look at our year-over-year revenue walk for Q3. After adjusting for the disposition of our Water Valley facility, last year's Q3 revenue was almost $3.4 billion. You can see that the strengthening US dollar drove a year-over-year decrease in revenue of over 9% or approximately $320 million. You can see the increase in our organic revenue, about 29% year-over-year. That compares to a 22% increase in weighted average market production, which means we delivered another quarter of strong outperformance. The sum of all this was just under $4.1 billion of revenue in Q3. Turning to slide 10, you can see our earnings and cash flow performance for the quarter. Our third quarter adjusted operating income was $438 million or 10.8%, which compares to adjusted operating income of $336 million or 9.8% 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 increased $138 million on $990 million of higher sales. The biggest positive driver of this performance was that we converted at approximately 17% on our additional sales. This conversion was partially offset by two things. First, we continued to execute on our planned increase in e-products R&D. In Q3, we increased these investments by $24 million relative to last year. Second, material cost inflation, net of customer pricing recoveries, was an $8 million year-over-year headwind in the quarter. Our adjusted EPS improved by $0.44 in the third quarter, driven by the $138 million improvement in our adjusted operating income and a much lower effective tax rate than we've been experiencing in the last couple years. This tax rate reduction was driven by a favorable mix of earnings across taxing jurisdictions and the impacts of ongoing tax planning initiatives. Finally, free cash flow. We generated $167 million of positive free cash flow during the third quarter. Let's now turn to slide 11, where you can see our perspective on global light vehicle industry production for 2022. As you can see, our market assumptions still incorporate a range of potential outcomes. However, we have incorporated several adjustments to our prior assumptions, including a small decrease in the high end of the North American market, continued production increases in China as we expect third quarter strength to continue into Q4, and a further decrease in European production due to the market uncertainty associated with the ongoing conflict in Ukraine. As a result of these assumptions, we now expect our global weighted light and commercial vehicle markets to increase in the range of 3%-4.5% this year, which is a bit narrower than the range underlying our prior guidance. Now let's take a look at our full year outlook on slide 12. First, it's important to note that our guidance assumes an expected full year headwind from weaker foreign currencies of more than $1 billion. This represents an additional headwind of $230 million versus our prior guidance. 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 3%-4.5% 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 $1.4 billion of our organic revenue growth, for just over 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, which we now estimate will contribute just under 4% of outgrowth for the full year. 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. Adding these items together, we're projecting total 2022 revenue to be slightly lower than before in the range of $15.4 billion-$15.7 billion. This slightly lower revenue outlook is being driven almost entirely by the additional FX headwinds. However, our expectation for organic growth has increased to 12%-14% compared to our previous outlook of 11%-14%. That is helping to mitigate the FX impact we're seeing. Switching to margin, we're updating our full year adjusted margin outlook to 10.0%-10.2% compared to our prior outlook of 9.8%-10.2%. 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 helping mitigate the impact on our P&L. For the full year, we now expect net material cost inflation to negatively impact our results by $110 million-$120 million, which is lower than our previous expectation of $145 million-$155 million. As it relates to R&D investment, our guidance anticipates a $145 million-$150 million increase in e-products related R&D investment in 2022. Excluding the impacts of net material cost inflation and the increase in e-products related R&D investment, our 2022 margin outlook contemplates the business delivering full year incremental in the high teens. We're now expecting full year adjusted EPS of $4.25-$4.45 per diluted share. This is an increase from our prior guidance, reflecting two things. First, we're expecting a lower full year tax rate of 25%, down from our prior guidance of 27%, driven by our expected mix of earnings and the benefits of tax planning initiatives we've been executing the last couple years. Second, we're benefiting a bit from the lower average share count, which is a result of the stock buybacks we executed during the quarter. 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 strong quarter. We delivered robust organic growth. Our margin performance was strong, driven by incremental margin performance and successfully negotiated pricing recoveries with our customers. We are increasing the midpoint of our EPS outlook for the full year, driven by our strong year-to-date performance and a lower tax rate going forward. Year to date, we've taken a number of actions to drive our future profitable growth and to create value for our shareholders. We've continued our disciplined M&A with the completed acquisitions of Santroll and Rhombus, as well as the announced acquisition of FSE. We've returned more than $360 million of cash to our shareholders through our buybacks and dividends, and we've secured meaningful new business awards for electric vehicles across multiple parts of our portfolio. These awards have added more than $800 million to our booked electric vehicle revenue for 2025 compared to the same point last year. As a result of our bookings and M&A, we believe that we have already achieved an important milestone, $4 billion of secured EV revenue for 2025. We view this as a huge success for the company, but we've done all of this while still delivering on our near-term commitments, once again showing the balance that is the key to our ongoing success. With that, I'd like to turn the call back over to Pat. Thank you, Kevin. Shelby, 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're 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 will pause for just a moment to compile the Q&A roster. I will take our first question from John Murphy with Bank of America. Good morning, guys, and thanks for the time this morning. First question just around what's going on with customers on recoveries and settlements and pricing, which is all kind of being put together in the same basket in discussions often from, you know, suppliers and automakers. I'm just curious, as you're going through the process of getting, you know, recoveries, you know, is some of this one-time in nature, or do you think there's kind of a little bit of a paradigm shift here in what's going on with pricing with some of your customers or pass-throughs and indexing? I'm just trying to understand, you know, if this is, you know, true ups or is this a change in attitude going forward? I think we've heard from some of the automakers, they didn't realize how much the volatility was impacting their suppliers, which is intriguing because they're in the middle of it. But some of this stuff was a result of making up for some of the inefficiencies around volatility. As schedules normalize, maybe these recoveries might not be as great going forward. What is your take on this? Good morning, John. Some of it is in price, some of it is one time. It's true that when we negotiate, when we talk to our customers, they realize that this is a big hit and that big hit may be here to stay. I expect that, for 2023, we will have ongoing discussions with our customers around inflation. What's important is that we make sure that the nature of the recovery that we get from our customer base match pretty much the nature of the help that we are giving to our supply base, and that will be our goal also going forward. And maybe, John, I'll just jump in and add on the one-time nature of certain elements of recoveries that we generated in the quarter. You know, included in that 10.8% margin that we posted was about a 40 basis point margin benefit arising from retroactive pricing recoveries, partially offset by retroactive supplier costs. There was a little bit of a tailwind in the quarter, about 40 basis points coming from that in our margin. That 40 basis points is the net of those two, Kevin, is that correct? That's the net of the two. Okay. Just really one quick follow-up on slide eight. You know, it looks like as you mentioned, you did $4 billion combined here versus the total target of $4.5 billion. You're overperforming on organic and a little bit underperforming on M&A so far. Right. If you think about this going forward, is it necessary to catch up on M&A or chase things, if you're winning more and more on organic and you might get you to your total goal more on the organic side as opposed to the M&A side? Is there something specifically on the technology side that might not be as associated with a dollar number here that you're trying to get to in M&A instead of just, you know, bolstering the total revenue number? How do you think the balance of these two is really key question? Yeah. John, first I would say that I'm very proud about where we are 18 months into Charging Forward. We're already 45% on our way into a five-year plan, so very proud about that. You know, from an M&A perspective, what we are focusing on is building capabilities, product leadership and scale from grid to wheel in BEV. That's the target. We're not chasing a number, we're chasing that type of mindset really. Okay, that's helpful. Thank you very much, guys. Your next question comes from Noah Kaye with Oppenheimer. Good morning. Thanks for taking the questions. Next to the traction on those pricing recoveries, just illustratively, how should we think about rollover benefits for 2023 at this point, you know, just given the timing of these actions? Seems reasonable to assume a couple points benefit for next year. Maybe you could comment on that, and I think Frédéric Lissalde, you mentioned that some of the recovery discussions would remain dynamic. Maybe you can help us think about, you know, timing of potential further recoveries as we look over the coming quarters. Yes. I'll start. As it relates to 2023, you know, as we look at 2022 and the recoveries and the costs that we've been incurring, you know, we don't have an expectation that we're gonna ultimately fully offset all the costs that's come into the P&L. We've been negotiating recoveries to defray a portion of those cost increases, a substantial portion, but not entirely. We're bearing some of that cost. As you look ahead to 2023, I wouldn't necessarily look there at there being a tailwind to our margin because we don't ultimately expect to offset all the cost increase that we're incurring in 2022. Right. I mean, the question is to the top line that there'll be some benefit to the top line from, you know, those recoveries rolling over. Yeah. I mean, to the extent that those that the inflationary impacts continue as we head into 2023, and that pricing needs to stay in place to defray the continued inflationary costs, if that's where it goes, then we would expect to continue to generate that top line benefit within our revenue. If you just take a step back, if you look at our outgrowth for the year, we're delivering about 9% outgrowth underlying our guidance, a little bit north of 9%. Just under 4% of that is coming from these, the customer pricing recoveries associated with material inflation costs, which means then we have five points or so of outgrowth coming from everything else. That's the way to think about what's happening in 2022, and then you can make assumptions about how you expect the inflationary environment to play out in 2023 and how that nearly 4% pricing would carry over. Right. Just to clarify again, have your expectations of that material cost inflation changed relative to last quarter, or are we still looking at the same number? They have. I think last quarter we were expecting that the contribution to our outgrowth from the pricing recoveries was closer to 3%. I think now we're suggesting in our guidance that the full year impact of those pricing recoveries is a little bit under 4%. That's part of the reason that you see in my remarks that the net impact that we're now expecting on the year from material cost inflation is down from our prior guide. It's $110 million-$120 million, which is a $35 million improvement from what we guided to last quarter. It's being driven by improved customer pricing actions. All right, great. Nice to see that improving. Then I guess sort of shifting to Fred, some of your commentary around the management of the portfolio and how you view M&A, that certainly makes sense at a high level strategically. I'm curious to know, you know, what the tenor and like the activity within the pipeline is like at this point. You know, obviously there's still a volatile production environment and lots of challenges for NAS and EV businesses. Maybe you can talk a little bit about the depth and, you know, kind of the actionability of the pipeline at this point. Right. It's very active. We are engaged with a certain number of companies, of targets. Still focusing on the same things. Again, scale on products from grid to wheel. Product leadership, which, and I mean by that, essentially around efficiency of moving electrons across that grid to wheel and potentially new products too in the field of EV. It's pretty active. Terrific. Thank you. Your next question comes from Colin Langan with Wells Fargo. Oh, great. Thanks for taking my questions. You mentioned at the midpoint, the inflationary costs are down about $35 million. You know, if I look at operating margins, the outlook for the year is still fairly flat. Looks like sales down just a bit at the midpoint of guidance. You know, what is offsetting that underlying, you know, $35 million of good news? Well, I think it depends when you look at the guide. I mean, if you look at the top end of our guide, one of the things to keep in mind is we took industry production down, and so that has an impact on organic growth in the high end of our guidance range. At the low end of our guidance range, as you look at Q4, you know, it's actually not being offset. It's really flowing through that $35 million benefit, which is why we raised the bottom end from 9.8%-10%. Okay. As I look into the implied guidance implies sort of a sales decline into Q4. You know, I think like IHS has light vehicle production up. Are you not seeing the market up? Is it just FX that's washing all that out? Is it commercial offsetting some of that? You know, what's kind of causing the softness into Q4? Yeah, sequentially going into Q4, we do have an almost $90 million FX headwind, Q3 to Q4, so that is a big piece of what's impacting revenue. Then the range of outlook that we have, you know, going from basically what's underlying our $15.4-$15.7 billion revenue guide is at the lower end and at the midpoint, some pressure on organic growth. Sequentially, that is. Got it. Just lastly, the $110-$120 impact, how much was in Q3, and how much would be left for Q4 as a headwind so we can model that? Thanks. We didn't break that out in terms of the Q3 and Q4, but because of the nature of some of the retroactive recoveries on a net basis that we generated in Q3, you know, it really mitigated the impact on Q3 relative to the other quarters that we've seen. In Q3, we had a negative $8 million impact. I think as we look to Q4, it's on a year-over-year basis a little bit larger because we don't expect the same size of retroactive related benefits of what we got in Q3. Got it. All right. Thank you very much for taking my questions. Your next question comes from Chris McNally with Evercore. Thanks so much, guys. Maybe we could start on actually some of the ICE products, particularly the margins, the revenue for fuel injection aftermarket have been quite good and, you know, we haven't really discussed sort of individual segment margins. Some of them are new. Maybe can you just talk about some of the strength you've been seeing and ways to think about, you know, some of the segment margins for fuel injection or aftermarket on a go-forward basis. Chris, I think the team's done a formidable job right after the closing of the Delphi transaction to turn this business around. If you look back, the Fuel Systems margins that we took the business at and what it is now, it's been pretty good, both on the Fuel Systems side and aftermarket system. Perfect. Then is there anything extraordinaries in sort of, you know, some of the margins we're seeing, you know, Q3 in terms of some of the benefits on a one-time price recovery? You know, we're just trying to, you know, trend it out and it's been pretty variable on a margin perspective over the first three quarters. Just anything qualitative on just the rate of margin here, what's sort of, you know, normalized. Yeah, I mean, I think it's hard to compare quarter to quarter this year because there's been such volatility. Q2, obviously, we were pretty significantly impacted by a combination of revenue being relatively low as well as material cost inflation, and the recoveries hadn't entirely been kicking in yet. As you go to Q3, you see obviously we delivered over $4 billion of revenue in the quarter and a strong level of customer recoveries. You're seeing a lot of swings quarter to quarter right now in this volatile environment, and that's really pushing through the segments as well. I think that's why you look Q2 going to Q3, you saw Air Management up quite a bit. You saw Fuel Systems up quite a bit as well. I think it's really a function of what we're seeing from both a revenue and a cost recovery perspective. Okay. Great. Super helpful. Then if we move to the EV outlook and obviously the $4 billion revenue number, I really appreciate the consistency as you guys are updating. Just in terms of the methodology, you know, as we see global EV volumes increasing, you know, can you just talk about how often you're marking to market, you know, sort of the 2024, 2025 assumptions on base business? Is that something that's done on a quarterly basis, a yearly basis? Just curious when you're booking the business, obviously, if projections go up, if that's a benefit. Then just a second, anything you could add on, you know, what you're seeing in Europe for EV outlook maybe, you know, maybe next year. The way we compute those EV wins is we look at the individual businesses, the volume that we are booking the business at. We sometimes apply some market intelligence adjustments, and that's how we are monitoring the 2025 organic revenue bookings. As far as your second question around Europe, I would say overall, EV is accelerating. We can see that in the marketplace. We can see that with the intensity with which we're discussing with our customers, and we can see that with our business too. That also applies for Europe. I'm very happy to see our growth in EV being across the three continents and also across a pretty sizable product portfolio. Okay, great. Thanks a lot, Fred. Mm-hmm. Your next question comes from Luke Junk with Baird. Great. Thank you for taking the question. Apologize if you addressed this in the prepared comments. I had to log on late here. Fred, just wondering, first question regarding the granting of increased production on the inverter award that you disclosed this quarter, is it possible to give us a better feel of how widespread this sort of activity might be going forward, you know, especially thinking relative to the 2025 organic EV awards that you've booked already? Are we talking $10s of millions or maybe even $100s of millions of potential upside from these sorts of activities? Yeah, it is. I won't quantify that, but it's sizable. I would say that this is not a one-off. There is a lot of discussions with uplifting volumes. I would say that one thing that is important is that the scale that we have in electronics and in power electronics, in both purchasing and manufacturing electronics and power electronics, allows us to offer our customers specific supply chains that are not intertwined. I think this is a very good success for us. It enforces the fact that we have great products, great efficiency, and also that resiliency of our supply chain is something that our customers have trust in. Okay, that's helpful. It kind of leads into my second question on the e-axle award. You said in the release that this can scale up to 7.5-ton trucks. Wondering was that the customer's specific need, or could you have scaled that up to even larger trucks with your current portfolio? A related question, bigger picture, just wondering how important scale is in the e-motor business as it relates to pursuing commercial vehicle opportunities. You know, can you leverage your scale in light vehicle as you go into that world? I mean, clearly very important in power electronics. Just wondering how transferable that would be in commercial vehicle as well on e-motor. Thank you. Yeah. No, for sure our motors can go above 7.5 tons, and this came from the customer specification. Our motors can go much higher than that. Yes, the answer to your second question is absolutely yes. Scale matters in CV for product leadership, but also competitiveness. This is a strategy that has been applied at BorgWarner for many, many years, where we have numerous products that cut across passenger car and commercial vehicle. We learn from both segments, and we can offer our commercial vehicle customers products that, one, fit for their function, but also are competitive because we have that scale. I will leave it there. Thank you. Thank you. Your next question comes from David Kelley with Jefferies. Hi, team. This is Gavin Kennedy on for David Kelley. First question, can you just remind us of your disposition strategy? I believe prior expectations were for $3.5 billion in targeted dispositions by 2025. Yeah, that. That's still part of our Charging Forward plan. As I mentioned last quarter, the challenging end market environment's really disrupted those potential disposition processes in the short term, and that's really due to two things, the uncertainty in industry production and the inflationary impacts and how those are gonna play out, impacts potential buyers in those types of businesses in the near term. Second, there's obviously challenges in the capital markets and the financing markets more generally. Those things have really slowed down our ability to transact over the last couple quarters, but it doesn't change the direction where we're headed over time here. That pause is okay because as you know, we have a lot of high quality cash flow generating assets in our portfolio. We're not under pressure at all to sell anything, and we're perfectly content to continue to generate the benefits of the cash flows from those businesses and then assess those as the market situation improves to look at re-engaging in some of those disposition processes to make sure that we deliver a disposition that's gonna generate appropriate value for our shareholders. Until the markets clear up from that, we're perfectly content to continue to generate strong cash flows from these businesses. Got it. That makes sense. As a follow-up, switching gears, you raised your DC fast charging expectations to $225 million-$275 million by 2025, which is good to see. Can you give us any commentary on margins today and expectations for margins going forward as these charging businesses scale? Thank you. I mean, we're not giving margin guidance yet as it relates to any of the specific acquisitions, but I think you know the strategy of BorgWarner in establishing product leadership as we get into different product categories and driving top quartile margin performance as a company over time. You should expect that as we get into any of these product lines, that the expectations for what we ultimately deliver financially on those products is the same as what we expect to deliver from all parts of our business. Great. Thanks, everyone. Your next question comes from James Picariello with BNP Paribas Exane. Hi, guys. I wanted to Hello. I wanted to ask about AKASOL, you know, noted as a growth driver in Europe. Wanted to first ask about the revenue trajectory, you know, maybe just any color relative to the targets that you laid out for AKASOL. Then also, you know, as it relates to IRA and the battery pack assembly credit, is there an opportunity for AKASOL that could benefit at least, you know, from the 10 kWh, $10 per kWh portion of that subsidy in the U.S? Yeah, James, we get a lot of good customer pull for battery packs and from AKASOL. We are increasing, you know, year-over-year about $200 million from 2021 to 2022. We're pretty confident that this business is gonna grow to plan. We have the right technology. We are going to expand AKASOL. We are actually expanding AKASOL as we speak in North America. These products really are answering a lot of our customers' questions and feeding a lot of their needs. Kevin, do you wanna take the IRA question? Yeah. I mean, we think there's a real opportunity for us to benefit from the IRA as we continue to invest to increase our capacity and manufacturing capability in the U.S. We'll continue to look at the opportunities afforded by the Inflation Reduction Act and see what opportunities are afforded to us. We think there's a real opportunity there. AKASOL has somewhat of a U.S. footprint, right? There's at least one facility, I believe. Yeah. There is one facility in the U.S. right now in Michigan, and we're looking at extending the U.S. footprint actually as we speak. Got it. Understood. For China, you know, the industry production obviously picked up pretty dramatically in the third quarter. It appears that there's some, you know, some customer mix normalization of programs. Just curious, you know, is it tied to, you know, one or two important customers in China? You know, is this something that's a sustained dynamic or something that could, you know, revert, you know, to the positive for you guys in terms of, you know, China production and your mix there? Yeah. I'm not sure I have that granularity for you, James, at this point. Maybe Pat can follow up with you offline. I don't have that granularity for the Chinese country. All right. Thank you. Your next question comes from Emmanuel Rosner with Deutsche Bank. Oh, thank you very much. With my apologies again for joining the call late, so some of this was discussed before. I apologize. I was curious if you could give us sort of a high-level walk of third quarter to implied fourth quarter outlook. It looks like you basically calling for lower revenues, but also in the lower margins. Just curious if you could just discuss some of the potential there. Were you saying both outgrowth and margin, Emmanuel? Is that what you said? Or just margin? Yeah. Revenue and margin. Revenue and margin going Q3 to Q4. Yeah, I think. Let me start with revenue. As you go from Q3 to Q4, you know, and you look at the range, the $300 million range we're providing on revenue, at the upper end of that range, you see revenue a little bit down, and that's really driven entirely by foreign exchange. It's about a $90 million headwind going sequentially from Q3 to Q4. If you look at the low end of the range, we're still assuming about that $90 million foreign exchange related headwind, but then there's about $280 million sequential headwind in organic growth. That's the way to think about revenue going through Q3 to Q4. When you look at margin, I think you've got to start by looking at Q3, that 10.8%, and remember my comments earlier. There's about 40 basis points of that margin coming from the net benefit of retroactive customer pricing recoveries, net of the retroactive supplier cost increases. That's about a 40 basis point tailwind in Q3. As you then adjust Q3 and look ahead to Q4, the Q4 at the high end of our guide is relatively flat, maybe slightly up from that to that adjusted level. If you look at the low end of our guide, which is around 9.5% or so in Q4, it's really jumping off that adjusted Q3 level and then recognizing that we have downside conversion on that roughly $280 million organic decline sequentially. That's how you really get to the math of it. The $280 million headwind sequentially itself, could you please just provide a little bit more color? Again, apologies if I missed it. I'm sorry. What's really driving the sequential is the production assumptions that are underlying the guide. I mean, at the low end of the range, you can see that production is down sequentially going from Q3 to Q4. I think it represents the volatility that still exists in this marketplace, and especially, I would say, in Q4, especially in Europe with everything that is happening. Taking that in consideration also in our Q4 top line guide, which is a little wider than usual, but it represents the market environment. If you're looking at like IHS as an example, our Q4 at the low end of the range is almost 1 million units below IHS from a light vehicle perspective globally. Okay, that's helpful. I was hoping to ask you about your free cash flow use priorities in the current environment. You obviously mentioned, you know, disruptive environments for dispositions. I assume that some of it applies to acquisitions as well. Is this the kind of environment where return to shareholders will be prioritized, or would you rather sort of like keep powder dry for, you know, future uses on the M&A side? Yeah, I mean, you can obviously see we've been deploying cash really in a couple different ways over the course of 2022. We've been executing on our acquisition strategy as we've communicated as part of Charging Forward with the deals that we've done to date this year. We've also been repurchasing stock as well, $100 million in the quarter, which means it's $240 million year to date. We've been pleased with deploying cash to support both of those objectives. You know, while we continue to assess the right moments to be opportunistic and buying back our stock, I'd say as you look ahead, I wanna continue to emphasize what we've been emphasizing in prior quarters, that investing in attractive electrification opportunities, including M&A, is really the near-term priority for our uses of capital. That's where we're gonna focus it as a priority. All right. Thank you. We have time for one final question, and that question comes from Joseph Spak with RBC Capital Markets. Thanks so much for squeezing me in everyone. Fred, maybe just first to go back to some of your comments on IRA, the expansion of AKASOL in the U.S. or the potential expansion, is that sort of a BorgWarner initiative, or is that something, you know, being driven by customer demand, and, you know, asking you to sort of help build that out? Also, you know, I know like the IRA bill sort of talks about inverters really more in a solar sense, but, you know, we've heard that there's some and I guess we'll wait for a Treasury ruling, but we've heard there's some talk that maybe that could apply for vehicles as well. Do you think there's any opportunity in that bill from inverters and/or even charging hardware? Yeah. Joe, first, the expansion in the U.S. is definitely driven by programs secured with the customers that we've had when we acquired AKASOL plus new customers that we've announced over the past quarters. Kevin, do you wanna take this section? Yeah. In terms of the question about inverters, I think based on our read of the legislation to date and our understanding of it doesn't apply to the inverters for automotive. I think the opportunity for us as it relates to IRA is really more around battery modules and battery packs. We're assessing that as we're looking to increase our manufacturing footprint here in the U.S. to support our customer demands. Would you consider inverters for solar applications or it's sort of a different competency? They are slightly different but not dramatically different. Actually, as part of our acquisition of SSE, as part of some charging integration that they do, they include solar, battery pack and chargers, and that might be something that we look at. I would tell you that it's not currently the priority, but in the future, that might be a nice diversification going forward based on the current technology. Okay. I guess finally, you know, you talked, you know, about the sort of overall enterprise level R&D and how that sort of, you know, I guess some of the changes there. I was wondering though if I mean, it seems to me, but correct me if I'm wrong, that like that's sort of predominantly centered in that e-propulsion and d rivetrain segment. I was wondering if you could give us a sense of like how much of a basis point drag has sort of that additional or step up investment, you know, weighed specifically in that segment. I mean, if you look at the, you're right, the e-product related R&D is disproportionately in the e-Propulsion & Drivetrain segment. When you look at our e-products investment to date, you know, it's been over $300 million, and for the full year it'll be over $400 million, and the bulk of that is really coming in that segment. That you can really see the impact that that's had on the margins of that business. Now, as we look ahead to 2023, we would expect that as our EV revenue is growing, that we would expect the contribution margins on that growth in EV revenue to be growing at a faster pace than our e-products related R&D. We'll start to get some improvement in margin in that segment as that contribution grows at a faster pace than that e-products related R&D. That R&D, Kevin, is really, it's sort of engineering ahead of launch or is it sort of, you know, some more like, you know, true like research type, you know, for future product? Like, how should we think about how quickly, you know, you guys start to get a return on that spend? It is definitely application engineering and engineering for launch that for business that we have booked or engineering for businesses that we are at the verge of booking. Okay. Thank you so much. I'd like to thank you all for your questions today. Shelby, you can go ahead and conclude the call. That does conclude the BorgWarner 2022 third quarter results conference call. You may now disconnect.