Good day, and welcome to the Sensata Technologies fourth quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jacob Sayer, VP Finance. Please go ahead. Thank you, Drew, and good morning, everyone. I'd like to welcome you to Sensata's fourth quarter and full year 2023 earnings conference call. Joining me on today's call are Jeff Cote, Sensata's CEO and President, and Brian Roberts, Sensata's Chief Financial Officer. In addition to the financial results press release we issued earlier today, we will be referencing a slide presentation during today's conference call. The PDF of this presentation can be downloaded from Sensata's Investor Relations website. This conference call is being recorded, and we will post a replay on our Investor Relations website shortly after the conclusion of today's call. As we begin, I'd like to reference Sensata's Safe Harbor statement on slide two. During this conference call, we will make forward-looking statements regarding future events of the financial performance of the company that involve certain risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include, but are not limited to, those discussed in our Forms 10-K and 10-Q, as well as other filings with the SEC. We encourage you to review our GAAP financial statements in addition to today's presentation. Most of the information that we'll discuss during today's call will relate to non-GAAP financial measures. Our GAAP and non-GAAP financials, including reconciliations, are included in our earnings release and the appendices of the presentation materials. Jeff will begin today with highlights of our business results during 2023. He'll then provide a few thoughts on our end markets and overall expectations about our financial performance for 2024. Brian will cover our detailed financials for the fourth quarter and full year 2023, updates on capital deployment, and he will discuss our financial guidance for the first quarter of 2024. We'll then take your questions after our prepared remarks. Now, I'd like to turn the call over to Sensata's CEO and President, Jeff Cote. Thank you, Jacob, and welcome everyone. On our fourth quarter 2022 earnings call, 12 months ago, we discussed three key themes that would shape our future performance. Those key themes were an unprecedented opportunity in electrification, an updated capital allocation strategy focused on reducing gross and net leverage while de-emphasizing M&A, and a focus on our financial performance to drive top and bottom line improvement against a challenging market backdrop. Let me take a minute to provide some thoughts on our progress against these three drivers of our success. As you can see on slide three, our conviction that electrification is a key component of our future continues to rise. Electrification revenue grew approximately 50% year-over-year to $700 million or about 17% of total revenue in 2023. For comparison, electrification revenue was less than 3% of our total business in 2019. Between 2021 and 2023, we secured more than $1.3 billion in electrification new business wins. The development cycle of programs typically include launch timelines of three-four years after the award. These wins give me great confidence that electrification is an increasingly important driver of our growth. While adoption of electrification technology, especially in automotive, may fluctuate from period to period, this overall trend will only increase. Sensata is well positioned to capture a meaningful share of the electrification market, not only in light vehicles, but also in heavy vehicles and in the industrial infrastructure needed to enable increased electrification. That said, our safe and efficient business continues to deliver significant value to our customers and our company. It provides Sensata with meaningful scale and efficiency, and it is attractive revenue generator that offsets the fluctuations we may experience. The second key theme was around capital allocation. We made key strategic investments over the past couple of years, and based on careful evaluation of where we are seeing the most success, we determined that our best use of capital is to invest in electrification. With a full set of leading-edge capabilities now in-house, we shifted away from M&A towards organic growth and reducing our net leverage. I'm pleased that we made good progress this year already, as gross and net leverage dropped to 3.8 and 3.2 times, down from 4.7 and 3.4 times, respectively. In 2023, we paid down approximately $850 million of higher interest rate debt by eliminating our term loan in the first half of 2023 and retiring our 2024 bonds last December. We also bought back $88 million of stock in the open market and paid shareholders $72 million in dividends. We remain committed to the deleveraging the balance sheet going forward, while also opportunistically undertaking share repurchases. Prioritizing our investments is a core component of our overall capital allocation strategy. With electrification as the clear future for our company and the best area of focus for our team, we have narrowed our investments in Insights, focusing our efforts there on profitability. We are exploring strategic alternatives for the Insights business as we continue to hone our strategic focus and investment priorities. Finally, while Brian will take you through the numbers, let me discuss the third theme around financial performance more broadly. The last several years brought unprecedented change to the end markets that we serve, including the impact of the pandemic, material supply chain disruptions, extraordinary inflation, and end market transformation. Throughout this period, we partnered effectively with our customers, helping them to solve their increasingly complex engineering and operational challenges. However, our business was not immune to these market pressures, and while we have worked to navigate these challenges, there has been a short-term impact to our business in the form of lower-than-expected revenue and adjusted operating margins. This has been disappointing. Specifically, revenue in our automotive business was negatively impacted by region mix, especially in China, where local OEMs have taken share from multinationals. In Europe, where we have less content per vehicle on EVs, given our lower market share as compared to diesel or gas vehicles, and in North America, from softening EV ramp-ups in the UAW strike. We have also experienced market declines and inventory destocking in our heavy vehicle off-road and industrial end markets, adding to the pressure on growth. Our team did an excellent job in recovering inflationary costs through increased pricing, but these efforts did not fully offset increased expenses. In addition, business mix has changed, resulting in a decline in our higher-margin industrial business. These factors, along with the effect of exchange rates, has led to a decline in adjusted operating margins. Despite these headwinds, we have taken actions within our control to help offset these end market and macro challenges. As we turn to 2024 on slide four, we believe our cumulative end markets will basically be flat to slightly down this year, but we expect our performance to outperform those markets. In automotive, the most recent IHS forecast indicates that 2024 vehicle production is expected to be down 50 basis points year-on-year. Additional evidence suggests that the automotive end market is returning to pre-pandemic market dynamics, including contractual price reductions. In heavy vehicle and off-road, third-party forecasts indicate that strength in heavy vehicle on-road in China will be offset by weaknesses in North America and Europe, as well as off-road markets, resulting in low single-digit market declines in that market segment for us. Our industrial business, which includes HVAC, appliance, and general industrial, continues to see inventory destocking and a slow global construction market impacting overall sales expectations. We expect these trends to continue in the first half of the year and begin to subside in the second half of 2024. Finally, our aerospace business, albeit a smaller percentage of our overall business, continues to see strong growth and is expected to be up year-over-year. Taking into consideration this anticipated flat to slightly down year-over-year market backdrop, we expect revenue growth of approximately 2%-3% in 2024. This outlook is based upon continued launches and ramps of certain light vehicle platforms, the launch of new tire pressure sensors on heavy vehicles, the launch of new A2L leak detection sensors in HVAC, and continued growth of our aerospace and Dynapower inverter and converter business units. Regarding our adjusted operating margins, structural changes in our business around pricing, revenue mix, and exchange rates have caused short-term margin erosion. We expect margins to increase slightly in the first quarter of 2024, sequentially from the fourth quarter of 2023, and then continue to grow sequentially each quarter of 2024 by about 20-30 basis points per quarter. We remain firmly committed and confident in reaching 21% or greater adjusted operating margins in 2026, despite these near-term headwinds. As shown on slide five, let me address the impact of mix on our overall business. Mix matters to margins across our business units and product lines. It's noteworthy that even with our recent adjusted operating margin challenges and automotive exposure, Sensata continues to deliver top-quartile margins as compared to our peers. As the charts demonstrate, our automotive business concentration increased by 2 percentage points in 2023, while our higher-margin industrial business decreased by a similar amount. This end market and product mix shift reduced operating margins by 40 basis points in 2023 compared to 2022. With the expectation that destocking will end, our industrial end markets will begin to grow again, reversing some of this trend later in 2024. In addition, given our long exposures to euro and won, and short exposures to the pound and peso, currency rates also impacted our margins meaningfully by 60 basis points in 2023. On slide six, I want to provide color into our automotive business. In auto, we are currently balancing two key trends: the move to EV from ICE platforms and mix shifts across regions. Further, within China, we saw the added impact of share shift to more local OEMs from multinational players. In North America, EVs are 50% ahead of ICE vehicles in terms of average content, given our higher market share among EVs. While in Europe, we are behind at only half the average content on EVs due to lower market penetration on the current generation of EV platforms. We believe new product launches anticipated in 2025 and 2026 should close this gap in Europe. In China, today, our average content on EVs is slightly higher than on ICE engines or ICE vehicles, but we are behind with local brands compared to multinationals. In 2023, locally produced automobiles comprised approximately 55% of the total market, an increase from the prior year. We work with many local Chinese OEMs today, and our pace of new business wins has accelerated across many product categories, including the development of country-specific contactors, which should help offset this trend. Now, let me turn the call over to Brian. Thank you, Jeff. Good morning, everyone. Key highlights for the fourth quarter of 2023, as shown on Slide 8, include revenue of $992.5 million, a decrease of 2.2% from the fourth quarter of 2022. Revenue was higher than the midpoint of our October guidance, reflecting favorable timing of the UAW strike, settling in November. Adjusted operating income was $184 million, or 18.5%. In the fourth quarter, adjusted operating margin was negatively impacted by both revenue mix and by $5 million of one-time adjustments related to year-end inventory procedures. Adjusted earnings per share of $0.81 in the fourth quarter increased $0.15 from the prior year quarter. On a constant currency basis, adjusted earnings per share decreased 4% from the prior year period. During the fourth quarter, the company took a non-cash impairment charge to goodwill of approximately $322 million, related to revised financial expectations for our Insights business unit. Key highlights for the full year 2023, as shown on Slide nine, include record annual revenue of $4.054 billion, an increase of approximately 1% from 2022, or 2% on a constant currency basis. Adjusted operating income was $774 million, or 19.1%, a slight decrease from $778 million, 19.3% in 2022. This was primarily due to rate of exchange, inflationary costs, and business unit mix, partially offset by operational improvements. Adjusted earnings per share of $3.61 in 2023 grew 6% from the prior year, driven by our focus on debt reduction and return of capital to shareholders. On a constant currency basis, adjusted earnings per share grew 14% from the prior year. Now, I'd like to comment on the results of our two business segments in the fourth quarter of 2023, starting with Performance Sensing on slide 10. Our Performance Sensing business reported revenues of $753 million, an increase of approximately 1% compared to the same quarter last year. Both automotive and heavy vehicle off-road increased slightly, primarily due to market growth and content launches, partially offset by revenue mix, pricing, and foreign currency. Performance Sensing operating income was $184.4 million, with operating margins of 24.5%. Segment operating margins decreased year-over-year, largely due to negative pricing, not fully offset by productivity, product line mix, and rate of exchange. On a constant currency basis, Performance Sensing operating margin was 25.1%. As shown on slide 11, Sensing Solutions reported revenues of $239.5 million in the fourth quarter, a decrease of 11% as compared to the same quarter last year. Continued destocking in industrials was the driver of the revenue decline, partially offset by continued growth in our aerospace business. Sensing Solutions operating income was $68.2 million, with operating margins of 28.5%. The decline in margins year-over-year is primarily due to the lower industrial revenue. As shown on slide 12, corporate and other operating expenses not included in segment operating income were $414.2 million in the fourth quarter of 2023, including the non-cash impairment accounting charge to goodwill of approximately $322 million, related to the revised financial expectations for our Insights business. The impairment was the result of moderated growth and cash flow projections compared to earlier business outlooks. While we are confident in Insights' future and believe in its market opportunity, we have narrowed our investments focus on electrification initiatives, resulting in the review of strategic alternatives for this business. Excluding the impairment charge and other charges excluded from non-GAAP results, corporate and other expense increased by 3% compared to the prior year quarter due to higher employee costs. Moving to slide 13, our capital allocation strategy is demonstrating excellent results as our return on invested capital increased by 40 basis points to 9.7% in 2023. We generated $57 million in free cash flow during the fourth quarter and $272 million in free cash flow over the full year. That represents approximately 50% conversion of adjusted net income. To increase our conversion rate in 2024, we have renewed our focus to improve working capital, with work streams focused on reducing inventory and receivables, as well as maintaining control over our CapEx spending. Capital expenditures this year are expected to be flat with 2023, at approximately $175 million. Our net leverage ratio was 3.2x at the end of December, and we expect this metric to further improve to below 3x by the end of 2024, and below 2x by the end of 2026. We bought back $28 million in stock in the fourth quarter and $88 million for the full year. In addition, we recently announced our Q1 quarterly dividend of $0.12 per share that will be paid on February 28 to shareholders of record as of February 14. We are providing financial guidance for the first quarter of 2024, as shown on slide 14. For the first quarter of 2024, we expect revenue of $970 million-$1.01 billion. At the midpoint of the revenue guidance range, we would expect adjusted operating margin of approximately 18.6% and adjusted earnings per share of $0.85. While the impact on margins from the rate of exchange is slowing, we expect it to negatively impact our first quarter results with an expected headwind of $7 million to revenue, 60 basis points to adjusted operating margin, and $0.05 to adjusted earnings per share. We anticipate full-year revenue growth in the range of 2%-3%. Revenue will likely be flat to slightly down year-over-year in the first and second quarters as our industrial markets continue to see destocking pressure. The second half of the year should rebound, with revenues increasing in the range of 3%-5% year-over-year, with new launches and ramping products driving growth. Within our peer group, Sensata continues to deliver top quartile adjusted operating margins, and we expect to sustain that performance. We remain confident in our 2026 margin targets of 21%, based upon expected volume increases and productivity gains. However, with the structural differences in the business since 2021, gaining significant adjusted operating margin leverage in 2024 will be difficult. Specifically, compared to 2021, as Jeff noted, we have experienced material impacts to margins from foreign currency exchange rates, high inflation, and negative mix between our product families and business units. As we return to a priced-down environment with our OEM customers, we will seek to improve productivity in our manufacturing facilities and supply chains to offset this trend. However, productivity benefits will ramp slowly this year as we navigate through higher cost inventory on hand, negotiate material cost reductions with suppliers, and improve our yields through automation and efficiency. Further, certain statutory cost increases effective January 1 add pressure to first quarter adjusted operating margins. From the first quarter levels, we would expect to see 20-30 basis points of sequential margin each quarter throughout 2024. Now, I'd like to turn the phone call back to Jeff for closing comments. Thanks, Brian. Let me wrap up with a few key messages as outlined on slide 15. First, I want to thank you, our investors, for your support as we work through this extraordinary transformation.... with our strategic focus now keenly directed on electrification. As I mentioned earlier, electrification revenue, which was less than 3% in 2019, is now 17% of our total business. We have won more than $1.3 billion in electrification opportunities over the past three years, and that will fuel our longer-term growth. Second, I'm confident of brighter days ahead. We know that our markets will improve, and our safe and efficient business provides a natural hedge for volatility that may occur with EV adoption rates. Our adjusted operating margins will take longer to recover than we initially expected, but we are prepared and continue to perform well compared to our peers and expect to see sequential quarterly margin improvement this year. Third, our capital allocation strategy is already showing good results as the increase in adjusted earnings per share outpaced revenue growth in 2023. We will continue to prioritize delevering while being opportunistic with share repurchases to further improve earnings per share and returns on invested capital. And fourth, last year, we made dramatic progress at addressing Scope 1 and 2 market-based greenhouse gas emissions, meeting our 2026 reduction targets early. Consequently, we have raised our target reduction goal for 2030 to 45% from our 2021 baseline emissions level. In closing, I'll note that when I was named CEO in March 2020, little did I know what the immediate future held: a worldwide pandemic, massive supply chain disruption, and the highest inflation we've seen in 40 years. However, we now see a return to a more normal environment. I am more excited than ever about the opportunities ahead. We are poised to deliver to our customers what we do best, helping them solve their most challenging engineering and operational challenges. We have a focused strategy, a committed management team, and more than 20,000 Sensata teammates across the globe driving execution. I look forward to updating you on our progress. Now, I'll turn the call back to Jacob. Thank you, Jeff. Now we'll move on to Q&A. Drew, would you please introduce the first question? Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Wamsi Mohan with Bank of America. Please go ahead. Hi, thanks for taking my question. It's Ruplu filling in for Wamsi today. Just looks like your implied operating margin guidance for fiscal 2024 is 19.2%-19.5%, based on 20-30 basis points improvement every quarter. That compares to the prior guidance of 20%-21%. So I think you said FX is a 30 basis points year-on-year headwind. Can you help us parse the remaining 80 basis points year-on-year into impact from pricing, mix restructuring, just so that we can size those impacts? And then what is giving you confidence in operating margin can really grow 20-30 basis points quarter and quarter every quarter? Yeah. So we spoke about really the three items that are impacting the margin profile. We did not speak to the benefit associated with the restructuring that we did in the third quarter of last year, but obviously, that is helping mitigate and offset some of the impact of the headwinds that we're experiencing. But it's really coming from the three areas that we've outlined. It's the mix of the business, which is really a mix around the end markets we're serving. So industrial, as an example, versus automotive, which is a higher margin business relative to our automotive business. So as industrial goes down, that impacts the business negatively, and also across regions and product families. And as we outlined in fourth quarter, that was a 40 basis point, or in 2023, that was a 40 basis point impact to us. The other is around foreign exchange. That's gonna impact more the first quarter than the full year. I think for the full year, we're thinking it's a modest amount of impact in terms of rate of exchange. Obviously, we don't control that, depending on where the rate of exchange goes. But as we enter the year, we believe for the full year, that's gonna be maybe 10 basis points or flat to last year. So that's starting to mitigate, which is very good news. And then, obviously, there's the aspect of the volume in the business as well that's impacting our ability to gain some leverage in terms of margin profile. Yeah, I just want to add real quick. I mean, obviously, one of the things that I spent a lot of time on in my first, you know, quarter here has been doing this deep dive around our planning as we go through the budget cycle. You know, one of the things that became clear as part of that is, you know, especially in the first half of the year, you know, we have a lot of room for productivity improvement as conditions normalize. But we do need to work through kind of higher levels of inventory, and so that's one of the things that will impact margins a little bit, especially in the first half of the year. And then as productivity gains kick in, we should be able to see that improving throughout the year, which gives us a lot of confidence to the 20-30 basis points improvement per quarter, sequentially going forward. ... Thank you, Ruplu. The next question comes from Mark Delaney with Goldman Sachs. Please go ahead. Yep, good morning. Thanks so much for taking my question. Given slower auto OEM plans around the pace of their EV ramps, and also considering the strong bookings the company's had in recent years, including what you reported today for 2023, is the target for $1.2 billion of automotive electrification revenue in 2026 still achievable? Yeah, it is based upon the expectation of EV penetration over time, and we know that can move around a little bit. We've talked about the fact that we have about 90% of that booked, as of the end of 2023. So we see a real strong line of sight to that $1.2 billion. We also have a fairly good line of sight to the other $800 million of electrification revenue in the other businesses based upon market growth expectations in those areas. So, you know, the $2 billion, it might be $100 million or so off in either direction. It will depend on market penetration rates and the development of those markets. But the movement toward electrification is real. That business grew 50% last year. It's now 17% of our overall company. That trend is going to continue. To the extent there is puts and takes in terms of the migration toward electrification, we have that natural hedge in the business, and we've talked about the fact that if EV penetration slows down, it may impact the overall growth rate of the business, but it would be positive to the margin profile in the business. So we feel well positioned in terms of what we've won and what our capabilities are, and we'll watch closely how the market evolves. Thank you, Mark, for the question. The next question comes from Matt Sheerin with Stifel. Please go ahead. Yes, thank you, and good morning. I wanted to just ask around your guidance for the year, that the 2%-3% growth. I guess question one is, what kind of confidence and visibility that you have, given that a lot of your peers and suppliers are actually not, not giving any guidance for the year, due to lack of visibility, and also just concerns that this inventory correction could take longer. So, could you just walk us through your thought process, by sector and growth rates by sector for the year? Yeah, I'd be glad to. So, we're, we're, in 2024, we are being much more conscious to follow IHS forecast, right? In the past, we have done, adjustments based upon our weighted impact, in the business and so forth, in terms of where we have content on various platforms and different OEMs. We believe it's better for us to focus on the IHS forecast and then share with you how we believe that is going to impact our company growth in the automotive business. So we're, we're following IHS forecast. Right now, the latest forecast from IHS for the full year is down, call it 50 basis points. We believe that our auto market, based upon launches, that we have engaged with customers to understand what is going to happen this year in terms of their product launches, and some of those were carryover from 2023 that were delayed into 2024. We feel good about where that automotive business is. We're giving you a view into the full year, but we're guiding specifically to the first quarter. So we would call the automotive market up a couple hundred basis points in it, excuse me, our business up a couple hundred basis points in a market that's down, call it 1%. In the HVOR market, we believe that the third parties are forecasting somewhere around 4% down. As I'd mentioned in my prepared comments, that's a result of strength in China on-road truck, but weakness in North America and Europe on-road, also in construction. So that would be the market expectation that we have baked into our view for the heavy vehicle market. And then in industrial, the first half is going to be a little bit more tough sledding with some continued destocking, but we do expect that to recover, to get back to single-digit growth for the full year. But the first half of the year will be down a little bit. Aerospace, the shining star, really, in terms of market dynamics, we would continue to expect that market to be up high single digits in 2024. Thank you, Matt, for the question. The next question comes from Christopher Glynn with Oppenheimer. Please go ahead. Yeah, thanks, Brian. Welcome. Wanted to ask you a question about free cash flow. I know you're kind of new to the role here, but, you know, conversion missed and was light in the year, you know, after a soft 2022, and then your 2024 guidance at 65%-70% compares to, I think, 75%-80% long-term outlook. So curious what your thoughts are on, you know, where the gates are and ability to lean working capital flows and some, maybe some of the operating disciplines that should be drive better free cash flow conversion. Yeah, no, great, great question. I mean, and as we've looked at the last couple of years to try to account for timing, you're right. You know, we've been basically kind of converting, you know, a half or slightly over half of our adjusted net income into free cash flow. You know, I can sum it up in one word: it's inventory, right? And ultimately, that's the main, you know, big piece of it for us and a lot of focus. You know, obviously, over the last couple of years, there was a different prioritization where we needed to make sure the supply chain had enough redundancy in it or enough, you know, quantity in it, if you will, to be able to make sure we could meet customers' demands. That was really important to the company. You know, now, in a more normalized environment, we're working hard to start taking down those inventory balances. ... That said, it's going to take a little bit of time, and it's why we've talked about, you know, higher cost of inventory that'll impact adjusted operating margins in the first half of the year, as well as, as we just work through kind of that overall normalization. Certainly receivable management, the company does a good job there, but we can do better. You know, one of the reasons for, you know, as we look at the end of this year, the end of 2023 and beginning of 2024, you know, you'll look at the balance sheet and know, you know, we really, didn't, we didn't try to manage payables, right? So we let that kind of naturally flow as it should, which is why we got the result for 2023 and where we think we get the improvement for 2024. And then to your point on the longer term, again, I'll, I'll come back to inventory. I mean, that's gonna be a key piece for us. Thank you, Chris, for the question. The next question comes from Samik Chatterjee with JP Morgan. Please go ahead. Hi, thanks for taking my question. Jeff, I guess I had one for you, it's a bit more on the strategic front. I mean, oh, I think out of today's earnings report, one of the investor sentiments that I think we'll hear is that the strategy that you've laid out in terms of the transformation, that continues to be sort of fluid and sort of change over time, not in relation to electrification, but the adjacencies of it, including... So you did invested in September, and now you're sort of restructuring Insights, and some of those sort of adjacencies continue to sort of be fluid. Any sort of thoughts around, when you can sort of more get to a more stable state in terms of strategy in relation to sort of tracking execution relative to it? Because I think the bigger challenge here seems to be in terms of just the macro developments that are happening, but you're changing your strategy in response to that as well. Yeah, it's a great question, and we talked a little bit about this at Investor Day, about the fact that several years ago, as when I took over in March of 2020, we realized there was going to be significant amounts of change in the end markets that we serve. And I've been known to say there's gonna be more change in the next 10 years than there has been in the last 50, and I think we all agree with that. That resulted in us needing to really look at what those changes were going to be and where we needed to invest to make sure that we stayed highly relevant in the end markets that we serve. What we had identified early on was three areas around autonomy, around Insights or IoT, connectivity, if you will, and electrification. We cast the net very wide to make sure that we had enough lines in the water, if you will, to incubate the growth that we wanted to experience long term. I will say very, very confidently, I'm certain now electrification is that future, and we are narrowing our investments to that. Now, we're very fortunate that two of those three opportunities we pursued were meaningful opportunities, in terms of the development of the market. But when you look at the fact that in 2023, $700 million of our business or 17% was electrification, the success we're achieving has really dictated the direction of the strategy. We have the capabilities to serve our customers there. They need our help, and that is the future for the company. Now, the core business will continue to be very relevant, but we need to focus the strategy in that area around electrification, and you can see it in the revenue growth and the new business wins that we're experiencing. It's painful to manage through our restructuring of businesses that are seeing very significant opportunity, but that is what strategy is all about. It's picking and choosing where we need to invest. We'll continue to be very committed until we find out where we wanna go with the Insights business, but our investments need to go towards strategy, toward the electrification area. Thanks for the question. Yeah. Thank you, Samik. The next question comes from Steven Fox with Fox Advisors. Please go ahead. Hi, good morning. Jeff, I was wondering if you could just dial in on your expectations for electrification for 2024. You're thinking on growth versus what kind of market expansion you're expecting, and also how those margins within that pool of products is advancing this year and its influence on the overall margin. Thanks. Yeah, so let me, let me start with the last part of that question, which is around the product development. You, you know, we're, we have a very strong portfolio of opportunities to go to our customers, and high voltage contactors are the core of that, but it's, it's much broader. It's current sensing, it's isolation monitoring, it's other aspects of sensing, if you will, or electrical protection that is necessary in order for our customers to go through this transformation. And by the way, there's an accumulation of all those components in the form of battery distribution units and other subsystems that we're getting pulled into that are very meaningful from an average selling price standpoint that is propelling the growth as well. But it's at that core component level where we have the expertise, and we continue to build on that organically, with the joint venture, with our partner in, in China around Churod Electronics. So there's different types of technology and product capabilities that are necessary in the different markets around the world. So we built out a really nice portfolio to be able to serve that market. And again, it's demonstrated in the form of the magnitude of the new business wins that we've experienced over the last several years, and that's been growing during that period of time. In terms of the overall development of the market... You know, if we go back five years, I think with penetration rates that we've experienced in 2023, of around 10% penetration in North America, somewhere around 16% in Europe, and in China, around 30%-35%, those are meaningful penetration rates of electric vehicles. Today, there are over 230 models in China of electric vehicles, and that's the reason why there's higher penetration there, because they've invested ahead of the curve, and they have so many different options. So the penetration may ebb and flow a little bit with regulation and different things that happen, consumer acceptance of it, but the ship has sailed on this. This is happening, and so that's why we've really doubled down, not only in the area of electrification for light vehicle, but it's happening in heavy vehicle and the infrastructure that's necessary to support it. So we feel good about it, but we're gonna watch closely as our customers make choices in terms of where they allocate investment dollars. And if some of our customers decide that they want to slow things down and spend money on a new combustion engine that's more efficient, then we'll follow suit and continue to serve them in that market that we do extraordinarily well. Thank you, Steve, for the question. The next question comes from Luke Junk with Baird. Please go ahead. Good morning. Thanks for taking the question. The question on the outlook for the back half of the year, specifically your expectation for revenue growth to rebound in the second half based on new and ramping product launches. And I'm just wondering to what extent you've injected any conservatism or haircut your assumptions relative to moderating EV growth and changing geographic mix relative to the auto piece of that ramp? And be also curious if you could just parse out what is auto and non-auto related in that ramp. I know you have some things in HVAC and whatnot that are contributing as well. Thank you. Yeah, sure. So let me touch on the auto piece, given that's a big portion of the business. Yeah, we're looking at IHS numbers, right? So first quarter of 2024 is expected to be about 21.5 million units. Second quarter is expected to be up a little bit by 22, and then in the third quarter, there's a natural dip. It's the fourth quarter for the automotive market that's up to almost 24 million units in the fourth quarter. So that's the data we're looking at that would drive net, you know, down a half a percentage point or down, you know, one percentage point in terms of overall production. And then we layer on top of that, all of the details associated with the new launches that are happening that, you know, we're building capacity, we're bringing raw material on. So there's been extensive dialogue with customers, and we learned a lot last year in terms of some of the delays that occurred to make sure that we're really engaging much more closely with customers to understand what's happening. You know, 2%-3% growth isn't spectacular growth, to be honest, right? And that does not drive out growth that we're normally accustomed to in the business. But it's the market reality based upon the end markets, the market itself, and also the content growth that we'll experience based upon launch schedules. I'll just add that in the, you know, the second half of the year, Luke, to your question, you know, we do have the product launches coming up for TPMS withi n HVOR that's driven by regulation in Europe, so that one makes us feel a little bit better about that one. The leak detection in HVAC we expect to see continue to see ramp up, you know, given where we are and what demand looks like there. And so, you know, as we've gone through this process, I mean, we've certainly, and, you know, Jeff mentioned it in his remarks, you know, we, you know, it's important that we make sure that, you know, we're executing well against what we're saying. And so, I think it's fair to say that we've tried to build in a level of conservatism, you know, into the forecasting. Obviously, we'll continue to watch third-party data as it goes and, you know, adjust if required, but we feel pretty good about it today. Thanks, Luke, for the question. The next question comes from Shreyas Patil with Wolfe Research. Please go ahead. Hey, thanks a lot for taking my question. I wondered if you could talk a little bit more about the productivity actions that you're looking to take this year, and how to think about that relative to the impact of contractual price reductions. And you mentioned those are starting to come back. I believe they're typically around 1%-2% annually. So just trying to think about how the two... Will you be looking to offset those price reductions through productivity this year? Thanks. Sure. No, great question. Thank you. So, you know, I mean, the first I would say is, you know, we have been investing continuously over the last couple of years in capital expenditures, driven around, you know, customer needs for our lines and facilities, but also to be able to gain efficiencies and improve automation levels. And so that's, that's certainly an area that we think is gonna help us, you know, kicking in here in the second half of the year to be able to find those gains and find productivity. You know, again, certainly in an environment that's more normalizing to a kind of an OEM price down environment, we're working with our suppliers already on what that means around material costs. Again, it's gonna take us a little bit of time to work through higher cost capitalized inventory, so that's a little bit more of a headwind in the beginning of the year. But again, as we talk about the sequential margin improvement in the back half of the year, we think that's certainly a helper for us. And as Jeff noted also, you know, we think, you know, exchange rates normalizing gives us a little bit more benefit there as we're continuing the purchase. Yeah, and the only other thing I would mention is on the pricing side. So we talked about a return to a more normal environment. We're not expecting 1.5% price down in 2024, but the trend is going in a direction from where we were seeing significant price up to more neutral on pricing. So we don't have to bend the cost curve completely, but we are trying to get ahead of the curve in terms of bending the overall COGS cost line to be prepared for that transition back to the normal environment, where we would see that 1.5% price down in productivity to offset it. Thank you, Shreyas, for the question. The next question comes from Amit Daryanani with Evercore. Please go ahead. Good morning, everyone, to those of you as well. You know, I guess the first one, Jeff, maybe just talk about what do you think the path to 21% operating margin looks like today? And is there a revenue run rate or a combination of that and cost reduction that you need to get there, and just what the contribution of those two buckets would look like? Yeah, so listen, volume helps us tremendously. There's no question about that. But with 2%-3% expected revenue growth, we can't count on that right now. So we're going to do all of the other productivity measures that Brian talked about to try to get more productivity to offset the pricing impact. At some point, and things are starting to turn a little bit in terms of the strength of the U.S. dollar versus those foreign currencies. So the fact that we're, for the full year, not gonna have a big impact, or a headwind associated with what's going on there is going to be extraordinarily helpful in terms of the overall benefit that we experience. But, you know, it's the combination of those things that are going to allow us to do that. Longer-term aspects of the profitability of the business mix, but we do that really well. We have a, you know, a dozen or so very large product families where we have product roadmaps that we've built that are multi-year roadmaps that will get us to better profitability in the mix of business. We've talked pretty extensively on prior calls regarding the fact that our electrification business is lower margin at the net margin level, but at the gross margin level, it's more comparable to the company margin. And so as that investment profile reaches equilibrium, we'll start to see a better drop-through in terms of overall margin profile. Thank you, Amit, for the question. The next question comes from Joe Giordano with Cowen. Please go ahead. Hi, guys. Morning. Morning. Hey, I just want to, you know, keep following up on the margin here. So I mean, I think having all the mix issues and pricing, I think competitors struggled with this as well, for, you know, over this kind of cycle here. But, you know, when I look at the Performance Sensing was like almost a 30% margin business at one point, right? And we're still pretty far below that. And I think others maybe are getting closer to where they were pre-COVID and pre-supply chain disruption. I'm just curious if maybe, like, is there a more aggressive kind of restructuring effort needed from a footprint standpoint or from a facility? Is there more you could do in the absence of favorable volumes to kind of push margins back up to kind of historical levels? Yeah. So, you know, I think we demonstrated in the third quarter that we're not bashful about making really tough decisions regarding restructuring, but we also clearly want to make sure that we have the team in place to deliver on the future. In a long cycle business, as you can imagine, that's a very delicate balance because we have a very large portion of new business wins. The $1.3 billion of new business wins over the last three years was just electrification. It was more like $2.5 billion of new business wins that we need to deliver on, that will provide the growth going forward. So, you know, it is a delicate balance, that short and long term is a delicate balance. We're trying to thread the needle on that. You know, we're taking what we believe are appropriate measures associated with restructuring the business, focusing the strategy in areas that are around the future, difficult decisions regarding Insights. So we believe we're making the right decisions. We'll continue to look at it. That's our commitment, to continue to look at what else we can be doing to accelerate that pace of change. And so, you know, we're sharing with you what we've acted on and what we believe the opportunities are right now. From a footprint standpoint, we're fairly consolidated. I mean, for $4+ billion business, we have 15 sites around the world. We don't have 50, right? So, we're already sort of, you know, and that's what drives the, you know, the 18%-19% margins in our business, which is comparable to some of our peers with much larger organizations. But we recognize we need to keep working at it to get back to, you know, a higher level of margin, and we're not backing off the 21. It's just gonna take us a little bit more time to get there, and it's a balance of short and long-term investment for the growth of the business long term. Yeah, and to your point on the Performance Sensing, no margin. You know, again, keep in mind that as electrification does continue to grow for us and gain scale, that helps. You know, we see similar levels of gross margin today in the safe and efficient side versus the electrification side. But we're not yet at the, you know, the EBIT margins, if you will, in electrification, and that will improve with more scale. As Jeff's noted several times, a lot of these new business wins, especially over the last couple of years, really start to kick in in the 25 and 26 cycles, which is part of the reason why we're investing today, and we're ultimately going to hopefully see that growth tomorrow. So those are two big drivers of where it is. And so again, I agree with Jeff. You know, I think we need to- ... smart around the cost structure, but, you know, ultimately, you know, growth is going to be an important aspect, and we have the fuel in new business wins to do it, so now we have to execute against them. Thank you, Jeff, for the question. The next question comes from Chris Snyder with UBS. Please go ahead. Thank you. I wanted to follow up on the insights business, and I understand that electrification is a bigger opportunity and, and probably maybe more worthy of investment dollars. But it's only been two or three years since the company bought Xirgo and SmartWitness, and the investment was very substantial at $600 million. I thought at the time, at least Xirgo was neutral to maybe even accretive margins. I guess, you know, my question is, has something changed in these businesses over the last two, three years? Are they more competitive than you thought? Or did something happen? Thank you. Yeah, it's a great question. So if you look at the most notable public comp to our Insights business, it's a company called Samsara. You may or may not know them. But their model is very different, and they're investing heavily in the growth rate that they're experiencing in that business. So it does require a very different business model in terms of investment, in gaining market share, and getting equipment out there to then have a revenue stream associated with the software. The opportunity is real, but it's tough to operate that model in Sensata's business when, number one, we can't run at a loss, and number two, we have other areas that are more meaningful for us where we can be investing in. And so, listen, I think, you know, we don't like our write-off on this business. We don't like changing our perspective on it, but I think that we have to make the tough decisions based upon the investments that we've made, the lines we've put in the water, and where that future holds. And, you know, we're gonna, you know, work to optimize that business to allow it to achieve its full potential. Thank you, Chris, for the question. We have a follow-up from Christopher Glynn with Oppenheimer. Please go ahead. Thanks. Yeah, just wanted to clarify on the 50% electrification revenue. I don't think Dynapower was a huge part of that. I'm wondering if you could comment on what the organic was and what your outlook is for the 2024 backdrop for new business wins. Yeah. So, trying to think back in time here was in the summer of 2022. So we had a half of 2023 that was the portion from Dynapower that was inorganic, but it's still, you know, sizable 30%+ growth that we're experiencing in the electrification business, Chris. About 24, anything on 24 NBOs? In ter-- The, listen- Overall size. The NBOs will continue to be meaningful. 2022 was the peak year in terms of sourcing opportunities. We ended up at 660 in 2023, and we think right in around that target is what we would expect for 2024 as well. So a heightened level off of four or five years ago and disproportionate in the area of electrification. Thanks again. Yeah, thanks, Chris. This concludes our question and answer session. I would like to turn the conference back over to Jacob Sayer for any closing remarks. Thank you, Drew. I'd like to thank everyone for joining us this morning. Sensata will be participating in the AllianceBernstein Tech Investor Conference in New York on February 29th, and the Morgan Stanley Tech Investor Conference in San Francisco on March 4th. We look forward to seeing you at one of those events or on our first quarter earnings call, which will be in late April of 2024. Thank you for joining us this morning and for your interest in Sensata. Drew, you may now end the call. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.