Lear (LEA) 25 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Joel Elsesser	VP of Investor Relations
Matt Simoncini	President and CEO
Jeff Vanneste	Chief Financial Officer
Frank Orsini	SVP and President, E Systems
Ray Scott	EVP and President, Seating
Itay Michaeli	Citi
John Murphy	Bank of America
Brett Hoselton	KeyBanc
David Tamberrino	Goldman Sachs
Chris McNally	Evercore ISI
Brian Johnson	Barclays
Emmanuel Rosner	Guggenheim
Colin Langan	UBS Investment Bank
Adam Jonas	Morgan Stanley
Rod Lache	Deutsche Bank
Joseph Spak	RBC Capital Markets
Samik Chatterjee	JPMorgan
David Leiker	Robert W. Baird
Shawn Kim	Gabelli
Jeff Osborne	Cowen and Company, LLC

Call transcript

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Operator

Good morning. My name is Alex, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Relations, Vice your may conference. of Elsesser, you Investor begin Joel

Joel Elsesser

morning for thank our Alex. and Thanks, Good you XXXX call. third earnings joining quarter for us

and this Our was posted Simoncini, link. on through for morning Today's Exchange lear.com, is Commission, website, Investor with our press call and filed the the release our presenters presentation the Matt Securities Relations are participating President our Vanneste, the Also President Officer. of and Financial several Jeff are team. members on President Chief Lear's Seating and of Frank other Orsini, CEO; Scott, Ray Division leadership E-Systems. call of

like remind will uncertainties. are I'd begin, we call, statements to the subject that we Before making that forward-looking to you and during risks be

Investor could our of described factors beginning results in the the presentation that of and Some SEC impact at Information, filings. also the slide future titled, our are in the

non-GAAP We measures. will financial to be referring also certain

X at today's Financial information of the measures labeled Additional these regarding Slide Non-GAAP the be found slides the end the shows in agenda Information can presentation. review. for

Following presentation, questions. your pleased be the to we formal take will

please and it to Jeff. I'll X turn to over turn Now, slide

Jeff Vanneste

effective Lear's all Joel. Sales, our improved financial momentum repurchase Thanks, double experienced operating with rate. of share the compared flow, XX% XXXX. tax digit lower by core our program cash and all key earnings free measures. performance, reflecting benefit results the quarter growth continued record third EPS and operating quarter with positive across during Adjusted a strong

grew the Core factors above the again strong in for well the X.X%, basis The improvement outlook. a our X.X%, favorable was industry XX the with growth financial from our a reflecting driving were From fourth million new As full strong our provides E-Systems are the quarter. quarter, seating the Margins the of performance slightly addition third backlog, $XXX new in operating our revenue by compared X shows for points positive production America. reflecting Antolin's to development ago. X%, X result X.X% of strong resolutions, increasing acquisition our remained as operating growing outlook Slide XX.X% North shows business. the XXXX. margins margin Sales XX% in and perspective business. Slide offset commercial backlog. as XX certain of basis Slide year the sales our favorable our XX% to growth year-to-date our quarter, points from a X segment Grupo for addition we associated and at increased with reflecting outlook updated sales year earnings up well increased the of by of driven core foreign with on lower quarter performance ago Lear of in partially the timing exchange cost primarily platforms of and but record from year earnings seating business XXXX. the down operating financial

European production Our assumptions, the outlook $XX.X and revenue forecast fourth reflects most major is IHS as as of currencies The million quarter. to strengthening are assumption on production by $XXX we higher to guidance the billion. latest $X.XX our the increasing euro a these Based US based for forecast revised dollar. on well compared the of

and million outlook in $XX operating operating increase We by core continued billion reflecting increasing to $X.X the for are earnings performance. sales our strong

and as Antolin to million of support orders $XXX recent launches our Grupo to at well We as foreign latest assumptions. new capital business million, increased by guidance are reflecting $XX increasing expenditures exchange for investment

billion. million We to raising flow cash $X.XX by also $XX our free guidance are for

now effective be rate Our for full the XX% tax expected year. approximately to is

who’ll drivers an some provides E-Systems Frank of Now our I'll of turn growth of it the segment. over President Orsini, the business in to overview E-Systems

Frank Orsini

of a XX. as providing Thanks the E-Systems our Slide describe often Jeff. network We business to neural Please turn vehicle.

connectors and and E-Systems high Our terminals applications. portfolio electrical that connectivity as electronic wire support as traditional power well and modules of architectures, consist harnesses,

increase We vehicle electrical our that traditional and year X% signal management. require to consumer power X% products, on the content driven additional per to by demand approximately per in for vehicle features expect by growing

growth well Additionally, over few I'll the emerging are cover positioned with we for industry that accelerated slides. next trends the

significant you the alone electrified industry Slide trends across XX% serving XX, Slide incremental the followed Lear. see has additional vehicles. with by and business year opportunity industry spread trends more expected two in for with These provides opportunity content associated As connected hundred to XX% or customers XX can XX the XX of penetration high accounted dollars for represent power on trend awards vehicle are for vehicles, autonomy years approximately over rates new next reach a nameplates vehicles. continents. growth some This details mega these new million six technology for on with few approximately three

represents as opportunity product a per As power electrical content product significant high incremental of additive these technologies we slide each vehicle shows, with distribution electronics high are a to portfolio traditional our core complete have power scalable This in segments. power systems. power

vehicle capabilities Our for acquisition high electric start cellular, content now with from ultimately over with infrastructure increasing connectivity range position Currently VSRC, rapidly RF Lear vehicle position XXV capitalize XXXX, stop of protocols. new These next new in $XXX connectivity trends growing approximately been launching opportunity with Autonet rapidly. vehicle to offering communication our for adding a XX capabilities complete product have We Lear product Arada opportunities enhanced In the and growth Wi-Fi presently Slide business as XXV a we VXX, to increases. with of years quoting shows of contract advanced grow offerings Bluetooth the and electrification XX year. capabilities business is E-Systems electrification and represents of trend. a to across awarded three and including Mobile. by programs the and have on portfolio these on connectivity. connectivity vehicle-to-vehicle number to Systems increasing level XXV next We nameplates power full award in customers, the million six to programs

highly upgrade in launch distribution offerings electronic Lear's our position connectivity across with XXXX Lear's traditional global XX major nameplates electrical on the industry leading Lear deployments nine are modules. representing will Our over-the-air than synergistic more leadership connected XX VXX in capabilities first and with in production platform. infrastructure states five modules Europe gateway capabilities with connectivity has software and countries.

quoting continue with see for our We connectivity customers. to solution increased activity global

Ray on an Now I'll Scott, of in to for seating. growth over turn it Seating our business update President drivers

Ray Scott

Frank. Thanks

seating provide continue seating to our and seating our capabilities I'll comprehensive value We component most possess the our proposition insight next into believe profitably the the is unmatched We in slides Over actions grow to that customer few Lear's some strategy to industry. business. segment. in

We products delivering lowest possible at also cost. the to are committed highest quality the

together advantage competitive driving Our world cost manufacturing class capabilities is footprint with provides product unique share our engine low growth. market a and

background future autonomous impact We our electrification our every and This needs. vehicle trends as are seating dedicated the to and no With to have innovation of connectivity of is is near that as that strategy. current exception. customer and nearly turn Slide both consumer component discussed part mega slide an XX. addressing meet and Lear product seating in key market trends The to please long-term of Frank that shows

the seating last to expand five innovation. has significant our Over taken years, steps Lear

resources timing. innovation ever innovation. and accelerate investing developed resources In more identify we on time, energy methodologies, dedicated before are and opportunities and have to short, to processes tools We than development specific and

examples to this major Drop are Go by Some is intelligence three and highlight slide. initiatives. key on Lear, which listed I'd system. our and Crafted Intu, like seat

develop to to seat crafted know, their aims by capabilities craftsmanship. with our Drop unmatched reconfigurable executed customers cutting advanced in surface to seating and life most Crafted As our Lear their showrooms. we level that ultimate of -edge to help brands to the by beautiful, bring using Go for take a you seat is design compelling, and team premium solution launched provides Lear vision materials act flexibility. an designs a

passenger and our benefits. next other Enhanced system generation of management The and drawing in advance these expertise functionalities capabilities on cargo SUVs CUVs, will Drop for Go will a complete and products and be reconfigurability, also includes electrification, Specifically into E-Systems. that vans.

for growing component aspects electric familiar on recent its acquisitions we shows and and Lear the and will Antolin's. as we opportunities for seating development connectivity. information most integration, leveraging acquisition these percentage features vehicle embedded on Lear Grupo this our of like automotive capabilities personalized seating this future Many has highlighted focuses The provide and the XX our in activities Slide our that for capability give Based superior in increased and achieved it XX we the supports which in seating of including with opportunities and leading with in system. our vertical may seating and we innovations seat seat Since the these of Intu X the applications. Not has also before. next complimentary profitable our share Finally, our the sales you on user trim of most of heating are Lear position capability systems. provide world's of systems other combined investments intelligent significant seating. industry. our comfort customers innovation of growth all only electronics Guilford intelligent center The page. the cost the does by roof. have XXXX capabilities, seating created Other industry our point and which expertise a is seating leveraging be generation full acquisition capabilities company sophisticated have the in structure. seating sensors Leather significant vehicle, provide. the above market how never supplier of Slide future the service of on electronics, of some experiences we all and in in gains and No making Ottawa our growth Lear generation We've innovative occupant and world. be software believe seat and business. vertically under fastest capabilities supplier dramatically also particularly meaningful for industry seating have product has these one by E-Systems innovate delivered only the most integrated cooling, become made seating with And E-Systems Fabrics, engaged seating the both Eagle E-Systems investment are possible and module The requires next systems seat rest and areas advancements business Tempronics an capabilities will materials. unmatched become broaden cover co already

As we we similar pace. years, have business the our seating project look growth will continue at to very five that next

by the earlier evolve, capabilities consistent We position matured per features emerging also capabilities, to markets. Lear's require and innovations safer us additional continue and Longer will content trends in and CPV. connected part and believe significant this .These in will substantial growth This features increase the and more market adding will seating from content seating, driven trends becoming driving drive in low benefit discussed segment growth. in leading summary, growth. market add well the see component content In product will drive in and infrastructure with will to total we average we've that term, higher. I product cost we and innovation profitable anticipate that Lear's seats which and vehicle participate increase electrical continued electronic

cost the the team delivering at most best day. every single have talented We possible seats the lowest

would thank so I and Matt. over like to to And turn it you

Matt Simoncini

both capabilities Great. Lear the guys. having segments product business continued leading segment complimentary; provide faster highlights on Lear's backlog. another Lear's positioned the In segments performing We've than have business summary, success. for again financial reporting are again financial XX and we our increased growing best and will portfolio. expect this us full Both with opportunity have to growth. that strength The to under Both high great results. sales record in made production continue unique Lear to the year businesses product the are our profitable continue had we Nice unique profitable build growth of record margins. umbrella to job this for due believe outlook Slide XXXX that together quarter, our industry investments business and

capital and are allocation record of shareholders. delivering superior our We performance that returns of have balanced a strategy track to a

us allowed the continue consistently Our to strong shareholders. to business invest flexibility in returning cash to cash flow free and financial while

happy be questions. would take to we Now your

Operator

And of Itay Instructions] first from Citi. [Operator Michaeli question form your comes line

Your is open. line

Itay Michaeli

real so lower little off some -and- if think Great, the of thanks, takes just quarter? fourth implied year-over-year, the walk walk kind just of into I good morning, everybody. margins on around start Why don't you hoping the bit we could puts you QX. quick

Matt Simoncini

to mix, down Yes. It comes really Itay.

going We into weaknesses The seeing it's quarter. headwinds truck outperform. changeover bit the cars are macros some past we SUVs than expect If pretty to we to see on that of hold also are that the little the getting certain in starting GM large platforms a we Other the on and large fourth SUVs. pickup quarter. clean a

Itay Michaeli

about outlook helpful. year, of picture previously last into kind preliminary as we market how And on puts expectations think are think of you about points the Maybe really X feeling XXXX, That's are I QX there? overall about call outgrow of each you think How actually other by XXXX. kind we the the Lear big and feeling in takes Matt, year. just maybe

Matt Simoncini

great The I It's feel well. doing on continued Both a about strong. global is our XXXX. are to basis. industry grow businesses

continues We than grow. more are share, continuing win to to business share our

if markets it's think think into set doing hundreds running outstanding whether year are you flat the teams cars the plateau major benefits we China pretty high The operating heading would Again next expect to of on macros pretty are Lear. at we a well America. are I of rotation level. I actually specifically, through world. Asia, The the see line Europe Even around lining flat job when North the facilities do well. the look are off as CUVs or we and

yes, a I So, bull. am

Itay Michaeli

maybe XX, your rates appreciate of competitive you how slide E-Systems. I power and the Yes. on bit more helpful. about a talk tracking Can a landscape win just little Kind within either to look there connectivity? on just And color rates and other high feel you are like That's relative very win components in do you had what's lastly E-Systems? the

Matt Simoncini

our in segments. there well doing are We product

we to to Lear. show in this. things you benefit a little happening things that our of the of slide, One want are with Itay can do color and can of the the capabilities some we some highlight on that the marketplace bit shows more Frank,

Frank Orsini

Yes, absolutely.

up So, particular the area benefits our this scale Itay, segments in ability all in to product power. power of from in high general, three

XXX electrified are XXV all full to the XXV our architectures XXXV and to So in architecture, way architectures right on house. wheel

are standpoint So we competing very from well. a competitive

lot in and the of the great everything expectations We continuing, We are we the a winning and the of we prospects. growth winning are exceeds winning and on business working that are terms are our a capital we mentioned investment business on. just see we business as margins are

we So right as well technology see now the we in; position really like very is we future the us for well. are and doing coming growth

Itay Michaeli

again and congrats. Thanks everybody helpful. very That’s

Operator

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

open. is Your line

John Murphy

guys. Good morning,

into there. CapEx is, I maybe a Just first and sort you winning it ramp the in mean obviously more are indicates the growth, I question developments wrapped kind backlog than had it's mean up of you of business expected CapEx not major but before.

right So us your we I saw, what grow backlog know simplistically on are question flat growth based simple to what and about revenue the if you And mean very but if on you you also can backlog like there. about seeing of just next very update wondering it now. see you expect we your give X% volumes if sounds year kind would

Matt Simoncini

last The answer is yes.

the we you but what color and seeing wins, near that it's the Deutsche full it businesses will of quicker going business don't capital X.X% that so I high near are was been And the the trend about of is we I'd our in are cadence I makes will year we've meaningfully. normal backlog conference in three as than is advance. is launch sense? of in to details which year. announce three at January some Like sales. running X%, with year CapEx Does that term think think next As this intensity expect change term year the Detroit of CapEx John bigger business backlog the than be kind to if far winning you the a

John Murphy

won you or win the of scope? are that to that mean Because new and programs that Does size in you businesses on of some have -- sort expanding untraditional it's

Matt Simoncini

It's both

John Murphy

Both, okay, helpful. that's

Matt Simoncini

takeaway also It's in capital John. is There recent term, Yes. the business near rates. with the some associated

and driven plans those some to to as we as that well as think Antolin's of tiers capital do that in with that we got Grupo of things the -- guidance. needed just you announced a some just Lear Some we capital acquisition performance sub saw that's the associated raise improve into portion into we consolidating the we

John Murphy

on helpful. is EVs, to opportunity sort you of XX three huge And in ultimately over page like mean and about backlog the to get just it this that's Frank I power-trains years. Okay, more is sounds mentioned next there you million $XXX high the

but XXXX to power-trains more of sound could going where high there it's real are there call over some Next to the should three opportunity some visibility to three this the of maybe next but penetration and beyond power-trains lot sort is business beyond significantly well What you have really see you the thinking into because it years opportunities get you which out beyond like next three what is get XXXX than ramp as increasing for that might years up. that of we be that and the window some do is out kind we additive about this it good are beyond talking to backlog have more does already. there years it

Frank Orsini

Yes, completely year it couldn’t some are said not area in sourcing The as tremendous. this have The we better. on are done that three either, absolutely. working Yes, even backlog still opportunities well. you

that are programs still Some bid. out for

be a, is, way, So our we for coming tremendous is of terms near CPB. in the ACE because us what's and think to think when term very that this of electrification opportunity technology you going

on The some slide give the there opportunity CPB put beyond backlog. for see you you three year we indications. So opportunity the we

As have those in areas. one we opportunities of each I mentioned,

believe going really is We in long for term this continues that's it So benefit Lear trend area. well. to to better get as us this a

Operator

from Hoselton comes of question KeyBanc. of the line next Brett Your

Brett Hoselton

flow of your little areas and kind of bit interest you M&A deal Good talk possible a about valuation company? morning. Can for

Matt Simoncini

Yes. capabilities. given opportunities the we At grow something numerous our business are time that looking increase to any at Brett would

We to capabilities we with are think in already in It's of seating. our have hard segment. capabilities best the that would need considering fairly are happy we component our don't something

to things E-Systems the positioning So our an multiple we the you do primary that of higher looking that's to our That types can focus some be of this to acquisitions. are similar are look at. property, division, have think to that we've these that the and lot space, Arada continue areas at being are Lot more area that smaller to silly, a valuation a acquisitions like to provide been cyber us of in be that has going space ridiculously order quite in intellectual technology been at, been that help software higher to deliver need vehicle, multiple get are to property play than provide to is they and be low. -- technicians of in hard Valuations Autonet going investments we a More understand engineers. swallow those everything it. we've Lear high [Indiscernible] just times to Lear's at are said, and you last times I ridiculous, made to they but year software have times areas power the and of is it's the in and in big value intellectual and

it. So think yes I that's

Brett Hoselton

combination and I consistently can good. from value the split Autoliv you the a significantly the that business. know in for And again with that I think to and recent you was bit given they the more said of given electronics us questions and maybe elaborate we two on there seating are split another? simply announcements you-- then the getting have addressed one their going because Autoliv on more company. Very you are benefit hoping Delphi the Delphi split, given can how that little is

Matt Simoncini

the and of are generating situations want is business high think we quite am shared segments and our the Right. back the are customers DNA fact In you don't revenue best actually than not outgrowing think product are that point, case have The segment. by And where structure continued this overlap the or our capital quite where piece first and and line last in both source taking capital Whether our and infrastructure, in to Delphi its is splits business. that come the mean Autoliv billion starting the a our products fund, or that when benefits both investment electronics grade both we our it electrical more allows E-Systems business business. growth capabilities market, Autoliv to business I you both standalone leveraging have us umbrella losses of breakeven business, product E-Systems management invest. underneath and that our is, different different also Lear's flat both the as infrastructure, our the us, these have but and structure in to to because growing cash its in are only a Lear. that bit $XX From financial of Delphi of you of that have technology firm are to willing finally and has and and to opposed I frankly to on wherewithal we foremost, the going we the and basically

more show product time intelligent. sub over become as to that of as most a have mechanical far slide want we Now, on the conversions, what is vehicle systems the

you high there a even of largely you happening the more is now and that's for see base. in features, If seating, it's instance, penetration vehicles. becoming same and steering more thing take intelligent autonomous becoming electronic more so it's see more systems as will electronics the We become power, it

software of connectivity when of the So at engineering come lot first sweet a that we've because and line developments our that the in we spot E-Systems. in have done Lear, from and the it's in intelligence the capabilities are we capabilities the of has look you

to right leadership way producer we responsibility corporation. we see we businesses create offer keep these we for that long together. being the So compelling team the believe it, that that, this all shareholders our now value would value a our said to now for sustained creation term create if to that best two consider a we receive do, But shareholders, as understand to

Operator

the comes question next Your of David Sachs. Tamberrino from of line Goldman

Your line is open

David Tamberrino

currently taking thanks things And for on What globally. an acquired deployments there? being of into the infrastructure? monetized? the of You hardware And production the you one necessarily but most is from is back revenues? that do think are there the like or platform. a in you opportunity actual how looking look not it I the how opportunities have Matt, is just ongoing really country guys increased applications term And vehicle is VXX in China the that's about service that you installing have like installations what Great, then medium have you've the do to smart business here. tied noted So that installed to questions for infrastructure and just that that rollout you think growth?

Matt Simoncini

It of Frank side is in talk data turn this a how David, our streams this us through the learning and learned one and develop being One what collected helps quite But our how I'll the can by the gateways over from modules one this to deployment. we of specific just deploy modules. you the will to is second opportunities. these benefits, revenue of but doing Frank is and it about you frankly side things benefit if

Frank Orsini

absolutely. Yes,

have vehicle information deployments topic the we infrastructure is direct and for for translating are we and So into that knowledge the VXX vehicle specifically applications as really global what seeing well. are vehicle-to-vehicle,

a that opportunity there we expand global your call deployments. To with are position. a XX to we is as mentioned leader answer So question, on

with are as countries quoting actively quoting work now states the other actively right we certain We US in are well. in and

of can We right actively now is for for space Asia the to are now. speaking country but China And every world India already be this right in in that technology. in terms we that another are said

are with working We America. South

We are with as well. Europe working

then lot but is and So as that believe said Matt a continue from are really there important is expand we deploying into becomes of knowledge application. to the taking that vehicle opportunity we to infrastructure

monetize an yes, capabilities regarding, something as provide we hardware question services to to opportunity today, are these is and well. software that looking Your is its

of and the that directly putting quoting certain So something the are very actively into future us the vehicle world. options in this to important around with are technology it's customers we

David Tamberrino

today the within standpoint where mean penetration ramp at that starts to do from the to we years? next in And are and X vehicle. you up where think X I

Frank Orsini

there is now rule DSRC some providing Lear been Well, right is but prepared method adopted either you of hasn't some know vehicles. proposed to relate data NHTSA cellular with between that's or yet that play making technology. that the fully for in will

So of in communicate terms of kind to we for that in looking applications will vehicles vehicle. And fair other. start believe now. will we each the penetration connectivity you next our between are that seeing it's share years quoting been stuff right to these technologies have believe the these We few of in of at. We the some do that see allow right on

David Tamberrino

us have what standpoint material? Understood. a up. Can for be would come remind much clauses you And and the lag the then just copper continue second there indexation the question for me. We you from noticed raw raw of to how material

Matt Simoncini

on side, the right. copper you So are

are the We about very recently price copper. the certainly we insulated have which to quickly. via index agreement of increase on an seen And run copper tend XX%

a about be the comes agreement has directly customer of is covered of into and from is type or the index it longer or by leather fabricated to in quarter could agreement to pricing commercial with matter covered Lear between about and market ranger commercial this, or generally XX% a the of and it fluctuation either productivity in on the impact an other on issues. month and adjusters XX% which XX% through the you timing customer. steel what of other the discussions our with a buy a tail hide purchase form on is So of and of have On through the our steel a supplier handled

Operator

from ISI. line from Your McNally Chris next question comes of the Evercore

line Your is open

Chris McNally

very for get voltage going was electrical, focus the opportunity to everyone you the great within you for this And envelop same today questions. think is X of which the sort I of to on now. guys, the gave single Lear, really the some points of much be as it could XX% drivers CAGR is right put the us the X I for industry the think -- outgrow focused be -- am could see sort back do you to we on that add couple understand system anything long-term of would of waiting you to together math numbers great you so for of been over of quarter, start that but can higher Hey we kind of years and help thank higher couple inflection electrification. to are of sort the be expect street has I helpful. together digits that which trends really when on XXXX, Or out slide sort the just and the can put can out or to we of and because growth focus increasing of be the for type can the of what not of we last clearly that could high some seems you forms electrification this that big

Matt Simoncini

an years. starting but this areas specifically regarding single in in know every to it the right. you engines It's regulations Chris city legislation as The to just I over initiative specific digit I is seems next legislation, Yes. or their have penetrating now greater combustion a with now China major five hard give metropolitan wildcard point. internal in or high

the come what we always rates not we that So We going been know pegged is really sure in. exceeded. to have are

I starts you would I here get running told have three now are years ago approaching would probably been is to X%. wildcard have if and try I it just we X% but realistic Then it COX the people and X% to So regions guideline to we the and or legislation that emission appears point to XX% again be to the be issue. can manage as try might to we think most

Chris McNally

just of And obviously then that electrical could as if that in traditional see say growth much use gave, content the the here now the CAGR per Can maybe of type connectivity. remains your have could blended an some production expect your we the in we plus single What will for if high have of division plus in am wiring that you growth in Understanding division? obviously an get going not XXXXs, trying XX% XX%. electrical is just you the the we that you with for that Matt to that sort of the into some on what same, just as XXXX of the as with terms to let outlook multipliers industry idea plus get CPV share I growth vehicle. we digit for move acceleration. we of towards multipliers and

Matt Simoncini

could from Yes, X. be I that would XX% yes be probably be comfortable collect probably more wouldn't that investment And an would number but piece share that. math you I I if I use do could the more I or like of with want it I might optimistic. standpoint. be think to

Operator

from comes Barclays. of Your line Johnson next Brian the from question

Your is line open.

Brian Johnson

team. good Couple sort questions the of one. term term Yes, afternoon, near housekeeping longer Lear and around E-Systems then

Was Was currency? walk it the on timing? maybe copper and uncharacteristic somewhat the puts you the Was the just margin it mix? could decline and takes product in First, quarter? it through for production of slight

Matt Simoncini

Yes.

I main cars was the -- but last margin the driver have pass Brian the this would third recovery, seasonality was afore of there like quarter. down had with unusual, normal lowest year in erosion which to in think brought margin the the year the quarter mix with an was fourth margin we mix XX.X% that XXXX a really was-- the the benefit of

stronger XX quarter cases year with our to we I usually had certain picked shutdowns third weakest about -- The of in quarters is Jeff Europe want was and basis the in quarter. North in points Last the because America say one up

Jeff Vanneste

Yes.

Matt Simoncini

last This year development in XX growing with cost a the points with cost associated had on incremental year recovery. backlog. we commercial basis margin

secondary up to that our normal I'd seasonality development a at number you you had was that take But pretty engineering and step segment. timer when tell consideration we the number. in last almost cost that's the for last deflated third one year's XX.X% to number, good So kind Brian. year's in quarter into

Brian Johnson

Right. And the mix. production

Matt Simoncini

Right.

Brian Johnson

from environment does Could for of things us in you and other. of What sense change way is other of a environment have electronics architecture train electrical into in opportunity bundle electronics high out the who competitor usual a do ease content power. e-drive the in harnesses And -- wiring terms sending power mechanical major that it one you para there of on motor players, module. give your coming with side there, that. couple see around few strategic the competitive On E-Systems then and players lot a one power side

just So and margin the think to environment do competitive what's it's business? what you is? for it mean Whether in strength has that going

Frank Orsini

very tell electrical cases of in because are we is similar last the this for this line. similar we've to we seeing you a seen couple competing architecture and are years, can product the many Frank, for competition what players Brian, over I Well,

way wiring, that system XXV electronic we full can are the where the the doing systems to a module terminal the power from So terminals, well. providing as are connectors all high we range

many of that the in similar competitive that in seeing of in we've and are things competition experienced similar is in of pressures cases nature. we scope the So past terms competition, terms

the outside quoting We So entrance very don't see actively all we nothing every today are over customer. any and there. are new world that with quoting we

So and business the that and experiencing wins we to expect growth the continue we that with well. and are successful we as are

Brian Johnson

to And Okay. I forth. the of silicon of tier than Are your normal you terms that different is around in you world set Xs thinking value thing? carbide where the added? so with? the -- and relationship players or Anything different and of dealing with the partners used is upstream debates

Frank Orsini

in power to even of so our size use Lear's to lead our and technology, selling power are more Lear it's high dealing can spins with, advantage actually high and industry because the used Players apply are case more we for our and to we product the reason. our voltage we of or other connectors. on actually connectors terminals that in we ratio terminals but our competitors to our customers to opportunity And internal terminals on

opportunity we we today. structure similar of us, tier is experienced terms it see but that Xs in very an For

Brian Johnson

And slides. was of a great. consultant great I Okay, set ex an it as

Matt Simoncini

appreciate that. you, Thank

Operator

Rosner the comes Emmanuel question next line from of Your of Guggenheim.

Your line is open.

Emmanuel Rosner

Hi, good morning, everybody.

follow be you backlog wanted understood Just if when us particularly to curious up like think. making Looks was three then your on is questions year in multiplied update billion If earlier by on shaping so like the up just strong just first $X.X where I just quarter be just this a disclose it in to said backlog. and January higher. could year comment you four I for sure you expect to correctly the the you number close that to I this be make couple of to to when

saying XXXX, had what that $X.X XXXX? to are a have you XXXX over that higher to is billion you than we'll So over XXXX number

Matt Simoncini

Well, I'll Emmanuel. start with number the XXXX

Your pretty math is correct.

that year yes are quarter than it previously at are We expect was numbers XXXX about making we billion. the we comment I to years The running overall. $X.X three will in for what consistent approach expect be higher and would billion billion $X.X and -$X.X but the pretty the discussed that backlog XXXX we

Emmanuel Rosner

okay. understood, I content be question the on Then vehicle slide would guess on Okay, opportunity seating. second your per in

You and in XXXX growth highlighted slide some X% which time $XXX same then just be trends then from a increase like of in look the X% year. five years at CPV your some XXXX XX would gross favorable but projection, average $XXX market at to very is over when going I

basically a you to your do year share So X% need in seating, market get gain? growth

Matt Simoncini

We gain. Yes. market need share

component they with -- seats. are saw leather make we are -- the In folks this our there share. market are cases competitors not many we also don't selling to the making We we

also you think color it's I opportunities. any the it's Ray, and both provide can more I think So there. content

Ray Scott

Yes.

we Asia I split I it's are a hit business in the Matt. of going similar at to gain today, think historically on of I we with in we market opportunities you there see have market XX% a back and we it look share seen. and very we've forward. mean XX%, think you the think trend gains we market going some continued mean a if I are are at

Emmanuel Rosner

Understood. no with final I undervalued customary is. the longer have how And I mean a are you your Lear one. just it slide Does value? stock guess quick added noticed you comfortable showing

Matt Simoncini

thought I to Emmanuel, we Oh thought clear. getting a that make putting in it winded tried are long we but we with about point

as spots if faster electronics are electrical spill to on when about and want Adient that the also my major that valued we profitable undervalued on think of been which the I six I correctly, the have more are that. probably give an me what we we business have we we but some is at Well, that talk yes, is turn quite growing of sweet valuation, and and we obviously just trends. one you think

management performance. industry. put one slide experienced I way, on plus ridiculously team of stable the find I most all track So, the it [Multiple the we a evidence yes, huge have record therefore. by and in And Speakers]

Emmanuel Rosner

to sure that not wanted just the with valuation are happy Yes, -- you are saying make you but current

Matt Simoncini

with me significant had value you too at the current the upside. over EBITDA a think in and it a XX slide look We turn the are one you aren't when on Yes, happy we $X do I at can heard math low and and with valuation. billion minimal of million you've state a outstanding. we It's minimal before, share

Operator

from comes the from UBS. next of Colin Langan question Your line

open. is line Your

Colin Langan

thanks the my back question the potential on earlier question. the taking Great, on circle for of businesses. I Can split

you've I past Have that lot -- the a on questions talked get investors color split were Any costs think you the but quarter And You that. if be? that large think stranded of in I you which tactic in to two. in of around there from about last the well. was is right that want out to $XXX the quarter just still million, would as the change check number was how

Matt Simoncini

to historically $XXX is. the cost, Yes. that roughly a we've respect With million. redundant estimated It

$XXX of your $XXX tax leakage. think above tax are to facts I pretty accurate. So The is

Colin Langan

remember you impact weak last risk the manage effect quarter well. since How now we an have should the we about to your Because but in How of you your seems small it as can go in And think XXXX? the think business? changeover pretty Okay. that I your into margins the held margin? was pretty KX factor? we it that on about it's think Do should part

Matt Simoncini

think become I which portfolio. it's last probably point made product of is most that one you is much important balanced more Well, the the

a headwinds. the bit job headwinds? your about we to to outstanding think seating had we bit is little the it. XXXX think Ray, you those team managing just done earlier what Little can manage talk about but can an offset talk team I doing

Ray Scott

Yes.

previous were to place We prior the are in we launch. different a than

are launches, that's the have the in we of going business, the investments we've team all the discipline we capital, ground, We different our the a place. -- through on in put made place, in are the

we as are confident we more much launches. into on our XXXX So head

Colin Langan

was as the XX% on unusual anything tech up? back XX% think this or at item. prior thing year? of should I go it the is think last trending year just rate we new mean two the Should this I it And XX%, I there mean it's years.

Matt Simoncini

which reforms see by effective obviously we in country earlier ongoing what it range. maybe wildcard versus will XX% last think basis I years XX% rate reflects we've see see but to the in and revised continue coupled for I of with where the tax really few some And saw usual to that, guidance an in seen to the tax the we you in and around earnings XX% full in is think planning mix absent continue of year. what year the tax now XX% the strategies that is

Operator

comes question next Jonas Morgan Stanley. line the of of from Adam Your

Your open line is

Adam Jonas

everyone. Thanks

So, or think more you hyped? EVs over is AVs? Matt, do what

Matt Simoncini

I think hyped are they both appropriately.

Adam Jonas

one -- another one. Any more hyped appropriately than hyped

Matt Simoncini

market the I in place think is there is level of that autonomy today.

think to going of see near are I you EVs. penetration the term

guys but see cars AVs I still me think driving old around. you'll you like time in have

but get now. I have shouldn't industry autonomy does and wonderful you which hope autonomous it leading on really we seat, will not -- any right full soon but it's by touted way look CTX# time our So at Cadillac feature so be the think it's the

So that's that's an in today. of aspect the marketplace autonomy

Adam Jonas

up, maybe been of -- decades mean integration have few [Multiple Speakers] vertical in time over for that topic this I just follow And and industry a it. you Got the

Matt Simoncini

Thanks for reporting on that.

Adam Jonas

I long I at is as know least am. as

mirror but become of shells capture billions less the pay I too to coming internal use. companies value supply to more of a some to we that him longevity capital employee other shelled see him and to and what or down I over architecture of of we maybe time where and am all I trying time cheese, this just some we investor this to design financing over have systems. here margin do architecture of at vertical electrical seats, cycle from looking be hollowed base Maybe of the baby to out time. I so have or are away go bit full sitting out lot some potential customers we OEMs do? the - a put for, time for the saying of going in got A not lot next written over benefit. couple trend a marketing they have around but the at at competitors software added Either going little and a the am your of the just is architecture slowdown I -the what question or So I and exaggerating have and kind power been are reinventing a of the and like if vertical integration and up not to integration, some a got tens that lot cycles. become over set combustion trend need on OEMs for the train and That's OEM am are could unionized things your is might of or

Matt Simoncini

we it. from one a capability and question, there. great to Meaning I confusion Yes, time the how time it One, they they is I that commented slightly mean some different, could assuming do think a to knowledge there are that tactical I to get out do and do it's have it. we

to is and mobility this spending want to a engineering lot asset are their gone. that trend are OEs we to we speak I think are think What This to do make capital that monetize effect. autonomous folks we your the outsourcing ultimately of be design not do will seeing be are of that need seats in Certain looking further instant, the those the for to still instance touting it business put OEs and skills and huge. investment power into a it the way to revenues dollars, is can the design invest seat at they certain seats participate they and up I and really look is capital free where that generate but is in turn autonomous for so is make where of to going full need vehicle. capital you which and

So we risk. think it's actually an opportunity a not

Operator

from next the Bank. of Your Rod question Lache Deutsche line comes from

open. is line Your

Rod Lache

morning, Good everybody.

cost I implications expansion you forward? for $XXX next first from is really a any some should thinking that volumes $X million million we and would clarify that be in wondering if that's mitigate next for going price and had quarter or For in flat there can impact an if decline any good. you volume Just opportunity year, year? has launch of cost example the margin about are EBIT and that was development

Matt Simoncini

therein think volume I North that in of quarter the American the in mix happened quarter. So and inside the with the with number impact what obviously the KX the

benefit Some actually of quarter. we that where was got up in volumes mitigated by the were in the Europe

you the volume seems let performing quite can quarter you rate of third well. volume The in the there or So impact run that saw takeaway I the And by that think beyond. in change the mitigated volume a I to environment quarter. that's think business year downside that the next as is the the overall some say of to performance we the of be take maybe level that reading was beyond

Rod Lache

Right.

flatter performance environment. actually So will be performance in you have through some production more would flowing a

Matt Simoncini

as within carline performance the anything Yes, It's or obviously. sell production the number number. what as much

would carline the we've flat always of out Our be would but ability take would cost and okay, that got business, be to there selling help flat okay.

Rod Lache

Yes. two And Frank. for I questions think maybe

high you just is power? your share First in is roughly could market clarify what

Matt Simoncini

-- are quite distribution electrical us it share it's that actually [Multiple scrambling is. -- have frankly. You with be know Rod market our no, pretty Speakers] consistent I and we've to number as

better some in players the of capabilities Although think do I the than our even larger are space.

Frank Orsini

now growing Yes. segment And it's our right too. fastest

Matt Simoncini

Delphi, four have Yazaki, Sumitomo and you. in of least electrical that and and them distribution. think from so are Us, all a don't number probably not We think we I capabilities there our at better that rivals for than standpoint So them. are would number. at have a players mean two don't major I of I

Frank Orsini

And We high modules in right the of got segments power connectors and selling three high range. our electronic now wire and we power in all power. harnesses, high are terminal

-- it's So

Matt Simoncini

it's just to something And mid-teen I -- be would conservative. go

Rod Lache

And if of Yes. am address high you maybe question. wondering kind level I could just

think in companies software Where controllers disadvantages differentiated guy longer customers capability or broadly will broader and would do your regard in is Just how E-Systems in in you the peers suggested? So you electrification are ADAS having in and as connectivity. run? of some like have things be stronger not electronics domain there

Frank Orsini

would I down and well we data that's that our systems Rod, we it you going I So, for wire together are think where When lot management. we are customers, signal a beyond put now. And tell boils of experts.

and today wire as our product customers system will part are controller level approach systems we do boxes, for are domain a of We we them putting together in feature the our keeping and content we've are doing been them Where continue ramping further do capabilities to on nature. top things and that hardware optimized, offering, future. up ads of offering, software of that

signals and ourselves positioning, to And the look allow those trends to other are in you to as throughout being are through as actively with actively So provide of vehicle. modules; vehicles. are the signal the the modules like, management to right and Matt come that speak and DSRC positioning positioning, data quoting what as each the incremental vehicles thinking mentioned content quoting are vehicles that's box software now start and autonomous we going will going able those towards hardware we connectivity VXX to we back And earlier and between infrastructure. movement vehicle

these which the vehicles the the positioning, presented ourselves vehicle, spot as and So we this architecture great signal come vehicle that's positioned be the on that a, now slide and we in this layer going. that in where signals today. higher we where of systems management top acquisition of place we to added exactly where incremental to are to data is and out of into on ourselves Plus in pull going opportunity vehicle, right and great see the with baseline connected you the powered functionality

in a autonomous So CPV as whether forward or we are for us there, we road all just content full vehicles move electrified as areas. a player are going they be connected, it three represents added to

Rod Lache

really be is benchmark no augment say that at the area would there you need you So capability your to level? moment to the at

Frank Orsini

type mentioned We want Matt everyday want But layer Well, capabilities of to software continue to get we participate allows at right in these to in are better looking as vehicle we to have Rod positioning. the baseline in We trends. vehicle-to-vehicle now terms in communications. on. that better software us get to

going We to areas are in continue our to increment to those absolutely though. look capabilities

Operator

question Your Markets. from the Capital next of comes Spak line of Joseph RBC

Your line is open.

Joseph Spak

everyone. Thanks

Just about walks is earlier and flow-through better little wanted I maybe on in get the still quarters? roughly get write-ups, on the that of the still coming items deal on housekeeping back, that bit split flow-through with, do And you some or coming costs Is on in assuming talked at just you backlog then I'm and we on the to that provided. on start the a differently? coming it XX-XX the two guess some acquisitions, the that

Matt Simoncini

Yes.

launches hand of reason the in CE that associated cost and with start we get to margins last incurred once of that in out backlog. question had to think the quarter, cost we correct it some me with was to part fact this We the Europe is headwinds some itself. Grupo it in Antolin's acquisition perform some I'll really to The which quarter. and this there put we because some transition premium difficult sorted Let yes at main but of overall the Jeff the on business premium going cost the the over

Jeff Vanneste

XXXX think for I running same CTE at it's system think I Joe, mix. backlog the on still And XX:XX the

larger likely systems starting that's will seating what in towards there see say not other XXXX come we geared to shift it's in currently to than mix published you'll that a XX:XX, but the will is think in think these and XXXX you be the out when going see I more ways be going the even than will going year. to be I E-Systems it not backlog it's be January

Matt Simoncini

lion portion split. to It share will of will like lion be or current it just be it will seating, -- disproportionate revenue as the a be proportionate the the relates

Joseph Spak

Okay. include also AccuMED? By the way, XXX does that

Jeff Vanneste

is specifically Antolin's That Grupo No.

Joseph Spak

Okay.

just the traditional seating I as to if Okay. curious was vehicles, autonomous of generation And you with functionality, the XX get to seats then your Frank, likely thoughts occur? more at that's on safety, on we intelligent If at especially we look or think that's the even I'm integration Ray. move look slide -- passive and we next necessary sorry, whether towards something

Ray Scott

a focused integrating and our a That's good our One, Yes. we've on that points. still today. belts been from a customer vehicle on seats do system different we all architecture that question and with is and customers integration of forever bags standpoints. couple from The safety

right that seen that believe some number working and look doing are have with customers devices with of do whole health we wellness in system going into passive is safety system the customers themselves type And we of anthropometric vehicles seat on measurement the smart your intelligent. our today Where effort seat passive different smart meaningful audio, belts the and and shared we what on working real And -- on when different read have the going So really picking get you integrated if and through to to no with a and obviously programs where have or work I a time the how with just more within ebbs can longer seat track. Frank dynamic we and generating today. the much we seat become at is up those and to for that center seats suppliers. smart development the as individualize for data to those and being on see actually we a biometrics, occupant, mobility safety that and personalizing device our device. now being not of other lot so seat and that's is are seat directly with all with customers our of is you spending tied and for what is dynamic features we -- we been recliners becoming have customers couple and that applications devices that are of are your opportunity a the kind with flows your stack a our We able

so is. really And that's focus where our

still much change on but are and smart see the passive to system within devices seat with We working going a customers our we themselves. restraints bags more

Operator

of JPMorgan. line next from question comes Your Ryan the of Brinkman

Your line is open

Samik Chatterjee

detail on this the stand research behalf towards spend and all the color margins. we -- to in morning. the both slightly development investment segments. I good to decline wanted that the is Hi, to get supporting for organic on had is terms contributing of E-Systems was thoughts growth as and discussion the touch think This quarter I well do that on and leverage the content growth? and being that higher in successfully Thanks Samik where on content opportunity there today What able mentioned opportunity a the your Ryan. incremental

from we should we how think you outlining? And development that right to could leverage opportunity your able here, So materially do you're this and content that now are change in expenses? we where about research

Matt Simoncini

is engineering an It class development quite more focus business or focused engineering frankly. or materially. Not more requires

move the in of as couple overall we tens you You the will might SG&A and forward. business a see notice line

meaningful more bit So, to overall little points meaningful and bit yes, intense little work know Corporation. to it's it basis engineering business is don't XX requires XX but a not not overall it's it a I change, Lear more a probably upfront but

Samik Chatterjee

I the And product final an time as market. Can provide Eagle was the at direct Have us just more in the the seen above at second and well? Ottawa? you for is adopt that's in stuff well thought segment on acquisition a it driving Got you it. more of Got the quite And products, well? the the as know to that question. it. update luxury growth with industry leather automakers and for cetera, be you market et

Frank Orsini

with we that respect work think studio. our clay and thing an been in-house that customers go one have and group Eagle can with own I our to Ottawa and capabilities, was Gilford important Yes. With design in Eagle the

as material they interior. So brand really more the We of are are design materials there a as product. that's continue far specific big their as crafted kind are luxury trends, but seat give seeing is exotic far a within we are all a we pushes in our for as really executed of looking the customers the importantly for significant to to customers type and a you know opportunity differentiate well opportunity that what question, seeing a asking envelop

are we so And excited about. absolutely yes

Matt Simoncini

as penetrate we vehicles would become leather seat continues expect into cars penetrating not more It is leather growing; that content, the in to the the And other trend well in to is baseline component is but it's just it outstanding expertise acquisition gained an that gain continue. and so from the people we design Eagle Corporation. Ottawa for has and it been building that our only addition acquisition. craftsmanship, complete the the Lear Not that does we as

a So penetration It's and a organizational an standpoint great financial it was from from from great standpoint. standpoint.

So it us. acquisition was an outstanding for

Operator

Your from Robert line comes next Baird. Leiker W. David question the of of

is open. line Your

David Leiker

in players in everyone. and you that's Europe questions going somewhere is of big pretty here. area some morning, Is your some the Matt, contracts to the dominated. in seemed way that you this quick coming for space, that a base smaller Two particularly good losing be business over that that's premium or else? Hi,

Matt Simoncini

our We everybody David. getting we it, pretty are of are -- it are winning much share from share we but our getting is of

are a seat Lear get right, covers they better the craftsmanship what foam best the a opportunity. earlier car that's the of have trim on and bit also think sourcing a had and they executed but stumbling holistic we to and and company manner. both sourcing which launch when assembly a little is smaller started think an I By seat they quality companies get some I see question the

prominent Europe sell continents. the where opportunity. organization to in specifically system in many cars widely also world multiple is footprint happening there an And still need right. of locations is in class These is and geographic quality thing other have and multiple the is The global held lot creating cases

are opportunity. it's an won't all our us I to share. than coming that's say but getting more yes, So, we

David Leiker

last just one And Great. one. then

the market portfolio electrical is E-Systems that the and XXXX for what in similar that traditional As connectivity. high a that then number market A and in you have have XXXX groups emerging you for the opportunities products Do traditional we look a power opportunity you And and between the to growth? at split and market. grade listed some

Frank Orsini

Yes.

products the to market said the create we on X% earlier beyond little opportunity X% emerging bit As and to trends traditional going today are an that.

David Leiker

the thought we Yes. had had will more up okay the understandable dollar I you follow -- number It there, if was

Matt Simoncini

Sure, David active quickly you are now.

David Leiker

I the on quarter, was opportunity. the I number, thanks great for more gross curious heard it's the a number dollar but

Operator

of question next Gabelli. Shawn the Your comes Kim from line with

Your line is open.

Shawn Kim

the morning. Thanks taking Hey, guys, good Congratulations quarter. question. for my on

quick Just little follow up.

the their time over lot players lot that years. And that You few of and are some of potentially $XX so each capability, lot size going some guys wondering recently Can that. a us? up the than XX% could if investing guys lot spending for $XX been us us Wanted last up efforts first OEs, and of years. it where help have software plan there could monetizing year to have around size year of context, next reports will folks year expenses, expenses updates? lot was into of -- in greater next some opportunities fixed how give billion expenses content is you warranty are that to OTA opportunity, on mentioned were, that billion just I couple of you to know a wise companies don't just the and of BOJ you those over you number focus

Frank Orsini

core going them we making we way is to product. connected our traditional have we the and products are are Well, do

we today. given have product over connected capabilities. do back gateways that we to a portfolio bought And companies both So they are we those their in us gateway capabilities making have that. XXXX, through The software

upgrade dealership of mentioned can by making to yes the over things. the is So couple all you top or problems happening. opportunities warranty the year instrument upgradeable over the because opportunity cost be of for vehicles domain. the the also vehicles as can area. infotainment Yes, you can It do components And reduce in connected the you for radio flash things cluster upgrades, ability our the software content provide since might for that gateway

of one including any the with train interface can infotainment. vehicle we power domains So

the Lear. you benefit with where working get that's So really

develop provide health they other can better vehicles also future. vehicle the The the the information so customers the is you thing pull and vehicle to off in can that

launch. We are entering first the our space heavily in XXXX product with

it's our to I in as product nine continue As mentioned be launch we that nameplates going platform. to Europe

So a very for opportunity. us it's big

us us it's on products now excited driver capabilities. we we as think page only We also it captured connected opportunity growth CPV not we the of big about combination through but core are to that it's a going a it connectivity the very are a because for software future. be for our be And making in

Shawn Kim

whether are and quick town, about follow maybe companies are finding a are more to it bit I'd are focusing activity talent. just with relates good or your comments Are Can some towards Silicon a X a are engineers up you as guys love And it. out that Got direct general? getting pipeline you shift auto about guys little question. town on Valley? in towards about on acquisitions Detroit seeing guys comment of how lots going out companies you competing in tier to you you that retaining you coming just going as Obviously development. especially if going software on of the

Matt Simoncini

talent for Lear We lot reasons. attractive to Corporation of have no problem a

in and design be shift I the come conversion think States it looking when time demographics It we are win, and world that of put that have Corporation. from the a are be everybody Two, we work are the and ton in biggest to problems neat industry why wants Detroit tech the have way it again to into United in you anywhere we in jobs. for the winner I that this getting to to HR are it's competitive we no the play no have we , really that. with industry grate Lear a industry is we are we and landscape is product on type provide practices by policies that Then and which effort a opportunity this of that's community attract and headquarters attracted and talent the and we auto, coupled think recruiting. to where you and companies problem have minded, by good it

Operator

comes line Jeff and final question from the Company. Osborne of Your of Cowen

is line open. Your

Jeff Osborne

thanks guys. in. morning, for good Hey, me squeezing And

the towards from harnesses lot A one. the just on the you about. premium of as quick the be and and one quantify you if that can curious was over T discussion margin would wire and E-Systems. power backlog Just roughly moves I And what high connectivity Cs talked traditional

Matt Simoncini

an Probably intensive on more average engineering comes business. bit and we incremental higher typically backlog stand for XX%, averagely capital margin about little slightly

low maybe digits estimate. probably So double my would be

Jeff Osborne

now to switches just XX It power X more the over high is the and changed as next years mix connectivity? over time towards

Matt Simoncini

wire they a they are move connectors engineering capital lower more Traditional and higher and as up, are We your margin. and Electronics so capital. harnesses material investment. would a exceed are not intensive to margin so capital require a engineering and function intensive a really it's of cost more intensive to require

profile more time. intelligent driven increase type product, over processes is would there margin shift we as So the software of and

you correct So are there.

Jeff Osborne

much. so thanks Perfect,

Matt Simoncini

Lear Great. all only people are employees finance the call want Lear that the team for like the supports thanking At on probably the by this point, pulling and together start I the information phone I to this. think team.

focus us to these numbers takes today's call it and work Secondly, as that dedication types that team broader to and post to I thank for as call. pleasant want the the allow have a outstanding of

communicate we headwinds easy as have we together that The is and all industry We team with isn't a know and work honesty and team a if communicate as nothing there but I transparency and we can work that. know stop us.

you. have the Thank We the best industry ass continue guys. in team to kick

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