Good day and welcome to the Aptiv Second Quarter 2022 Earnings Call. My name is Jennifer and I will be your conference operator today. [Operator Instructions] Thank you. Jessica Kourakos, Vice President of Investor Relations and ESG, you may begin your conference.

Thank you, Jennifer. Good morning and thank you for joining Aptiv’s second quarter 2022 earnings conference call. The press release and related tables, along with the slide presentation can be found on the Investor Relations portion of our website at aptiv.com. Today’s review of our financials exclude amortization, restructuring and other special items and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for our Q2 financials as well as our full year 2022 outlook are included at the back of the slide presentation and the earnings press release. During today’s call, we will be providing certain forward-looking information, which reflects Aptiv’s current view of future financial performance and maybe materially different for reasons that we cite in our Form 10-K and other SEC filings, include uncertainties posed by the COVID-19 pandemic, the ongoing supply chain disruptions and the conflict between Ukraine and Russia. Joining us today will be Kevin Clark, Aptiv’s Chairman and CEO; and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business and Joe will cover the financial results in more detail before we open the call to Q&A. With that, I would like to turn the call over to Kevin Clark.

Thank you, Jessica and thanks everyone for joining us this morning. Beginning on Slide 3, through the first half of the year, two themes stand out; the first is strong broad-based demand across our portfolio of product offerings reflected in over $20 billion in bookings during the first half of 2022, including a record $14 billion in the second quarter alone, almost double where we were at this time last year. The growth in bookings showcases our strong portfolio of technologies and the increasing strategic value we are providing our customers as they transform to meet the consumer demand for the electrified software-defined vehicle. The second theme relates to the persistent COVID and supply chain issues that continue to constrain automotive production impacting our first half revenue growth and our profitability. Looking ahead, we believe that these constraints on production and the record levels of inflation will continue for several more quarters and will be addressed with actions that we already have in place. Newer challenges in Europe are being addressed with incremental measures, including another round of customer price increases and increased number of product redesigns further consolidation of our supplier base and additional structural cost reductions, all of which will significantly improve our profitability in the short and long-term. Setting aside the near-term constraints, I can confidently say that our competitive positioning, reflected in our bookings momentum, has never been stronger and will drive the acceleration of our revenue and earnings growth as vehicle production stabilizes. So we are balancing improving our profitability and cash flow over the short-term while continuing to invest in those growth initiatives that will drive more meaningful margin expansion in the years ahead. We will talk more about these at our upcoming Investor Day in Boston on February 14. By then, our 2022…

Thanks, Kevin and good morning everyone. Starting with a recap of the second quarter financials on Slide 11, as Kevin highlighted, the business reported another quarter of strong growth over market despite the difficult operating environment. Revenues of $4.1 billion were up 9% with 8 points of growth above underlying vehicle production despite the prolonged COVID shutdowns in China. The China shutdowns, which disproportionately impacted our Shanghai base customers, negatively impacted our growth over market by approximately 1% in the quarter. Adjusted EBITDA and operating income were $365 million and $213 million respectively, reflecting flow-through on incremental volumes and positive price in the quarter offset by an increase in supply chain disruption costs related to the China shutdowns as well as higher levels of material inflation and the negative impact from FX and commodities, primarily related to the lower euro and changes in copper prices. Earnings per share in the quarter were $0.22, reflecting lower operating income levels while the EPS impact of higher interest costs was substantially offset by tax favorability. The equity income loss at Motional had a $0.26 negative impact. Lastly, operating cash flow was $95 million, with capital expenditures increasing $80 million year-over-year to $207 million for the quarter. Looking at the second quarter revenues in more detail on Slide 12. Increased volume was driven by strong growth over market across all regions. Pricing activity in the quarter was positive as we continue to make progress, recovering higher input costs from our customers and as noted, FX and commodity movements were net negative to revenue as compared to the prior year. From a regional perspective, North American revenues were up 21%, representing 9 points of growth over market, driven by continued strength in our Active Safety product line and our Signal and Power segment. In Europe,…

Thanks, Joe. Turning to Slide 18, I am happy with the bookings momentum, which will yield strong profitable growth in the years to come. We have work to do, but we’re making a lot of progress on several initiatives that will improve both earnings and cash flow in the near and long-term. As Joe discussed, we’re further optimizing our cost structure, increasing prices to offset inflation and attacking anything else that we can control or we can influence. I’m confident these actions will translate into a significant improvement in second half margins and cash flow and provide a solid action point as we move into 2023. More details around the progress on these initiatives will be presented when we provide 2023 guidance. But we clearly expect meaningful improvements in profitability during the coming months on relatively low vehicle production assumptions. Thanks, again, for your time. And let’s open up the line for Q&A.

Thank you. [Operator Instructions] We will now take our first question from Joseph Spak with RBC Capital Markets.

Thanks. Good morning, everyone. And thanks for the color. Can we start on Slide 17, just the first half or second half? Two things. One, the – what’s the confidence in sort of the 32% sort of incremental conversion given some recent performance? And then in the half-over-half performance and lower disruption costs of $166 million, I think that, right, $50 million from China, we know right off the bat. I guess what’s the rest? Is that some of those discrete recovery items you talked about or if maybe you could sort of help untangle those buckets.

Sure. So Joe, it’s Joe. I’ll start. So yes, the 32% incremental, I mean, we have been running close to 30%. Obviously, more volume helps even ASUX on – at the volume level was 35% in Q1, 33% Q2. So at the volume level, the product lines are flowing well and continue to. High voltage is now a big contributor for SBS. So I would say that level of flow-through very consistent with what we’ve seen over the last few quarters. Couple of things there. On your $166 million, the question on the disruption costs, the performance and lower disruption costs, we’ve got about $80 million improvement first half to second half in disruption costs, $30 million is China, $50 million is just the overall improvement. And as you know, we’ve talked in the past that as the supply chain improves things like premium freight and some of those other costs will get better. So that’s $80 million in total with – including the $30 million and you’ve got about 40 plus – right around $40 million, $45 million of the cost saving actions hitting in the back half of the year that get us there. And then you’ve got additional performance improvements on some of the other initiatives we were working at as well as just little bit natural back half favorability we have in the business around things like NRE and some stronger regional performance in Q4.

Okay. But you said those totaled $150 million. So I guess I am having a little bit trouble sort of understanding, I guess total into the $166 million unless I misunderstood the $150 million comment?

You have $80 million from supply chain disruption, about $40 million to $45 million from the cost savings kicking in and then the other sort of Q4 strength is the difference.

So volume, some timing as it relates to NRE and other items, Joe?

Yes.

Okay. I guess moving on, just on AS & UX. So it sounds like going forward, you get more immediate recoveries for some of those open market purchases on semis. And I think you said that was about a 300 basis point headwind here in the quarter. So as we sort of go through to the back half of the year – I mean I think in the past, you sort of said that can get back to mid-single digits or maybe even high single just in the back half. Is that – given everything else sort of going on and now that you’re giving recoveries, is that still sort of the second half level for that segment?

Yes. We back half kind of achieved kind of mid to high single digits for back half and exit the year, including Q1, Q2 at kind of mid to slightly higher single-digit margins for ASUX.

Okay, thanks. I will pass it on.

We will go next to Rod Lache with Wolfe Research.

[Technical Difficulty] So there is no question of the secular growth. I just wanted to get a better sense of margin trajectory from here. You’ve previously talked about a bridge from your original margin targets, which I think were around 14%. And obviously, the numbers are pretty low right now, but I was hoping you can maybe just give us a high-level on how these margins recover [Technical Difficulty] sort of ZIP code. Presumably, part of that is a recovery to something like $90 million [Technical Difficulty] showed like $40 million of EBIT for the 1 million units of upside. And you’ve got growth over market [Technical Difficulty] add three over the next 2 years and 30%, but [Technical Difficulty] just additional color, either from the $1.6 billion [Technical Difficulty] or the $1.8 billion, $1.9 billion that you’re implying is kind of a normal run rate for the back half?

Yes. I – listen, you’re breaking up a little bit. So just to make sure that I fully understand your question with respect to margin trajectory. Listen, I think as it relates to the business model and flow-through nothing has changed. We’re in a period of time, obviously, where we’re operating at much lower vehicle production, right? 81 million units. Material cost inflation is at record levels. We’re confident in our ability to get back to our old targets for overall margin performance. That’s going to happen through continued revenue growth, one; two, pushing through more material cost increases to customers; three, from a supplier management standpoint, we’re going through a significant amount of supply chain activity where we’re consolidating the [Technical Difficulty] we’re engineering out older solutions with new principally semiconductor chip solutions. We’re validating second sources so that we have more optionality or choices for both our customers as well as for ourselves in selecting products. And then we’re aggressively going after our own cost structure. So with all of those initiatives underway, we have confidence in our ability to ultimately hit those targets I’d say the aspect that right now is difficult to predict in this environment is the macro trends, especially as it relates to vehicle production what we see in Europe today versus what we’ve seen in Europe previously and continued strength in North America in a rebound – in continued rebound in China production.

So maybe just you can clarify for us, either from the full year guidance [Technical Difficulty] hopefully, you hear me, the $1.6 billion midpoint or you implied like $1.8 billion or $1.9 billion at a 10% to 10.5% sort of normal run rate in the back half. So what is the actual supply chain and COVID costs that you’re absorbing in those kinds [Technical Difficulty] or unusual engineering or absorbed material that has not yet been reimbursed?

Yes. Right now, Rod the disruption costs with the increase in China and some assumption in the back half a little bit more is right around $300 million. Obviously, a lot of that has been incurred in the first half. As I just mentioned to Joe, we’re expecting an $80 million improvement first half to second half as that gets better. But round number is about $300 million. Inflation that is, I think, still sort of flowing through that we need to continue to get after is about $100 million. We’ve obviously got a lot of – probably got $0.5 billion of price built in. And from that perspective, of that $500 million of price built into outlook, we’ve got customer commitments for $400 million of it and $300 million already under PO. So obviously, as Kevin said, we just got a little bit of work to do to finalize that. But certainly, that’s a big step forward from where we were at the end of the first quarter from a customer perspective. And it actually we’ve been incorporated – we’ve seen a fair amount of inflation occur over the course of the second quarter. But to Kevin’s point, we’re more real time now in terms of passing through those price increases. So we’re able to start to get commitments from customers to offset that more quickly.

Okay. That’s helpful. And then just lastly, can you talk a little bit about Motional still a pretty big drag on the numbers, as you pointed out. I wanted to get a sense of your commitment to that. And how we should be thinking about that sort of a year or 2 from now? Should we be anticipating a larger drag or should we be assuming that something changes structurally in that kind of time frame?

Well, yes, we are obviously still very committed to Motional. From a trajectory related to investment, it will continue at current sort of run rates. With respect to commercialization, I’m sure you’ve seen the UberEats announcement. You know that we have the Lyft relationship. You know that the Gen 2 vehicle beyond the Lyft network in 2023 fully autonomous. So from an overall technology and commercial standpoint, things remain on track. We continue to work closely with them on advancing our own internal ADAS solutions as well as providing them with certain product and software solutions that enable their autonomous driving stack. So they remain on track. We remain very committed. We will see a fully driverless vehicle on the Las Vegas Strip in 2023, and the team is working on a number of other commercial opportunities to bring into fold or to put the technology on. And we will continue to evaluate what we do from an overall monetization and funding standpoint over the medium and longer term.

Okay. Alright, thank you.

We will go next to Emmanuel Rosner with Deutsche Bank.

Thank you very much. First question, I was hoping you can give us a little bit more color or a final point on what exactly you’ve been seeing in Europe? And what sort of like embedded in your outlook in terms of headwinds? I guess – I’m a bit surprised that going through this starting in so far, this hasn’t really been messaged from sort of like are there automotive players in terms of this level of risk? Certainly, if there is an energy crisis, this would be something else, but this is also not your base case scenario. You have some fairly major European automakers sounding more confident about the auto’s recovery in the second half. So just was hoping if you could just give us a little bit of a final point. Is it a function of your customer mix? Is it a function of some of the chips you buy or is it really sort of like you are seeing a slowdown in Europe?

Yes, it’s Kevin, and Joe will provide additional detail. Listen, I think you’re hearing mix narrative on Europe, right? The reality is there are OEMs who have raised significant concerns as it relates to their outlook on the European macro situation and the impact on vehicle production. So I think it’s a general view in terms of what’s going on in Europe, and there may be different players who have different views. We obviously have concern. We obviously saw a significant downturn as the quarter rolled out or played out in the second quarter of this past year. So I’d say underlying macro is a big piece. There is some element that relates to specific semiconductor availability that impacted us during the quarter. So that has some impact, but we do think there is an underlying macro issue there that we need to keep our eye on, and that’s what’s reflected in our outlook for Europe which, Emmanuel, I think somewhat reflects that downside outlook that I just actually presented.

Emmanuel, I’d just add a couple of things. One, the semiconductor, and the way the industry has been working through escalation, how you escalate with customers and how the customers engage with the semiconductor companies, it’s pretty clear it’s just not us. It’s the customers are raising concerns. We know they are talking to our suppliers and more broadly around that and escalating more issues than our availability. So I would say it’s not something specific to Aptiv. And as I mentioned in sort of the June update, one of the things that’s somewhat hard to tell at the moment is the split between semiconductor availability and macro. One of the things we are seeing is to the extent we ended the period with, what I’ll call back orders, we are not seeing those back orders rescheduled into the second half of the year, right. So, it depends on what you want to call that, that’s inherently on a full year basis of schedule call down. They are not looking to pick up the extra volume in a lot of cases in the back half that would have come from some of the supply chain constraints in the first half. So, we are seeing that. We are also seeing schedule reductions. Again, we don’t think they are related to energy shutdowns at this point for my comments. But we do have a number of European OEs that are lowering schedules for the back half of the year at this moment.

Okay. I appreciate the color. And then just following up on this and it’s a very big picture question as I am still trying to understand really the outlook you are describing. But essentially, if I look at your new outlook versus old one on Slide 16, basically the biggest driver of the lower operating income is essentially the market and primarily in Europe, as you sort of like described. But at the same time, you are still calling for a fairly strong second half, and I would argue that the miss versus expectation prior the action happened in the second quarter, where this sort of maybe operating income was maybe $100 million below what the Street looked at. And so it seems like on a full year basis, you are describing something that the macro level was getting worse in the second half. But in terms of your own dynamics and macroeconomics, it seems like the second half is supposed to be actually particularly strong while a lot of the headwinds have already happened. So, can you just go back over this and explain how you see things?

Yes. I don’t think we are saying it’s entirely the second half is getting worse. I think we are saying vehicle production, as Joe said, on a sequential basis and year-over-year in the second half will be better. Europe will be weak, okay. So – and we believe you will continue to see strength in North America and in China. There is a second half impact versus prior expectation as it relates to semiconductor chips supply availability. So, that puts some downward pressure on the amount of that sequential increase H1 to H2, but we are going to see improvement. Disruptions will be down based on increased semiconductor availability. We are expecting inflation actually to be muted second half versus first half, again, on a sequential basis. So, it won’t be a headwind like it was in the first half of the year. Significant increase in cost recoveries from customers that Joe walked through and then the benefit from incremental cost reductions or cost actions that took place in the first half of the year. So, Emmanuel, I would characterize it as our outlook for the second half of the year is not as strong as it was previously. From an overall volume standpoint, there are some markets that continue to be strong. Europe, we think will be very weak. And there are certain actions that were taken in the first half of the year that will flow through in the second half as well as certain things such as disruptions and inflation that will either be a tailwind in the second half or at least not a headwind.

Yes. And Emmanuel, I think I understand your question, it’s sort of the high level when you take a step back, when you look at the individual regions, that’s why we are calling out Europe. China was obviously down due to the shutdowns. We are actually making up a little less than half of the missed revenue from China in the back half of the year. That’s being offsetting some of the deterioration in Europe. North America is a little stronger in the back half of the year than we originally forecasted. But again, being offset by Europe. So, I appreciate the comment. But I think when you look by region, there is either sort of missed revenue being made up for in China Q2 versus H2 and some strengthening in North America, but the downside is really within the European revenue number.

Yes. Thanks so much for all the color.

We will go next to Chris McNally with Evercore.

Thanks and so sorry to be – it’s going to be a little repetitive. But I just wanted to kind of put together some of the comments and the questions that have been asked so far. So, specifically on Europe, you are saying weak second half from your down 5% comment, most people are getting something like down production 8% to 10% second half over first half. Is that sort of aligned with what you have? And then obviously, the same for China, I am also getting down on second half over first half, something like 2%, 3% when forecasters have up 20% to 25%. So, I just want to make sure we are all on the same page here because I think we all will be asking the volume question over and over again.

Yes. So, for the full year, we have Europe at this point down 5%, which is a big move. It would have been up 10% in the original guide. So, we have it down 5%. China, we have down 4%. We had that down in the original guide, about 1.5%. Chris, so like I said, we are seeing some recovery. From a revenue perspective, a little less than half of the revenues missed in the first half, we were scheduled to make up in the second half in China. Vehicle production is a little less than that. Obviously, given our growth over market will run higher on revenue. And then North America is up approximately 10%. We added up approximately 9% in the prior guide.

Yes. I guess Joe, the main question and respecting that Aptiv has good insight into production, you are on – one of every three vehicles, right, on electrical. I guess this is a question of some of these – the weakness that you are talking about when will sort of the ground truth come out, is this Q3 where you think everyone else comes to you, but – I will echo what Emmanuel just said is you are materially weaker than – forget about the forecast is, right? They are always wrong. But everyone else sort of right now on Europe and China in the second half. So, I am just curious on that timing. When do you think you will be proven right or others proven wrong? Is that in the next couple of months?

Yes. Listen, we – I think we operate off of what we receive from our customers. Those – that is what we use to forecast over a three-month or six-month timeframe. So, what we are signaling by region is what we are seeing in terms of build schedules. There are others who use sources like IHS to build their operating or financial forecast. We use that for the long-term. We don’t use that for near-term where we have actual build schedules. So, our view is you will see that play out during Q3 and Q4.

Okay. Clear. Maybe then and Joe if we could follow-up on Slide 17, obviously, the performance bucket, the $166 million is a big aspect of getting to the second half margins. Can you just – I think the question was asked slightly different from RBC. But how much of that would you say is sort of in the bag, something like COVID in China, you know what that disruption cost was in Q2 and you are assuming it doesn’t come back. Could you just kind of walk through to your confidence in that $166 million number, which would help us get to the sort of 12% plus margin number in the second half?

Yes. So, $166 million, you look at $80 million is improvement in COVID and supply chain disruption costs first half to second half, 30% is China going away – $30 million is China going away. So, $30 million of the $80 million is China going away. The other $50 million is a decrease in run rate from the first half, which again, the world – there is a lot that could still happen in the world. But based on what we have seen from the level of supply chain disruption, trends in premium freight, trends in labor and downtime, yes, we obviously feel confident enough to put that $50 million in the forecast. So, that’s $80 million of that. $40 million plus is cost savings. So, those are basically headcount that’s come out over the course of the second quarter. That will not be there in the third quarter and fourth quarter in the back half. So, high confidence there. The balance is what I will call sort of the normal uplift in back half performance in the businesses. Things like customer NRE, there is some strength in trial and manufacturing performance in the back half of the year that just comes with some of the sort of how volume flows through the plants and particularly in China at that time of the year. So, those are very consistent trends we see every Q4. Nothing to do with COVID, nothing to do with supply chain disruption, not new, that sort of normal business trend. So, obviously, fair degree of confidence in that number to put it into the forecast. I understand what was big on the slide, but…

Chris, it’s Kevin. I would say very, very high level of confidence in all those cost items that have executed or we have already executed or we are executing. Joe said, there is another roughly $100 million of price that we need to go after in the back half of the year. But we have enough confidence to put that into the forecast. We have made a lot of progress year-to-date. We have brought the vehicle production outlook down to what we see from a customer schedule standpoint. So, high level of confidence in where that sits. What could be – a potential take would be does the energy issue in Europe further impact vehicle production and bring those levels down beyond what we assume, that would be a headwind. On the flip side, to the extent we see stronger growth in North America or in China, or we see a free up or additional supply of select semiconductor parts that would be a tailwind. So, where we settled, we have a very high level of confidence.

Okay. Thanks team. I will follow-up on the rest offline.

Thanks Chris.

We will go next to David Kelley with Jefferies.

Good morning Kevin and Joe. Thanks for taking my questions. Maybe just following up on the semi issue discussion. You noted the broker by step up. I am assuming some of that was China disruptions. But if we take a step back, I guess, are you seeing the number of problem categories shrink at this point? And maybe the shortages are increasingly isolated, but still meaningful where we have them, or is this kind of a broad step back in component availability that’s taken place over the last couple of months?

No. By and large, availability is improving. We have one semiconductor supplier that, I would say, has been a challenge for us as well as others. But I believe that’s been an ongoing issue. But overall, we are seeing the market and availability actually improve. We have seen inflation increase, Joe talked about that. That’s something we are working through as it relates to resourcing and pushing increased prices to customers. But overall balance of availability, the trend has been positive in general.

Okay. That’s helpful. And then in light of the schedule reductions, you held the high-voltage growth outlook here. So, maybe if you could speak to the customer prioritization there versus component availability, specifically in EVs? And Joe, you mentioned that the strong flow-through you are seeing from high voltage. So, how should we think about margin contribution from that relative outperformance?

Yes. I think no change relative to what we have talked about, Joe certainly has talked about in the past, still see very strong demand for high-voltage electrification solutions. All of our customers are accelerating their plans as it relates to battery electric vehicles. And the margin profile of that business continues to be very attractive, certainly higher than the average. The weighted average from an SPS overall margin standpoint.

Yes. I think David, from a margin contribution perspective, we talked about it before, as it hit sort of $1 billion, the high-voltage product line sort of got to segment average and would expect that to move up over time as you get to sort of the $1.5 billion, $2 billion mark, SPS segment average.

Okay. Got it. Thanks guys.

Thank you.

We will go next to Itay Michaeli with Citi.

Great. Thanks. Good morning everyone. Just two questions for me. First, Joe, going back to the go-forward margin discussion, I think you mentioned second half normalized rate of 10% to 10.5%. Is that a good base to think about for the go-forward kind of normalized Aptiv incremental margins maybe with some benefit from the restructuring? And second, Kevin, I think in your prepared remarks, you mentioned that the bookings were coming at or above the long-term margin framework. And I was hoping you can maybe elaborate a bit more on that and kind of what you are seeing in the terms and conditions of new bookings?

Yes. Itay, I will start. We – yes, that was a very specific comment that 10%, 10.5% because we get that question a lot of we do run hot in the back half of the year from a margin perspective for a few sort of normal business things. So, we wanted to provide people with what we thought a better baseline was on second half and sort of taking out the unique second half attributes.

And as it relates to new programs, Itay, we have a process as we pursue and ultimately contract on these programs where we roll through the current environment from an inflation pricing cost standpoint. The agreements or contracts are structured in a way where we have in the current environment, more flexibility to change out components or alternatives and far more flexibility to push price through to customers – increased costs through to customers.

Got it. That’s helpful. Thank you.

We will go next to John Murphy as our last question from Bank of America.

Good morning. I will ask two quick ones here, guys. Just I mean first, we think it’s about Slide 17 here, Joe. You mentioned the 10% to 10.5% you just alluded to with Itay as the somewhat normalized second half margin. If we think about everything that’s going on in the world, I mean forget about sort of the walks, you are still at close to recessionary level volumes. Cost or inflation on raws is still near multi-decade highs. You have supply chain disruptions, you have shortages of semiconductors. The fact that you are putting up a 10% to 10.5% sort of normalized or even 11.9%, as you say you might print, I mean shouldn’t that give you actual really good confidence in the long-term targets as opposed to some skepticism? I think there is a lot of people worried about these short-term moving parts, which we have to worry about. But it just seems like that kind of basis should give you a lot more confidence in your long-term targets, not skepticism.

Yes. I will start, Kevin can chime in. I mean listen, we are I don’t disagree with that comment, John. I mean we are working through a lot, and I understand there is a lot going on, and we are sort of in year three of various forms of disruption. But I think we are – as I mentioned at the end of my comments, I think to be able to grow at the rate we are growing, there is – the margin expansion we are seeing, flow-through on volumes remain very strong and the prices we talked about, the price discussion with customers has been a bit of a balancing act in terms of making sure we maintain the relationships and can still win business while protecting Aptiv. So, it’s hard with everything going on. But I mean that was certainly the intentions of my final comments there in the prepared remarks, I think where we view the business given the conditions as performing well. With that said, obviously, you know us, we would want to do better, and we will work to do better as we go into next year. But there is progress. There is a lot of progress through difficult environment. I don’t know, Kevin if…

Listen, John, I think Joe hit the nail on the head. Listen, I think the team has made a lot of progress and is performing well in a challenging environment. However, to Joe’s point, we don’t make excuses. And we want to make sure that we are on a good exit point for 2022, so that we are able to deal with any other challenges that appear in 2023. And if they don’t, you see significant revenue growth and flow-through on that incremental volume. And we continue to work on our cost structure. We continue to work on our product portfolio and our value proposition to our customers. We would tell you the pull from our customers in terms of our solutions, whether it’s smart vehicle architecture, high-voltage electrification, and we would tell you now increasingly request or opportunities to present software solutions. All of that is highly attractive. But we are dealing with the near-term macro challenges, and that’s what we need to deal with.

Okay. And then just a second question real quick on the bookings, which didn’t get a lot of airtime here in Q&A, pretty massive. I am just curious, is there anything specifically or unique that you think was going on, or should we start thinking about a run rate that is something more like this? And what’s the booking to realization sort of timing? Has that actually sped up versus history?

It’s probably sped up a little, John. It’s probably those bookings directly correlate to some of the advanced development programs we have had on smart vehicle architecture with what we say one of the leading OEMs as it relates to rethinking vehicle architecture and the software-defined vehicle. So, it’s the benefit of all the work that we have done in the past. We think it’s likely there is more to come. They are on a fast path to get that on vehicles launched over the next couple of years. So, what used to be maybe a 4-year sort of cycle is now probably closer to a 3-year cycle. We are excited about it. And again, we think it reflects the benefit of our broader portfolio. And ultimately, we are going to be able to drag with its software, which again, is higher margin and higher growth.

Great. Thank you very much.

At this time, I will pass on the call back to Kevin Clark.

Okay. Thank you very much, everyone, for your time today. We really appreciate it. Take care.

That completes our call. Thank you for joining.