Good day, and welcome to the Aptiv Q1 2023 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jane Wu, Vice President, Investor Relations and Corporate Development. Please, go ahead.

Thank you, Ally. Good morning and thank you for joining Aptiv's first quarter 2023 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 we'll address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for our first quarter financials as well as our full year 2023 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 that reflects Aptiv's current view of future financial performance, and may be materially different for reasons that we cite in our Form 10-K and other SEC filings. 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'd like to turn the call over to Kevin Clark.

Thanks, Jane, and thanks, everyone, for joining us this morning. Beginning on Slide 3. We had a strong start to the year, showcasing our ability to continue to execute in a dynamic macro environment. Touching on a few of the highlights. Revenue increased 15% to $4.8 billion, a new record for quarterly revenue, representing 6 points of growth over underlying vehicle production, supported by strength across all regions and product lines, particularly in our ASUX segment. Operating income and earnings per share totaled $437 million and $0.91 respectively, reflecting solid flow-through on volume growth and contributions from our recent acquisitions, Wind River and Intercable Automotive, partially offset by periodic supply chain disruptions and unfavorable foreign exchange and commodity prices. New business bookings totaled $13.9 billion, driven by a record level of customer awards for our Smart Vehicle Architecture and High-Voltage solutions, further demonstrating our strategic value to our customers as the industry accelerates towards the fully electrified software-defined vehicle. Turning to Slide 4. While the overall macro environment remains challenging, we're beginning to see supply chain improvements that are broadly in line with our expectations. Our 15% revenue growth in the first quarter was supported by a 9% increase in underlying global vehicle production, principally driven by stronger-than-forecasted customer schedules in North America and Europe. We continue to benefit from consumer demand for more feature-rich, highly electrified vehicles, which could further accelerate with more stringent government regulations, such as the recent EPA proposal that will result in electric vehicles representing at least half of U.S. new car sales in 2030. Although supply chain issues persist, we're now seeing sequential improvements in the overall supply of semiconductors, which has translated in a more stable vehicle production schedules. While we work to position ourselves to benefit from these near and long-term tailwinds,…

Thanks, Kevin, and good morning, everyone. Starting on Slide 10. Aptiv delivered strong financial results in the first quarter, reflecting robust execution across both segments and sequential improvement in the supply chain, although disruptions still persist. Revenues were up 15% to a record $4.8 billion or 6% above underlying vehicle production without growth across all regions and strength in ASUX. Growth over vehicle production was driven by active safety and high-voltage launches in China and Europe. North America was negatively impacted by program timing and acute supply chain constraints with certain large North American customers, which are not expected to carry over to the remainder of the year. Note that our growth over vehicle production excludes the impact of acquisitions. Adjusted EBITDA and operating income were $594 million and $437 million, respectively, reflecting flow-through on increased volumes at roughly 30%. Higher manufacturing and material performance, which offset an $80 million increase in labor costs in the quarter and FX and commodities that negatively impacted OI margins by 100 basis points, primarily due to a stronger Mexican peso and weaker RMB. And as Kevin noted, both Wind River and Intercable posted strong results for the quarter, in line with our expectations. Wind River saw strong growth in both the telecom and A&D end markets. And although that business may be lumpy on a quarterly basis, we remain on track for strong full year growth. Earnings per share in the quarter were $0.91, an increase of 44% from the prior year due to higher operating income, partially offset by higher tax expense and equity losses at Motional. Operating cash was an outflow of $9 million, which was $193 million above the same period last year, primarily a result of lower year-over-year working capital investment during the quarter. Capital expenditures were $269 million,…

Thanks, Joe. I'll wrap up on Slide 16 before opening up the line for questions. As I mentioned, 2023 is off to a great start with customer market and supply chain tailwinds all contributing to our strong first quarter performance. Customer engagements for Aptiv's SVA solutions and Wind River software offerings are incredibly strong as we continue to deliver value by providing optimized full system solutions with increased performance at lower cost. As expected, we've seen sequential improvements in the supply of constrained parts resulting in fewer production disruptions. And we continue to optimize our cost structure to improve our operational resiliency. That being said, we remain laser-focused on mitigating the impact of persistent macro challenges, including ongoing material and labor inflation, as well as the periodic supply chain disruptions. In summary, we're experiencing tremendous commercial momentum and we've never been more confident in our ability to execute our strategy, deliver on our commitments and maintain our track record of outperformance, all of which will drive sustainable value creation for our shareholders. Operator, let's now open up the line for questions.

Of course, thank you. [Operator Instructions] And we'll go ahead and take our first question from Chris McNally with Evercore. Please go ahead.

Good morning. Thank you. So two quick questions on sort of auto 1 [ph] I guess the first, if we start with the obvious on production, the slide, Joe, you call it an in-line quarter, but I think we're all starting to see better production in Q1, the schedule for Europe full year. So I think the main question is your minus one global production, are you seeing something in your call offs that are quite different than sort of the LMCI [ph] just 4% to 5%? Or Joe, is it just too early in the year to update that and you'll have more visibility maybe in the middle of the year?

Yes. I think it's the latter, Chris. I mean schedules were in line with what we expected for the most part in Q1. As I said, in North America, we did have a couple of OEs that get impacted by supply chain constraints not related to us. So we weren't the constraint, but we were obviously impacted. They didn't build as many vehicles as they thought. But again, overall, I'd say in line. And I think, yes, generally speaking, an in-line quarter, we continue to be tied out to customer schedules in Q2. Understand there's some optimism out there in the back half of the year. But our view is, you know, it's a little early at this point in early May to call that. But I would say Q1 as a positive in terms of both what we saw our customers do and how the business performed, and we'd expect that to continue into Q2.

And Joe, as a slight follow-up, is it fair to say that there's some early shoots in Europe on the production side? I mean we're sort of seeing it on the sales and regs, which is giving us a little bit that confidence just on Europe specifically?

Yes. I would say Europe has progressively gotten, I would say, from a customer perspective and what we're seeing on the ground, sentiment has been improving since the late fall of last year. I think that continues again, a little - for us, a little too early to put it into the numbers, and we have to really see it in customer schedules as we get detailed production schedules for the back half of the year. But sentiment has been improving since what I'll call that low in sort of September, October last year, in our view.

Great. And then the last quick one. On the strong orders number, obviously, a big, big number for SVA. Does it - will that have any negative impact to the guide versus prior expectations? Sometimes there's engineering expense that falls when orders are this big. Just if you can comment on that. Thank you.

Yes. Maybe I'll take that, Chris. I think just given the nature of – the strategic nature of those SVA programs, the bulk of that activity has been proceeded with advanced development programs. So there's very clear line of sight as it relates to investment required in timing of that investment, and that's obviously incorporated into the outlook for the - for this year as well as beyond 2023.

Thanks so much.

We'll go ahead and move on to our next question from John Murphy with Bank of America. Please go ahead.

Good morning, guys. First question around the price cuts that are going on in EVs both in China and the U.S., to a lesser extent, in Europe, also to a lesser extent. What could that mean for volumes for EVs for you? And Kevin, I know with Wind River and SVA, there's kind of a view of sort of the full life cycle management. It seems like there's a developing strategy of your lower margin at the front end on the vehicle and higher margin or profit over time from the lifetime of the vehicle. How could those SVA and Wind River maybe partake in that as well as help the automakers achieve that?

Yes. Well, I think your first question, listen, we haven't - to the extent you see cost of those - prices on those electric vehicles decline, you should see the opportunity for more pull through, more sales, more retail demand. I'd say, near term, we haven't seen much of a change. But having said that, Joe walked you through the numbers. I talked about the bookings. We see a tremendous amount of demand for vehicle electrification that we obviously benefit from. As it relates to SVA, both the hardware solution as well as the software solution really, it's an effort from an OEM standpoint to enable ongoing revenue opportunities. And I'm not sure any of them have, John, concluded that upfront profit on the vehicle will be less. I think the real focus is on how do we drive efficiency as it relates to designing, engineering, manufacturing and ultimately delivering a vehicle. And then how can they, on an ongoing basis, either address issues that minimize warranty costs as well as to provide revenue - ongoing revenue opportunities with enhanced ADAS solutions, enhanced user experience opportunities, opportunities on the battery as it relates to increasing battery life or range. So it's really that endgame that's really driving the demand. And I think given what the industry has gone through over the last couple of years as it relates to heading towards software-defined vehicles, given the challenge associated with that, I think there's been a lot of learnings. And I think as a result, we've been involved in a lot of discussions, which has generated a lot of demand for what we offer, both from a hardware standpoint as well as Wind River software solution.

Okay. Maybe just to follow-up to put it more so succinctly, how much opportunity for revenue and profit do you think you may have beyond initial point of sale? And maybe on these calls at some point in the future, we might stop talking about global production, and you might start talking about subs. Or how much of your revenue could be beyond point of sale that will be much more probable over time?

Yes. No, it's - I don't have a specific number other than saying it's big. To the extent we have a - we have solutions that enable life cycle management, that enable to constant upgrade and enhancement of certain solutions. Obviously, that increases the size of the markets that we operate in today based on the way we look at them, whether that's ADAS, whether it's battery management systems, whether it's user experience. So to the extent we're creating revenue opportunities for our customers, the size of the market increases and there's an opportunity for us to benefit in that increased market.

Great. Thank you very much.

Our next question will come from Rod Lache with Wolfe Research. Please go ahead.

Good morning, everybody.

Hey, Rod.

I want to ask first about the numbers. This quarter, you achieved 15% organic growth, that's $625 million. You mentioned, Joe, that you're achieving the 30% conversion. So that would be about 180 year-over-year. I see the $130 million of EBIT growth, and you mentioned manufacturing and productivity was kind of a wash. It sounds like FX and commodities might have been a $50 million drag, but wasn't there some benefit from the pricing that you took in the middle of last year or maybe no? So I'm not seeing it in the growth over market in the quarter.

Yes. It was a slight benefit, Rod, but it's - net price and commodities basically are netting out to what I'd call sort of a slight benefit on the top line. I think to your point, the slight benefit on the top line, they're actually a slight negative on the bottom line so - from an OI perspective. So again, that's what drove - if you really think about, and it was in the prepared comments, the 100 basis point margin impact of FX is in part driven by top line going one way, OI going the other way on the commodity side of things. So I think there's a little bit of mix there. But I think the big piece is, if you look at it, FX - particularly on the RMB and the Mexico peso, total FX impact was about $65 million in the quarter. So as you think about incremental revenue flowing strongly, I mean that - at least in our view, that sort of came out sort of in total where we were expecting. But the incremental volume or the bulk flow-through on any additional volume really got taken up by the FX impact, particularly peso for us, which isn't usually an impact, but it was particularly strong. It strengthened a lot this quarter. A lot of folks don't expect that to continue, but that was certainly a meaningful number in the quarter.

Okay. And maybe just to follow up, how should we - how are you thinking about the FX transactional exposure, at least what you've embedded for the year? And just a question for Kevin. You've got obviously, a lot of exposure to some of the growth of your companies in the industry with Tesla being your fifth largest customer and Geely now. And I was hoping you might be able to address this phenomenon of the Chinese starting to export a lot more and whether you think that, that actually is something that could move the needle for Aptiv over time?

Yes, Rod. From an FX perspective, haven't changed our assumptions from the start of the year. So the pesos in 2.50. RMB is a little under 7. Obviously, I think just given the volatility in those markets, for us, we'll, at the midyear point, take a look at where we are and update those assumptions. But those - and they're in the deck with the FX assumptions. They have not changed from the original guide. Kevin?

Yes, I think, Rod, just to add to that, I think in light of - or assuming rates stay where they are effectively as you fall out into the balance of the year. Sequentially, it should be less of a headwind across our business. So it should be a net positive there. Listen, as it relates to our exposure to - you referred to them, some of the growth or OEMs, we've made tremendous progress with players like Tesla. As you all know, we've grown with them across models, across regions. I referenced, Geely, in the L2+ ADAS program that we were awarded that will initially focus on the China market but is intended to be used on vehicles that will be exported outside of China as well. So that is certainly an opportunity. As you look at the major local OEMs in China based on our discussions, they are clearly focused on how do they begin to export vehicles outside of China. I think their general view is they have technologies and they have quality, which is at a level where they can meet kind of consumer standards outside of the China market and provide themselves with additional opportunities for growth. So it certainly is an opportunity. I'm not quite sure how large it is for us at this point in time. But given the progress we've seen in the locals make over the last 3 years, which has been significant, I think, would be a fairly good opportunity.

Okay. Just to clarify, Kevin, I know that the locals are like half of your China backlog. What percentage of your business in China is accounted for by the local OEMs?

Today, from a revenue standpoint, I think it's about 40%. Yes, 35% to 40%.

It's growing. If you go back to 2019, Rod, that number, we were 75% global, 25% local. And from a revenue perspective, today, we sit at about 60-40, global, local. And bookings are about 50-50.

Thank you.

Our next question comes from Adam Jonas with Morgan Stanley. Please go ahead.

Thanks, everybody. Hey, guys. Hey, Kevin. It really seems like the narrative around supply and demand for EVs has changed pretty markedly this year and from my read, at least in kind of an adverse way. I mean, when you hear Tesla talking about selling vehicles for no profit, and you see the Ford Model losing $60,000 per car in names like Rivian, Lucid and Fisker are really, really struggling to kind of get by here. If Western OEM volumes end being lower than expected, what would the impact be on Aptiv margins medium term?

Yes. Our high-voltage margins mixed out, and if you were to focus on North America and Europe are slightly higher than our overall SPS margins at this point in time. If you think about it, it's engineered components from our connection business, cable management solutions from HellermannTyton, as well as bus parts from Intercable and wire harnesses. So it mixed out, it's slightly higher than our SPS margins. Our two biggest markets from a revenue standpoint today are Europe and China, then followed by North America, I believe, from a revenue standpoint, although they're all relatively close. It's relatively balanced. So I don't know, maybe Joe can take a shot at it...

Yes. North America is about 29% or expected to be about 29% of high-voltage volume, Adam, in the year. You'd call that, to Kevin's point, North America slightly above SPS segment margins on a high-voltage basis.

I appreciate that. And just as a follow-up, going back to Rod's question about the Chinese OEMs. Again, they have a clear mandate from Beijing to accelerate exports into international markets like ASEAN and looks like they're targeting Europe near term as well. How would - I hear you that you're very much, as you've always done, your team thinking of the future and skating to where the puck is going, getting the content where you need to get it. It seems like you recognize that folks like BYD and Geely are here to stay. I'm thinking if there was a surprise, all else equal, of those two names specifically, taken more share out of China, given where you are on those products today, would that represent a positive, negative or neutral mix shift for you?

Yes. BYD or Geely were to grow outside of the China market in a disproportionate way, what impact does that have on margins? Just want to make sure I fully understand. It would be positive.

Thank you.

Thank you.

And our next question will come from Itay Michaeli with Citi. Please go ahead.

Great, thanks. Good morning, everybody. Just two questions for me, maybe for Joe. Can you maybe just help us and just talk about how you expect the cadence of margins for the business throughout the rest of the year. And then secondly, maybe for Kevin, back on the bookings with Q1, I think the last five quarters, you're now running or averaging about $9 billion. Was Q1 another just a lumpy quarter? Or is there potential upside to 2023 bookings relative to your expectations?

Maybe I'll take the first. Joe, the second, if that's okay? Listen, as Joe has always I think said, bookings are lumpy. And I think when you - especially when you factor in some of these Smart Vehicle Architecture programs with OEMs, they are significant programs that go across all vehicle lines over a number of years. So when we're awarded that business, I think you're going to see a disproportionate impact on bookings. Having said that, when you look at the underlying trend about domain consolidation and integration, I think it's fair to expect, Itay, that the amount of our bookings actually go up naturally, just given the nature of the products that we're selling. Hard for me right now to give you an exact dollar amount, but we would expect that trend to continue. We'd say we have a high level of confidence in the $32 billion of bookings that we've communicated for this year. Is there an opportunity to beat that? Yes, there is. But we'll see how the timing as it relates to program awards.

Itay, thanks. I appreciate that question. We have talked about this a lot in the first quarter. I think with one exception, which I'll come to, I think you just think through quarterly cadence of margin, we should be returning to what I'll call sort of that 2018, 2019, our historical cadence, right, of just sort of the natural flow that's in the business. So Q1 will be weaker, will build up over the year. Q4 will be a stronger year and will average to the full year margin. That's historically how the business behaved through 2020. And we - and I realize we're not giving quarterly guidance, but that's how we've talked about margins building up through the year. So I think just on reference point, you can sort of go back to those years, 2019, you've got to watch out a little bit for the strike. But the flow is basically there. I think the one caveat this year that we're obviously managing closely, but it's just a little bit of an unknown still is the supply chain disruption costs and how those hit on a quarterly basis. As we talked about it in February, we have $180 million in the guide, full year COVID supply chain disruption costs. We believe those are probably more weighted to the first half of the year as they roll out in the second half just given the sequential improvement. And those costs were, round number, is $50 million in Q1, which is a $30 million improvement year-over-year. So you got to make an assumption of how the 180 rolled out. But apart from that, I'd sort of go back to how the business would flow sort of pre-2020. And I think we're getting - may not be perfectly on that, but I think that's a good proxy, if that's helpful.

Yes, that's very helpful. Thank you

Our next question will come from Dan Levy with Barclays. Please go ahead.

Hi, good morning. Thank you. Joe, I want to start with just a follow-up on Itay's question there. And a bit more specific to ASUX. You just did roughly 4.5% margin. I think you said for the year, it's 8% to 9%. So I think that implies like an exit rate, probably double digits. So is it just the timing of the recoveries that get you that ramp-up over the course of the year? Or is it just some visibility on those supply chain pressures dissipating over the year?

Yes. There's - listen, I think it's a combination, right? There's the natural flow in the business. Q4 is much heavier for ASUX. You get those engineering credits. That's unrelated to COVID, unrelated supply chain disruption. That's my earlier comment on how the business flows. I do think it'd be low double digits in Q4. I think that's a reasonable proxy. So you have the sequential improvement, you have the normal flow of the business and then you're going to have volume growth. That business is going to grow throughout the year. We've got some strong launches coming in, in the second and third quarter.

And the visibility on those recoveries, is that just based on historical? Or just you have a good sense with your customers that you'll get those recoveries?

Yes. I mean those are in, right? You got a lot of - remember, we did a lot of it last year. There was obviously some to take care of this quarter. But a lot of it last year and then that rolled in a piece price in the beginning this year. So yes, I would say visibility there is good. We've got confidence there, and it's in the guide.

Great. Thanks. And I wanted to follow up on the prior line of questions on the EV pure plays. And I think one of your very large customers, their strategy clearly has been to reduce a tremendous amount of cost to unlock lower price points. So I just want to understand in an environment where - and I presume that's their strategy, but others will follow that strategy as well. In an environment where you have customers that are trying to cut cost out of their system as much as possible to unlock these lower price point, to what extent does that make it a tougher commercial environment for you? Or can you still hold firm on your margins and your offering?

That's actually a perfect environment for us. We benefit from that. So when you think about a full system solution, our ability to integrate and our ability to optimize that integration, the result of that sort of situation and the result of customers thinking that way is we tend to get more content. We tend to get more of our own content, which not only translates to higher revenues, it translates into higher margins. And a great example, I think we've talked about this in the past, we've had a couple of OEMs come to us and asked us to take a look at their vehicle architecture, kind of soup to nuts, both low voltage as well as high-voltage and come up with ideas where we can reduce weight, mass and costs. And there have been a number of situations where we've been able to reduce overall cost by 20% to 30%. And we're able to do that, saving the customer money, while at the same time, enhancing our profitability. So those are situations that are really good for us. And as we evolve into the challenges that our customers are having with software, which we've talked about previously, in terms of that debate about in-sourcing versus outsourcing and the fact that we're seeing - we're having more of our customers come to us to provide solutions. When you think about Wind River, when you think about Wind River Studio, when you think about what we're doing with the overall software stack, those are all things intended to drive flexibility and reduce cost. And we fully understand that we need to enable our customers to achieve their objectives. And a big piece of that is delivering technology at lower cost. So to be candid with you, it might sound a little crazy, but that's the sort of environment that we're actually looking for, and we think we really prosper in.

Great. Thank you.

The next question comes from Emmanuel Rosner with Deutsche Bank. Please go ahead.

Thank you very much. A couple of more questions, if I may, I guess, expected cadence for the rest of the year. First, I guess, on the gross over market, 6 points in the first quarter and then obviously, your normal framework of 8 to 10 for the full year. In terms of what drives this acceleration, is it mostly the timing of your launch?

Yes, launches will strengthen throughout the year, but the 6 points, I think, is more of the sort of the abnormal number there, right? We just - and this happened in Q2 or Q3 last year, too. We just had a couple of customers, particularly in North America, they we're launching, they were accelerating ramp. Those ramps slowed just given some supply chain constraints. So we're - just relative to market, they weren't as strong. So those problems are clearing up. They're getting better in this quarter. So we - it's more of a returning to the framework then something needs to happen to get us to the framework. And we've always said, and I appreciate it's - I appreciate it's a long term guide, and we've historically been well within it, but it's always going to be a little lumpy, right? It's historically been lumpier to the high side with launches, but this is more a specific thing to Q1 than a longer term concern.

And just quickly following up on this, are you expecting these volumes to be made up? Or are you just saying that there's enough sort of growth of the market in the back half - in the rest of the year...

Yes, there's enough - I think if they can make it up, that's going to depend on the other suppliers being able to get the parts. I think the supply is at least returned to where they can hit schedule, so we'll be back. We'll see how much they can make up.

Okay. Thank you. And then the second piece would be on the margin. And I appreciate the comments around cadence and sort of like normal flow of the business. Can you just - maybe just remind us in terms of the margin improvement in the back half, the big pieces of it, right? The cadences of 2019 is extremely helpful. Just interested if there's pieces that you could quantify either in terms of lower disruption costs or sort of like more price recoveries, I guess, just how...

Yes. The net price benefit is really going to be first half. If you think about when that kicked in last year was really not July or August time frame, a little bit in June. So we're sort of seeing that now. That will continue into Q2. And then really when you get to - we've started to see the material manufacturing performance improvement, right? We talked about that needing to offset labor costs and it did offset a little to the positive side actually. So that's going to continue. And then you see volume build through the back half of the year, then I think you have that normal cadence of a strong Q4 as well around engineering credits and those types of things. So - but the net price, the customer recoveries are really a first half just given the timing of those last year when they started to kick in.

Okay. Thank you.

The next question comes from Mark Delaney with Goldman Sachs. Please go ahead.

Yes. Thank you for taking my question. Good morning. Another one on the cadence and on the revenue side, in particular, if I take the 1Q revenue, you're annualizing to nearly the high end of guidance around $19.3 billion. We spoke about growth over market maybe picking up a bit. We spoke about supply chain starting to ease. So it appears maybe you are tracking towards the high end of guidance on the top line for the year. But if you could maybe help us understand are there any offsets we need to be considering and how to better think about the cadence of revenue throughout the year?

Yes. Listen, I think it sort of goes back - Mark, it goes back to Chris' first comments, right? We - Q1 is off to - it was a good start. I think we're very happy with delivery. Obviously the FX, and as I mentioned, North America. But on balance, it's a quarter that was very much in line with our expectations we feel good about. And we expect Q2 to be the same, and then I think we reassess where we are for the year. I think on the margin side, as I said, there's - we're starting to get back to what feels like to Kevin and I sort of the normal cadence and flow of the business historically with the exception of the 180 million, just when do these disruption costs hit. Ideally, those go away much faster. We saw good improvement in Q1, $80 million in 2022, down to $50 million this year. And again, I think we see how Q2 plays out, and we'll have a better sense of where we are in disruption costs so we continue to see sequential improvement. And then can look at what customers actually do in their detailed production schedules for the back half of the year.

Okay. That's helpful. And my second was on Wind River and good to hear all of the momentum that you're seeing with customers. You did talk about potential lumpiness in Wind River in the prepared remarks. So maybe you could just double-click a little bit on that. I mean certainly aware there's some telecom CapEx weakness and maybe that's what you were speaking to, but anything more on Wind River, especially because it's a high-margin business and maybe we need to be mindful of the cadence within Wind River as we're thinking about the EBIT both for the year. Thanks.

Yes. Yes. So both, as I mentioned, both acquisitions performed in line with expectations. Acquisitions are accretive to the margin for total Aptiv [ph] margin. So it's positive on both the revenue and the OI. My comment around Wind River, just trying to set some expectations ahead of time. It's not necessarily on telecom weakness or any particular weakness in the market. Relative to - that - it's a very important business, but it's a relatively small revenue stream, right? It's about - there'll be over $0.5 billion this year, up from a little less than 450 last year. They tend to have some big deals come in on a quarterly basis. So it's more of a cadence within that business. It's always existed of timing of when some of the larger revenue opportunities get signed up. And much like our bookings, it's not necessarily a straight line quarter-to-quarter-to-quarter. That's all I was cautioning about. So I think full year, they have a very good sense and have historically a very good track record. Quarterly, as a private company, they hadn't historically been managing the business quarterly, if you will, and some of those contracts to be a little lumpy. And I just - we wanted to caution that before the lumpiness appeared versus after. If that makes sense.

Yes. It's really - it's the accounting for the revenues, the nature of the contracting.

Thank you.

And our last question will come from Tom Narayan with RBC Capital Markets. Please go ahead.

Hi. Thanks, guys. Yes, a quick follow-up on, I think, Rod's question. Just - it sounded like you said that the - Joe, like the FX assumptions based at the end of Q4 and now it's changed in Q1 and that has impacts in Q1. Just curious if FX is at the Q1 level, how does that change your guidance specifically like EBITDA or EBITDA margin? Is it - how would that be impacted if it stays it...

Let's be clear, though, right? We've let the rates in place for guidance. The impact we're talking about is the year-over-year FX, Q1 2022 versus Q1 '23, that's the $65 million. So it's where rates end up at the end of the quarter. So that specifically, that transaction loss, particularly in Mexico and the peso and the RMB is a year-over-year number. And again, our assumptions are there. We haven't changed since the beginning of the year. We've seen some volatility in those FX markets. And again, I think as we get to the midyear, we'll assess macros, vehicle production, FX, commodity prices and look ahead to the next 6 months and see what we think. But the impact is really year-over-year versus - we didn't have a guide out there. So it's really the year-over-year impact I was talking about.

Okay. Thanks for that. And then just the follow-up would be there's a large ADAS provider that this earnings season noted that one of their OEM customers, I think reduced kind of purchase order pretty substantially in China, the specific OEM. Just curious if your specific OEM exposure in China, how would you characterize? I mean, certainly, your guidance suggests a really strong growth over market despite the challenges there. But is there anything noteworthy in terms of your specific Chinese OEM exposure?

Yes. No, our outlook as it relates to China market, our customer base hasn't changed since the beginning of this year when we gave guidance. So we would - we, at least, don't see any significant changes.

And with that, that does conclude our question-and-answer session for today. I would now like to hand the call back over to Kevin Clark for any additional or closing remarks.

Thank you. Thank you, everybody, for your time today. Have a great rest of the day.

And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.