Elena Rosman - Vice President of Investor Relations Kevin Clark - President and Chief Executive Officer Joe Massaro - Senior Vice President and Chief Financial Officer.

Brian Johnson - Barclays Chris McNally - Evercore ISI Joseph Spak - RBC Capital Markets David Leiker - Baird John Murphy - Bank of America Merrill Lynch David Tamberrino - Goldman Sachs Emmanuel Rosner - Guggenheim Rich Kwas - Wells Fargo Steven Fox - Cross Research Colin Langan - UBS.

Good morning. My name is Crystal, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Aptiv Q2 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions] I would now like to turn the call over to Elena Rosman, Aptiv’s Vice President of Investor Relations. Elena, you may begin your conference..

Thank you, Crystal. Good morning, and thank you to everyone for joining Aptiv’s second quarter 2018 earnings conference call. To follow along with today’s presentation, our slides can be found at ir.aptiv.com.

And consistent with prior calls, today’s review of our actual and forecasted financials exclude restructuring and other special items and will address the continuing operations of Aptiv. The reconciliation between GAAP and non-GAAP measures is included at the back of the presentation and the earnings press release.

Please see slide two for a disclosure on forward-looking statements, which reflects Aptiv’s current view of future financial performance, which may be materially different from our actual performance for reasons that we sight in our Form 10-K and other SEC filings.

Joining us today will be Kevin Clark, Aptiv’s President and CEO; and Joe Massaro, CFO and Senior Vice President. Kevin will provide a strategic update on the business and then Joe will cover the financial results on our outlook for 2018 in more detail. With that, I would like to turn the call over to Kevin Clark..

Thank you, Elena, and good morning, everyone. Thanks for joining us today. I’m going to be in by proving an overview of the second quarter and highlighting the key new customer awards in recent developments across the business.

Joe will then take you through our detailed financial results for the quarter, as well as our outlook for the balance of the year. Our strong second quarter performance reflects the continued momentum resulting from the execution of our strategy.

We delivered record second quarter revenue growth as well as recording operating income, EPS and free cash flow. Revenue was up 12%, that’s nine points over market. Operating income increased 19% to 474 million and margins expanded 30 basis points to 12.9%.

Earnings per share total of $1.40, that’s up 24% and free cash flow increased 34% to 360 million. New business awards totaled over 6 billion, bringing the year-to-date total to a record 11 billion, supporting our outlook for revenue growth across the portfolio.

In addition to delivering strong financial results during the quarter, we strengthened our product portfolio with two acquisitions. First, we closed on KUM, are both on to our engineered components business, which enhances our competitive position in Asia and stuck in.

We reached an agreement to acquire Winchester, a leading provider of custom engineered interconnect solutions for a broad range of harsh environment applications. Both transactions increased our end market diversification and provide solid platforms for further adjacent market expansion, which we'll cover in more detail shortly.

In summary, our strong second quarter performance validates the robustness of our strategy and our business model. On slide four, you can see our portfolio of advanced technologies aligned to the safe interconnected mega trends are translating into customer awards.

As I just mentioned, bookings totaled over 6 billion in the second quarter, bringing the first half total to over 11 billion. The record bookings are largely the result of our leadership position in several advanced technologies. Beginning with Active Safety with 7 billion of customer awards since 2016.

Translating into 1 billion of ADAS revenues in 2018, reflecting over 60% of revenue growth this year and very strong double-digit growth over the next several years. We’ve experienced a substantial uptick in Level 2 plus awards from our traditional OEM customers, which I'll discuss in some more detail shortly.

This acceleration of Level 2 plus commercial activity dovetails nicely with our discussions regarding Level 4 and Level 5 automated driving, which are principally with the players serving the mobility market, but also includes select OEMs.

Moving to infotainment and user experience, bookings have totaled 6 billion since 2016, giving us confidence with the strong revenue growth in this product line will continue beyond the end of the decade.

Turning to signal power solutions, our engineered components business has booked 12 billion of new customer awards since 2016, including 1 billion of high voltage connectors, bringing customer awards for high voltage electrification to 2.5 billion over the last two years.

Our first half pace with new business bookings puts us on a clear path to finish the year above 2017 to a record 19 billion. And gives us confidence in our outlook for continued strong revenue growth. Turning to segment highlights and starting with advanced safety and user experience on slide five.

We’ve experienced 10 consecutive quarters of strong double-digit growth. Second quarter revenues increased 23%, that’s more than 20 points above market driven by 48% and 24% growth in the Active Safety and the infotainment in user product lines respectively.

Based on our strong first half revenue growth, we now expect to approximately 20% segment growth in 2018. As already mentioned, Active Safety revenues will total over 1 billion and increase overt 60% in infotainment and user experience revenues will reach 2 billion up over 15%.

Our expertise in both software development and vehicle architecture including central compute platforms enables us to often uniquely optimized advanced safety and infotainment user experience solutions, which have driven several of our recent new business wins. The democratization of Active Safety is accelerating.

We’re awarded three Level 2+ ADAS Systems in Q2 with SGM, SCA and GAC. At the same time, the number of Level 3 through Level 5 commercial opportunities are increasing. The right side of the slide highlights our recent new business awards from Great Wall Motors.

Our China team secured a conquest win for the Integrated Cockpit Controllers on the next-generation Haval and WEY SUVs which will power multiple cockpit dashboards, including the instrument panel, heads-up display and the center stack.

This award represents our latest generation of Integrated Cockpit Controllers, operating on a single controller solution, ensuring both the functional safety and network security required to deliver today’s dynamic digital user experience. Turning to slide six.

The primary factors driving the democratization of Active Safety are consumer preference and willingness to pay. Consumers are demanding safer vehicles and OEMs are responding, driving increased penetration of Active Safety systems across their full vehicle line-ups from the Premium to the Value segments.

Center to our success booking ADAS programs has been our ability to provide OEMs with scalable, highly reliable systems that also lower total system cost.

By centralizing the function and feature set into a multi-domain controller, we can cost effectively scale the computer requirements up or down to match the specified level of Active Safety functionality.

And by optimizing center configurations that can scale across platforms, we can significantly lower the mass and cost required to support more advanced ADAS features. As a result, our OEM customers can deploy these systems quickly and at competitive price levels.

As OEMs look to leverage their investment development for Level 3 and above ADAS systems, the design of our multi-domain controllers and the optimized configuration of our sensors supports fail-safe operational solutions in a more economically viable way.

In short, our approach to advanced ADAS solutions is unique in the industry and is helping us winning the marketplace, including with the four major OEMs features on the left side of the slide, while positioning us to be even more competitive in the future.

We now expect Active Safety revenues to increase from $1 billion in 2018 to well over $2 billion in 2022, representing a continued very strong double-digit growth rate. Turning to slide seven.

The advanced work we’re doing today on Level 1 and Level 2 ADAS systems for our traditional OEM customers is being leveraged in the Level 3 through Level 5 automated driving solutions. A current application of this technology is on our Level 4 commercial deployment in Las Vegas. We’ve given over 3,500 automated rides utilizing the Lyft network.

Roughly 100 rides per day, earning a near perfect rider rating of 4.96 out of 5. The vehicles in the Lyft network are running over a span of 20 hours per day and are serving 20 pick-up and drop-off locations today, increasing to 30 by year-end.

As our Las Vegas fleet scales, we’re leveraging our data services platform to monitor, diagnose and update our automated driving software to dramatically improve development cycles time.

Further, the data we’re collecting about traffic flows and pick-up and drop-off frequency is proving to be of substantial interest to potential mobility customers, providing additional opportunities for data monetization.

In addition, we’re also seeing significant increase in connected services from traditional commercial fleet operators as they work to improve fleet utilization and meet more stringent regulatory targets.

We view our vehicle deployments in Las Vegas as opportunities to learn how to best develop, how to operationalize and commercialize our automated driving technology. Consistent with that objectives we’re partnering with Hertz to provide management services for our fleet of roughly 75 autonomous vehicles in Las Vegas.

The partnerships with Lyft and Hertz are an important first step on our path to commercialize automated mobility on-demand in a thoughtful, prudent and safe manner with multiple mobility partners across the globe. Tuning to slide eight.

Our Signal & Power Solutions segment is focused on next-generation vehicle architecture, requiring high-speed data and high-power electrical distribution to enable the advanced technologies that will shape the future of mobility.

The business continues to benefit from the need for more scalable and optimize vehicle architecture to enable advanced vehicle features and functionality which is reflected in customer awards.

Our current pace of new business bookings in this segment translates in the solid mid-single-digit revenue growth over the next several years which is what we experienced in the second quarter, 8% revenue growth, five points over market driven by 63% growth in high voltage revenues and a 12% increase in engineered components revenues result the strong growth in both the automotive and industrial end markets.

Revenue growth in this segment benefited from new platform launches in North America, which more than offset the continued weakness in passenger car volumes. Underscoring our industry leading position in this segment, we are recently awarded the Electrical Architecture on a new North American truck and SUV program, a high-volume conquest win.

Turning to slide nine. The acquisition of Winchester Interconnect takes all the right boxes. It perfectly positions us to accelerate the end market diversification strategy, we articulated in 2017. Winchester provides advanced interconnect solutions for some of the most demanding harsh environment applications.

The company’s revenues are diversified around industrial applications serving the aerospace and industrial end markets as well as products for data infrastructure and medical.

Consistent across each of these markets is a high cost of product failure and the need for products to beat the challenging temperature, vibration and other design specifications which in many ways are transferrable to Aptiv’s expertise.

Joe will discuss the integration plan for Winchester shortly, but we’re confident their talented management team wants to enhance our ability to accelerate the growth of our $1.5 billion of current adjacent market revenues.

As we continue to execute our diversification strategy with the goals improving our overall through cycle operating performance, Winchester brings us closer to our target of 25% non-owned revenues by 2025, providing a business platform from which to expand our product portfolio and geographic reach.

With that, I’ll hand the call over to Joe to take us through the second quarter results and review our increased guidance for 2018..

Great. Thanks, Kevin, and good morning, everyone. Starting with a recap of the second quarter financials on slide 10. Results exceeded the guidance we provided back in May with revenue of $3.7 billion, up 12% or nine points over vehicle production, reflecting a continued ramp of new program launches in both our segments.

EBITDA and operating income increased 19% driven by higher sales volume and operational performance, and operating margins were 12.9%, up 30 basis points. Earnings per share of $1.40 was up 24% despite the expected higher tax rate on a year-over-year basis.

Importantly, operating income earnings continue to grow double-digits while investing in future growth. Lastly operating cash flow was $566 million up 37% driven by higher earnings and favorable working capital.

Turning to slide 11, sales of $3.7 billion were approximately a $135 million higher than expected, largely driven by stronger volumes in both segments despite some variations in customer schedules in the quarter. FX in commodities were also a positive.

From a regional perspective North America sale were up 15% and benefited from a number of new programs launches in advanced safety and user experience and signal and power solutions, more than offsetting continued passenger car production declines.

Europe sales were up 9%, also better than expected driven by the ramp up of new program launches despite slightly slower production schedules and China sales were up 11% as we continue to see strong revenue growth and expect to grow 8 to 10 points over market for the year. Slide 12 walks our operating income performance year-over-year.

Operating income of $474 million was up 19% while margins expanded 30 basis points to 12.9%. Conversion on strong volume growth and operating performance more than offset price downs, which were slightly below 2% for the quarter and the higher mobility investments. FX and commodities were modest benefit in the quarter.

Although, as we've discussed in the past, revenue from stronger FX and commodities are dilutive to operating margin rates. Stronger operating performance yielded higher earnings per share in the quarter as shown in the walk on slide 13. Earnings per share were $1.40, up 24% as operating income growth translated into $0.28 of earnings.

And all other items were a net $0.01 headwind. Moving to the segments on the next slide. Advanced Safety and User Experience revenues grew 23% in the quarter driven by new launch volumes and higher take rates globally in Active Safety and Infotainment and user experience which grew 48% and 24% respectively.

Operating income grew 35% and margins expanded 80 basis points for the impact of mobility investments driven by strong revenue growth and improved performance.

Our mobility investments totaled roughly $40 million in the quarter and as a result of the acceleration in commercial activity, we now expect full year mobility spending to be roughly $160 million, a $20 million increase versus our prior outlook. Segment revenue growth is now expected to be approximately 20% for the full year.

Turning to Signal and Power Solutions on slide 15. Revenues were up 8% in the quarter, driven by new product launches and increasing high voltage electrification and engineered components volumes. For the year, we expect 6% to 7% revenue growth with strong growth across all product lines.

Operating income grew 24% and margins were up 130 basis points in the quarter. Operating margin flow through is being somewhat impacted by operational inefficiencies driven by variations in customer schedules and higher launch volumes. Primarily in North America and Europe, which we've assumed will continue for the balance of the year.

Turning to slide 16, we are raising our outlook for 2018. Revenues are now expected to be in the range of $14.35 billion to $14.55 billion with an adjusted growth range of 8% to 9%, up from 6% to 7% previously.

As you can see, we are still targeting global vehicle production up 1%, despite movement within the regions and some variations and customer schedules. Our outlook now assumes a $1.16 a euro rate for the remainder of the year, down from $1.18 and $6.80 for the Chinese RMB from our prior outlook of $6.50.

Adjusted EBITDA and operating income are expected to be $2.455 billion and $1.805 billion at the midpoint respectively, up 15% and 13%. Earnings per share are expected in the range of $5.30 to $5.40, up from our prior range of $5.20 to $5.40 reflecting a 15% increase year-on-year at the midpoint.

And operating cash flow is expected to be approximately $1.6 billion also at mid-teens over 2017 with CapEx unchanged at roughly $750 million. For the third quarter, revenues are expected to be up 10% at the midpoint and production growth of roughly 3.5%.

Adjusted operating income is expected to be $420 million at the midpoint, up 7% versus prior year as volume growth is partially offset by the previously mentioned higher mobility investments and operating inefficiencies and FX and commodities revert to a headwind both sequentially and year-over-year, accounting for approximately 50 basis points versus Q3 of 2017.

EPS in the range of $1.21 to $1.26, up 5% to 10% and assumes a 15% to 16% tax rate. Looking at the 2018 operating income walk on slide 17. Performance highlights include, continued sales growth across both segments, price downs remaining in line with expectations, a modest benefit year-over-year from favorable FX and commodity pass through.

And an operational performance and cost reduction initiatives fund our investments for growth including $100 million increase in mobility investments year-over-year. Turning to slide 18. Our strong balance sheet allows us to execute our strategy for growth and create value for shareholders.

You recall, we came into the year with a large cash balance as a result of the dividend from the Delphi Technologies spin-off relatively low net debt and a conservative leverage profile.

We’re committed to maintaining our investment grade rating and target a debt to EBITDA ratio of less than two times which is roughly where we expect it to be at the end of the year.

This was the result of executing our consistent capital deployment strategy, focused on investing in our businesses both organically and inorganically and opportunistically returning cash to shareholders.

Our recent bolt-on acquisitions of KUM and Winchester will be accretive to EBITDA margins and drive growth in our Signal and Power Solutions businesses as they benefit from a more balanced mix of customers, regions and end markets.

We’re also funding CapEx to support our strong bookings and fast-growing product line such as active safety, infotainment, and high voltage electrification and for the year we expect to return approximately $450 million to shareholders through share repurchases and dividends.

Moving to slide 19 before handing the call back to Kevin I want to spend a moment reflecting on our recent acquisitions align to our strategy. Both KUM and Winchester strengthen our Signal and Power Solutions business where we are global leader in electrical distribution, automotive connectors and cable management fastening systems.

KUM with approximately $250 million of revenues annually expands our range of automotive connectors, has an attractive facility footprint and will enhance our growth in the Asia Pacific region. Moving to Winchester.

As Kevin mentioned, the portfolio of Precision Engineered Interconnect Solutions creates a platform to further expand in adjacent end markets by adding over $250 million of revenue to our current $1.5 billion in non-automotive revenues.

Upon closing, Winchester will operate as an independent business unit in the Signal and Power Solution segment and will continue to go to market under their existing brand name similar to HellermannTyton.

By leveraging our expertise to expand into adjacent markets with design requirements for the harshest of environmental conditions we are confident we can achieve our target of 25% non-auto revenues by 2025 significantly improving our through cycle performance with increased diversification.

In summary we have an exceptional track record with both on acquisitions to achieve accretive growth in earnings and expect KUM and Winchester to do the same. With that I’d like to hand the call back to Kevin for his closing remarks..

Thanks Joe. Let me wrap up on slide 20 before we open it up for Q&A. we delivered another strong quarter with record revenue growth as well as record operating income earnings per share and free cash flow.

As a result, as Joe said, we’re raising our guidance for the second time this year with 89% adjusted revenue growth, 13% operating income growth and 15% earnings per share growth.

We continue to make significant progress executing our strategy and optimizing our business model, including increasing revenues faster than underlying vehicle production, through content growth and market share gains as customers increasingly look to Aptiv as their partner of choice as reflected in our bookings performance.

Continuously improving our cost structure and increasing our operating efficiencies to both reinvest in the business and to expand margins and grow earnings and cash flow, leveraging our balance sheet for further value creation, investing roughly $1.5 billion in acquisitions in 2017 and 2018 combined, while returning over $1 billion of cash to shareholders through dividends and repurchases.

Positioning Aptiv for the future, strengthening our portfolio safe, green and connected advanced technologies to widen our competitive modes, capturing opportunities in new markets and diversifying our business mix to ensure less volatile operating performance through the cycle. With that let’s open the line-up for Q&A..

Thank you. We’ll now take our first question..

[Operator Instructions] Our first question comes from the line of Brian Johnson with Barclays..

Good morning, Brian..

Good morning, Brian..

Good morning. A couple of housekeeping questions then a more strategic one, in terms of housekeeping so couple of things around the guide for 3Q, it looks like and as called out delivery delays brand increasing production delays to reflect in IHS due to the need to push vehicles through the WLTP compliance.

So, does your third quarter outlook kind of take not just the IHS numbers but some of the productions schedules emerging or likely to emerge from your customers when you put out that guide?.

Yeah, Q3 has got schedules Brian as best as we have them from a customer at this point. Obviously get more to IHS as you get the final couple of months of the year, but at this point, as best we have, and we're tied out to schedules..

Okay. Second sort of housekeeping which will transition more from strategic one. The third quarter operating guide implies, third quarter guide implies an operating margin of 12 to 12.2, a bit lower than many of us had modeled. Could you may be mention, how much of that is mobility, launched cars or other kind of expenses..

Yeah, it probably starts, particularly if you are focused on margin rate. The biggest change is going to be the effects and commodities. So, that as I mentioned in my prepared remarks, that’s about 50 basis point after 12.1 off the midpoint.

So, if you adjusted for the FX in commodities including the revised macros we used for Europe - for Euro and RMB, you're up to about 12.6. We've taken the RMB down of 680 had ended Q2, it would have been in the 63s. So, we’ve got a straightening above or below 680 now.

So, we’ve got a little bit of catch up on the reval and the core comings as we adjust from sort of where we ended the 63 and changed to 68. So, that on our margin rate perspective that’s effectively zero revenue and the reval coming through on the OI lines, So, it plays a little bit of havoc with the rate.

Mobility investment, the additional of 20, that's pretty much spread evenly through the balance of the year, so call that 10 million and then the operating efficiencies I mentioned them. They impacted us a bit in Q2. We’re forecasting them to continue that in part is the higher launch volumes particularly in SPS.

But also, as I mentioned, we’ve got things like Meridian that happened in Q2.

You've got some other changes and schedules which necessary call downs of volume are, but they are making it much more lumpy within a given quarter and obviously it’s harder to react if you’re running slower for a two or three-week period, it's obviously, harder to react from a car structure perspective. That any type of longer-term change.

So, call that another 15 or so in the quarter as well, 15 to 20..

Okay, which give ....

The rate delta and we have this challenge going the other way in the first quarter. The rate challenge is really of the FX and commodities input..

Okay, so I know this sort of gets into your question on the [indiscernible] call, management described as was in their Investor Day. The cash flow characteristics of taking on Active Safety business, of course recognizing they are different scale than you.

But, described a couple of years of cash and expenses for application engineering, some of it gets reimbursed towards the tail end of the project then of course launches. So, with your strong booking pace and with the strong launch activity.

How should we be thinking about the sort of headwind in a good way to the margins in Active Safety and may be less or so infotainment, as you go through this growth period?.

Maybe, I'll start Brian. So, as you know, last year we’ve booked about $3.7 billion in the Active Safety business. This year, today just under $2 billion and on track to do well over $3 billion.

As we’ve talked about in the past, typically in our product range when you launch a new program or a new technology, when you sized the revenue from zero to 300, you’re investing effectively in that technology and then from 300 on, you’re actually positive from an operating margin standpoint.

And add $1 billion in run rate revenues today and our Active Safety business is at the ASUX operating margin range, X the investment in mobility. So, for us, it's strong, very profitable business..

Okay. So, if you are scaled, then the increased bookings don’t lead to a margin headwind from development expense..

Well, I mean it creates development expense and probably creates some margin headwind, but the incremental volume more than offsets that, that's how I would describe. Listen, we’ve gone from five Active Safety customers back a couple of years to we’re heading pretty closed to 20.

So, there is launch activity and development activity affiliated with both of those. But at $1 billion of run rate revenues, we’re solidly in the black from a margin standpoint..

Yeah. We have volume ramping obviously on the previous launches. The mobility investment, obviously that’s focused on the AMoD, Brian.

And I think I mentioned in my prepared remarks, if you back that out, the core ASUX business, which includes all of its own development business, the only thing that’s in that mobility number is truly the AMoD investment. Those margins expanded about 80 basis points year-over-year. So, we’re seeing that business perform as we would have expected..

Okay, thanks..

Our next question comes from the line of Chris McNally with Evercore..

Good morning, Chris..

Good morning, Chris..

Good morning, guys. Yeah, just wanted to think about the operating leverage and we’ve discussed in the prepared remarks for Q3 and second half. But sort of to Brian’s question, as we start to think about 2019, you’ve had such a big jump in obviously everything autonomous, you had a lot of launch activity.

Could we start to think about in 2019 that the incremental margins get back to a more normalized operating leverage, typically your kind of 20% or I think your longer-term guidance of 20 basis points to 30 basis points of margin improvement?.

Yeah, Chris. We would stay focused on that framework we provided at Investor Day, 20 basis points to 40 basis points of margin expansion while investing in the business. Again, I think -- and you got to watch the FX and commodity, the beginning part of this year has been somewhat volatile, and it disproportionally affects the margin rate itself.

But as we look out, our best estimates of FX and commodity rates right now would probably give us a little bit over a 10-basis point headwind on margin rate for the year, which would put us north of 20 basis points of margin expansion even with the increased mobility investment and that’s a framework we’re very focused on maintaining..

Yeah, Chris. It’s Kevin. I would just add one additional point. So, we’ll launch about 1,700 programs this year, of which about 250 we’d consider to be major launch programs. And a lot of that activity is in the SPS business that Joe talked about earlier.

And when you look at that on a year-over-year basis, that’s roughly a 70% increase in critical activity. And as Joe mentioned, there were couple of areas from an operational standpoint I think we could have performed a little bit better in Q2 and quite frankly in Q3 and Q4.

So, as that launch activity slows, as you head into 2019, we should get the incremental benefit..

Okay. That’s perfect. And then just for the second half, because obviously with everything trade FX is going to remain such a focus for short-term performance.

Does the sort of the rule of thumb that you have for the renminbi, so $20 million per, I think it’s roughly every 1% or for every $0.06? Does that still holds post this sort of big move that we’ve had over the last three months?.

Yeah. Generally, it holds. It flows -- the renminbi flows a little bit higher than the other currencies just because of some of the balance sheet translations over there. So, it may flow close -- we usually say FX flows at 10, we usually say that may flow a little, somewhere between 10% and 15%..

Okay. 10% to 15%.

And then you said for Q3 specifically 50 basis points which on an overall could be roughly $20 million of EBIT year-over-year?.

Total FX and commodity between 15 and 20. And a big part of that is just the renminbi really has moved here since the end of the quarter.

So, we’re assuming we sort of take the full 630 to 680, 630 something was the quarter-end to the full 680 at the end of Q3, which is really what’s driving that FX and commodity line and obviously not a lot of revenue associated with that, just really the re-val..

Okay, great. Thanks so much, guys..

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

Good morning, everyone..

Good morning, Joe..

Hey, Joe..

Kevin, just I was wondering if you could spend a minute talking about Level 3, because we have heard from customers it seems like conversations with companies are ramping up, I think in prior quarters you’ve indicated that as well as more interest in that product.

But then we see stuff like Audi [ph] sort of eliminating the Level 3 product in the U.S.

so I guess I just want to understand where we really stand with Level 3?.

That’s a great question. It's very customer dependent, there are OEs who are very focused no developing Level 3 and leveraging Level 3 into Level 4 and Level 5. So, we’re in a lot of those dialogues.

There are other OEs, Joe who at least as of now are looking at the incremental cost of Level 3 versus let's say a Level 2 or Level 2 plus solution and seeing more value in the Level 2 plus solution on a kind of cost per benefit standpoint. So, it's a bit bifurcated quite frankly.

Those customers who tend to have a - let’s call it a sequential development strategy as it relates to autonomous driving moving from Level 2 to 3 to 4 to 5 are focused on advancing to a Level 3.

Those who are coming at two different directions, and Level 0 to a Level 2 plus being ADAS and a group that works on that and a separate group working on Level 4 and 5 seem to be considering skipping that Level 3 step..

Okay. So, the $2 billion Active Safety target that you set out in 2022, can you give us a sense of the breakdown of that between I guess more like Level 2 or then Level 3 plus..

Yes, a lot of that – well that would be ADAS business for us, so we’re – what guidance we have given is 2025 we’ll do about a $1 billion of automated driving revenues roughly $500 million as at be Level 3, $500 million Level 4 and Level 5.

The $2 billion of ADAS business is Level 2 plus and Level 0, 1, Level 2 plus, what I’d say most of the growth being in the Level 2 plus over the last year or so..

Okay. .

So, Active Safety sells. So, consumers are asking for it as I said in my prepared remarks, we’re seeing OEs really pull for it, we’re seeing a lot of opportunity around the Level 2 and Level 2 plus area. So that will drive most of the growth..

Okay.

And then just separately, if your approach or I guess would you consider direct investment in some of your autonomous efforts similar to what we've seen some other players in the industry do?.

When you see direct investment in some of autonomous efforts. If would we invest in others or ….

No, taking new capital just directly into some of your efforts?.

Well, as you’ve heard Joe and I say, we’re about driving shareholder values, so it starts with that. So, how do we best drive shareholder value, if an opportunity like that presented itself and it delivered shareholder value that something that we certainly would do, obviously should do.

Having said that, we need to have a good understanding of what the capital – how much capital was – what effectively we’d use it for.

I think if you’d ask Joe and myself at this point in time, we feel like we’re spending the right amount of money to do everything we need to do to develop our automated driving technology, both for OEM customers as well as for the AMoD customers and really don’t view there to a gap in what we’re developing or working on as it relates to resources, people or funding.

So we really need to understand the situation. But again I – as we have always said, we’re about driving shareholder value..

Okay, thanks a lot, guys..

Thanks..

Our next question comes from the line of David Leiker with Baird..

Good morning, David..

Hi, good morning everyone. I wanted to talk about the mobility investment that you’re doing.

That’s $31 million increase year-over-year, obviously if I am reading that Joe right is that correct?.

Correct. $40 million of mobility spend in the quarter, increase of $31 million year-over-year..

In the quarter, you’re talking about, yes..

In 2Q..

Yes.

And what line items that flow through, that’s in the cost to goods sold?.

Yes, that’s primarily, there is some SG&A obviously oversight and such but a lot of it flow up through, the engineer – our engineering flows up through costs of goods sold..

And then as we look, that number has been growing for you, what does that look like next year or the following year that total spend?.

Yes. So, obviously early days to roll it up. I mean, you won't see the step level change and we say that's a couple of times. You won't say the step level change obviously that you saw to 2017 or 2018. Could you wind up in 2019 at 180, maybe close to 200. Possibly, we're still working really through that.

It would really all depend on the opportunities, the increase that we've come out with this quarter and completely related to the opportunities and quite honestly getting close to what I'd almost call commercial pursuits at this point with some of the major always and some of the mobility on demand providers.

So, to the extent we see greater opportunities would increase the spend but the step level change that you saw from 2017 to 2018. We certainly would not expect to repeat without a significant known sort of commercial event..

And then the last item on here, what do you think that timeline looks like to reach profitability for those efforts?.

We've talked about having that, that sort of billion dollars of revenue in 2025. Half a billion of that coming from AMR.

I think we're on a sort of a growth trajectory, sort of come from 2021 through 2025, and, it'll to some extent mirror our other product lines, where we sort of break even at that $350 million of revenue and would expect to grow from there.

There may be some opportunities just given the nature of this revenue, some software sales, some recurring data service fees where we climb profitability a little bit faster than our traditional product lines, obviously. But we really still look at this business is from a revenue perspective evolving from sort of 2021 through 2025..

David, the other thing, I think, and we don't count for it this way, we're careful not to count for this way. But as we develop the technologies related to AD, that's something that we clearly transfer to our active safety programs, principally around perception systems as you can imagine.

And I think one of the big reasons we've been able to -- in addition to market growth, but when you look at winning percentages and overall bookings in ADAS, principally around level two, level two plus.

The reason we've been so successful, the last year or so, and would expect to continue to be is -- is as a result of those investments that we're making. Now, again, we don't, count it that way. We keep it separate. We make sure that we're focused on how do we drive revenue and profitability in the AD business separately, but there is a benefit there..

Yeah, those skillsets are an investment there. Definitely driving revenues and other parts of the business..

Right..

Okay. Great. Thank you..

Thanks..

Thanks..

Our next question comes from the line of John Murphy with Bank of America Merrill Lynch..

Good morning, guys. Just one other follow-up on that mobility, in mobility investments. And when you think about this over the long run, and then we just kind of went through sort of have these morphs into or supports other parts of the business.

When you think about sort of returns in mobility, where do you think they ultimately go? I mean do we turn the corner in 2025 and all of a sudden, the return on invested capital here is much higher than the corporate average.

Just curious how you think where this will ultimately land?.

Yeah, listen, I think well before 2025 year at or above our return on average return on capital in this business, right? We're not looking to manage fleet that's not the business we're in.

So, we're not going to invest significantly in building cars fleets will be owned by others will provide the technology related to those fleet, will provide the software, will provide the perception systems and as you know the more software that goes into those solutions higher the return. So, I think it's well before 2025 John..

Okay. That's helpful. And then just second sort of staying on the return side. I mean we think about Active Safety as you're talking about Kevin on with slide five.

As you democratize this technology, there's a lot of concern in the market, the margins and returns may come down, but if you have the ability to scale and leverage the, sort of the initial technology investment, the returns may actually expand.

Just curious think about the democratization how that will work?.

Yes. Listen, software you do once, right? And I think definitely in low in systems, you'll see increased costs pressure, it's the nature of the business that we operate in and it's quite frankly what we deal with across all of our products and it’s something that we do a very good job of managing with our customers, with our partners.

Having said that, there is real demand going up this chain from a technology standpoint from Level 0 to Level 1 to Level 2 plus I'm confident of Level 3 and so on.

And those will continue to be products that consumers are willing to pay for and their advanced technologies which very few people can quite frankly develop and can integrate into vehicles and you’ll see margin benefits..

Okay.

And then also just on diversification into the non-automotive business, I mean getting 25% as a target, as we think about margins and returns there, were those also similarly be higher than corp average as they stand right now?.

Yeah, those are - that is - that strategy is pretty straight forward. There are opportunities in places like commercial vehicle where we take our products that we manufactured today. And we sell in the markets that historically we haven’t had is much focus on.

We had focus, but not as much focus, so it is a concerted effort to further pursue - to take existing technology, existing products and pursue opportunities in that market, but second is in and around the engineered components space, where the product portfolio is often very, very similar.

Now, the go-to-market is very different or can be very different, the approach from a sales standpoint can be very different. And as you know we bought HellermannTyton a few years ago, that’s a business that has operated extremely well.

It’s been a great case study for us, it’s grown well over 10% per year with a real strong sales force and as Joe mentioned with respect to Winchester, we think it’s a great asset with a great management team, a great footprint and to the extent we can provide them capabilities maybe leveraging sourcing and things like that.

Maybe there are products that we have in our portfolio today that they can add into their portfolio to sell in the industrial and other markets. Now, if we can diversify our revenues be less cyclical in a very low risk way, we think it’s multiple enhancing and it’s returning enhancing..

Sounds good to me. And just lastly, maybe one odd question right now just given that you just executed sort of the separation spin.

As we look at what’s going at auto leave with [indiscernible], I mean you have some great technology that is much higher growth than maybe average particularly in Active Safety and high voltage, would you ever consider sort of another spin of this super high gross stuff just given some of the fanatic valuations have been put on some of this high gross stuff even out in the positive cash flow?.

One, I think our high growth has positive cash flow, so I want to make sure and every business is different. So, the [indiscernible] business is a very good business with great technology and I don’t have all the specifics as it relates to their product portfolio and where they’re investing.

But we have a great business that’s high growth has positive cash flow significant software capabilities. Again, we Joe and I go back to we entertain whatever creates the most value for shareholders. Now having said that, we think being able to leverage both the hardware and the software capabilities is very unique.

And we think that’s one of the reasons we’ve had the win rates, we’ve had on - from a booking standpoint, from an ADAS standpoint or from an infotainment user experience standpoint and we think we’ll have more to talk to you about as it relates to smart vehicle architecture so future solutions for the architecture of the car, so we think there is an incremental benefit of having the two together..

So, it’s fair to say right now no plans but over the long run if there’s an opportunity to creature of the value would be something to entertain is that correct?.

Yeah, right now no plans, yup right now no plans and always, always focused on driving shareholder value..

Great. Thank you very much..

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

Hey David..

Hey David..

Hi. Good morning. How are you doing guys? I wanted to dig in a little bit more in the advanced tech user experience business I think you mentioned a couple of integrated - cockpit controller wins. Wondering how much growth you’re seeing within your business.

How much further RFPs are out there from OEMs and what the competitive landscape is for that subset within advanced safety and UEX?.

Yeah, I mean we’ve had strong bookings over the last couple of years, the SUX, the infotainment user experience business is growing kind of mid-teens sort of growth rate from a CAGR standpoint. We expect it to continue to do that through the end of the decade. There will be some movement up and down based on programs rolling on and off.

There continues to be significant demand for the product. Always are looking for ways to consolidate controllers and increase compute power. We've talked about our integrated Cockpit Controller you saw at CES or CFP which has 40 times the power of our integrated Cockpit Controller or less mass and safety OE cost.

So, there is a lot of focus from an OE standpoint how to get leverageable compute power, how to kind a centralize it and how to increase or enhance the software operations of the software on the hardware..

Okay. And from a competitive landscape. I mean how many folks you're seeing out there that are competing against you within that segment in order to achieving better target margins or maybe you're looking at better potential target margin maybe you're looking at maybe some little bit..

Yeah. So yeah, I think given our software and our hardware and our systems integration capabilities, again, we feel like we're the most uniquely positioned to play in this base. We run into more typically our players like -- who we traditionally ran into, who had strong software capabilities.

And I think with their more recent transaction with Samsung have some hardware and systems integration capabilities on the infotainment side..

Yeah, and I think Dave on an Active safety, we've talked about it before. To us particularly when you get to the Level 2 and the Level 2 plus systems, we feel that modes expanding. So, there is fewer and fewer folks at least from what we're seeing that are sort of in the room with us at least on some of those initial bids.

And I think they’re the ones you'd expect really the Bosch the -- the big global players that could deliver this technology on a certainly on a global platform. And for us that's a pretty good spot for us to be. We compete well against those guys, that's a structured market.

And again, we think we just given some of the complexity going on in this technology that modes widening as to who can really do that..

Understood. And then maybe just switching gears and thinking about mobility in services your update 3500 plus rides. I think the last time it was maybe like 400 plus rides with 99% fully autonomous post-Detroit I think it was updated towards our show.

What's the percentage of mileage that's being driven autonomous right now or kind of life to date in Vegas? How many disengagements or what type of disengagements you're seeing.

And maybe just talk a little bit about the learning of this system that you're seeing from and when we are out there in Vegas too today in July?.

So, the system we have today is obviously stronger than what we had at CES. So, we go through a regular process of updating and enhancing and quite frankly, that's why we have the Las Vegas location that's for further validation and development of the underlying technology. The vehicles tend to continue to be riding at roughly 99% autonomous.

We have roughly 15 vehicles on the Lyft network today. We have roughly 75 in total, 59 were list network growing to 30 before year-end. We served 20 locations now will be 30 by the fall or year-end as well. As it relates to takeover seems like that I don't have that data in front of me, but we continue to make improvements in the underlying system..

Yeah, it's certainly strong. I think David, the learnings as we've talked about before, the learnings at this point from Lyft are really on the commercial side of things.

As Kevin mentioned in his prepared remarks data coming off the cars who's that data valuable to, how best to incorporate, and these are learnings for both us and Lyft, how best to incorporate these vehicles into an existing mobility-on-demand network.

Where to deploy them when to deploy them as Kevin said, these cars have the ability to run consistently for longer hour and the day. So, at this point, certainly from takeover and an automated drive perspective, the numbers continue to go up from where they were in January, but really this is focused on how best to use these assets to turn revenue..

Yeah, and on that front.

Have you seen interest, are you close with anyone kind of signing up or signing someone up to purchase that data?.

Yeah. We have several dialogues with the number of folks who'd be interested in location and other data in and around Las Vegas..

Okay. Thank you, gentlemen..

Our next question comes from the line of Emmanuel Rosner with Guggenheim..

Hi, good morning..

Good morning, Emmanuel..

Hey, Emmanuel..

So, on Active Safety, it looks like your integration capability is a strong competitive advantage.

Have you noticed any meaningfully improved win rates for business now that the OEs request quotes that are -- that include not just ADAS, but also highway auto-pilot?.

Yeah. I don’t know if I have right in front of me, I don’t have data as it relates to win rates on ADAS. Our win rates overall have gone up this year versus prior years. And given the amount of ADAS activity, I would assume that that would show a similar sort of trend, Emmanuel.

But I think to Joe’s point on the Active Safety side, given there is very limited group of players out there that can do both hardware and software and then overlaying our vehicle architecture capabilities on top of that. I think it’s differentiated us and has resulted in some of the significant wins that we showed in our presentations.

I mean those are pretty complex ADAS programs with large multi-national OEs. And when you get into a Level 2 plus systems, you need to be able to be a strong systems integrator..

Understood. And then I guess in terms of your efforts to sort of diversify the revenue stream, so you guys spoke about non-autos at 25%, that’s obviously an ambitious target. So, what is required to get there? And then separately still on the diversification.

I think you had laid out some directional targets for having a portion of your revenue from software or from recurring sources.

Can you sort of like quantify those or put a timeline on that?.

Yeah. I think it’s -- and really Emmanuel we have focused a lot of that conversation around 2025 where we’ve talked about that $1 billion of AMoD -- automated driving revenue, half being from mobility on-demand service providers.

So, obviously there is a large percentage of that which we expect to be data services and software sales of the mobility stack. So, that’s obviously part of -- when we think of non-auto revenue, it’s not tied to light vehicle production. So, that’s certainly part of it.

The other key things we need to execute on and I think we’ve started making progress already, organic growth of the commercial vehicle business and that really goes across both segments, solid growth in the quarter and we expect solid growth in 2018 as it relates to CV.

And then it’s continuing to focus within SPS, continue to focus on those adjacent markets where we think it makes sense for businesses like HellermannTyton that will include organic growth into those non-industrial market, into those non-automotive industrial markets, but it will also be part of the inorganic growth strategy.

We think Winchester will serve as a great platform for non-auto ECG acquisitions. We’d often come across smaller connector businesses that we liked, that were non-auto, that we thought we could acquire, we had a reasonable multiple, but we really didn’t have a place to plug them into and we’re obviously a large company.

And without a platform to bolt-on to if you will, it is hard to do bolt-on transactions. So, Winchester really gives us the ability to go into those markets and identify opportunities there. Winchester has as Kevin mentioned solid management team, very experienced in M&A. We’ll help them in a couple of ways.

We think we’ll have some material saving synergies long-term that benefit them. They’re also 80% to 85% North America at this point. And for smaller company going into Asia Pacific, going into Europe in a meaningful way is more challenging just given the infrastructure.

We obviously have a lot of capabilities in those parts of the world to help them ramp more quickly in Europe and Asia-Pac. So, we certainly see broadly speaking SPS, but particularly the engineered components group is a meaningful next step in that non-automotive revenue..

That’s great color. Thank you..

Our next question comes from the line of Rich Kwas with Wells Fargo Securities..

Hi, good morning, all..

Hey, good morning..

Hey, Rich..

Just two for me. So, I didn’t hear anything on tariff, so I assume that is immaterial at this point, on 301..

Yes, so good question. Yes, it is, we’ve benefit there really from our operating model, we’re very focused on localize production, localize sourcing, if you look right now, what I’ll call it the direct – potential direct impact.

We only have about $400 million of material flows between the two countries and quite honestly as we started to look at that, we found pretty straightforward ways to localize about half of that. The only reason that’s not localize now and this is particularly along the engineered components group.

From a capital deployment perspective at the moment it's more capital efficient to produce in one place and ship. To the extent that became more expensive than the trade-off of putting capital locally would obviously switch and we’d be able to localize.

So, it’s just at this point at $400 million you’re talking about maybe a $5 million to $10 million impact from tariff. So, it’s just not material. Given the portfolio moves to the business, we have significantly changed our buying, what we buy, what we need to buy to manufacture.

Our global steel and aluminum buy are less than $10 million annually, so that’s just not registering as problematic at this point..

And Joe on that $5 million to $10 million, is that an annualize number or half year number..

No, annualized..

Okay.

And then Kevin just a question, so Winchester gets into portion as it is – how much scale does this give you, are there other any opportunities out there, where you could do additional M&A and further – the scale?.

Yes, definitely. So, Winchester as I said strong operating teams, strong business team, great systems have experience with M&A in these small spaces that Joe alluded to.

And our EBIT [ph] to them will be continuing to go out and do what they have been doing and we’ll provide them support in certain areas from utility standpoint and the control standpoint..

Okay, so is that market fairly fragmented?.

Yes, when you look at the connector engineered component space, it's very fragmented. As Joe said, there is a period of time where consolidation took place, where the larger players and we bought MVL back in 2012.

I would say that was the last of the medium size connector players that were out there and then from there it drops down to relatively smaller businesses out there. So – and the number of them are very strong. So, we’ll continue to acquire those businesses integrate them into the Winchester business model.

But again, a big piece of diversification strategy is really about doing more with what we already have. So, Joe talked about commercial vehicle market, that’s again existing product portfolio with more focused in selling into commercial vehicle.

We purchased the Control Tech business, the data business that’s growing just under 20% per year, its non -- it’s not tied to vehicle production, tied to data and value through data, continue to grow that business and focus that business in the OE market as well as in the AMoD market and that’s in the connector space through engineered component space..

Great. Thank you..

Thanks, Rich..

Our next question comes from the line of Steven Fox with Cross Research..

Hi, Steven..

Hi, good morning. First question just, getting back to the mobility landscape, there has been a lot of activity in last 90 days along the line with tie ups between different types of companies, capital structure, just had a.

I just curious if we step back and look at all that and given your investments increasing, what is it say for how maybe the landscape is changing relative to your position. And then I had a quick follow-up..

Yes, I think, and Joe should comment as well. Listen, I think it depends at – the answer to question depends on the perspective through which you are pursuing opportunities in this market, right.

I think it’s important to know, we are focused on selling autonomous driving systems and perception systems and vehicle architecture into the automated driving market, whether that be with OEMs, or that be with mobility providers. So, we’re pursuing all the opportunities to generate incremental profitable revenues, Joe sometimes alludes to.

We’re not looking to be the army; we’re looking to be the arms dealer. And, you know, all the players that you talk about, we sell product to that are used on their automated vehicles. And it ranges from the architecture to perception systems to other software. And that’s the space that we really like to be. We think it's the best space to be.

Now, a part of our strategy is to sell the full systems and that’s primarily focused to fleet management providers, right? But folks, OEs or others who decide they wanted to do a portion of this business on their own, we’re more than happy to provide them with whatever it is that they need.

Joe?.

No, I think from what we see, and one of the reasons we’ve increased spend sort of accommodate the level of commercial discussions we’re seeing now.

When you have a big announcement from WeMo [ph] or CM Cruise [ph], the other folks interested in being in this space tend to want to accelerate their development and we’re viewed as a leading enabler of this technology thinking of the Lyft cars on the road in Vegas are a clear demonstration of that.

And so, our activity from all the others, we actually tend to see a bit of pick up in the discussions when you see big meaningful announcements coming out of like a WeMo or a GM Softbank..

Great, that’s really helpful. And then, just a clarification, just to be painfully clear on the Winchester deal. You’re setting it up to sort of its own entity and to leverage its brand name with your own technology, I get that part, but, to the exempt that it is a broad line connector maker under your umbrella.

How do you position against some of the major players out there like a TE connectivity and Eveline [ph] as you diversify your own business?.

Yeah, listen, I think for Winchester, they position themselves very well.

We’ll - much like we did with HellermannTyton since 2015, we will provide a global footprint, provide capital, provide things like material synergies and some horsepower but that management team has done a great job over the last few years of positioning themselves to be very competitive as it relates to very complex harsh environment interconnect systems, whether that’s into Milero [ph] or some of the other industries.

So, really the way much like we did with HellermannTyton. Again, HellermannTyton as Kevin mentioned was a very good teacher for us on how to incorporate a well-run business that is not a 100% auto into our broader system and we’ll continue to use that play book with Winchester. So, Aptiv will support from behind.

But it's really that management team through their product development efforts, their marketing efforts, great sales force, that’s really been able to distinguish the Winchester brand. And bringing customers quite honestly, is Aptiv even if we had the technology or could port the know-how from auto to other industries.

Whatever, really hard time going into a Boeing or going into an Airbus. And as we sit here today, on that part of the business, we now have through HellermannTyton and then through Winchester, are going to have content on platforms like the 787s, the Airbus A350, the F35.

So, we’re really starting to broaden that base, but our perspective when we do businesses like Winchester, HellermannTyton is buy we really smart management teams that understand their channels, understand their go to market strategies and we support them, but we’re really leveraging that management team to do a lot of the commercial activity and product activity..

Yeah, I think it’s important to know - to really reinforce Joe's comment about like HellermannTyton, this is about acquiring a great asset and it's a business, quite frankly the numbers speak for themselves, high single-digit revenue growth and EBITDA margins that are in line with our control - our connector..

Yes, north of 20%..

So, it’s a very well-run business for the great team and a great set of assets, and how do we bring additional value to them whether that be from sourcing synergies or incremental resources..

Yeah, I think, as I mentioned earlier, where we really thought there was both sides, the Winchester side and ourselves that we really complimented each other.

We would have a had a hard time buying smaller connection system businesses without a platform to bulk them into right and it'd be very hard to buy a 30 or 40 million revenue, no arrow connector business and plug it into auto business. It just not the way they run, it would be distractions on both sides.

So, we needed a platform and they quite honestly would benefit from being part of a large global player that can support them accordingly..

Great. That’s helpful. Congrats on the results..

Thanks..

Our final question comes from the line of Colin Langan with UBS..

Good morning, Colin..

Thanks for taking my questions. Just one clarification. You mentioned that the China tariff would be a $5 million to $10 million headwind, I guess assuming that there is a tariff [Indiscernible] official yet. But the rates they’ve quoted is 10% [Indiscernible] there is $400 million in transit.

Will that be like a $40 million number of what am I missing on the math there?.

On the tariffs math..

Yeah. I think on that stuff, from the schedules we have seen, it’s where we go in and look out what we’d pay on those individual products. And again, then we’d start sort of mitigating instantly, if not to somewhat proactively..

Let’s just say it would be less than 10% on the….

Yeah..

Okay. And just to clarify for the guidance.

Is KUM included it in the updated guidance? And if so, how much of that helps us?.

Yeah. KUM was, we thought it was going to close a little later in the year, it was effectively in the range in Q1, it’s going to close a little bit earlier. It is in the guidance now since we’ve closed. I’d call it about $10 million of EBIT for the balance of the year.

This is one where you obviously you pick up sort of the full purchasing accounting deals amortization before you start to hit all the synergies and stuff. So, it will ramp over the course of 2019, but I’d call it $10 million of OI in the back half of the year, probably $0.03 of EPS..

Got it. And just strategically, how is the infotainment market shaping up today because I know there is -- some people are talking about Android getting more involved in the market, I think they’re actually launching their own infotainment products.

Are you concerned about that or it that a different stage from [Indiscernible]?.

Yeah. So, listen, we didn’t bring any content into the automotive space especially if it’s from consumer electronics is helpful. As a systems integrator, we actually are launching one of those Android programs. So, we’re one of their partners.

We think it’s something that quite frankly given our systems integration capabilities and software capabilities provides additional opportunity..

Got it. And just lastly. Can you just quickly remind us what is the name content you have on the Audi A8 first Level 3 vehicle as the multi-domain controller, is it mostly hardware and software, any dimension there would be helpful? Thanks..

Yeah. It’s the multi-domain controller, it’s software, it’s some systems integration and then it’s a radar technology..

Got it. Thank you very much..

Thanks..

Great. Thanks, Colin..

All right. Well listen, thank you everybody for your time. We greatly appreciate it..

Thank you, all..

That concludes the Aptiv Q2 2018 earnings conference call. Thank you for joining. You may now disconnect..