Good morning, everyone, and welcome to the Lear Corporation Second Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Please also note today’s event is being recorded. At this time, I’d like to turn the floor over to Tim Brumbaugh, Vice President, Investor Relations. Sir, please go ahead.

Thanks, Jamie. Good morning, everyone, and thank you for joining us for Lear’s second quarter 2024 earnings call. Presenting today are Ray Scott, Lear President and CEO; and Jason Cardew, Senior Vice President and CFO. Other members of Lear’s senior management team have also joined us on the call. Following prepared remarks, we will open the call for Q&A. You can find a copy of the presentation that accompanies these remarks at ir.lear.com. Before Ray begins, I’d like to take this opportunity to remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Lear’s expectations for the future. As detailed in our Safe Harbor statement on Slide 2, our actual results could differ materially from these forward-looking statements, due to many factors discussed in our latest 10-Q and other periodic reports. I also want to remind you that during today’s presentation, we will refer to non-GAAP financial metrics. You are directed to the slides in the appendix of our presentation for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. The agenda for today’s call is on Slide 3. First, Ray will review highlights from the quarter and provide a business update. Jason will then review our second quarter financial results and full year financial guidance. Finally, Ray will offer some concluding remarks. Following the formal presentation, we would be happy to take your questions. Now I’d like to invite Ray to begin.

Thanks, Tim. Nice job. Please turn to Slide 5, which highlights key financial metrics for the second quarter of 2024. Lear continued its positive momentum, delivering modestly higher revenue in the second quarter compared to last year, exceeding $6 billion. Core operating earnings were flat at $302 million. Adjusted earnings per share was $3.60, an increase of 8% driven by higher adjusted net income and the benefit of our share repurchase program. Operating cash flow was $291 million in the second quarter, and free cash flow was $170 million, an increase of 8% compared to last year. Slide 6 summarizes key business and financial highlights from the quarter. We generated quarterly record revenue of over $6 billion in the second quarter. Growth over market for the total company was 3 percentage points, with sales in both segments outgrowing the industry. E-Systems growth over market was 7 percentage points, and Seating growth over market was 2 percentage points. During the quarter, we repurchased $60 million of shares and paid $44 million in dividends. We continued to repurchase additional shares throughout our quiet period and have repurchased over $110 million of shares year-to-date. Adjusted earnings per share grew by 8% in the second quarter, driven in part by the benefits of our share repurchase program. In E-Systems, we delivered our eighth consecutive quarter of higher year-over-year margins by executing our focused product portfolio strategy and improving operational efficiencies. In Seating, we continue to see strong demand for our innovative solutions in thermal comfort. Given the rapid commercial adoption of our new products today, we are introducing our ComfortFlex by Lear modular designs as well as our ComfortMax Seat by Lear. ComfortFlex and our ComfortMax Seat will showcase the various thermal comfort solutions that only Lear can bring to automotive seating. We continue to diversify our customer base in both Seating and E-Systems. In Seating, we were awarded the complete seat for a new variant of the Geely Zeekr, highlighting our continued growth with Chinese domestic brands. In E-Systems, we were awarded the low-voltage wiring for the Volvo EX30 in Europe. The Smart Junction Box award for Volkswagen and Audi will support the initial volume for their scalable system platform of BEV vehicles. Additional volume will be awarded in the near future. Last week, we closed on the acquisition of WIP Industrial Automation, which we announced during our first quarter earnings call. WIP leverages robotics, artificial intelligence, and vision systems to design turnkey solutions for complex industrial challenges that will help accelerate our automation initiatives globally. Turning to Slide 7, I will provide more detail on the progress of our thermal comfort strategy. We remain on pace to meet or exceed our total revenue target of $1 billion from thermal comfort by 2027. The combined capabilities of Lear and the companies we have acquired are leading to an acceleration of new business opportunities and awards, and we are winning 80% of the programs we are quoting. We continue to innovate our thermal comfort product offering. ComfortFlex by Lear is a brand architecture of modular designs, which combine two or more thermal comfort functions. These designs reduce the number of parts, resulting in less weight and complexity while improving performance and comfort at a lower cost. For instance, our solution for Volvo, launching later this year, combines heat, ventilation, and massage functions. Our solution for Lucid includes ventilation and massage, similar to our product for Volvo and adds lumbar functionality. Our third upcoming ComfortFlex design is for a European OEM that includes four capabilities: heat, ventilation, lumbar, and massage. Lear’s expertise in complete seat applications allows us to design and deliver a combination of thermal comfort functions for our customers. Our vertical integration and complete seat leadership enable us to integrate our ComfortFlex modules into the trim covers to develop our ComfortMax Seat by Lear. Our first iteration of the ComfortMax Seat technology is currently in validation with Ford Motor Company. The ComfortMax Seat for Ford includes thermal comfort content that was previously supplied by a competitor and will now be manufactured by Lear. This is one of the first examples of our innovative solutions driving conquest opportunities. Initial test results are confirming our estimates that these integrated solutions improve the performance of our thermal comfort components. As expected, the ventilation air flow and the size intensity in the ComfortMax Seat are outperforming the traditional design currently in production. Full validation is expected by the end of this year, which will enable our ComfortMax Seat to go into production for the first program starting in 2026. Once validated, our ComfortMax Seat can be used in additional Ford programs whether or not Lear is the complete seat provider. Ford is just the first customer to begin this validation. We are in late-stage discussions with three other key customers for our ComfortMax Seat. Our ComfortMax Seat provides several opportunities for long-term growth. The improved performance and reduced complexity deliver a better value proposition for our customers at a very critical time when they are seeking innovative solutions that reduce costs. This provides Lear with a competitive advantage when quoting just-in-time seat programs, and these Lear modules can be sourced to other complete seat suppliers, driving growth in our component business. Slide 8 highlights Lear’s strong position with the Chinese domestic manufacturers. Lear has 30 years of automotive experience in China. Over that time, Lear has strengthened its local presence, built strong relationships with key customers, and has become a clear leader in luxury seating. We have been growing with key established customers such as BYD and Geely and have supported the launch for other targeted new market entrants like Xiaomi and their successful SU7 program. Two-thirds of our 3-year backlog in China was driven by new business wins with Chinese domestic automakers, some of which are captured in our growing non-consolidated backlog, which increased by 70% to $650 million. This positions Lear to continue growing in Asia as the Chinese domestic OEMs continue to outpace overall market growth in China. The financial return profile of our business with Chinese domestic customers is in line with our segment averages for Seating and E-Systems. As with most programs in our portfolio, the profitability is generally dependent on the level of vertical integration. Chinese domestic OEMs tend to control less of the seat component sourcing, providing Lear with more opportunities to vertically integrate. The Xiaomi SU7 is a good example of that. We have foam and thermal comfort components in addition to the just-in-time assembly. We continue to pursue opportunities for the Chinese domestic automakers both in China and as they expand globally. In Seating, we continue to win business with BYD and expect to produce about 30% of BYD’s seats within the next few years. Our vertical integration, combined with our local engineering capabilities, provides a significant opportunity for growth in China as customers look to rapidly implement innovative solutions. For E-Systems, our market share in wiring and connection systems in China is similar to our global share despite the elevated competition from local suppliers. We are currently pursuing new opportunities in wire with the Chinese domestic OEMs. Now I’d like to turn the call over to Jason for the financial review.

Thanks, Ray. Slide 10 shows vehicle production and key exchange rates for the second quarter. Global production decreased 1% compared to the same period last year on both an aggregate and Lear sales weighted basis. Production volumes increased by 2% in North America and by 5% in China, while volumes in Europe were down 6%. From a currency standpoint, the U.S. dollar strengthened against both the euro and RMB. Slide 11 highlights Lear’s growth over market. For the second quarter, total company growth over market was 3 percentage points, with Seating growing 2 points above market and E-Systems growing 7 points above market. Growth over market was particularly strong in Europe at 7 percentage points, with both business segments benefiting from higher volumes up in the Land Rover Range Rover and Range Rover Sport. New conquest programs such as the BMW 5 series and i5 in Seating, as well as new business with BMW and Renault in E-Systems, contributed to the strong growth in the region. Lower volumes in several Stellantis, Audi, and Porsche programs negatively impacted seating platform mix in Europe. In North America, sales outperformed industry production by 1 percentage point, reflecting favorable backlog, partially offset by unfavorable platform mix in both segments. The growth in E-Systems was driven by new business on General Motors Ultium platform, including the Honda Prologue and Acura ZDX. Seating benefited from new conquest business on the Jeep Wagoneer and Grand Wagoneer. Lower volumes on Lear platforms such as the Mustang Mach-E and E-Systems and the build-out of the Chrysler 300, Dodge Charger, and Challenger in Seating impacted growth in North America. In China, revenue growth lagged the market by 5 percentage points, driven by lower volumes on Lear platforms such as the BMW X3 and iX3 in Seating and the Volvo XC40 in E-Systems. New business on the Xiaomi SU7 and the BMW 5 series and i5 Conquest programs in Seating partially offset the unfavorable platform mix in China. The mix shift to domestic Chinese automakers accelerated in the past year. When you include revenue from our non-consolidated joint ventures, our China growth over market improves by 5 points to flat for the quarter. Turning to Slide 12, I will highlight our financial results for the second quarter of 2024. Sales reached a quarterly record at over $6 billion, a slight increase versus last year. Excluding the impact of foreign exchange, commodities, and acquisitions, sales were up 2%, reflecting the addition of new business in both of our business segments. Core operating earnings were $302 million, flat compared to last year as positive net performance and the addition of new business were offset by lower volume on Lear platforms. Adjusted earnings per share improved to $3.60 as compared to $3.33 a year ago, reflecting higher net income and the benefit of our share repurchase program. Second quarter operating cash flow was $291 million compared to $311 million last year. Free cash flow, which is not shown on the slide, was $170 million compared to $159 million in 2023, reflecting lower capital spending, partially offset by higher cash restructuring costs. Slide 13 explains the variance in sales and adjusted operating margins in the Seating segment. Sales for the second quarter were $4.4 billion, flat compared to 2023. Excluding the impact of foreign exchange and commodities, sales were also flat as the addition of new business was offset by lower volumes on Lear platforms. Adjusted earnings were $302 million, down $20 million or 6% from 2023, with adjusted operating margins of 6.8%. Operating margins were lower compared to last year due to a decrease in production on key Lear platforms and the impact from foreign exchange, partially offset by positive net performance in the roll-on of our margin-accretive backlog. Slide 14 explains the variance in sales and adjusted operating margins in the E-Systems segment. Sales for the second quarter were $1.6 billion, an increase of $34 million or 2% from 2023. Excluding the impact of foreign exchange and commodities, sales were up 5%, driven primarily by our strong backlog, partially offset by lower volumes on Lear platforms. Adjusted earnings improved significantly to $82 million or 5.3% of sales compared to $63 million and 4.1% of sales in 2023. The improvement in margins reflected strong net operating performance and our margin-accretive backlog, partially offset by lower volumes on Lear platforms. Now shifting to our 2024 outlook. Slide 15 provides global vehicle production volume and currency assumptions that form the basis of our full year outlook. We have updated our global production assumptions, which are based on several sources, including internal estimates, customer production schedules, and S&P forecast. Our production assumptions are modestly lower than the latest S&P forecast across our key regions, reflecting our most recent customer production schedules and our expectations regarding near-term market conditions. At the midpoint of our guidance range, we assume that global industry production will be down 3% compared to 2023, which compares to our prior guidance assumption of flat production volumes. We have also adjusted our currency estimates, which now assume an average euro exchange rate of $1.085 per euro and an average Chinese RMB exchange rate of RMB7.2 to the dollar. Slide 16 provides detailed insight into our outlook for 2024. Key changes include the following. Our revenue is now expected to be in the range of $23.2 billion to $23.7 billion. Core operating earnings are expected to be in the range of $1.1 billion to $1.2 billion. We have substantially completed our commercial negotiations around price increases for inflation, volume reductions, and other matters with nearly all customers. However, our full year core operating earnings range is wider than usual to reflect the uncertainty around the timing of negotiations with the remaining customers. As we discussed in our last earnings call, we are focused on negotiating agreements that ensure sustainable financial returns. We are increasing our outlook for restructuring costs by $25 million to $150 million to fund actions that will improve our manufacturing capacity utilization and reduce costs. At the same time, we are reducing our outlook for capital spending by $25 million, primarily due to slower customer ramp-up on various new vehicles and to continue aggressively managing capacity utilization. Operating cash flow is expected to be in the range of $1.1 billion to $1.3 billion.

Thanks, Jason. Please turn to Slide 22. There continues to be focus on what we can control and execute on our strategic initiatives. In Seating, we are accelerating the deployment of our Thermal Comfort Systems Products. Our ComfortFlex by Lear modular designs are expected to launch over the next several quarters. Full validation of our ComfortMax Seat by Lear Technology is on track to be completed with Ford by the end of this year. The thermal comfort business gives Lear a competitive advantage and further strengthens our industry-leading position in Seating. In E-Systems, our execution and focus on efficiencies continue to drive margin improvement. We’ll continue to win new business across all powertrains resulting in strong growth. The acquisition of WIP Industrial Automation was recently completed. WIP strengthens our automation and artificial intelligence capabilities, which will extend our leadership as an advanced manufacturing integrator. The initiatives we are executing will drive sustainable profit improvements and will allow us to continue to return capital to shareholders. We have repurchased over $110 million worth of shares year-to-date and have set a target of $325 million for the year, which will help accelerate earnings per share growth. And now we’d be happy to take your questions.

Our first question today comes from John Murphy from Bank of America. Please go ahead with your question.

Alright. Good morning, guys. Just first question on the Chinese automakers in the market. You said something about being 30% of BYD Seats in a few years. I’m just curious who the other 70% is as far as the Seats that are sourced by BYD, what the competitive landscape is there. And if you see anything different, I know it might be hard to tell between the vehicles that are sold within the China market versus the vehicles that are exported because obviously, exports are going to probably continue to grow pretty rapidly over time. And if there’s a difference in the opportunity set for you in-market versus exports?

Yes. Starting with kind of the breakdown of BYD’s Seating suppliers, they do have an in-house seat making company, I believe it’s SDC. In addition to that, they have a joint venture with Forvia. So I think our book of business with BYD and those two are the vast majority of BYD’s Seat suppliers if you look out over the next 3 or 4 years. In terms of the content differences, we’re not seeing significant differences at this point in time. What you’re seeing with BYD is a couple of things, manufacturing in China for the domestic market and export, but also then setting up manufacturing outside of China. So they have capacity in Thailand. In fact, they’re in Hungary this week meeting with our team there; they're establishing capacity in Eastern Europe. They’re talking about Brazil as well. And I think the way they’re initially entering these markets, mostly through knock-down CKD business. And to the extent we’re supplying that in China, we’ll likely win that business as it moves to the other markets. And then from there, they will ramp up production and manufacturing in those regions. And because of our presence in those markets, we feel confident we’re going to win our share of that business. I don’t think we’ll be the only supplier in those markets, but we will certainly maintain our share with them.

And I think just, John, we were there not that long ago, Frank and I. And looking at some of the vehicles, it’s impressive on the luxury side, what they’re doing with content and features. And I don’t see that diminishing regardless of whether it’s in China or export, really. They’re separating themselves with some of the quality features. And I think that’s where we’ve done a nice job of really getting at growth with BYD is the capabilities we have with Thermal Comfort. I can’t emphasize the importance of having innovation and technology, and they’re very, very focused on ways to drive modular solutions, improve features, and package the features within the seat. And having that capability, I think, has uniquely positioned us to be as successful as we have been with BYD. And I think even outside of China, looking for that to continue. They really have to differentiate their product, having that type of capability outside of China and in China is very complementary. And so it’s been a great customer. We love the growth. We don’t see that really changing in China or outside of China.

That’s very helpful. And then just one second question, I mean you’re explaining that the lower guide largely is based on market conditions of lower volume, maybe to some extent, mix. But there’s definitely some programs that are being pushed down and to the right, particularly on EVs. I’m just curious how much disruption that’s creating in your business, how much that may be adding into sort of the incremental pressure here in the short run? And how you think about that in 2025 and beyond because you’re being pretty polite not calling that out too much, but I would imagine that’s a bit of an issue?

Yes. We’re certainly seeing the disproportionate share of this adjustment to our revenue guidance being driven by lower volumes on electric vehicle platforms. And I think it’s roughly 65% of the revenue reduction is driven by lower volumes on those platforms. And those are a combination of programs that we’re ramping up this year that are now ramping up more slowly and those that are getting pushed out even out of this year. And then also programs that are in production that are now running at a lower rate than they were last year. And so some of the serving OEM EV programs that launched last year and the year before, we’re seeing lower volumes on this year. In terms of how it impacts our business, it really depends on the customer and the program. We have certain customers where they’re producing EVs and ICE vehicles in the same footprint and we are as well. And in those cases, we’re able to adjust much more quickly. Our component plants are the same thing. We are generally producing components for ICE EV vehicles, and we’re able to move headcount, and we’re not hiring as quickly to adjust to the lower volumes. The exception to all that, some of our dedicated capacity we put in for some new EV plants, and that’s where you’re seeing perhaps a little bit more decremental margin impact on those platforms specifically.

Very helpful. Thank you, guys.

Thanks, John.

Thanks, John.

Our next question comes from Joe Spak from UBS. Please go ahead with your question.

Thank you. I guess just to start for the ‘24 guidance. I know you’ve taken a more conservative view here than prior. I think you’re even more conservative than current S&P. But we’re seeing OEMs announced production cuts by the day, really. So how should we interpret what’s in your guide here? Like are some of these announcements that we are seeing and will likely to see over the coming months, you think already embedded in your plans? Or should we expect potentially more risk if we see continued production cuts?

Yes, Joe. We spent a lot of time on this over the last several weeks, as you might imagine. And our adjustment to the second half outlook was greater than what we had anticipated and communicated at a public investor event in mid-June. And that really reflects the kind of the ramp-up and announcements and also our extrapolation of what that may mean into the fourth quarter as well, particularly on electric vehicle platforms where we’re just seeing a slower ramp up in slower demand in the U.S. and Europe, in particular. And so, we’ve tried to capture not just what’s been announced, but what we anticipate to be announced as the year progresses. And at the midpoint, we’ve tried to capture a balance of that risk as well as some upside on platforms that are doing particularly well. For example, in China, and a number of our Chinese domestic OEM platforms, like the Xiaomi SU7 and Leap Motor, we’ve increased our volume assumption, reflecting the strong sales performance that they’ve seen in the market. So it just depends on the customer, the car line in the market. but we’ve tried to be very balanced. I wouldn’t characterize the midpoint as unduly conservative or unduly aggressive at this stage.

That’s very helpful. And then maybe just to follow on a little bit from John’s question. So we’ve obviously seen the slowdown in EVs where new programs proceeding where a large part of your backlog. I think overall, that was also expected to drive E-Systems. We’re seeing just other production cuts in the industry from some higher inventories. So when we put it all together, like I’m just thinking out here, like how do you actually view the growth algorithm for Lear over the next 1 to 3 years? Because it would seem at the very least, and I know you’ve already sort of done this once, like there needs to be a revision to some of the backlog commentary you had prior. So I’m just curious if you could help us a little bit on how you’re thinking about the next couple of years here?

Yes. If you look at E-Systems, what we talked about previously is that about half of our 6 points of growth over market was driven by the added content on electric vehicles and our participation in that market transition. And so clearly, that piece of the 6 points has slowed down. Despite that, we have grown 6 points over market including this year on a 5-year running basis in E-Systems. And we expect this year to be 6 points of growth over market despite the pullback in this transition to electric vehicles. So growth is holding up, clearly in E-Systems because we’re winning business on the low-voltage side on ICE vehicles and taking share there as well. And I think that’s a factor. In Seating, I think there’s a little bit more near-term uncertainty because the weighting of EV platforms that are in the backlog is ramping up a bit more slowly. And so our growth over market this year in Seating is more like 2 points roughly for the full year and 3 percentage points in the second half of the year. And so the question that is unanswered, and we’re seeing some evidence of an answer forthcoming is how many extensions will we see in ICE programs as the slowdown in EV ramp-up continues. And we are starting to hear more discussions or participate in more discussions with customers. We’re not prepared to front run their commentary in this regard, but we are seeing more evidence that there will be ICE extensions that will help sort of backfill that lower revenue growth attributed to the new EV vehicle. So ultimately, I think the bigger question on sales growth is going to be what is it – what happens with industry demand overall. And that will be the key factor determining the pace of growth in both segments in the near-term. Longer-term, we continue to take share in both segments, and we see a strong backlog in both segments and believe that we can grow both segments consistently with our target rates, 4 points in Seating and 6 points in E-Systems over the next 5 years. And so we’re more confident, as we see it today than even in the past in Seating really because of the thermal comfort traction that we have with customers and how that’s contributing to our competitive advantage in Seating and our strength in our E-Systems business and the cost structure in that business allowing us to take share there. So I think the growth story longer-term is intact. I acknowledge that in the near-term, it’s a little bit bumpy.

Maybe one quick follow-up. I don’t know if there is a new answer to this, but in the original backlog, let's say, in Seating for example where you’re seeing a lot of new programs for EV, what was your sort of high-level assumption for ICE declines at that time?

Yes. It depends on the customer and the region. There isn’t a straightforward answer that I could provide you, Joe, in the constraints of time on this call. I need a half-hour discussion on that.

Okay. We will take it offline. Thanks.

Thank you.

Our next question comes from Dan Levy from Barclays. Please go ahead with your question.

Hi, good morning. Thanks for taking the question. Wanted to start with a question on Seating and just the margin trajectory. So recognize the volume mix pressure. But really, the question is – if you’re guiding 6.3 for the back half of the year, is that really a starting point for 2025? And maybe just more broadly, look at your Seating Day a year ago, you were talking about a path to 8%, 8.5% over time. And I recognize a very different industry today, the mix is softer. The backlog has been impacted. There’s some FX and inflation. But really, the question is what’s the path to getting Seating margins back on track? Is there any benefit from TCS or Vertical Integration? Maybe you could just talk about the broader trajectory of Seating margins? And if there’s anything beyond just the program launches and customer mix.

Yes. Dan, I’ll start with the first part of that question. I think if I’m modeling 2025, I would use the full year guidance proceeding at the midpoint of 6.5% as a starting point into next year, because you’re really seeing a concentration of this volume reduction in the third quarter. You have extensive downtime in North America and Europe, much more so than we saw last year. And we’ve built in a slower production into the fourth quarter across a number of our car lines. So I think that 6.5% is a better starting point. If you look at what we’ve done this year, we’ve generated positive net performance of about 20 basis points in the first half on Seating. We expect to do that again in the second half; we’re seeing 10 to 15 basis points of margin growth from our backlog. And so as you fast forward into 2025, I would expect both of those to continue. I would argue that we are poised for that net performance to accelerate beyond the 20 basis points that we were able to achieve this year, because I would characterize this year as sort of the peak wage inflation impact and also a pretty significant peso headwind that will diminish considerably certainly, if the rates hold up where they are right now. What we have done in terms of these investments in WIP and other advanced manufacturing automation systems and integration companies will allow us to really accelerate labor cost reduction and manufacturing cost reduction over the next several years. I would characterize what we are doing with automation has been sort of in the second inning of the game. You are seeing the initial benefits we talked about reducing headcount by 8%. Seating revenue is only down less than 1% for the year. So, pretty impressive performance, and the vast majority of that’s already been completed. As you look out to next year, we see more opportunities to do that. And then if you sort of get past the next 2 years of say, 50 basis points of backlog and net performance improvement a year, I think you start to see the full benefit of the TCS margin enhancement over a longer period of time, driving both revenue growth and improving margins in that third, fourth, and fifth year of the 5-year plan we are building right now. So, those would be the kind of the building blocks I would think about.

Got it. Thank you. As a second question, I wanted to ask about the E-Systems margins. And really to see the offsets that you are talking to recognize that the EV impact on E-Systems is probably higher than what’s going on in seating?

Yes. I mean if you look at sort of the first half to the second half, what we are guiding to is more than offsetting the impact of lower production volumes. So, the volume impact first half to second half and the revenue reduction is actually a smaller impact in E-Systems than seating based on just platform mix. But we are offsetting that through a combination of commercial negotiations, the vast majority of which we either have a line of sight on or are completed. There are some that are still ongoing that we have to work through, but our confidence level is high. We have lower engineering launch costs in E-Systems that’s more a reduction in launch costs than it is engineering. We have a clear line of sight to that just given the cadence of our launches this year. We have significant improvements in our North America wire business that we have guided to a 30 basis point improvement sequentially on. We are seeing those happen into the third quarter. The first quarter was the low point. We saw improvements throughout the second quarter, still not happy with the performance there, but it improved nonetheless. Those improvements and efficiencies continued into the third quarter. You’re going to really see a nice benefit both in the second half versus the first half, but also next year versus this year since we had such a slow start to the year there specifically in that part of the business. And then the last driver is really restructuring savings in automation. We continue to have opportunities to shift headcount from Eastern Europe to North Africa, from the border of Mexico to the interior of Mexico, and then from all parts of Mexico to Honduras. And so that’s the last sort of contributor to it. We have a clear line of sight on what we need to do to meet that midpoint guidance and hope to do better than that in the second half of the year.