Good morning. I'm Ryan Wendling, Vice President of Investor Relations and Treasurer. Welcome to our earnings call for the fourth quarter and full year 2024. Please note this call is being recorded and all lines have been placed on listen-only mode to prevent background noise. Before we begin this morning's call, I'd like to remind you this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 5. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various factors, risks, and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Please refer to the page entitled Forward-Looking Information for additional details. Presentation materials for today's call were posted on the Investors section of Visteon's website this morning. Please visit investors.vestion.com to download the material if you have not already done so. Joining us today are Sachin Lawande, President and Chief Executive Officer, and Jerome Roquet, Senior Vice President and Chief Financial Officer. We have scheduled the call for one hour and we'll open the lines for your questions after Sachin's and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you for joining us. Now I will turn the call over to Sachin.

Thank you, Ryan, and good morning, everyone. Thank you for joining our fourth quarter and full year 2024 earnings call. Vistion delivered a strong performance in 2024 with robust sales of $3.87 billion, record adjusted EBITDA of $474 million, and record adjusted free cash flow of $300 million, all of which are outstanding numbers for our company. Our product portfolio is well aligned with key industry trends of digitalization, software-defined vehicle, and electrification. Demand for Visteon products that enable these trends, such as smart core, large displays, digital clusters, and BMS were strong and resulted in our sales outperforming underlying customer vehicle production by four percentage points. In the Americas, Visteon outperformed the market by double digits driven by ramp-up of digital cluster and electrification products. In Europe, Vistion outperformed the market by mid-single digits with the launch of digital clusters and large displays in mass-market passenger vehicles as well as on heavy commercial vehicles. In Asia, robust demand for large displays and smart core drove mid-single-digit market our performance in Japan and India. And while market headwinds faced by our customers in China muted our performance, Vistion delivered 9% growth over market outside of China. We secured $6.1 billion of new business wins in 2024 with strong demand for our large displays, smart core, and digital cluster products. We achieved important milestones in new product introduction with first wins for our high performance smart core and onboard charger and dc to dc converter which further expands our product portfolio into fast-growing parts of the market while our customers had lower than average coat activity in 2024 i'm pleased that the breadth and strength of our product portfolio enabled us to exceed our new business win target for the full year adjusted EBITDA was a record 474 million dollars driven by strong operational execution and our continued focus on cost control adjusted EBITDA margin was a record 12.3 percent for the year 130 basis point improvement compared to last year adjusted free cash flow was also a record at 300 million dollars for the year we delivered on our commitment to balanced capital allocation with more than 100 million dollars deployed to mna and share repurchases overall our 2024 performance is proof of the strength of our product portfolio a continued focus on operational excellence in our best-in-class cost structure turning to page three key industry trends of digitalization, software-defined vehicle and electrification continue to drive increased digital content in the vehicle. Vistion's product portfolio is aligned with these trends, which was also reflected in our new product launches in 2024. Software-driven features and functions are growing rapidly in the mid and upper part of the market, which is driving demand for our industry-leading smart core and large display products nearly 30 percent of our 2024 launches were for these products which are a key driver of our market out performance the trends of digitalization and connected car are now impacting mass market vehicles digital clusters and android-based infotainment systems are becoming mandatory features of affordable vehicles in all regions of the world we are also seeing commercial vehicle and two-wheeler oems start to offer digital cockpit systems about 40 percent of our launches in the year were for products targeting this section of the market as shown on this page in the fourth quarter we launched digital clusters on the popular citroën c4 and on a scooter for tvs and asian two-wheeler oem our wireless bms BMS offers OEMs the flexibility to offer a range of electric vehicles with different battery configurations without re-engineering the system, which reduces time to market and cost. In Q4, we launched our wireless BMS system on the Jeep Recon, our second launch with Stellantis. We launched a total of 95 new products in 2024 with 21 different OEMs globally and on ICE, hybrid, and fully electric vehicles. This is a testament to the strong execution capability of the Visteon team and to the powertrain agnostic nature of the business. Turning to page four, we delivered $6.1 billion of new business wins in 2024, making it our third straight year at or above the $6 billion level. We made significant progress on our strategic initiatives to diversify our customer base and expand into adjacent end markets. The breadth of our product portfolio and success in new customer acquisitions enabled us to win a high level of new business despite lower-than-usual customer quoting activity. OEMs from Japan, Korea, and India accounted for about 40% of their total wins, with Toyota emerging as the top customer for bookings for Vistion in 2024. We also won our first cockpit business with Maruti Suzuki, the market share leader in India with significant runway for further expansion. Customer interest for large displays was strong across all regions and we won substantial displays business with multiple OEMs including Lexus, Mahindra, Stellantis, Volvo and Audi. Our displays design and manufacturing capabilities are a competitive advantage for the company and most of these are conquest wins for visdion in china we expanded our base of domestic oem customers by winning a smart core program with faw and a large display program with dong fun both these wins are for new affordable electric vehicles that are expected to launch at the beginning of 2026. in the fourth quarter we won our first high performance smart core program with Zeeker, the premium EV brand of Geely, the leading domestic OEM in China. SmartCore HPC is designed to run large language models for AI in the cockpit, which requires significantly higher processing power than the usual cockpit domain controllers. The system will launch in mid-2026 in China and will be offered in the higher trims of Zeeker's vehicle models. While China is leading the industry in bringing AI in the cockpit, we expect OEMs globally to follow quickly and bring the exciting potential of LLMs to their customers. Lastly, we won our first business for onboard charger and DC to DC converter with Mercedes-Benz. These power electronics components offer best-in-class power conversion efficiency in a small package, which is critical for improving battery range and reducing charging time for electric vehicles. Overall, 2024 was a very successful year for Viztion in terms of new business bookings. These wins highlight the breadth of our technology portfolio and our ability to stay in sync with emerging technology trends and launch new products. Moving to page 5, before turning to our forward-looking outlook, I wanted to take a moment to reflect on the highly successful year we had and the significant progress we made on our strategic initiatives. Our strategy is focused on addressing fast-growing automotive technology domains with products that are aligned with the key industry trends, coupled with the best-in-class cost structure. We added new customers and expanded our business with leading OEMs in Asia, particularly in Japan and India, which was a key priority for the company. We achieved significant bookings for our digital products that support key industry trends, such as large displays and cockpit domain controllers, laying a solid foundation for our continued growth. We are also constantly innovating and enhancing our product portfolio. We displayed our onboard charger and DC to DC converter for the first time at CES in 2022 and delivered our first win for these products within two years in 2024. Expertise in emerging technologies is critical for continued success. We strengthened our technology capabilities through bolt-on acquisitions that complement our in-house R&D and bring critical expertise in-house. AI and large language models will drive the next cycle of innovation and content growth in the cockpit and require new hardware and software solutions. We introduced a high-performance version of SmartCore called SmartCore HPC that can run AI models in the car and secured our first win with Zeker as discussed on the previous page. And at CES earlier this year, we introduced an industry-first software solution for AI-based user interface called Cognito AI that enables car makers to implement smart assistant features in their cockpits. Our technology platforms are a key competitive advantage for Viztion, and we are continuously enhancing these platforms and integrating more functionality in them. We integrated new software technologies such as surround view and software-defined radio that eliminates the need for third-party solutions, reducing the total system cost to car makers. We're also driving vertical integration of hardware, bringing Tier 2 content in-house to drive innovation and increase our competitiveness while removing layers from the supply chain. In 2024, we started manufacturing of automotive cameras in-house as well as designing backlight unit for displays and injection molding of various metal and plastic components used in our products. Our cost structure is already very competitive with most of our manufacturing and engineering footprint located in best cost regions. However, we continue to look for opportunities to further align our footprint to the evolving market dynamics. In 2024, we increased our resources to support growth in Japan and India while reducing our footprint in China to reflect the changes to the market in that region. And as software is core to WISD-ON, we have established a training and development program to build a pipeline of talent to meet our growing needs for software developers that are specialized in key automotive technologies. This is truly a competitive advantage as it's very challenging to find such expertise in the market. We remain committed to a balanced capital allocation approach. We are laying the foundation for future growth with the organic growth initiatives I mentioned earlier, while layering in M&A to expand our product and technology offerings. We deployed $55 million to M&A in 2024 and have a pipeline of additional token acquisitions. We also returned capital to shareholders with $63 million of share repurchases in the year overall 2024 was an impressive year for visdion as we expanded our product and customer base delivered strong financial results and set ourselves up for future growth with strong bookings turning to page six on this page i would like to share our sales outlook for 2025 and through 2027 for 2025 our customer vehicle production forecasts are based on S&P Global's January forecast and include company estimates where our production expectations differ from S&P. Global light vehicle production is expected to decline slightly with a mid-single digit decline in Visteon's customers' vehicle production. Several of our largest customers, including Ford and GM, are expected to adjust production to work down elevated vehicle inventories. Our growth over market is expected to be mid to high single digit in 2025 with another year of outgrowth in every region outside of China. Our strong performance is driven by new product launches with several customers including Ford, Renault, Stellantis and Toyota as well as commercial vehicle and two-wheeler OEMs. Despite a strong performance in 2024, we expect electric vehicle sales in the U.S. to stay flat in 2025 due to tariff and incentive uncertainty. We are forecasting our BMS sales to be slightly lower in 2025, accounting for the elevated levels of electric vehicle inventory in the market. In China, where we have experienced sales headwinds in 2024 from the loss of market share by global oems we expect our sales drop to moderate in 2025 and represent the low point for our sales in that market before recovering in 2026 overall we're guiding to sales of 3.75 billion dollars at the midpoint for 2025. this represents a flat based sales year over year despite the headwinds from lower customer vehicle production and recoveries as well as effects this is a very solid performance as a strong product portfolio and business win momentum offset the near-term market headwinds now turning to our outlook for 2026 and 2027 we're assuming that light vehicle production increases in line with snp global forecasts for both years with customer mix improving from 2025 growth over market is expected to be in mid to high single digit in 2026 and 2027 we have some large smart core and display programs that are launching with customers in asia and europe that will drive our market outperformance in those regions in china in particular we have several new launches with domestic chinese oems as well as german and japanese oems that are expected to do relatively better and hold their market share in that region our bms sales are expected to grow modestly in line with electric vehicle sales growth at gm and slantis and helped by the launch of bms with a third customer based in europe overall we're targeting 4.15 billion dollars in sales in 2027 which is a mid single digit sales growth kegger relative to our 2025 sales guidance. This represents an attractive multi-year growth profile as the strategic initiatives continue to gain traction. Now, I will turn the presentation over to Jerome.

Thank you, Sachin, and good morning, everyone. I want to start by taking a step back and looking at our financial performance over the past five years. For perspective, I would like to compare our current results to what we delivered in 2019, the last year before the COVID crisis. During this time, the industry has faced several challenges with significant supply chain disruptions and inflation, and yet we have grown revenue, improved margin, and generated impressive free cash flow. Over the last five years, sales increased almost $1 billion compared to 2019, including recoveries. Our leading market position in digital clusters and cockpit domain controllers drove strong growth in the first half of the period, while innovations in displays and electrification generated growth later in the period. We grew despite a substantial sales headwind from the changes in the China market since 2022. We doubled EBITDA over the same five-year period. EBITDA margin reached a record of more than 12 percent in 2024, an improvement of 440 basis points compared to 2019. Our ability to grow revenue and significantly improve margins at the same time is a testament to our strong product portfolio and operational efficiency. Improvements in margins have been the result of scale from additional sales, our laser-focused cost approach, and our drive for a best cost footprint, as well as an engineering platform approach, which allowed us to optimize cost while continuing to invest in the business. Our EBITDA to cash conversion was 38% on average over the five-year period. This is the direct result of our increased profitability, our success in managing working capital, as well as turning Visteon into an efficient business with light capital requirements, all supported by a strong balance sheet. Overall, Visteon has delivered impressive improvements in sales, margins, and cash flow over the last five years. With an innovative, technology-based product portfolio and a team focused on execution, Visteon has a strong foundation for continued profitable growth. Turning to page 9. We had a very strong finish to the year with Q4 sales of $939 million. Compared to last year, sales benefited from our market outperformance, driven by new product launches and robust performance of our digital cockpit and electrification product lines, offset by lower customer production, lower recoveries as a result of improved semiconductor supply and annual pricing. In terms of performance by geography, Europe had double-digit market outperformance, America's high single-digit outperformance, while China underperformed. The weaker Euro video performance in China is consistent with a trend from recent quarters and is due to the ongoing market share shifts towards domestic OEMs. While we remain underexposed to domestic OEMs relative to the market, we continue to make inroads with these customers, including a significant Q4 new business win for our HPC with Zikr, as mentioned by Sachin. Adjusted EBITDA was $117 million for the quarter. Our EBITDA performance was driven by continued cost discipline and strong operational performance. Net engineering, while including the recent acquisition we made in Q3 2024, was lower due to the favorable timing of engineering recoveries, offset by higher SG&A. Margins improved to 12.5%, a 70 basis point expansion compared to the prior year. When adjusting for more normalized engineering and SG&A, our run rate margin exiting the year was around 12%. Adjusted free cash flow was a record $165 million in the quarter, a result of our strong adjusted EBITDA and a significant inflow from working capital. This level of cash flow was above our expectations as we had several one-time working capital benefits. Lastly, we continued to return capital to shareholders in the fourth quarter, repurchasing $43 million of our shares. We remained committed to our balanced capital allocation framework with allocations to organic growth M&A and capital returns to shareholders overall we delivered a strong fourth quarter with continued market outperformance strong adjusted EBITDA margin with significant cash flow generation we continue to launch a high number of new products and win new business which will drive future growth turning to page 10. For the full year, sales were $3.87 billion, representing a slight decrease year-over-year. Base sales, which excludes the impact of supply chain recoveries, were roughly flat compared to the prior year. Our next-gen products, including digital clusters, displays, smart core, and electrification, drove our 4% market outperformance. This market of performance was offset by lower customer production, lower recoveries, price downs to customers, and a headwind from FX. China was also a 5% headwind to growth of a market as a result of our global OEMs losing shares in the market. Adjusted EBITDA for the full year was a record 474 million, a 40 million improvement compared to the prior year. Our EBITDA performance was driven by solid incrementals on our growth of market and another year of significant operational improvements as we continue to optimize our manufacturing costs and increase vertical integration, which more than offsets the impact of annual pricing to customers. Net engineering costs were lower, mostly due to the favorable timing of engineering recoveries, which can be lumpy in nature, as well as lower spending in China, in response to the challenges in the region. This decrease was despite additional engineering spending in 2024, associated with our acquisition of an outsourced R&D firm. Net engineering cost as a percentage of revenue was 4.9%, which is below our normal run rate. SG&A as a percentage of revenue was 4.6% and in line with our expectations. Finally, we benefited from the non-recurrence of the $15 million recall charge incurred in 2023, but were also negatively impacted year over year by approximately $12 million of foreign exchange, driven mostly by the Brazilian real and the Japanese yen, partially offset by the peso. EBITDA margin was 12.3% in 2024, an expansion of 130 basis points year over year. Turning to page 11. Vistion generated a record $300 million of adjusted free cash flow in 2024. The improvement compared to the prior year was primarily due to higher adjusted EBITDA and an inflow from trade working capital. This trade working capital inflow was above our expectations, as we benefited not only from the unwide from lower sales, but as well from several one-time benefits in the fourth quarter of 2024, some of which will reverse in 2025. Adjusting for these items, trade working capital would have been a modest outflow for the year, and our conversion would have been between 45% and 50% of EBITDA in 2024, closer to our targeted level of 40% conversion. Cash taxes were modestly higher than the prior period as we paid higher taxes in line with our increased profitability. Interest was positive for the year, as interest income on our invested cash exceeded the interest cost from our term loan. CapEx was $137 million for the year, an increase of $12 million compared to last year. The increase was primarily focused on investing for the future, including setting up our new plant in Tunisia, as well as several vertical integration initiatives, including investing in our display product line. Our consistent cash flow generation and solid balance sheet enable significant allocations of capital to both invest in our future and return capital to shareholders. In 2024, we deployed $55 million to M&A and $63 million to share repurchases. We expect to continue executing on these important strategic initiatives. Turning to page 12. Before moving to our financial guidance, I would like to address the topic of tariffs. The tariff situation continues to evolve with the tariffs against Mexico and Canada currently postponed until early March and global reciprocal tariffs proposed last week. If implemented, these tariffs would have a meaningful impact across the entire automotive industry and especially the supply base. We're working closely with our customers to identify mitigation actions and minimize any potential impact on Visteon should these tariffs be enacted. Our guidance does not include any impact from these or any other potential tariffs. Now let's turn to our 2025 guidance. Our guidance range for sales is $3.65 to $3.85 billion. Excluding the impact of supply chain recoveries, our base sales are expected to be roughly flat year-over-year. We have assumed this year on customer production declines mid-single digits, with customer production down the most in the Americas as OEM's right-sized dealer inventory and in Europe due to the ongoing macroeconomic weakness. Our growth of market is anticipated to be mid to high single digits, driven by strong expected performance for large displays, digital clusters, and infotainment products. Regionally, we expect the strongest performance in the rest of Asia and Europe, offset by continued double-digit underperformance in China. Recoveries and effects are expected to be a 3.5% headwind in 2025. Adjusted EBITDA is expected to be between $450 million and $480 million, representing a margin of 12.4% at the midpoint. This is a margin improvement year-over-year as continued strong commercial performance and further operating efficiencies partially offset the impact of a more normalized net engineering spend. As a percentage of 2025 sales, we anticipate net engineering to be in a high 5% range and SG&A to be in a high 4% range as we continue to invest in our teams to support future growth. We also expect FX to be a modest headwind to EBITDA in 2025. Adjusted free cash flow is expected to be between 175 to 205 million, which at the midpoint is a conversion of 40% of adjusted EBITDA into adjusted free cash flow. We expect working capital to be a modest outflow for the year to come as the one-time benefits from 2024 unwind next year. CapEx is forecasted at 150 million as we invest for future growth and margin expansion with several notable vertical integration initiatives planned for 2025. And finally, while we do not provide quarterly guidance, we expect a slight decline sequentially in both revenue and EBITDA in the first quarter of 2025. Turning to page 13. Looking now to the medium term, we are providing 2027 targets for sales, adjusted EBITDA, and adjusted free cash flow. For sales, our target for 2027 is $4.15 billion. This represents a 5% growth CAGR and an increase of $400 million in sales between 2025 and 2027. Our forecast assumes a modest LDP growth for our customers over the period. We're expecting growth of a market of mid to high single digits in both 2026 and 2027, driven by the progress on our strategic initiatives. We expect our growth to be largely driven by launches of next generation products that align with our strategy of growing our business with white space customers in rest of asia in sdv enabling products with oems in europe and in adjacent markets including commercial vehicles and two-wheelers we continue to have significant new product launches including a few key programs such as a display with toyota a cluster with Maruti Suzuki, a large CDC program with a luxury German OEM, or multiple product on two-wheelers with Honda, KVS, BMW, and Royal Enfield, and a high-performance compute cockpit domain controller with Z-Care in China. As a result, our product portfolio mix will continue to evolve with growth driven by displays, electrification, and cockpit domain controllers, while at the same time expanding our market share with white space OEMs and in adjacent markets. In addition, we anticipate we will return to growth in China starting in 2026. For adjusted EBITDA, margins are expected to expand to 13.3% in 2027. This represents a 90 basis point increase from 2025. Roughly half of the increase in margin is from leveraging scale as we grow the business and the other half relates to further improvements in operational performance and manufacturing costs, including vertical integration. Our continued focus on cost controls drives incrementals in the low 20% range. With regard to cash flow, we expect to convert more than 40% of adjusted EBITDA to adjusted free cash flow in 2027. This represents $230 million of adjusted free cash flow, or a 10% CAGR, from 2025 levels. As a result of our capital-like business model, nearly 50% of the increase in EBITDA from 2025 to 2027 flows through adjusted free cash flow. Our strong level of cash flow will allow for significant capital to be deployed to M&A and shareholder returns. Overall, I am excited to deliver on this plan and the substantial growth in sales, EBITDA, and free cash flow we are showing here. I am confident that the foundation we have put in over the past few years positions us very well for strong financial results through 2027. Turning to page 14, Vistion remains a compelling long-term investment opportunity. We expect to benefit from a higher demand for more digital content in the cockpit, regardless of powertrain, and the growth of electric and hybrid vehicles. Vistion is well positioned for top-line growth, margin expansion, and free cash flow generation, while our strong balance sheet provides us with significant flexibility to pursue our capital allocation priorities. Thank you for your time today. I would like now to open the call for your questions.

At this time, if you would like to ask an audio question, please press star then the number one on your telephone keypad. Again that is star and the number one. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Don Levy with Barclays. Your line is now open. Please go ahead.

Hi, good morning. Thank you for taking the questions. I wanted to ask a couple questions on the revenue outlook and mixed dynamics. And first, maybe if we could just talk about the growth opportunity that you have ahead with the Asian OEMs, Toyota, etc. What percent of the revenue is it today? I think it's small. How significant is that in driving growth for this year and through 2027?

Great, great. Thanks, Dan. And let me take that question and Jerome can add more to it. So this Asian OEMs historically have been underrepresented in our of revenue, revenue makeup, and I'm talking about OEMs primarily in Japan and India, so OEMs outside of China. And just to put things into historical context, the reason why they were underrepresented is because we were working with many of them in China, where China was the focus for them as well with us in the past few years. So as we started to see this transition happen in China with the loss of market share for global OEMs, about a couple of years ago, we made it our strategic initiative to grow business with these OEMs outside of China. And in terms of our current share of revenue, I think they are like high single digit levels. And if you think about even by 2027, they would almost double in terms of their share of our revenue. So pretty, pretty robust growth. And they represent between them, I would say somewhere around 25 to 30 percent of the global vehicle production.

So it's a sort of a white space opportunity for us great thank you um the second question is on uh also on mix dynamics uh and and it's maybe two parts of it you know you're talking about customer mix as a headwind this year but improving next year if you could unpack that and you're saying china sounds like it's weak this year but turns around the next couple of years uh what's turning things around in china so uh customer mix yeah yeah you know yeah thank you yeah let me walk you through that because it is

uh something that does need a little bit of explanation so if you look at customer mix and i'll start with uh 24 um overall production was down um by let's say about a a point um in in terms of LBP, our customer mix was negative slightly by about one and a half percent in 2024. And as we look at 2025, we are essentially looking at industry forecasts, S&P Global's forecast mid-January, as well as the customer data that we get directly from our customers. And I would say that customer data tends to be more accurate. in the near quarters, first couple of quarters. After that, we tend to use more industry forecasts to come up with our own perspective, a balanced perspective of how we feel the LVP will turn out. And the negative mix in 25 is really driven by a few large customers that are forecasted by S&P Global to have lower production this year as compared to last year for example ford and gm here in north america in europe it is uh mercedes primarily that's impacting us is dragging our our mixed down and in asia there's nissan and mazda now most of that is our second half of the year so we will have to wait and see how much of that actually transpires. But as I explained, it's really driven from what the industry forecasts point to in terms of production. Now, if you look at, again, the forecast for 2026, the mix is still negative, but it improves from the 2025 level and so it's a moderating situation for us now when it comes to China again taking maybe a step back because I think this is going to be a topic for a lot of people listening today in terms of how do we see the China market and our performance there now Historically, our business in China has been with global OEMs and clusters has been our main product that we offered with them in China. And since 2022, the market has changed quite dramatically in many ways. So the transition to electric vehicles also caused a transition of the products in the markets from clusters and standalone infotainment to CDCs in larger displays. And as the market changed quite rapidly, global OEMs have lost a significant amount of share in that market. Now, we were able to develop business with some domestic OEMs such as Gili, GMC, and Dongfang. But that business, although it has developed well, was not sufficient to offset the loss of sales that we saw with the global OEMs. Now, this dynamic will continue also in 2025, but that impact is going to be moderated. We have a few product launches that I remarked in my prepared remarks with both international OEMs operating in China, the Germans and the Japanese, who we think are going to do relatively well as compared to the the rest of the global OEMs, but also with our domestic Chinese OEMs. So that's that's is what is causing us to to think that our sales in China are going to be at a low point this year and then start to improve from 2026 onwards.

Thank you. That's very helpful.

Your next question comes from the line of Mark Delaney with Goldman Sachs. Please go ahead.

Yes, good morning. Thanks very much for taking my questions. I was hoping to start with SmartCore. If we look at the SmartCore infotainment bookings in total for 2024, I think it ended up at about $1.6 billion compared to $2.7 billion last year. You did mention some momentum that was SmartCore specifically. So could you elaborate on how SmartCore bookings are tracking?

I'd be especially interested if you've had any success with multi-domain controllers, which I know had been a uh an area of focus for the company in the last few years and as you think about smart core going forward uh the last investor day you spoke about that getting to a billion dollars of revenue in 26 i recognize the industry environment has changed but maybe you can update us on when you see smart core revenue reaching that sort of a level yeah yeah sure so the thing i would like to first maybe um discuss here is that what we're seeing is is a a couple of trends right so large displays and higher power smart core domain controllers are really what's driving the products in the mid to upper section of the market but there's also a lot of interest in standalone digital clusters ivi in more mass market so both those dynamics are happening at the same time and you know inherently smart core wins tend to be lumpy these are the more complex systems that car makers have in in their electronics portfolio and so that's that's where there's a lot more uh activity that goes in into uh the the coating and and vetting of the suppliers um the other thing i would like to mention and which i also uh verified in my prepared remarks is that 2024, we saw a slightly lower level of customer activity in terms of coating, especially in Europe and North America as the OEMs were dealing with the evolving market dynamics with lower than expected demand for EVs and what has been happening to their sales in China. up so um if you look at uh you know 2023 we did pretty well um and um that was also mostly with um western oems and uh in 2024 uh majority of of our um nuclear suspends for the reasons i mentioned came from Asia and the products that were of, I would say, interest to the OEMs there. Yes, some smartphones, but still largely displays and standalone clusters and IBI or infotainment. As many of those OEMs were a little late in following some of those trends and are now quickly catching up. Now I expect to see smart core activity in Europe and US return back this year and next year. So things ultimately are a little lumpy when you talk about new business wins, but overall I do expect it to be quite okay for us. That includes with multi-domains as an area where you could get some bookings yeah i think for for us uh you know when we talk about multi-domain uh you know we do see some body control functions getting integrated into smart core so uh when we talk about smart code hpc is a good example we don't really classify that as a multi-domain controllers for us still more of a integrated cockpit domain controller with some for instance integrated we don't yet see ADAS for example integrated into a single compute cluster that will probably take a little bit longer helpful my second question was just around

bookings and you just alluded to it but the the quoting activity in 24 you said was somewhat subdued could you talk about your expectations for the market opportunity for bookings in 2025 And do you have any guidance relative to the 6 billion that you did last year? Do you think you could grow out in 25?

Yeah, absolutely. In fact, you know, the slowdown in 24 that I mentioned is causing 25 to be quite robust. Many of these OEMs have to still plan and launch new models. So the pipeline seems to be pretty robust and with a sort of a shift more towards Europe and U.S. more. And from a product perspective, it does look very similar to what we have seen in the last couple of years. Displays are pretty strong as this smart core. Thank you.

And in terms of the overall target for us, it remains the same 6 billion plus for the year as well. let's take the next question your next question comes from the line of tom narayan with rbc please go ahead hi yeah thanks uh hi sachin jerome thanks for taking the questions um first one is on the 25 outlook so you called out i think it was ford gm mercedes was it i think nissan and mazda for why your company-weighted LVP is down mid-single digits while S&P is flattish. But I mean, based on what I think those OEMs have said on their respective earnings calls or just in general, it might appear that your guys' forecast could be maybe conservative, just seeing if that's the case. And then I appreciate the comments on China. Now, just as a housekeeping, what are you including in your growth over market expectation in 25 for China or ex-China? Sure, sure.

And Tom, you are correct that if you look at some of the OEMs that I mentioned, what they have publicly said, it would imply a more, I would say, our view being a little more conservative which is why i wanted to clarify earlier that what we have assumed is based on s p global's uh outlook for especially for the second half of the year so there might be some uh uh you know um upside if our customers production plans do materialize so that's that's one point uh in terms of growth of a market um you know if if you again look at 2024 uh you know new product launches were really the drivers of our growth over market especially in america's which was a strong double digit performance and europe and and uh asia outside of china were made single digit again driven by our product launches now um china 24 was a bigger negative now as we look at 2025 up more or less at a bigger picture the same dynamic space with china uh uh improving moderating in terms of the loss right and the rest of the world more or less uh i would say i'm looking the same it does shift a little bit we have more launches in europe that's going to drive If market outperformance there are stronger than the rest of the regions, but overall it should look very similar in terms of growth of market.

Okay, thank you. And my follow-up, you know, a recurring theme that has appeared on the supplier basis earning season and even before is this, what's been called the urge to demerge. A couple of tier one suppliers announcing their intentions to divest certain businesses to unlock shareholder value. Just curious how you view your portfolio of assets. I know in the prepared comments, you talked about a pipeline of tuck-ins and the M&As you did in 24. It would appear that you're more likely to add assets instead of cutting. Just curious how you think about portfolio allocation. Yeah, yeah.

That's a great question, Tom. And if you think about the spaces that we are focused on, there's a lot of activity there. there's a lot of content growth happening there driven by technology so we really believe that we are in a position to take market share uh really based on our ability to add new product lines right and and anticipate and position the company to take advantage of the emerging trends and you've seen us do that now repeatedly this 2024 we launched a couple of products smart code HPC, which I think is going to be a big driver of growth for the company for a fairly long period of time as more content and especially AI start coming into the cockpit. And electrification, our product line is continuing to expand very much along the lines that we have said earlier. If you go back a couple of years, we've been talking about adding power electronics to our BMS portfolio and that is starting to come to life. So as our product landscape and technologies landscape grows, it's critical that we have expertise in all of the key technologies that are important and so we will continue to look for those types of acquisitions. So that's going to be our strategy for the midterm and we will see from thereof it evolves. Thank you.

Your next question comes from the line of Colin Langan with Wells Fargo. Please go ahead.

Oh, great. Thanks for taking my questions. Just wanted to look at the 27 sales target. It's over a billion lower than what you had talked about at the investor day. Can you just remind us what, I know obviously a lot has changed in the last couple of years, But any way to bucket the major drivers here? I mean, I know EV is one of the factors. Is it really just mostly customer mix effects?

Right, right. I'll start, and then I'll also ask Jerome to maybe expand if I've missed anything. The main drivers are really, I would say, three that you can consider. Close to a billion dollars, as you said, lower than what we thought it would be. Number one would be China. So if you think about China, where we were at and where the market is at now, we were expecting to see a steady growth from the 2023 levels. And since then, we've lost almost about, I would say, five percentage points of revenue in China alone from just where we were at in 2023, let alone the growth. so if you consider what we were expecting it's actually a bigger impact than a five percentage point that i mentioned after that you have uh electrification right bms uh in particular you may remember uh back in those days the expectation was much higher in terms of the ramp up of electric vehicles and our customers and that has come down significantly between the two of them that's about

70 80 percent of of the impact um in terms of the billion dollars that we are talking about and the rest is uh just production expectations uh our customers uh production over that period of time has come down and that's really the third bucket jerome i would just add uh the ev as well growth so beyond bms which is for us uh essentially gm ev was supposed to grow much more and we had some very specific programs that were on EV that obviously are not going to have the same impacts. So that's probably as well in the second bucket, another area to mention.

Got it. And any color, where is your China? Obviously, China's number one on your list there. What is your China-local mix in 24, and where do you see it going by 25 and 26? When are you able to catch up there, or can you, given some of the economics that locals isn't always great?

Sure, sure, sure. So if you look at our revenue, it's about 10% of the company revenue that's our China exposure now and of that the mix is 60 40 so 60 with global OEMs and 40 domestic as you know the market share is about I would say reversed right so the domestic OEMs have about 65 percent share of the market versus global OEMs 35 and that has come down quite quickly over the last couple of years. However, I would like to just point out that if you look at the performance of global OEMs in the market in January of this year, although it's just one month's data, they've been able to hang on to their market share in January in terms of retail sales. So global OEMs are at about 35 percent uh which is the same rate that they exited last year at and uh that's the first time i've seen even though the data is said just one month data uh that there hasn't been a further degradation of market share um and so i think that that's uh points to maybe some uh level of of at least a slow down in the erosion of the share and maybe at some point it will form a certain base level that we can work with. In the mid to long term, I do expect that German and Japanese OEMs in particular will have a certain share of the market that we can participate in and then the rest of the business will be with the domestic OEMs.

Got it. All right. Thanks for taking my question.

Your next question comes from the line of James Piccarello with BNP Paribas. Your line is now open. Please go ahead.

Hi, everybody. Just on free cash flow, can you confirm what specifically drove the working capital benefit in the quarter, how that influences your 2025 free cash flow outlook? And can you speak to the M&A pipeline, how that looks and will be balanced against share buybacks for this year and also what was the inorganic revenue contribution in the quarter? Apologies if I missed that. Thank you.

Yeah, thanks a lot, Jim. So we had a very good quarter in terms of cash flow generation indeed and there are a few drivers and in fact it's a lot of little things that added up to a fairly large number. So it was, as you just said, mostly from working capital generally I would say collections were very good with customers but we were surprised in some cases with the timing of some of the payment from some customers so that's one driver the second driver is the fact that we had very good recovery engineering recoveries in Q4 and again the timing of these recoveries allowed us to collect the cash in Q4 where normally it would have probably gone into a q1 so that's the second big driver third large driver as well we generated uh inventory reductions and that as well as uh driven some cash and finally what you have in q4 generally is a reduction in sales and that generates uh some positive as well working capital so some of that will not reoccur obviously in q1 mostly the timing of the customers, the engineering recoveries, and as well the inventory reduction. So that's why you have such a, let's say, large cash inflow in Q4 of 2024, and we don't see that flowing through going into 2025. Our conversion, we think, is still around the 40% from EB-dyne to cash flow. So it's very consistent with what we've been generating in the last few quarters. In terms of capital allocation, we remain very balanced. We've done about 43 million of share repurchases in Q4. When I say balanced, we continue to invest in the business. We've bumped up a little bit. You probably saw in 2025 our capex span to invest in vertical integration, where as well, because of all the wins that we are having in the rest of Asia, we need to as well rebalance a little bit our footprint, and we're investing in India and the rest of Asia to be able to accommodate that. We're investing in vertical integration, so that's one aspect of our capital allocation. We are working on a pretty extensive pipeline of M&A in 2025, and we're making good progress on that side. and then finally will remain opportunistic on the on the share repurchase side so again a very balanced approach as far as capital allocation is concerned and then maybe back to your final question the acquisition we did in 24 which was at the end of 24 was pretty small in nature it was more adding adding capabilities so it's not really material to our numbers in definitely not in 24 and not even in 25. So we've not been disclosing any substantial information on that side.

Got it. Okay, super helpful. And my last question just on BMS, you're assuming flat to slightly down this year to account for IRA tax credit repeal uncertainties. I of course think that's prudent, but just curious if that's getting informed by your own bottoms up roll up of customer or is it simply just an overlaid macro point of conservatism on your part? And if possible, could you also confirm what your BMS revenue total was in 2024?

So what we saw in 2024 was a pretty robust demand for our BMS product, especially with GM. And as you probably know, the supply chain pipeline is a little more extended for BMS than for some of other products because we supply to the battery plant that then supplies to the vehicle manufacturing plant. So there are the two reasons why we believe that it's good to be prudent. One, as we talked about the IRA credit potentially being at risk. Number two, overall demand is not as strong as as perhaps was anticipated earlier. And as a result, there is a fair amount of inventory, both of vehicles as well as from our perspective, our product going into that extended supply chain. So we believe 2025 will be a year where that's going to get adjusted and balanced out and then 26 onwards we can expect to grow with the market. So that's really been the main thinking, you know, the driver behind our forecasting for a slightly lower BMS revenues for us in 25. Jeremy, you want to talk about how big was the...

Our revenues in 2024 were high single digit or BMS. And as Sachin said, it was a great year for us with a lot of ramp ups, probably quite some inventory building as well.

High single digit growth. Oh, high single digit percent of total sales. Got it. Thank you. All right. Correct.

Yeah.

Your final question comes from the line of Prius Perel with Wolf Research. Please go ahead.

Hey, thanks so much for taking my question. Jerome, you mentioned that 50% of the EBITDA margin improvement by 2027 is being driven by scale. And I was wondering if you could just expand on that. Is that mainly engineering and SG&A leverage, or do you have capacity that needs to be filled out?

Yes, absolutely. That's what I mean by scale. Generally, we've seen that this business is very sensitive to scale, and we've done a great job over the years leveraging additional volume while keeping our SG&A and engineering at levels that are reasonable, to use that word, not proportionally increasing to the level of sales. So that is what I do mean by scale. The rest of the improvement is coming from our operational improvement, and we still have got a lot of areas that we think we can still improve. We've done, as I said, a pretty good job in the last few years. I'm mentioning vertical integration as one fundamental driver for us to improve margins and bring in hours as much as what we can control not only for cost saving purposes by the way but as well to stay relevant from the technology standpoint on some in some areas like displays. We will continue obviously to work on manufacturing productivity, but we do as well continue to work on engineering productivity automation in engineering. AI as well will be a tool that will be using to be able to be more productivity. more predictive from an engineering standpoint. So there are a lot of drivers that we are considering as we look into 2027.

Okay, and then just looking at 2024, clusters as a percent of total bookings was about 17% last year. It's about 40% of the current revenues. So just trying to get a sense of what happened, and what you were seeing in clusters last year and how you're thinking about the growth rate for that business going forward?

Yeah, yeah. So that's a good question, Treyas, and this goes back to the point that I was making about some of the changes we are seeing in terms of the product makeup as we go forward here. So standalone clusters and infotainment in mid to high segment of the market are going to be replaced by larger displays and cockpit domain controllers so there will be some level of that sort of cannibalization if you want to call it that that's going to happen in the industry and and for us we think that's a good thing because from an ASP viewpoint, both displays and CDC are higher than standalone clusters and IVI or infotainment. At the same time, we're seeing those go more down market in terms of more affordable vehicles. So the volumes are going to go up, ASPs are going to go down on those clusters and and uh infotainment uh and and that's how we see the market evolve what we have uh really done here is to anticipate these trends and position us to uh in a in a manner where we can take advantage of them so we have a very strong displays and and cdc uh you know business that's growing uh clusters is still growing if you look at the volume uh our digital clusters grew close to almost 17 18 percent in 2024 year over year right and asps have come down as as those their product has gone into more value uh oriented uh uh vehicles so we will continue to see this dynamic which is i think a very natural progression of how content is uh growing more starting with the upper end of the market and then coming down into the mass market This concludes the VisGen's fourth quarter and full year 2024 results earnings call.

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