Earnings Call
Versigent PLC (VGNT)
Earnings Call Transcript - VGNT Q1 FY2026
Operator
Good day, and welcome to the Versagent Q1 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Annalisa Bloom. Please go ahead.
Annalisa Bluhm, Head of Investor Relations
Thank you, and good afternoon, everyone. I'm joined today by Joe Liottini, our Chief Executive Officer, and Doug Osterman, our Chief Financial Officer. Today's call includes forward-looking information reflecting our current view of future financial performance and may be materially different for reasons that we cite in our Form 10-Q, earnings materials, and other filings with the Securities and Exchange Commission, including the risk factor section of our registration statement on Forms 10 and 12-B and A filed on March 6, 2026. Our guidance reflects management's current expectations and should not be relied upon as a guarantee of future performance. We undertake no obligation to update these statements except as required by law. We may also reference non-GAAP financial measures during the call. Reconciliations to the most directly comparable GAAP measures are included in today's earnings release and are available on our Investor Relations website. I will now turn the call over to Joe.
Speaker 14
Thank you, Annalisa, and good afternoon, everyone. Today marks an important moment for Versigent. On April 1st, we entered the public market with clarity about who we are, how we compete, and how we create value. Versigent launched from a position of strength, generating close to $9 billion in annual revenue, not as a concept, but as a scaled, profitable, and disciplined business. And I'm pleased to be here speaking with you today on our first earnings call as an independent company. Before we get into the numbers, I want to take a moment to thank the hundreds of customers, thousands of suppliers, and our incredible employees, nearly 140,000 of them around the world, who made this historic moment possible. As we begin, I want to take a moment to outline how we will spend our time this afternoon. I'll start by describing what Versagint does and the problem we solve, then walk through how our business model drives sustained growth and margin expansion, outline our strategic comparatives as a standalone company, and then provide a brief update on how the first quarter unfolding. Doug will then walk you through the financials in more detail. As a reminder, the financial information we will discuss today reflects results from a period when Versigent operated as part of Aptiv and is presented on a carve-out accounting basis. Versigent exists to solve a challenge that is intensifying across many sectors, including mobility, industrial, and energy systems. Today's innovations are trading products with more autonomy, more connectivity, and more features, resulting in increased power demands, increased sensing capabilities, and much more sophisticated and complex products. Customers need to deliver these innovations while still finding ways to reduce complexity and create productivity opportunities. That's where Versigent comes in. Power and data distribution are critical to unlocking advanced functionality. It is the nervous system of modern products, And that shift plays directly to our strengths. At its core, Versagint designs, manufactures, and delivers low and high voltage power, signal, and data distribution architectures. Each architecture is unique. These advanced systems connect and power the critical components that enable modern vehicles and equipment to function safely and reliably. Increasing complexity means these architectures must be carefully designed early, optimized holistically, and executed consistently at scale. That is where Versigent operates. What differentiates Versigent is not just scale, but how we apply it. Our systems are embedded in design of leading OEM programs globally, and we work with every major auto manufacturer, including growing automotive leaders in China. More than 75% of our revenue comes from solutions our engineers influence, often early in the program life cycle when architecture decisions matter most. While Versigent is often categorized alongside other automotive suppliers, we operate as a highly engineered design-driven company supported by an intelligent and proprietary design and engineering tool suite. These tools allow us to model, simulate, and optimize complex electrical architectures, helping customers reduce weight, cost, and risk while accelerating development and improving quality and the efficient manufacturability of these products. Importantly, they are deeply integrated into our engineering workflows and customer engagements, creating a sustained competitive advantage. Our unique engineering capabilities provide expertise that differentiate us from others as architectures evolve simplified systems remove pass-through content such as copper and increase the value of optimization with elegant systems and digital design capabilities that is where Versagint leads and why our new architectures are margin and creative over time this shift toward greater capabilities plays directly into our operating model we combine design influence proprietary tools and discipline manufacturing, and automation to drive structural margin improvement through execution. Versigent is fundamentally resilient. Our growth is content driven, supported by long-term secular tailwinds including electrification, connectivity, and software-enabled functionality. We are platform agnostic. Whether customers deploy ice, hybrid, or battery electric architectures, the complexity of these programs continues to rise and versus benefits we also see attractive opportunities beyond automotive adjacent markets face many of the same pressures we already solve for more content and features greater reliability and tighter tolerances we are approaching these adjacencies selectively extending proving capabilities into areas such as commercial vehicles energy storage and selected industrial applications without changing our operating model our execution discipline or our technical expertise. As we begin this next chapter, Versagen enters the market with clear priorities. Strengthen our market leading position by leveraging our full service capabilities. Continue optimizing our cost structure through automation and footprint discipline. Deliver consistent financial results through execution. Allocate capital in a disciplined manner to drive long-term shareholder value. These priorities reflect how we operate as an independent company, focused, accountable, and execution driven. With those priorities as our foundation, the first quarter provided clear evidence of how they are taking shape in the business. The progress we delivered across launches, customer wins, and quality reflects disciplined execution and reinforces our positioning with leading OEMs and global programs. During the first quarter, our teams executed across a broad set of programs globally with a high level of launch activity and complexity. We successfully delivered multiple launches across regions and programs, including complex premium and high-content vehicle programs requiring advanced electrical architectures in close coordination with OEM engineering teams, all with stable ramps with more than 99% quality and more than 99% on-time performance. We also continued to build go-to-market momentum through new program wins and extensions with leading OEM customers. These awards span regions and programs and reflect continued demand for Versigen's low and high voltage solutions as electrical content and system integration requirements increase. Quality and delivery remained a clear differentiator in the quarter. Customer recognition and quality awards reinforced Versigen's reputation as a partner that executes consistently, particularly on complex global platforms where reliability and performance are critical. In addition, we made tangible progress in non-automotive markets, beginning production on an energy-related power program. This program expands our served applications beyond traditional vehicle architectures, while leveraging the same engineering, manufacturing, and systems capabilities that underpin our automotive leadership. Together, these execution outcomes supported the volume growth achieved in the quarter and demonstrate how our priorities are translating into results. From a financial standpoint, the quarter was a strong start to the year for Versagen. Revenue increased 9% year-over-year to $2.2 billion, with 3% adjusted growth, adjusting for foreign currency and commodity pass-through, reflecting solid underlying volume performance across the business. Doug will walk through the financial details in more depth, but at a high level, the results reflect strong execution and demand across the business. In addition, we had a strong start to the year with $2.6 billion in new bookings this quarter, and the start of 24 new programs, putting us on track for the most new major launches in our history, including the production on an energy storage program. Regionally, performance was strong in the Americas, where adjusted growth was 6% year-over-year, supported by higher volumes on key programs and new business wins. In Asia Pacific, adjusted revenue growth of 12% was driven by new platform launches, including the Greenfield program in India, and continued momentum with both global and regional OEMs. In EMEA, revenue was down 12% on an adjusted basis, consistent with a softer production environment. Though we continue to see progress through incremental program wins and successful launch of a premium vehicle mid-cycle refresh. Overall, the regional results reinforce the strength of Versagen's global footprint and customer relationships, with the volume growth driven by launches, program execution, and expanding content on key programs. Taken together, the quarter reflects a solid operational and financial performance as we move into the rest of the year and reinforces our confidence. As Versagen enters the next phase, we do so to unlock greater value. We are a highly engineered, globally scaled, and cash-generative industrial company, supported by clear priorities, strong execution capabilities, and disciplined capital allocation. With that, I turn the call over to Doug Osterman, our Chief Financial Officer, to walk through the financial details of the quarter and our outlook for 2026.
Doug Osterman, CFO
Thanks, Joe. I'll begin with a review of our first quarter financial results. As a reminder, results for the quarter are presented on a carve-out basis, reflecting Versigent's operations as part of Aptiv through March 31. The separation was completed on April 1, and financial information for periods prior to that date have been prepared as if Versigent had operated as a standalone entity derived from Aptiv's historical accounting records. With that context, I'll walk through the quarter starting with revenue on the next slide. Overall, Versigent had a strong first quarter. First quarter revenue was $2.2 billion, representing 9% growth year-over-year on a reported basis and 3% growth on an adjusted basis, excluding the impacts of foreign exchange and commodity pass-throughs. The quarter reflected solid underlying volume performance driven by sustained demand from core OEM customers. Despite the lower global vehicle production environment, volumes increased across a number of key programs and demand remained strong. Growth in the Quarter was supported by Versigen's solid position on global platforms where electrical architectures are becoming more complex and increasingly integrated into vehicle performance and functionality. We continue to work closely with our OEM partners in the early stages of design, which supports both volume growth and durability of business over time. In the Americas, we achieved adjusted growth of 6%, driven primarily by higher volumes on truck and SUV platforms and strong execution across ongoing programs. Versigent continues to be well-positioned with leading North American OEMs, particularly on large truck and SUV platforms where electrical architectures require high levels of reliability, scale, and integration. In Asia-Pacific, adjusted growth was 12%, reflecting growth with both global OEMs and domestic customers. Performance in the region was supported by launch activity, program extensions, and continued demand across China, India, and other growth markets. One area where we continue to see growth is with customers in China that are benefiting from the increased demand for vehicles exported to different countries. As architectures evolve and regional platforms become more differentiated, customers increasingly value Versagen's distinct engineering depths and local manufacturing capabilities, which contributed to the quarter's volume growth. In EMEA, revenue declined 12 percent on an adjusted basis, reflecting lower production levels in the region and the end of production of certain programs. Customer engagement across the region remains strong and the program portfolio continues to support future growth as production normalizes. Across all regions, the quarter reinforced the importance of Versigen's global footprint and its ability to consistently support OEMs across continents, platforms, and vehicle segments. Adjusted IVITDAH for the first quarter was $203 million. That's an increase of 3% year-over-year with an adjusted IVITDAH margin of 9.2%. Adjusted EBITDA reflects contributions from higher volumes alongside ongoing operational execution, offset primarily by foreign currency exchange and commodity headwinds. As you can see on slide 10, the increase in sales specifically related to foreign currency exchange and commodity pass-through was 122 million. This increase alone drove a degradation of about 50 basis points of margin in the quarter on a year-over-year basis, but we believe we are on track to meet our full-year margin targets. IPADOT performance in the quarter was driven by operational execution and certain cost dynamics, such as material productivity from supplier negotiations, value-added engineering, and content reduction initiatives. The quarter also reflected higher commodity costs and foreign currency exchange impacts, including the timing of customer pass-throughs. You can see on slide 11 an unfavorable impact of 46 million on a year over year basis. This primarily reflects two factors. First, an increase in the copper index of over 25 percent, driving about two-thirds of the impact. And second, a strengthening of the Mexican peso of about 15%, which is the primary driver of the remaining impact. For copper, we have escalation agreements that cover roughly three-quarters of our exposure. However, there is a lag on average of about three to four months between when our costs increase and when we update the pricing with our customers. This causes temporary margin dilution when indices increase rapidly, as we saw in Q1. Assuming copper indices stay consistent with Q1 average rates, we expect the lag impact to cease, as our prices will be adjusted to align with our costs. We factor both higher copper prices and stronger Mexican peso into our planning for the year. We will continue to manage these risks through customer agreements, financial hedges, and cost reduction initiatives. Looking ahead, margin performance is expected to continue to be driven by profitable growth execution on manufacturing and materials initiatives with cost actions in place to manage external pressures. Turning to income taxes, the U.S. GAAP income tax benefit for the first quarter was $9 million, compared with an income tax expense of $29 million in the prior year quarter. The quarter-over-quarter change was driven almost entirely by a favorable tax reserve adjustment during the first quarter of 2026. For full year 2026, we expect an adjusted effective tax rate of approximately 23% with a comparable cash tax rate. Operating cash flow in the first quarter was $36 million, and pre-cash flow was an outflow of $30 million. Cash flow in the quarter reflected several timing-related factors. Capital expenditures totaled $66 million. In addition, the quarter included restructuring cash outflows aligned with actions already underway, as well as $26 million of one-time separation costs. Working capital was also a use of cash during the quarter, as we experienced our typical seasonal build required to ramp back up from customary customer shutdowns during the last couple of weeks of the calendar year. As the year progresses, continued execution and working capital normalization will support significant free cash flow generation. From a financial position standpoint, Ursogen ended the quarter with 282 million of cash on hand, 1.1 billion of overall liquidity. This is supported by an $850 million revolving credit facility that remains undrawn. Our cash balance at quarter end reflects the timing of certain separation-related cash settlements with our former parent company, much of which have been settled after the quarter end, bringing our cash balances directionally in line with the $400 million pro-forma level outlined in our Form 10. Turning to our outlook for the full year, we are reaffirming our financial guidance for 2026. For the year, we expect revenue of $9.1 billion to $9.4 billion, which represents approximately 2% adjusted growth despite a production environment that is expected to be down about 1% year over year. From a profitability standpoint, we expect adjusted EBITDA of $950 million to $1.03 billion, with an adjusted EBITDA margin of approximately 10.7% at the midpoint. This outlook reflects profitable sales growth and continued progress on operational and performance initiatives. This includes manufacturing efficiency, material productivity, and automation, which are expected to drive continued margin expansion. From a cash flow perspective, we expect free cash flow of $200 million to $300 million for the year, which includes approximately $70 million of separation-related costs. Our free cash flow outlook reflects the expected cadence of earnings growth, working capital normalization, and the reduction of separation cash outflows as the year progresses. Turning now to capital allocation, Versigent remains committed to a disciplined and balanced capital allocation framework, prioritizing continued growth while returning cash to shareholders. As part of our capital allocation framework, we intend to return a portion of future earnings to shareholders through a regular dividend. This policy reflects our confidence in the durability of our cash flow profile and our ability to support recurring returns to shareholders. The initial dividend is expected to be declared following the end of the second quarter in the range of 13 cents per share per quarter. Of course, any dividend is subject to the approval and declaration by our board. In addition, our board approved a share repurchase program for up to $250 million. The program does not have an expiration date and may be amended, suspended, or terminated by the board. Under the program, we intend to repurchase shares opportunistically, from time to time, subject to management's discretion. Our intention will be to fund share repurchases with operational cash flows, which typically are weighted towards the latter half of the year. Together, the Dividend Policy and Share Repurchase Program reinforce our commitment to returning capital to shareholders while enabling continued execution of our business priorities and maintaining a disciplined balance sheet. With that, I'll turn it back to you, Joe.
Speaker 14
First, it launched into the public market with a strong vision. We delivered solid performance with strong revenue growth, all while reinforcing our position as an industry leader. Above all, our team remains focused on the right things, driving revenue, increasing cash flow, and executing with a high level of operational discipline across the business to unlock greater value for our customers and our shareholders. With that, we are happy to take your questions. Operator, please open the line.
Operator
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star 1 to ask a question, and we will pause for just a moment to allow everyone an opportunity to signal for questions. We do ask that you would limit your questions to one question with a follow-up. So again, it will be star one to ask a question. We'll now take your first question coming from the line of Chris McNally with Evercore ISI. Great. Thanks so much
Chris McNally, Analyst — Evercore ISI
team and congratulations on the first quarter out of the box. Maybe just one housekeeping and then we'll go a little bit more strategic on the housekeeping you know um could you just kind of give a sense for how you mentioned the three to four months on on copper you know q1 um you know seasonally light and took the copperhead could you just give us a sense for how we may see those you know sort of the the earnings cadence over the course of q2 to q4 and and when probably at this sort of $6 level, you know, what's a good quarter that we could sort of expect to be fully recouped by? Yeah, thanks for the question, Chris. You know, we saw a pretty
Doug Osterman, CFO
significant move up in the copper price during the first quarter, as you know, and, you know, it seems to have stabilized a little bit in these last week or two. But really, with this kind of three to four-month lag that we talked about that's built into the escalation of the contracts, typically we're going to see that start to play out in the first, you know, month of the second quarter and really, you know, should be for the most part normalized by the time we get to kind of end of the second quarter, beginning of the third quarter. Now, that, of course, assumes that copper pricing stays, you know, stable. But that really should be kind of the cadence of the catch-up. Now, in addition, as you know, you know, we do hedge the portion of our contract or our copper exposure that is not covered by contract escalation. And really, that just provides us some time to have conversations with our customers about the amount of copper and the change in the price and that sort of thing. But that's really the other 25%. But that obviously
Chris McNally, Analyst — Evercore ISI
has an immediately offsetting effect. No, that makes that makes sense. And we've seen that smoothing effect in years past, like 2024, when you had the copper spike. Okay, that all makes sense. Maybe a little bit on the strategic side. You know, I think we talked a little bit about in your parents, your former parent enacted, you know, sort of these secondary CAM extensions that we're seeing in industrial and and you had some pretty exciting you know news over the course of marketing versagen about you know 150 million of wins to battery storage 3 billion cam you know is it fair to think of a couple of years out that you could be a you know a significant player here sort of that similar mid-teens 20 market share that that you've carried in in auto um i just I think investors, we all don't know a lot about wire harness in that market. So anything that you can add about color of who's playing in that market now, you know, because it seems like there's a lot of runway for you to grow.
Joseph Liotine, CEO
Yeah, thanks, Chris. This is Joe. Just, you know, if we zoom out a little bit, you know, we're focused there for a reason. You know, we've looked at our engineering skills and capabilities, and they apply, you know, quite well there without a lot of change or adaptation. We've looked at our manufacturing, and it applies as well. So from an asset intensity and a capability development standpoint, we really don't require effort there. What we have seen, though, is there is some go-to-market uniqueness and nuances that we need to kind of refine to make sure we're ready for all those opportunities. We're in quite a few different pre-development programs already. We have our first serial production here launched in Q1. So this is beyond just theory. We're seeing progress there. I think the competitive market there from a supply standpoint is pretty diverse, you know, versus battery storage or robotics or even commercial vehicles. So it's not necessarily one cohesive group, but everything we've seen points to either customers are coming to us and asking us to participate or we're engaging with customers and getting very good receptivity. Now, again, the battery side and robotics side is quite small today. So even if the growth is big, you know, the starting point, the absolute value is smaller, but we feel really good about both our applicability and the potential of those TAMs. So I would say early days, but, you know, we're just essentially reinforcing the strategy and the thesis that we laid out just a couple months ago.
Chris McNally, Analyst — Evercore ISI
Yeah, and the customer overlap is really, really encouraging. Okay, thanks so much, team.
Speaker 17
See you soon. Thanks, Chris.
Operator
All right, we'll take your next question, coming from the line of Joseph's back with UBS.
Speaker 2
Hey, guys, this is Gabriel on for Joe. Thanks for taking my questions. Doug, you outlined the $0.13 quarterly dividend, so maybe a 1.4% current div yield. Can you help us think about how that could evolve over time, especially given similar auto supplier peers generally screen somewhat higher? Is this more of a starting point that will be re-evaluated? And I guess just more broadly with the new authorization, how should we think about the balance across your capital priorities going forward?
Doug Osterman, CFO
Yeah, thanks for the question, Gable. And really, you know, what we wanted to do was, you know, we had stated previously that we would have a competitive dividend. We wanted to provide some additional definition around that. We think the 13 cents a share, you know, is a good, you know, range that we'll discuss with the board at the end once we have kind of Q2 earnings in the bag. And we think that's a good way to start returning some capital to our shareholders. Of course, you know, as earnings progress, you know, we'll revisit that with the board from time to time. But I think that, you know, should help you get some order of magnitude on what we mean by a competitive dividend out the chute. Now, when we look, of course, at the authorized buyback program that we discussed with the board, you know, I just want to revisit the fact that really, you know, when we look at our overall capital allocation strategy, our number one priority, of course, is to continue to grow the business. And we have a lot of nice organic opportunities. Joe just discussed a few of those. But really, even running at kind of that 3% of revenue in terms of CapEx, we should be generating a lot of cash beyond that. And so we thought it was important to get a buyback program authorized by the board. Of course, we would seek to time that in coordination when the cash is being generated by the business. And as you probably know from our history, you know, cash generation is typically a second half. So I wouldn't see us getting, you know, or even thinking about getting active on that front, you know, until kind of that time period.
Speaker 2
Got it. That's really helpful. And Joe, just following up on a question that was asked on the active call this morning on the, you know, conquest business, a competitor announced. I know there was a lot of color provided, but I wanted to ask if you had any further comments of your own on that. And more broadly, can you discuss your competitive positioning going forward as a standalone company versus when you were a part of Aptiv?
Joseph Liotine, CEO
Yeah, appreciate the question. Just to maybe clarify or reiterate a couple things that were said by Kevin, again, we retain the vast majority of that program. A small amount was awarded to a competitor and on smaller, more basic harnesses. And so, you know, I thought Kevin did a really good job bringing facts to the discussion in a comprehensive way, in a well-constructed way, and not just hyperbole. I think it's important, you know, that, you know, GM took the time. So I'm appreciative of that. They took the time to say the things they did in a sanctioned real comment that they stand behind. And they cited us as the gold standard in wire harnesses. They cited us as a company in which they expect us to have fewer incremental opportunities. And then they also cited that we had zero operational issues. So it's just a testament to, I would say, a very valued customer of ours to go on their way to do that. And I think maybe the last thing I would say is if we zoom out and look at the facts, in 2025, our growth over market was strong and better than competition, as was our bookings. In Q1, our growth over market was strong and better than competition, as was our bookings. And then our future outlook in terms of what we shared in our investor day and our thesis was strong growth over market as well. And so if you take all of those, that's a comprehensive view of the business. That's not just the shiny object to maybe distract from the broader dialogue. And I think that's important to keep that context together.
Operator
Thank you very much.
Operator
We'll now take your next question, coming from the line of Emmanuel Rosner with Wolf Research.
Emmanuel Rosner, Analyst — Wolfe Research
Great. Thank you so much. I was curious if you could give us a little bit of color on how do you think potentially about the current quarter? I think what makes it a little bit complicated in terms of understanding cadence exactly is obviously these commodities had been very large, but then the recovery. So just, I would think that makes it a little bit more back-end loaded when you get the recoveries, but in terms of margin, but anything can give us in terms of, you know, how do you think either about Q2 or about the cadence of first half versus second half?
Doug Osterman, CFO
Yeah, thanks for the question, Emmanuel. You know, we certainly started with a strong first quarter, and that gives us a lot of confidence in reaffirming our guidance. But in terms of cadence, as you know, you know, in the automotive industry, typically from a volume perspective, Q1 is a bit lower. So if you if you look at kind of the seasonality of the industry, we would expect more production in Q2, 3 and 4. For us, you know, our margins historically have kind of peaked in Q3. And really, when I look at this year, as we talked about, if copper prices stay relatively stable, we should see a majority of this copper headwind from a timing perspective that we saw in Q1 work its way through the system kind of at the end of Q2, beginning of Q3. so we would expect margin progression. The other thing is, of course, you know from our business that when we have higher volumes, as we expect in Q2, Q3, and Q4, at a 23 percent contribution margin, that also enhances, of course, our overall margin. So I would say, you know, when I think about the guide that we have kind of the midpoint, say at 10.7 percent adjusted dividend margin for the full year. I would say as we progress, probably two-thirds of that would be additional volumes that we expect in the coming quarters above kind of our current run rate. Maybe a third of that would be related to this copper escalation, as well as additional performance initiatives that will offset some of the headwinds that are naturally a part of our business.
Joseph Liotine, CEO
Yeah, and maybe just to support the comments made by Doug, you know, if you look at what we did in Q1 and maybe what we did operationally in 2025 in terms of improvements, we're essentially just continuing some of these things on the revenue side, the mix side, and operational improvements. Obviously, the commodity side is a little bit more nuanced. And so, you know, there isn't a big change in business composition to achieve that. It's more a continuation.
Emmanuel Rosner, Analyst — Wolfe Research
Okay. Okay. Just one quick clarification, and then I've got another question. But when, Doug, when you're saying that by the end of Q2 and start of Q3, most of it would have, you know, basically been offset, do you mean that the entirety of the net headwind that we saw in Q1 would already be recovered, sort of like by end of Q2, beginning of Q3, or that this is when it's no longer a headwind and then you have to recover it in the second half?
Doug Osterman, CFO
Yeah. If the copper prices stay relatively stable, what we would see is the escalation that's built into the contracts. We'd see the commodity portion of the headwind work its way through. Today, it's just in our cost, but it would go into our revenue as the contracts escalate the pricing. And so what you're left with is really just a little bit of dilution to margin, which would be relatively small, you know, overall from the higher copper price. But the majority of that headwind would have worked its way through.
Emmanuel Rosner, Analyst — Wolfe Research
Okay. And then, you know, just coming back to the, you know, the caller you gave and Kevin gave about this, you know, GM business, and I think a lot of very fair points that you've highlighted, I think one of the things Kevin was saying was, hey, this is a sort of like, you know, build to print type of business, sort of like lower margin. Can you clarify from a, you know, strategic and focused point of view on a go forward basis? Is that still sort of like attractive business you're, you know, you're looking to win and capture and continue to, you know, to grow? Or is there sort of like also a strategy, which is to sort of like refocus on, you know, more profitable part of the business?
Joseph Liotine, CEO
Yeah, so I think it's a great question. I think if you come back to what we've talked about as our competitive advantage and what we've demonstrated over a long period of time, that really stems from engineering expertise and I'd say a tool suite that's proprietary from an engineering standpoint. So we certainly want to gravitate toward the things that are most complex, toward the things that are most innovative. So that's true. And maybe it is a bit of a bias in our strategic approach for sure. Having said that, we want to win all the business we can. you know, in many cases. So I wouldn't say it was necessarily us deselecting, but there is a bit of a natural bias for us. And sometimes we're willing to do things a little more or a little less based on the margin profile. That's certainly a consequence there. And so what Kevin was trying to share is, hey, this is a little bit of the more basic things. And so, you know, not going to have the best margin and characteristics like that. Having said that, we do a lot of that product as well. So I don't want to make it sound like we never do that, because that wouldn't be accurate. But we certainly have a bias to the biggest, most complex. And that will remain
Operator
going forward for sure. All right. Thank you. Next question will come from the line of Colin
Colin Langan, Analyst — Wells Fargo
Langan with Wells Fargo. Oh, great. Thanks for taking my questions. You know, this morning, I think Aptis said that commodities were about 50, were a 50 basis point margin drag relative to their expectations. I assume you were using a similar assumption on raw materials. So you're able to hold the guide. So how much worse was commodity and what are the offsets that you were seeing that enabled you to hold the guide? Yeah, thanks for the question. I think, you know,
Doug Osterman, CFO
when we look at, you know, the 50 basis points, that's really, you know, the portion of the commodity activity that has been built into our pricing and our cost now. So that, when you look year over year, right, there is some copper movement that happened prior to Q1 that has now worked its way into our contracts. It is in our revenue line. It is also in our cost line, but there's no margin associated with that. So it has a bit of a dilutive effect, right? That's a 50 basis points that we talked about. The more important headwind is when we have it built into the cost, as we saw the rapid rise in copper in the first quarter, right, that builds into our cost, but has not worked its way into the escalation of the contracts yet. We expect that to happen in the majority of that to happen in the second quarter, right? And that headwind then will be significantly reduced. So if you look at the kind of 210 basis points that we talked about for FX and commodities in the chart on the adjusted IVIDA walk, about two-thirds of that is commodity related, once that's passed through, that will drop to like 20 basis points, that portion of it. So in terms of just dilution, right, from the revenue being higher. So it's a headwind that is transitory and temporary in nature because of the way we've structured our contracts, but it needs to work its way through the system. And I think it's important of understanding the margin profile in Q1 versus what we expect for the rest of the year, and really as it works its way through, that's why we're still very confident in being able to, of course, meet our margin projections for the full year. I guess just to follow up on this,
Colin Langan, Analyst — Wells Fargo
it shouldn't have raised your sales, the higher copper pass through going through revenue and diluted your margin? I guess I'm trying to understand what maybe the offset would be, And is, I guess, on that, is production lower now, then? Is that the offset, that you have higher copper and more lower production?
Doug Osterman, CFO
No. I mean, when we have higher copper, you know, and it passes through the contracts, of course, it raises the overall margins. Sorry, it raises the overall revenue picture. And that's why we typically will talk about this adjusted growth on revenue, where we adjust out the commodities and FX to give you an idea of kind of what is the organic growth. And that's the 3% adjusted figure that we talked about in the call, you know, dialogue earlier. You know, so that's really the driver in terms of, you know, this kind of enhancement to revenue. Now, once that, you know, as I said, once it moves from our cost to also being in the revenue line, you know, those equal each other out, but there's no margin on that piece of it. So, it's a bit diluted because the divisor being larger, right, in terms of the overall revenue picture. But really, you know, the key to understanding the commodities exposure, I think, is to understand that 75% of our contracts have escalation in them. The other 25% we hedge on a two-year horizon. So we do have coverage for this. It just takes time to work through the system.
Colin Langan, Analyst — Wells Fargo
If I look at slide 11, you had really strong net performance of $31 million. And if I look at the Aptiv slides from this morning, they actually said something about favorable commercial. Is some of that a commercial settlement in there that's helping that? Or is that the run rate we should be thinking about for the rest of the year? It seems quite helpful.
Doug Osterman, CFO
Really, what you're seeing in that positive performance of $31 million is materials performance. I talked a little bit about this in the dialogue. So materials performance that is negotiation with our suppliers and importantly, value add and value engineering done by our engineering teams. And this is really a big differentiator that Joe's talked about many times about, you know, the value that our engineering teams are adding to our customers' products. And really, that material performance, as well as some manufacturing productivity and things like that, are outweighing the labor economics and some of the mix that we see within the net performance figure. So positive number overall this quarter. And we expect to have further gains in that category as the year progresses.
Joseph Liotine, CEO
Yeah, and just as a build a little bit to my comments earlier, we had demonstrated that ability in full year 2025 as well. Much of that came out of North America. We will continue those efforts because we believe there's more value across the globe to continue that, and hence that's part of our story as we talk about a two-point of margin improvement over the next couple years. So part of that is the operational improvements along the way.
Colin Langan, Analyst — Wells Fargo
Okay, but there's no, because I think the Aftis slide said favorable timing of recoveries was a help. So we shouldn't expect that there's a one-off nature in this number and that it maybe, you know, softens the rest of the year because there was some one-off recovery.
Joseph Liotine, CEO
Yeah, no, I would think of it as a relatively clean quarter in terms of income, you know, or profit. We did have, obviously, some one-time events related to the restructure or the separation. But from a profit standpoint, relatively clean quarter, nothing lumpy from a recovery standpoint, nothing that would subtract from Q2 to Q4.
Speaker 17
Okay. All right. Thank you very much for taking my questions. Thank you.
Operator
Next question will come from the line of Itay McCallie with TD Cowan.
Itay McCallie, Analyst — TD Cowan
Great. Thanks. Good afternoon, everybody. I just wanted to start off to talk about kind of growth over market, your outlook there for the rest of the year. I think Q1, you were at about roughly five points above market. It sounds like the guide for the year is more like three. Maybe just talk about the puts and takes of how we should think about it the rest of the year and maybe whether there's any kind of upside potential to that.
Doug Osterman, CFO
Yeah, I mean, I think, you know, you're exactly on when you when you're looking at kind of our growth above market in first quarter was pretty strong. And really, I think, you know, some of the positives we saw in the first quarter, as you saw from the regional detail that we shared, was, you know, we kind of over-indexed with some of the customers in China who are very focused on export and, frankly, have, you know, outperformed some of the volumes that we had assumed in the budget and business plan. And so some nice upside there that may or may not continue through the year, but right now, you know, has been pretty strong. I would say when we look at kind of the overall growth, you're right. When we look at the way the market is expected to progress in terms of volumes, we would, you know, need to run at just a couple percent above market growth to be well within the range of the guidance that we've provided from a revenue standpoint. point. So we feel pretty comfortable that right now, given the outlook, and we have pretty good visibility, of course, on schedules in Q2 at this point. So we feel pretty comfortable reaffirming our guidance. When we look at puts and takes, of course, you know, there are a couple things to keep in mind as the year progresses. One, we've talked about, you know, whether commodities will kind of stabilize or continue to move around. Now, of course, that's something that we're used to and that we deal with on a regular basis. But that could impact kind of the cadence from quarter to quarter. We do have some very significant launches this year. It's a big launch year for us. So as you can imagine, our team is laser focused on execution this year, a very important year for some big launches. Of course, the macro impacts, as everybody were focused on all the geopolitical events and, you know, whether there could be knock-on effects on overall vehicle demand, you know, among our customer groups. And then I would just say, really taking a look at our plans and really being focused on controlling the controllable. So the things that we execute on daily, you know, our team, you know, is going to deliver day in, day out. And that's really where our focus is. But when you ask me kind of puts and takes, those are kind of, I think, the big hitters that I see.
Itay McCallie, Analyst — TD Cowan
Very helpful. And just as a two quick follow ups. First, it looks like the kind of the gross incremental margin was more like 30 percent, just looking at the volume on EBITDA versus revenue. you. I'm curious if that potentially could be sustainable as well. And second, on the bookings in Q1, I think I was up year over year, but curious, just any thoughts there and any perhaps
Doug Osterman, CFO
target to share for 2026 for bookings? Thank you. You're just comparing the EBITDA contribution from volume of 20 over the 66 volume? That's right. Yeah, I think that's pretty much in line with the 23% that we typically quote, you know, as our, you know, contribution margin. So I don't see, you know, it's maybe, you know, kind of right in that range. Sometimes, you know, there can be some, you know, smaller recoveries or things like that that impact the number a bit.
Joseph Liotine, CEO
A little bit of mix might be in there as well. We did have favorable program growth in North america and a little bit on the export side um so a little bit of mixing there as well got it
Speaker 17
that's very helpful and the second part of your question was oh sorry then back to bookings yeah
Joseph Liotine, CEO
so we did have a good q1 um you know frankly exactly on plan so so we feel good about um the bookings progress and we feel good about the um you know full year revenue forecast as doug shared just a few moments ago so from that standpoint i'd say exactly on track
Operator
We'll now go to your next question, coming from the line of Tom Narayan with RBC Capital Markets.
Speaker 12
Hi, this is Thomas Ito on for Tom. Thanks for taking the question. So we've been seeing some improving electrification trends through Europe recently, especially with like hybrids and EVs given the elevated energy prices. Could you just help us understand whether that's translating into any potential increased demand for your high-voltage portfolio?
Joseph Liotine, CEO
Yeah, so as it pertains to EVs, both hybrid and full-battery electric, I think it's important to understand and remember that all BEVs have low-voltage and high-voltage, and all hybrids have both low-voltage and high-voltage. And so oftentimes people maybe take a shortcut assuming high voltage is just BEV. But a lot of the content on a BEV is low voltage. And so what I would say is we are seeing some of those trends. They vary a little bit by region, a bit more hybrid in America, a bit more BEV, and maybe a lot more BEV in APAC, specifically China. And so as we've shared in other discussions, it's about a 50% increase of content for a hybrid and greater than a 70% increase for a BEV. So as those trends continue, they also happen in unison, right? They always happen together with more autonomous, more connected, and more features. So, you know, those things are all kind of moving at the same time. And so as that continues, you know, we do think vehicles get more complex, architectures get more complex, and the content per vehicle generally moves in those kind of heuristic trends. And so that is going to be beneficial if they continue to move maybe more than people expected.
Speaker 12
Okay, gotcha. Very helpful. And then as a quick follow-up, so on your APAC growth, and maybe specifically to focus on China, are there any updates you can give us on maybe your overall exposure to the Chinese OEMs versus some of the global OEMs? And maybe is there like any target percentage of APAC revenues coming from the Chinese OEMs?
Joseph Liotine, CEO
yeah so you know for us strategically this is true across every region our goal our aspirations always to match the market with how the market's constructed and then after that what we do is we layer in our strategy and our strategic filters and what that does is there's a natural selection toward more complex vehicles as we've talked about a little bit toward you know things that really fit for us and so you know the the china market in particular has you know greater than 110 or or 18 brands, we don't necessarily need to match 118 or 110. So we've picked the ones that kind of really have the right volume, have the right complexity, we think are most sustainable, we bias toward the OEMs that do a lot of export, and they also want to localize in other regions, because again, as a global provider, we're a very good partner as they want to do those things. And so as we look at that, you know, we're continuing to increase our local Chinese OEM share, and that's been true for the last couple of years, and I think we've shared publicly in 2025, greater than 75% of all of our bookings was with local Chinese OAS. So essentially, you know, showing the trend, showing our competitiveness, and our credibility in that market. And that will continue. But again, we will look to match the market, but with our strategic filter in place as well.
Operator
Thank you so much. Next question will come from the line of
Operator
Edison Yu with Dosha Bank.
Speaker 6
Great. Thanks for taking your questions. I want to come back on the growth. Is anybody going to kind of break down the growth for both the quarter and the full year expectations for high versus low voltage?
Doug Osterman, CFO
So, yeah, as we talked about, you know, growth, you know, in the in the first quarter, you know, year to year was was nine percent. Once we adjust out the FX and commodities, we're roughly at 3%. When we think about growth over market, the market was down 2% or 3%, so growth over market probably 5% to 6% overall in the first quarter. When we look at our outlook and the guidance that we've reaffirmed, if we look at the step up in volumes, it's just part of the seasonality of the industry, right? We see volumes growing significantly, as does IHS in Q2, 3, and 4, and really to hit our guidance, we would need to run at just a couple percent above that, which is typical for us from a revenue standpoint to run a couple percentage above just a standard vehicle production growth. So that's really where we need to run is just a couple percentage above market growth. So, and then in terms of electrification mix, Joe, I don't know if you want to.
Joseph Liotine, CEO
I would say continued growth there kind of with the market, nothing unique about the composition of our revenue in Q1. That was different than the market trends. Again, different by region. So, you know, weighting that to our business in the region, but within region, fairly consistent with the IHS trends on electrification.
Speaker 6
And just a follow-up on China. Anything you can point to in terms of the dynamics there, whether it's on high voltage versus low voltage or on the growth of our market going through the rest of the year?
Joseph Liotine, CEO
Just generally, I think what we saw, I would say, really the back half of last year in 2025 in terms of trends, in terms of export volumes, in terms of electrification and BEVs specifically, less so on hybrid. Those trends continue, frankly, even accelerated a little bit in Q1, export in particular, I think, as that local market has a bit more downward pressure. You know, they're on the market. You're seeing the export and the localization dialogue increase from the local Chinese OEMs and, frankly, from the global OEMs who are based in China. And so I think thematically, that's probably the biggest move in the last six or nine months, is that, you know, how will that dynamic play out? How long will those export trends happen? How much localization will happen in EMEA or South America or elsewhere? That's probably the biggest new news that really is kind of maturing.
Speaker 17
Got it. Thanks.
Operator
We will now go to your next question, coming from the line of Stephen Fox with Fox Advisors.
Stephen Fox, Analyst — Fox Advisors LLC
Hi. Good afternoon. I had two as well. I guess, first of all, I just was wondering structurally in terms of passing through and then recovering higher copper costs, is this industry standard sort of here to stay? The reason I ask is because I know in other industries like, you know, networking, cable, the recovery can be like within a month. So what's the prospects for sort of improving on that recovery time? And I don't know if it has improved over the years. And also, just can you address how you're hedging as well? And then I had a follow-up.
Joseph Liotine, CEO
Maybe I'll start with some of the contract and strategy, and then Doug can compliment on the hedging approach and strategy as well. I think on the copper, whenever there's big changes, everyone kind of wants to reevaluate the structure of everything as they should. So the context is quite different. We've not seen necessarily the amount of movement in a small window of time that we've seen in the last, let's say, six or so months. So, you know, maybe there's going to be some changes that come. I would say there are some differences already by region, and there are some differences already by customer. And so it's really thinking about if the context is going to be a bit more dynamic, are there better mechanisms to do this, both from the supply standpoint as well as the customer standpoint, because those need to be kind of done in unison. And so I would say, you know, reevaluating some of those things. We'd obviously like less gap, less lag on some of these things. And so, you know, we'll see if anything changes. Part of that has to do with, you know, negotiation with customers. And then by region, there's different nuances as well. So I would say that's more an open question than it is maybe a commitment that something's going to be different in the future. But when there's time to change, we should probably reevaluate and say, is there a better way to do things? So that's going to be more on the contract strategy side. And I'll turn it back to Doug on the hedge strategy side.
Doug Osterman, CFO
Yeah, on the portion where we don't have escalation built specifically into the contracts for that roughly, say, 20% to 25% of our overall copper buy, we do hedge that position through the financial markets. We hedge it typically on a two-year horizon. We kind of leg into those positions over time. So it basically kind of delays the impact of the copper move on our financials, and it gives us time, frankly, to have some discussions with those customers about the impact that it's having on the cost structure of the products that we provide to them. And those conversations are pretty transparent. I mean, our customers understand how much copper is in their product. You know, we can – obviously, the indexes are easily observed, and so those tend to be pretty transparent. and productive discussions. But the hedging obviously gives us some time to have those conversations and then work out the proper adjustment.
Stephen Fox, Analyst — Fox Advisors LLC
Great. That's helpful. And then just as a follow-up, I know build-to-print is not, you know, a big portion of your revenue base, but I guess how do we think about it? Is it a necessary evil to maintaining these customer relationships? Why can't you sort of move entirely away from that and focus more on where you have design control and can make a better margin?
Joseph Liotine, CEO
Yeah, so to your point, you know, about 25% of our revenue is non-influenced design. That's not necessarily synonymous with build-a-print because there are instances that are somewhere in the middle. And I think what I would say is, you know, we obviously do those things today, and we do them for a reason. And there could be very complex build-a-print architectures that still fall into what we think are important and we still can drive quality improvements and other design improvements along the way as we see them so you know to me it's not as simple as build to print or not what's more critical is its complexity and the value we can drive along the way it's just common though that some of the more basic simpler shorter smaller harnesses end up being build to print because there isn't you know there isn't much to solve for so so but they're They're not exactly synonymous. I would say we evaluate things based on our criteria, value creation, our ability to, you know, really make a better product for our customer, even better. And then, yeah, sometimes there's some consequences. We'll build a print product just doesn't meet our criteria, and they fall out, or we don't necessarily bid, or maybe we don't necessarily win in some cases. And I think that's okay. Our goal is not to win everything. Our goal is to win the most value-creating businesses and support our business behind that, where we're adding the most value to customers.
Speaker 17
Great. That's a really helpful perspective. Thank you very much.
Operator
We'll now take your next question, coming from the line of James Piccarello with B&P Bearbus.
Speaker 5
Hi, everybody. So I want to ask about the pre-cash flow for this year. So $250 million at the midpoint, the $70 million of separation costs go to zero for next year. Is that right? And then is your restructuring cash spend also running elevated this year as well? Just any color on that amount for this year and the normalized run rate would be great.
Doug Osterman, CFO
Yeah, so I can give you some perspective on that. We did talk about restructuring, one-time restructuring expensive, about $70 million for the full year. We're, you know, our, sorry, one-time separation expense of $70 million for the full year. Those expenses really in the first quarter were right around $26 million within the cash flow, so we're kind of a little bit higher run rate than the $70, but we really, as I kind of outlined, expect those to decline over time, so we feel like we're pretty much on track for the 70 million that I mentioned, we do expect those to drop in about half that number for next year and then disappear altogether. So one time total between the two years of about 100 million, but constantly declining from kind of the 26th that we saw this quarter. And then, you know, if we look at restructuring, restructuring, you know, some years is higher than others tends to be kind of lumpy. This year, we did talk about the fact that restructuring would be kind of higher than normal, right around the kind of 100 million range. And we saw roughly a quarter of that kind of in the cash impact, about 26, 27 million in the cash flow this quarter. So I would say right on track. I would say the other thing to recognize when we look at year-over-year cash flow is that last year we had a relatively low level of capex spending for this business. So last year, when I look at the capex, you know, we only spent about $160 million. This year, we've talked about kind of 3% of revenue, right around the $240 million range. So you should expect, you know, kind of that 80 difference to play out over the quarter. So roughly, you know, say 20 million more per quarter. And because of the launch expenses, you know, this quarter, we were more like 30 million more than a year ago, first quarter. So that's really, I would say, back to a more normalized level of CapEx. But, you know, in terms of, you know, go forward, kind of more normalized rate, I think, you know, like I said, next year, you'd see that 70 drop into about half. You know, we don't have a full restructuring plan for next year, but I think this year will be kind of unusually high. So I would anticipate that that may come down as well a bit. So, and then in terms of cadence, I think your second part of your question was kind of cadence throughout the year. I would just say that, you know, if you look at our history, typically we're ramping up from kind of the seasonal downtime time with our customers at the end of the calendar year in the first quarter. That tends to be an outflow of working capital. We typically also see a step up, you know, in use of working capital second quarter. Third and fourth quarter is really where we see the stronger cash generation typically.
Speaker 5
Perfect. No, that's really helpful. Thank you. And then just to go back to, you know, it was Colin's question, maybe addressed in other questions as well, but on the full year FX and commodities margin dilution, right? The first quarter combined, it was 260 basis points dilutive, right? Which speaks to the great underlying profitability that you guys showed in the first quarter. Is the full year expectation still at that 50 basis points dilution target or
Doug Osterman, CFO
is it running a little heavier with some offsets? Yeah, I think if commodity prices stay roughly in the range where they're at today, I think we might see another, say, 15 to 20 basis points of headwind as we work it into the revenue picture. So you're talking about total headwind from just the larger revenue base of maybe 70 basis points overall. But we do feel like there's a real opportunity to offset that. And so we are still holding our guidance at the 10-7. You know, we have a lot of productivity initiatives that we're working on. We feel pretty good about the margin outlook as volumes increase later in the year. And we think that the 10-7 that we've guided towards is still very achievable.
Speaker 17
Perfect. Thank you, guys. Thank you.
Operator
Your final question is coming from the line of Dan Libby with Barclays.
Dan Libby, Analyst — Barclays
Hi. Good evening. Thank you for taking the question. I wanted to ask more of a strategic question and sort of in light of the copper prices that, you know, continue to go up and could just be structurally going up. So you're 75 percent pass through. Now, we've also heard that on the performance side, you've talked a lot about automation. I guess the question is, where are you on the automation journey? You know, how much more is there to unlock on automation? And is that effectively sort of the structural hedge against the higher copper prices that as it just becomes more expensive, you're going to lean more heavily on the automation side?
Joseph Liotine, CEO
Yeah, good question. I think of it slightly differently. The automation side is more of a natural hedge for labor wage inflation because we're able to essentially do the work differently and as a consequence have less direct labor. So I think that's more the natural hedge. The copper side of things is more on engineering design, engineering optimization, potentially substrate and metallurgy changes we can do with aluminum or other things. So that's more on the technical side for copper, because you're really changing the product and the characteristics of the product have to meet performance requirements about thermal and peak and other things. Whereas the automation is changing how we construct the product, not the product itself. Hence, it's more of a labor wage hedge. It's going to be the simple way to think about it. Not perfect, but simple, I think.
Dan Libby, Analyst — Barclays
And so where are you in that journey on automation?
Joseph Liotine, CEO
Yeah, so I would say we've made a lot of progress. Most of our progress stems in our China model and plants. And so we've done a really good job there. We have essentially a strategic approach on how to tackle it. We have a lot of really productive ideas that we think have really short paybacks. And so we're really kind of amplifying that work and that scaling. And so that's one of the things as we look at what can Versigent do differently and better as a separate standalone company. Frankly, capital deployment is one of the big value creators and part of our thesis to really fund these ideas that improve our operations that likely have a benefit to margin, as we talked about, half a point over the next couple of years of the two-point improvement, and then, frankly, quality and other benefits on top of that. So I think that's what you really see to date. We've made progress globally, but specifically, and maybe most in China, and really our plan for the next couple of years is to accelerate that scaling throughout the globe, because we think they're quite good in terms of payback standpoint.
Dan Libby, Analyst — Barclays
Great. Thank you. And then a follow-up, again, another strategic question. It was asked earlier on build-to-print and that on the flip side, 75% of your revenue is highly engineered. Can you maybe talk about where the booking trends are, especially as automakers are starting to revisit some of their architectures? How is that impacting that 75% rate of highly engineered versus 25% that's a bit more sort of base content built print?
Joseph Liotine, CEO
Yeah, so, you know, obviously the world is getting more and more complex, and so these architectures are getting more and more complex with it. So no matter what people would like to do, there's the natural practicality of sometimes you need help to get these complex solutions to be more optimized. And, you know, five years ago, I think it is, we were 20 points less revenue that was influenced by our engineers than we are today. So the trend in the last five years has grown dramatically. We were at about 50, 55 points, and now we're at 75 points of revenue. And I expect some continued appreciation there, but it's not likely going to go to 100%. There's lots of reasons for that. But I don't see it going or reverting back toward the 50% anytime soon either. And then as we enter adjacent markets, I think those needs are the same. If you think about autonomous, remote diagnostics, connectivity, all these complexities are absolutely growing in those areas as well. And so that need for technical expertise, that need for joint development, pre-development, I don't see that going dramatically different than where it is today. It might not increase to 100%, but kind of where we are today feels like, you know, a pretty good equilibrium, what we're seeing in the future. You know, I have no reason to believe it's different than what we're doing today.
Operator
Great. Thank you. Very helpful. And it appears there are no additional questions at this time. I will now turn it back to Joe for closing remarks. Great. Thank you. Thank you all for
Joseph Liotine, CEO
joining us today and for your interest in VersaGent. On behalf of our entire leadership team, We're pleased with the execution and progress delivered in the first quarter and remain focused on building on the momentum as we move in through 2026. We look forward to sharing further updates with you next quarter. Thank you.
Operator
This concludes today's call. Thank you for your participation. You may now disconnect.