Welcome to In the Fast Lane. My name is Edison Yu, and I lead the U.S. Autos Mobility and Robotics Research here at the bank. We are recording ahead of the Deutsche Bank Autos Conference in New York next week, and we're delighted to welcome Versagen to the program. And joining us from the company, the CEO, Joe Leotini, and the CFO, Doug Osterman. Thank you both for joining us today.

Edison, pleasure. Thanks for having us.

Yeah, thanks for having us, Edison. For some background, Versagen is a leading global auto supplier with over 140,000 employees. It generated about $9 billion in revenue last year. This Versagen actually has content on one out of every six vehicles made in the world. and within that, one out of every three battery electric vehicles. So a very large company with tremendous reach across the globe. To kick off, for those tuning in who aren't as familiar with the company, Joe, could you give us an overview on the main products and offerings you have and generally who are the sort of the competitors we should think about in the same realm?

Yeah, sure. Happy to. So as you mentioned, we're about a $9 billion business. Principally, our work is to design, engineer, and manufacture wire harnesses. And that's both low voltage and high voltage. So our revenue really is pretty spread out across the globe evenly, about 40% in North America, 25% in EMEA, and about a third in APAC. And we're principally focused on all vehicles, irrespective of powertrain. So we're powertrain agnostic. So we'll produce and design ICE architectures, hybrid, and BEV. And within that, really, we're always looking to design the entire architecture. And so if it's low voltage or high voltage, if it's, you know, distributing signal or data or power, it really doesn't make a difference to us. We're looking to optimize all of those. So from a product portfolio standpoint, low voltage principally on ICE, on hybrid, you have both. And actually on BEVs, you have both as well. And so really the only product line part of our business is kind of the charge cords. That's a separate high voltage only product for BEVs and for sub hybrids. The rest of it really usually is done as an overall architecture, kind of mixing both low voltage and high voltage together.

Great. And I'll just provide a little context. You know, generally, you know, I think the two competitors that often are brought up are, I believe, Yuzaki and Sumitomo. Is that correct?

Yeah, I mean, the way I would think about it is the landscape's kind of broken out in two groups, broadly speaking. One group is global competitors. The two you mentioned, as well as Versigent. And then the remaining, I would say, are more kind of tied to either an OEM specifically or a region specifically or even a country specifically. And so they're usually not at global scale, a little bit different characteristics there. But the three you mentioned are typically thought of as the global players.

Gotcha. So myself having followed us for a long time, we obviously watched what recently happened with the spin out. Can you just remind people, perhaps not as close with the situation, what was the rationale and what are your top priorities moving forward for the next 12 months?

Yeah, so Versagint was spun out of Aptiv, Greater Aptiv. And Aptiv essentially had three main business units, wire harness being one, connectors and some other businesses being the second, and then software and sensing, ASUX, things like that being the third. And so when, you know, Aptiv looked at the overall strategy of the company, looked at, you know, the investor base and what they aspired to achieve and frankly capital deployment, they realized there were pretty different strategies across the businesses, namely in the wire harness side of things. You know, essentially we had been, you know, I think a little bit maybe the second priority as the company looked to grow in software and other areas. And so as we discussed how best to really fuel our strategy, it became pretty clear that, you know, competing capital priorities was maybe limiting the ability for Versagent to grow. And so it's been discussed over probably many years on what to do and when to do it. And then ultimately it felt like it was the right time for various reasons to spin off. And so for us, the exciting part really is, you know, a sharpened, more focused strategy regarding wire harnesses, low voltage, high voltage, and the future that's coming. A sharper, more deployed resource set, both internally as well as externally. And then lastly, just capital. You know, how to put capital behind some of these big ideas that we think are very value creating. In particular, things like automation and digitalization where we see really big opportunities. We already have quite a bit of progress in our China manufacturing environment, and we see what we could do with a little bit more precise strategy, a little bit more capital deployed to those ideas. And so that excites us. And so I think that really was the reason for the change. We'll continue to look for opportunities within Versage to deploy capital to the biggest ideas, and we've already kind of demonstrated when doing so, we can generate more growth and, frankly, better margins. And so that's a pretty big part of our story.

Excellent. We'll definitely come back to some of those points you made. Let's start talking about, I think, more about the company and what you're seeing. I think, you know, in May, a lot has happened this year, I think, in the industry. Can you give us just some insight, I guess, into what you're seeing on the ground, perhaps by region? It seems the dynamics are a bit different, but given your reach, given your scale, and also given, you know, the kind of the events have transpired just in the last couple of months, what are you seeing on the ground?

Yeah, as you opened with, there's really two or three of us globally that kind of have that same perspective across all the regions. And so for us, the regional differences probably is the most amount of change we've seen in the last couple of years. And what I mean by that is, obviously, the geopolitical things related to tariffs and potentially conflicts and war, but also as it pertains to the knock-on effects to consumers. So in the U.S., the EV growth has slowed. It's still growing, but it's slowed versus what people thought in a pretty significant way. And publicly, OEMs made certain disclosures about write-offs and changes of strategy and implications. So that was pretty big. I think at the same time, you know, hybrids might be growing a bit faster in North America than people thought as a consequence of some of those things. And then if you contrast that with Asia Pacific and specifically China, you know, the BEV movement has not slowed down. You know, I would say it's probably exactly what people thought, maybe even continues to move in that direction. And whereas hybrids might not be quite as strong in its growth as we're seeing. And so I think that doesn't really surprise anyone, but it is quite different from the two regions. And then EMEA, I would say from a powertrain standpoint, probably continuing on the trend they were at, maybe a little different than what people thought, but pretty close. I think the bigger phenomenon that's taking place in EMEA is the export level from China to EMEA, you know, really started probably in Q4 of last year, but it's, you know, ramped up and continues to ramp up with really no real end in sight. And I would say that's a pretty pronounced change when you're talking about a quarter of the biggest country's production being exported to another region, there's obviously knock-on effects and consequences to that, that sooner or later will have to come through, both to consumers, but also to the industrial footprint. And that might then drive another set of either geopolitical things or something else. So I think from a market standpoint, that's pretty big. And again, that was supported. We were out in China just a couple of weeks ago at the Beijing Auto Show. And I would tell you it was very consistent from all the local Chinese OEMs. The focus was on both export and on localization in outside markets. And that was consistent, like for everyone. And I think when you start talking about the implications of that over a one, two year period of time, it's pretty significant. So from an industry standpoint, those dynamics continue to be quite large. And then I think the tariff question kind of floats in and floats out pretty quickly. And so if that changes again in any market, there's going to be implications of that.

I wanted to double click a little bit on China. You obviously yourself had a very, very strong quarter there in the first quarter of this year. Can you talk about why you're able to do so well there? And on the export side, us being a German bank, we can see a lot of the Chinese automakers coming to Europe. How much or what do you think the next couple of quarters looks like? Do you think the exports will continue to be quite strong?

Yeah, so just from the China market standpoint, we've been in that market decades, so a long time. Our team is really skilled, very much localized to the market, understands the elements and characteristics well from supply all the way to customer. And, you know, separately from China, but more for Versagint, we always look, our strategy in market is to match the market. You know, whatever its composition is, we want to match that, generally speaking, because we know that insulates us from, I'll say, being out of place if things change. And so for us, we're typically looking in all markets. What is the most complex programs? Where can we add the most value? Where do OEMs need us the most to help in terms of pre-development, development, optimization? So we're always gravitating toward the most complex programs. In addition, you know, we want players at scale and we want players that have global growth potential. So understanding OEM strategies around export and localization is also pretty important. And so the byproduct of that, the natural selection is we, you know, there's 100 plus labels or brands in China, local Chinese brands. We obviously don't do business with all 110 or 120, whatever it is, because there's high fragmentation. So our strategy helps us get to a natural selection point. We're kind of picking some of these individuals that have the most potential. And that played out both last year as well as this year, where, yeah, the market's down almost 20% year-to-date, but we were really working with the biggest OEMs on the biggest programs that actually did the best, both domestically, but also via export into other markets. And so we were essentially insulated from a lot of that downward pressure in China from an industry standpoint because of our process, our strategy, who we partner with, and the mix of the programs that we're on. And so that was a quite helpful thing. And that was both from a customer selection, program selection, and it is a knock-on effect powertrain, right? Since BEVs are the powertrain growing so strongly, BEVs typically have more than 70% more content than an ICE vehicle. And so there's a little bit of a product mix within the customer and program mix as well.

And I would just add that, you know, our over-indexation with these exporters in China is really, you know, a factor of both our strategy and, of course, the way in which we are positioned within the market. As we talked about, there's only, you know, a handful of truly global players in this market. And I think our customers recognize that. Those that are focused on export, they recognize that we can help them as exporters. And then as they localize in those markets around the world, we can also support them there. There are only a couple of competitors who can really provide that type of support. And I think that really makes us quite attractive to those companies.

Let's dive a bit more into the operational aspects of the business. I think we've got a pretty good sense on the market. As we know, but I don't know if everyone knows out there, you know, wiring, wire harness, notoriously very labor intensive. Can you walk us through the milestones for some of your automation and assembly initiatives? and what percentage do you think of your, uh, backload is, I'm sorry, backlog is modeled on these kind of new automated efforts?

Yeah. So it's a, it's a complex topic, um, that has a lot of potential. Um, so it's obviously very important to us. The first thing I would say is, um, you know, automation is, is a piece of it, but the readiness or the enablers in order to really leverage the benefit of automation happened well beyond that. So the engineering design work in terms of build a process is really important. So you can make it as efficient as possible to be manufactured, no matter what the design is. And that's something we do quite well. In addition, process standards, we have something we call enterprise operating system. How we really just do our work every day, all day long, is really quite robust. And it's something that was first established in the Delphi days. So we've evolved it since then. And so really lastly is automation. So if you don't have, you know, excellent bill of process and you don't have excellent process work and you don't have digitalization already contemplated in your plant or in your workflows, then automation is essentially going to automate like a bad idea in isolation as an island. And it's really not going to have the network power that it could have if these other things are foundationally there. And so for us, China's our most advanced location where we do quite a bit of both all the process work and digitalization work, but also the automation work. And so really driving toward that is important to make it beyond just theory and beyond a PowerPoint slide, but in practice. And so our plant near Shanghai is actually quite automated. We've taken those learnings and started to build essentially like a plan of record of what we want to do globally. And then we're now rolling into kind of a phasing or a feasibility of how do we roll those things out. Now, it's not as simple as saying we do it in China, so let's do it everywhere else because the business cases, the labor wages, the incentives, the architectures all have different characteristics. So you're really optimizing like a set of data to say what makes sense. And for us, we're really focused on automation that sits on top of great foundation, A, and B, that has really good paybacks. Two years or less is kind of the general take for us. If we can identify those and execute them two years or less, we know that's going to be value creating for us and value creating for our customers. So we're kind of focused there. And so that roadmap varies a little bit by region. It can vary by product. The complexity of certain architectures have different characteristics on how automatable it is you know, with the right kind of efficiency. And so all that is contemplated. And what we've said publicly is half a point of our two-point margin improvement over the next three years comes from automation. Now, that will vary across the regions. It won't be a static percent in every place, but it really is kind of the goal for us. And then you referenced our, you said backlog, but maybe I'll correct and say bookings, because they're actually not orders, but bookings, we can automate low voltage or high voltage. We can automate ice hybrid or BEV. So that's not really maybe as big a differentiator as people think it is. They sometimes gravitate toward BEV is the only thing that can be automated. That's not exactly right. Smaller harnesses can be, the periphery of the plant can be. There's lots of things that can be automated irrespective of the architecture characteristics. And so for us, we're tackling, I would say, the plant environment first and the architecture second, because A, we control the plant environment. So we should, you know, control our own destiny. Waiting for architectures to evolve or demonstrate characteristics that are automatable, you know, is essentially waiting for someone else to create our strategy. We don't want that. Now, we'll always take advantage of that as architectures evolve, as there's simplicity that gets presented, and if it can be automated, we'll absolutely do that. But we don't want to wait for others to dictate our strategy. And so we're really going to attack the entire perimeter of the manufacturing facility, first and foremost. And so, you know, I would say early days today, mostly in China with some, you know, specialization in some other areas in Europe and North America, but then a roadmap to get us to this half a point of margin improvement, you know, by the end of the three-year window that we laid out. is there any kind of cool example or interesting example you can maybe uh help us visualize you know the automation and work anything worth calling out yeah i mean the the cool examples i mean depends on what you think is cool i think all this stuff is cool so i could do this all day long um i think you know when you've seen a facility that's high velocity and everything is moving in the facility like material movement i mean specifically you know with agvs with big robotic grocery stores, you know, and everything's getting packaged, you know, with big, you know, transfer lines. It's really quite amazing to see. I think that's kind of more in the general footprint. As it pertains to actual wires, when you see like taping automated, it's pretty impressive because the speed, you know, in which this thing's happening is quite fast. And even the fidelity you're talking about very small spaces to you know engineer robotics in and they're able to navigate in these really high fidelity spaces and do things very very quickly uh that's pretty cool to see i think the other piece i would talk about really is more on the digitalization like what we're able to do now with digitalization in some i would say early days ai in terms of sequencing in in the plants um really timing all the operations to be as efficient as possible, potentially identifying micro stoppages to really extract out inefficiencies. The amount of power in that data set is not like it ever was before. It would take you days to do some of this analysis. Now it's being done for you. So we think the potential there is actually quite significant.

Oh, incredible. Okay. Well, yeah, we'll definitely, we'll have to get some videos for me or something at some point to showcase. Wanted to move on to the content side. You know, we talked about sort of the automation and some of these initiatives. But I think one question that often comes up is, look, there's varying types of content depending on the powertrain and some are higher and some are lower. How do you think about balancing this going forward? And I would also say that in the context of, you know, there are architectures kind of, I think, emerging that are trying to reduce the amount of content, but maybe not the value of the content. So how do you think about by power training the content and also some of these trends on next-gen architectures that are looking to, I guess, reduce the weight and the cost of the content?

Yeah, it's a really complex, evolving domain area. And the thing for us is our differentiation, the reason what makes us great is engineering capability and proprietary engineering toolkits. That really is the reason why we're able to generate almost 2x margins. It's the reason why our revenue, 75% of our revenue is on architectures we influence or help design in some capacity. It's the reason why our growth over market is better than competitors and has been consistently over the last, let's say, quarters and maybe even years. And so that expertise, that capability is about solving problems. So anything that's complex, we don't really care if it's low voltage or high voltage. We don't really care if it's ICE, hybrid, or BEV. Actually, we don't even care if it's on an auto, commercial vehicle, battery energy storage, or robotics. So for us, it's about applying a set of capabilities that are unique and differentiated, that are better than others, that people, you know, seek us for and solving their problems and doing it in a way that creates value for our customers and hopefully value for us. So that really is the goal. And then when it comes to content, I think there's some things that are maybe misunderstood. First and foremost, you know, we love complexity and we want to solve it, you know, as smartly and as efficiently as possible. Second, the secular trends are not going to subside. And what I mean by that is there's every vehicle that's launched in the future, doesn't matter what powertrain it is, will have more autonomous features, period. Every vehicle that's launched in the future will have more in-cabin features and entertainment and connectivity. It's not going to slow down. Every new vehicle that's launched is going to have some migration toward hybrid and EV greater than today. Now, it might vary by region. It might vary by beverage, hybrid, but it's still more. And both those are always more content per vehicle. So like second bucket is content per vehicle is only going up. There's no headwinds there. Third is maybe like a 2A, I guess it is. When people talk about optimized, zonal, things like that, a couple things to understand. One, it takes a lot of engineering to move to those new architectures. two they only happen on clean slate new programs new platforms no one's doing that on an existing platform there's only so many of those that happen each year you know every couple years they need help to get to those zonal things which is us oftentimes where and we can get a lot of value in that pre-development development uh journey with with oems and then uh what does come out oftentimes is copper. And copper is a pastor for us. So it's not that meaningful to us if we're reducing copper because we don't really get paid on it anyway. Now, there's some small dilutive aspects to it when you do it over time. But in general, the tailwinds combined with our ability to participate in that design far outpace or exceed any of the potential reductions on content horizontal. And really, I think everyone gets this wrong. The data is super clear. Like if you look at the data, data is clear. There's no new architectures that are less either because of Bev or hybrid or autonomous or in-cabin features. And every thing in a car or any vehicle, a sensor, a massaging seat, a screen, any functionality that's put in the car essentially needs either low voltage or high voltage to bring it from A to B. It's not going to get there on its own. Now you can make it more elegant, you can make it more optimized, but it still needs to go from A to B. And we're only creating more and more A to Bs, not less over time. And so I think for us, and we've depicted this in a couple of different examples, but without maybe trying to have a crystal ball to say how much everything grows, because we don't know, but all we know is for sure it's a net tailwind, not a headwind. And I think that's really important to understand why our growth over market has been so strong. Well, it's not because we're taking, you know, production share. It's because the content's growing at a faster rate than production is growing. And we gravitate toward the most complex vehicles with the most content per vehicle. So it's natural to see us grow a bit faster than everyone else.

And I would only add, Edison, And that, you know, we do have a number of customers globally who are pretty far down that path of zonal architectures, particularly in China. We have a number of customers who have moved to that. And those are still extremely feature-rich vehicles with a lot of wiring content.

Yeah, no, that was a great, I think that was a great breakdown. A couple of follow-ups to that. I think everyone agreed that the feature set, the content is growing. i guess could you provide some maybe some real life examples of of how or instances where to your point like the wiring or harness content goes down and then you provide you know an abcd that actually increases the total value of the program like is there is there some like easy examples you can maybe bring up i mean to doug's point you know we're in second third generation of bevs that have i'll say some zonal aspects not complete not perfect because there's consequences to that and those those vehicles generate a lot of content per vehicle for us a lot and they're

growing they're not shrinking we have other examples in north america um where there's certain aspects of zonal in certain architectures and yet the content per vehicle uh is quite high for us even with those zonals in there and so i think you know the the a to b part is important what are they optimizing some of these zonals it might be more processors it might be more ecus It might be more software, but you still got to get from A to B. And so that might be more elegant, you know, because at some point you can't just keep stacking one more idea, you know, onto these architectures. So it does require a little bit of a re-engineering, a rethink to optimize, but it's still net more. And again, if you look at just the heuristics, hybrids have some optimizations in there. They're 50% more content. BEVs have some zonal and other optimizations in they're greater than 70% more content. And so the role of high voltage is really power. It doesn't do anything besides power. The role of low voltage does everything else, autonomous, connectivity, in cabin, massaging seats, whatever it is. So high voltage as a product is only power. Low voltage is literally everything else.

And so as all these things grow, you know, I think people sometimes take this shortcut this um of bev is high voltage not really like there's way more low voltage content um than there is high voltage content and they have different roles in the architecture they're not substitutable i understand i understand okay um just thinking about just the to your point right you you have some oems in in china who are who have kind of gravitated more to zonal but i think outside of china maybe outside of you know call it tesla and rivian And the adoption, I believe, I guess we would call it next-gen architecture, is still fairly low. Is that picking up? Are you getting a sense that's picking up at all?

I mean, I think it's going to pick up over time. But again, I go back to, like, there's only so many clean slate architectures done annually. Like, it's just the opposite of a decay curve, right? It's just only so many that are done. And there's consequences. It takes a ton of engineering to do that. there are massive knock-on effects to many, many other things in the vehicle that need to be addressed. Although you can take out weight in copper and some other things, there's some costs as a consequence, more ECU because it's centralized. You need to get everyone on the same software library stack. There are other consequences that I think aren't as simple. And so people get a little enamored with the zonal concept. But as I said, it never happens in isolation. And B, There are other like very, very big consequences to those things. Not everyone can do that all at the same time without really, really big investments. And some of that investment is engineering. Some folks want to spend their engineering on powertrain or want to spend their engineering on performance. They don't want to necessarily spend all their engineering on, what I would say, behind the green line architectures that may or may not, you know, be the most compelling feature for that brand to consumers, depending on what the brand is and the consumer use cases.

Understood. Understood. I want to ask about, you mentioned the copper dynamics, pass-through dynamics, and just more generally, obviously we've seen some pretty big moves in the commodity prices. Can you just remind us how the pass-through mechanism work and kind of what are you assuming and what protections you have in place or hedges you have in place?

Maybe I'll turn this one over to Doug to help us out on.

Yeah, thanks, Joe. So, yeah, as you mentioned, copper is our largest commodity exposure. And because of that, you'll find that, you know, around 75 percent of the contracts that we have with OEMs have a specific escalation clause within the contract that increases the price as we see copper step up. And so the issue that we have there is that roughly the delay factor, the lag between when the copper price actually moves and when the contract adjustment is made typically is around three to four months. And so we do see some impact from that. The other 25% roughly of our contracts that don't have a specific escalation clause, we do hedge. We hedge over a two-year horizon. And really, that just gives us some time to have those discussions with the OEMs about the increase and how it's affecting our cost structure. Those conversations are fairly transparent. I mean, they know how much copper is in their product. We know how much is in there. We can observe the various indexes and have a pretty productive discussion around what the impact has been and how to adjust for it, but it takes a little bit of time. And so that's really what we see impacting kind of the first quarter. We talked about the fact that that was about a $28 million impact in the first quarter on year-over-year basis, some of which we had built into our budget and business plan. We plan for copper to be around $5.50 on average dollars per pound for the full year. And we'll see how that plays out. But we do have hedges in place. And we look at really our hedge strategy, our exposure, our coverage rates on a regular basis. So we've been doing some adjustment as of late.

Go through a couple financial questions since we're kind of on that topic. and then have a couple of strategic ones after that we can maybe close off with maybe more fun, maybe a little bit more controversial on them. So on the financial one, I think one strong aspect of the story, I think your goal is to do roughly a billion in cumulative free cash flow by 2028. How do we get there? And are there any certain assumptions that you would highlight that are sort of crucial to hitting that target?

Yeah. I mean, we've talked about a couple of things. $1 billion total free cash flow over the three-year horizon. We mentioned that this year will be a bit more muted, kind of in the range of 200 to 300 million, and that we expect cash flow to, of course, step up over the next two years. A lot of that step up has to do, frankly, with kind of some one-time costs that we have as a result of the separation. So we've talked a little bit about the fact that we have about 70 million or so of one-time separation costs that will hit in 2026. Most of that is related to just standing up our own IT systems. That number should drop to about half that figure next year and then disappear altogether. And so that obviously will impact the progression of cash generation. We've also talked a little bit about the fact that we expect to grow faster than market. We expect that vehicle production, just like IHS expectations will be a little bit down this year over the three-year horizon, be a CAGR of around 1% growth. We expect growth in the 3% to 4% range because of all these kind of content per vehicle tailwinds that we just discussed. And of course, we've talked about margin expansion. Joe outlined one of the drivers of that, which is the automation piece, but there are a number of drivers that we think will help expand margins. And so all that combined makes for a pretty powerful story at the bottom line in terms of top-line growth, margin growth, reduction in one-time expenses. So you'll see, we expect to see a progression in terms of the cash generation over the three-year period. But cumulatively, we're looking at about a billion.

We have some debt holders who probably want me to ask this leverage. So I think, you know, you launched or you came out, I think you had to do about a 2 billion, a little over 2 billion to fund the dividend to Aptiv. How does one think about the leverage ratio and how aggressive you will be with, you know, kind of early debt retirement versus reinvestment?

Yeah, I mean, right now we feel pretty comfortable with the capital structure that we have in place. I think, you know, historically, you know, there have been spins that have been heavily laden with debt. You know, that's not the case with Versigent. We have a pretty healthy balance sheet, I would say, a nice credit rating as, you know, a highly rated high yield name. And we're pretty comfortable with the ratio when you look at kind of net debt to EBITDA of about two times. We've talked about a gross debt to EBITDA ratio that we'd like to maintain between two and two and a half times. I think that that metric will improve over time, one, because we'll be growing EBITDA, and two, because we do have a little bit of natural paydown in the debt structure. Part of the structure is a $500 million TLA that has an amortization of about $100 million over a number of years. So we'll have a little bit of debt pay down that is natural. But I think we feel pretty comfortable with the strength of the balance sheet at this point and where we sit from a credit ratings perspective. So I don't think there's a lot of work to be done there. And I guess, you know, the message to the investment community is at this point, you know, I don't see a lot of change in terms of, you know, the ratios that we're talking about in terms of leverage and that sort of thing.

Wanted to conclude with a couple of strategic questions. You know, first, you know, both of you have been in this for a long time. I remember maybe 10 years ago, there was talk about, oh, we need more consolidation in electrical architecture, so maybe some of the regional players. So, I guess, what's the latest thinking on just the industry dynamics? Have we consolidated enough now? Do you think there's more coming? And if so, would you want to be the one to initiate that? Here's your thoughts there.

Yeah, I mean, you know, I don't have a crystal ball on how others view it or what will transpire. I think there has been some consolidation, not so much maybe in America's and EMEA, but more on the APEC side of things over the last couple of years. For us, you know, we look at ourselves as we're the best or one of the best operators. We're growing faster than others. So, you know, we're focused on our strategy. We're focused on fueling that. I think there's implications if we're as successful as we'd like to be, if our competitive advantage really resonates the way we think it should and does. But for us, I think consolidation is probably more a priority for others than it would be for us to talk about because we're winning and we think we have even more value we can create once we start fueling these strategies that maybe were a little bit under-fueled in the past.

So I wanted to ask about some of the secular markets outside of autos. I think you mentioned battery storage before. You also had some announcements, I think, about robotics. How does one think about those opportunities and the timeline into making inroads there?

Yeah, so, you know, as we shared, as we opened, you know, about 10% of our revenue comes from non-auto. And much of that is commercial vehicles, heavy equipment on-road, off-road, agriculture. But growingly, we've better understood our engineering capabilities fully apply in those other sectors. They don't require any real change or incremental investment. It's really just a requirements or input change for us, which is easy to manage. Our manufacturing environments also apply quite well without big changes to that either. And so really for us, it's really about go to market and sales, which is a smaller, quicker kind of investment for us to really build up the team to better know the players, to better know the process, and really be a lot more proactive. Historically, of that 10% revenue, you know, all of it was essentially reactionary. Someone came to us and asked us to do it. But what if we were actually proactive? What if we were actually focused? What if we put resources behind it? You know, what could it be? I'm assuming bigger than 10%, if 10% is just us fulfilling requests. And so we're focused there. It's early days. Our first serial battery energy production was in Q1. We're in pre-development on some more battery energy storage. And we're on pre-development with a few robotics players as well. And so we think those areas will grow. The commercial vehicle is probably an easier extension for us because we're already doing And then these other areas are smaller, more nascent sectors, but their CAGRs are quite And so we're excited about that complement to our overall revenue profile for the future.

I think we could talk on for another hour, but I appreciate both of you joining us today. It's been a great session. And until next time, thank you again.

Thank you. Good to see you again.