Samik Chatterjee: Hi, thank you for taking my question. Paul, congrats. Brian, best of luck. On the outgrowth to the market, if I look at the last 12 months number at 460 basis points and last quarter, I think the last 12-month number was around 535. So that’s been moderating here. I’m just curious when you sort of piece out the drivers there, wide the outgrowth to the market is moderating. How much of that is the share shift in relation to China automotive market versus maybe lapping some of the pricing that you had taken, which was probably helping our performance? If you can piece out sort of what the drivers are and why that’s moderating. That will be helpful. And a quick one for Paul. Paul, FX is always tough to model for you guys. Can you just give us some guidance for you based on where or how should we think about FX?
Jeffrey Cote: Yes. So let me hit on the growth and we’re broadly the secular growth story that you’re commenting on and the impact to that and then Paul can touch on the other topic. So if you look at the full year 2023, on a reported basis, the Company will be about flat on revenue. On a constant currency basis, we’ll be up 1.5%. While the global markets that we serve are down about one, so there is a secular growth story. We are growing faster than markets. When you break that down, Automotive is up about two, heavy vehicle is up about 1%, Aerospace is up 28%, and the Industrial market is down 9%. So the big impact in terms of 2023 is really the bit industrial business in terms of that being down 9%. When you look at the auto market specifically because that tends to be the market that we talk about when we talk about secular growth.
But the reality is there’s secular growth in all of the markets that we serve. If you look at the IHS forecast for the full year right now, it’s about 3% auto growth. We’re at 1.5% when you consider constant currency, we’re it for. So we are growing faster than the production growth rate as forecasted by IHS. There are a lot of moving parts in here, okay? But I think part of the challenge is we get into all of the details on it, which are many, but they are really — there are two structural things that are impacting outgrowth to market in auto and there are two temporary things. The structural items are the shift in China from multinational local. That’s a significant impact to Sensata, right? Now that five percentage point share shift occurred during 2023.
But as I had mentioned in my prepared comments, we believe that stabilized now, but we will watch that very closely. And the way that we will address it is by accelerating our new business opportunities with the local OEMs, not only on internal combustion engines, but on the EV platforms. And we’re making progress on that, with 35% of their production during ’23 being EVs and us being higher revenue per vehicle on EVs, that demonstrates the progress that we’re making there. But in order to become more equivalent, multinational and local, we’ve got a lot of work to do. But that is our strategic focus. The second is the EV shift in Europe. So if you — and again, in my prepared comments, I talked about the fact that because we were behind on the original sourcing associated with launches in Europe around EVs, we’re about half of content or the half the revenue per vehicle in Europe on EVs versus internal combustion.
We’ve got a number of wins that we’ve had that will materialize over the next several years that will address that issue, and we’re not done. We are continuing to work with those customers to get more revenue per vehicle on the EV platforms as that take rate accelerates. So those are the two structural, very strategic issues. There’s a lot of other noise in the system associated with things that are going on, but those are the two things that are having the biggest impact in terms of structural. The two more transitory or temporary items are the launch delays that we’ve talked about. So there’s a significant amount of launch delays that have happened during 2023 that we were counting on our revenue that would have changed that out growth rate.
And again, we’re working with customers around creating more certainty around those to make sure that they and we are ready to launch when we’ve intended. And the second is around the D3 impact in the fourth quarter. So we have more revenue per vehicle with the D3. When that revenue goes down, it creates a mix problem for us. But those last two items will fix themselves with more engagement with our customers and the resolution on the UAW strike. So the other two, we’ll keep you posted on it. We’ve got to make sure that we continue to drive the strategy to address those issues. Hopefully, that gives you more color on that.
Paul Vasington: And on the FX, I mean, FX will continue to be a headwind next year. I would estimate somewhere around 50 basis points impact to operating income and operating come margin. We do line with what we — what we shared on Investor Day, just given, and that’s based on the current base. So how we exit the year stayed the same. That’s what I would expect.
Operator: And our next question comes from Amit Daryanani with Evercore. Please go ahead.
Amit Daryanani: Good morning. Thanks for taking my question. I just have two as well. First, on the auto, on your December quarter expectations for automotive revenues to be down 10%. Can you just talk about how do you think that stacks up across the various geographies for you? And then any initial sense of what calendar ’24 production could look like across the key geos?
Jeffrey Cote: Yes. So on — again, I spoke to the auto production versus what our market rate was for the full year. If I remember correctly, in the first quarter, we were growing faster than the market that the IHS market. In the second quarter, we were behind. Third quarter, we were about equivalent and then fourth quarter, we are behind. So — and that’s due to primarily the mix associated with D3. So the expected drop in production on D3 has a revenue impact to us, that’s causing our adjusted market in auto. But across the year, Amit, we’re pretty much on top of the IHS forecast. So mix will move around based upon OEMs that produce cars and the platforms that are produced, but across the market, across the year, it’s pretty — it seems to be pretty stable.
Jacob Sayer: And to clear up in case there’s any confusion, Amit, the numbers that are on that slide are meant to be market growth numbers, not our revenue growth. Obviously, they are weighted for our revenue across OEMs and geographies. They line up the auto number at least it lines up with the IHS forecast for production.
