Okay. I think we're ready to go. If everybody can just filter in, I'm going to introduce our next speaker, which is Lear Corporation. I think as everybody here knows, Lear is one of the largest global suppliers of automotive seating systems. That business accounts for around two-thirds of the company's earnings, and Lear's also a growing player in vehicle electric architectures through their E-Systems segment, which accounts for around a third of the company's earnings. At a high level, we view seating as a compelling segment because of its attractive free cash flow and also its relative earnings and cash flow resiliency, and I think we saw a little bit of that showing through in the guidance that the company released this morning. Over time, we also like Lear's exposure to growth in vehicle electrification.
Just to remind everybody, some numbers out there, the potential addressable E-Systems content for a combustion vehicle should be around $500 per vehicle. It's $800 per vehicle on a mild hybrid, $1,700 on a full hybrid, and $2,500 for an electric vehicle. Obviously, a huge opportunity for growth in content per vehicle. Clearly, Lear's not immune to cyclicality or extreme volatility in production schedules, and we saw that a bit during the second half of last year, but those underlying secular trends are still there. That relatively impressive, not relatively, but absolutely impressive free cash flow clearly is still there. Here to talk more about Lear in the secular dynamics, the outlook, how things are shaping up, I'm very pleased to welcome Ray Scott, the company's CEO, and Jeff Vanneste , CFO. Ray, I'll pass it on to you.
Great. Thanks, Rod. It's an honor to be here today participating in the first Wolfe Research Global Auto Investor Conference, and thanks for everyone coming here today and listening to all the great things going on with Lear Corporation. Before I begin, I'd like to direct your attention to our safe harbor statement as we will be making forward-looking statements and referring to non-GAAP financial metrics. More information regarding these items are available at the end of the presentation. I'd like to begin the presentation with some background on Lear Corporation. We're a large global automotive technology supplier of two critical automotive systems, seating and electrical and electronics systems. Both our Seating and E-Systems segments are industry leaders, and we have very low leverage and the ability to generate significant cash flow. Given our financial performance and track record of returning cash to shareholders, we have delivered superior shareholder returns.
Over the last five years, our total shareholder return has outpaced that of the S&P 500 and dwarfed that of our automotive supplier group. Lear has a very resilient business model, industry-leading operational excellence, and a financial performance, a strong balance sheet, a robust backlog, and the ability to generate significant free cash flow. We are in an excellent position to take advantage of any market opportunities. As a matter of fact, we have never been in a better financial position or had more financial flexibility than we have today. Our commitment to maintaining our strong financial disciplines ensures that any business that we take on will offer fair returns to our shareholders. Lear has all the key ingredients to invest, innovate, differentiate, grow, and create value.
We are committed to holding our investment in innovation and technology sacred and are working towards expanding our top and bottom line with our products, our processes, and our business model advancements. Lear has tremendous capabilities in innovation and technology in two business segments that are perfectly aligned with the industry megatrends. We have consistently outperformed our peer group across every major financial metric. This level of performance is the result of having the best team in the industry, investing in the business over the long haul, and continuing to focus on our customers, operational excellence, and achieving profitable growth. This slide highlights our global business segmentation by region and customer. As you can see, our business portfolio is very well-diversified. We are not dependent on any one customer or region to deliver sustainable results.
Recent volume reductions in the current macro environment, though not something we seek, of course, have increased our customer diversification. For example, Ford represented over 20% of our sales in China in 2017. We estimate that number to be around 10% in 2018, and are forecasting our Ford China sales to represent approximately 5% of our business in China in both segments in 2019. We are launching a significant number of new programs this year. slide seven highlights some of our key launches in Seating. We are very excited about several major new programs in key vehicle segments. Many of our most important programs are transitioning to new models, including GM's full-size pickup trucks in North America. As we discussed on our third quarter earnings call, we will experience downtime in advance of the start of production as these OEMs reconfigure their assembly plants in preparation for new vehicles.
On a couple of these large North American Seating programs, we expect 13 weeks of downtime through the first three quarters of this year, with eight of those weeks occurring in the first quarter. We couldn't be more excited about this business because these are some of the most coveted platforms in the industry. We're also launching significant backlog in our E-Systems with premium vehicles such as Land Rover Defender and several BMW models. We're excited about these product launches because they contain some of the most complex technologies we have ever produced, including the 11 kW onboard chargers for the Volvo Polestar 2 and the Jag Land Rover I-PACE and I-TYPE. As you can see on slide nine, we have consistently outperformed our peer group across every major financial metric, especially those metrics related to earnings growth and converting those earnings to cash.
We are experiencing a transformational time in the automotive industry. The next 5- 10 years will bring robust content opportunities from the auto tech secular trends that will shape the future of the industry and accelerate growth. Lear has been developing industry-leading capabilities and technologies across all these megatrends. We have a strong leadership position in seating technology, which includes our INTU seating portfolio. We have industry-leading expertise in high power electronics, cellular, Wi-Fi connectivity, and dedicated short-range communication-based V2X connectivity with safety applications. In cybersecurity, we have a dedicated product security team based in Ann Arbor, Michigan, which is led by the industry expert, Dr. André Weimerskirch. Our recent acquisition of Xevo technology brought us expertise in vehicle positioning and advanced sensor fusion software capabilities. Across all these trends, we are pursuing significant opportunities in software, services, and data.
Lear is well-positioned for growth in these key areas. Our investment in innovation, both internally and externally, are the key to our future growth in alignment with these industry mega trends. The key to successful innovation is forming collaborative partnerships with all these players in the ecosystem. We'd like to highlight a few of these initiatives that we just recently announced last week and this week. The launch of the Lear Innovation Ventures, led by our CTO, John Absmeier. LIV will enhance our focus on product, process, and business model innovation. Through LIV, Lear will invest in advanced development teams, partnerships, and early-stage technologies. We recently announced that we are a corporate partner of Techstars Detroit, a venture fund and mentorship driven for accelerators and startups. We also reached an agreement with Hyundai to be the first Xevo technology development partner.
This partnership will allow Lear and Hyundai to enhance vehicle positioning systems currently on the road while developing advanced systems for fully autonomous driving. In addition, we just launched a joint development partnership with Gentherm to accelerate the future of in-vehicle microclimate. This last slide, I just want to talk to a little bit. Like I said, we couldn't be more excited about the innovation and technology that we've been talking about and developing with our customers. This slide just gives credit to what we're doing in monetizing and really taking these programs to the next level. If you look in the right-hand corner, this is the Jaguar I-PACE with a 7 kW onboard charger. In the bottom right-hand side of the slide is the Audi. We've talked about the continuation of the most sophisticated connected gateway with a communication box.
Those programs have gone across multiple platforms with Volkswagen, a great growth story for us. In the right upper hand corner, I want to talk about this. I think a lot of people have seen different videos or ideas on what the interior could look like. With our capabilities and convergence of E-Systems in Seating, we've developed a power rail system with a very unique cassette system that sits within the rails. We're currently going to launch this in 2020 with a German OEM. What's important about these programs, we talk about we're an operational excellence company, very focused, and that's at the DNA of our company, but we're also transitioning and being recognized by our customers with technology and innovation.
In the bottom right-hand corner, John just was at the Consumer Electronics Show last week. We partnered with Rinspeed to show the capabilities that we have with intuitive seating. These programs that we've talked about in the past are in development programs with our customers today. It's not just about the innovation technology that we have within our company, but how we're capitalizing those and commercializing them with our customers. They are going into production. They're either in production or going into production in the near future. Sorry, Jeff. With that, I'm going to go ahead and introduce Jeff Vanneste , our CFO, to discuss the financial outlook.
Thanks, Ray.
This slide shows our updated three-year backlog. It is important to note that our sales backlog includes only awarded programs, net of any lost programs or business rolling off, and excludes pursued business or content growth. Our updated backlog includes the negative impact of approximately $300 million of customer-announced program cancellations and a $100 million decline as a result of the impact of foreign exchange. Despite these negative impacts, our sales backlog for 2019- 2021 of $3.35 billion represents the largest backlog in Lear's history. The backlog is well-balanced by region and customer, driving continued diversification of our top line. Of our overall consolidated and unconsolidated backlog of approximately $3.9 billion, $1.2 billion is in China, with approximately 45% of that in our E-Systems segment. From a segment perspective, our backlog is split approximately 70/30 between Seating and E-Systems.
Consistent with last year's backlog, approximately 90% of our Seating backlog is on CUV and SUV programs. With respect to our E-Systems segment, we continue to take share and win new business aligned with emerging industry trends, especially vehicle electrification and connectivity. Over 40% of our E-Systems backlog is in electrification and connectivity. For 2020 and 2021, there are still several programs that are up for bid, so we expect the backlog in those years to continue to grow as those new programs are awarded. Here is our financial outlook for 2019. Our sales guidance of $20.9 billion-$21.7 billion represents a wider than normal range, reflecting the current uncertainties in both the operating and macroeconomic environments. We developed the high end of our sales guidance using December IHS estimates as a baseline, with modifications for information gained from the customer and also our own internal assessments.
Our outlook forecasts our top platforms in North America and Europe to be down approximately 5% and 1% respectively, which is generally consistent with IHS's December forecast. In China, our forecast reflects our top platforms to be down more than 10%. From a currency perspective, our guidance assumes an average euro of $1.13 per euro and an average Chinese RMB of RMB 6.95 to the dollar. As Ray previously highlighted, given the launch on some of our key platforms, we will experience 13 weeks of downtime as those specific programs, primarily in the first half of the year, launch. As a result, the cadence of sales will ramp up from the first half of the year to the second half of the year.
To put that even more in perspective, at the high end of our guidance range, it assumes that our first half sales are down over 5% year-over-year, but our second half sales are up more than 10% year-over-year. Core operating earnings are forecasted to be in range of $1.6 billion-$1.7 billion. The high end of our guidance range reflects full-year Seating margins of approximately 8% and full-year E-Systems margins of approximately 12%. We are expecting another year of strong cash generation, with free cash flow forecasted to be in the range of $850 million-$950 million. Restructuring costs are forecasted to be approximately $140 million, up $40 million from our 2018 outlook, primarily reflecting footprint and census actions attributable to the macroeconomic and current industry environment, including the impact of some of the recent customer announcements.
Based on our projected mix of earnings by country, we expect our overall effective tax rate to be in the range of 22%-23%, but our effective cash tax rate to be approximately 20%, reflecting our cash tax attributes. Lear has one of the strongest balance sheets in the industry. Our debt structure includes a combination of flexible term debt, a $1.7 billion undrawn revolver, and fixed debt with no bond maturities until 2024. Lear has never been in a better financial position, nor had more financial flexibility. Lear has a long history of converting earnings to cash and a disciplined approach to capital allocation. Our strong cash generation allows us to not only invest in our business, but also return cash to our shareholders.
Our first priority is always to invest in the business, supporting our customers, expanding our product and process capabilities, and improving our overall cost competitiveness while making strategic acquisitions that add product capabilities and top-line diversification. We're committed to maintaining investment-grade credit metrics and returning excess cash to shareholders on a consistent basis. Since 2011, we have returned nearly $5 billion to shareholders through our share repurchase and dividend programs. I'll turn it back to Ray for some closing thoughts.
Thanks, Jeff. To sum it up, we're very excited about where we are as a company. We have a very resilient business model, a strong and flexible financial position, and the ability to generate significant free cash flow. We have a proven track record of operational excellence and superior earnings growth and shareholder returns. We are well-positioned for the mega trends that are transforming the automotive sector, and we are accelerating the pace of innovation within our company. We are separating ourselves from other competitors, and we have never been in a better position to take advantage of any opportunities that may present themselves. Lear's future is very bright. With that, we'd be happy to take some of your questions, Rod.
Is it on? Is this mic on?
It is now? Okay, perfect. Thanks. It sounds like your expectations are pretty conservative with respect to the key platforms that you have exposure to. I was hoping you can drill down a little bit into what some of the levers will be in the E-Systems business specifically. The margins in that business had been running at 14%. There was obviously some key platform exposures that came down, and now you're expecting that that's going to sustain at that 12% level. Still good, but not where it was. Do you have visibility into certain things that can help drive the profitability back up to the level that it had been at? Do you see some big opportunities on the horizon with respect to electrification, which should have more terminal connector content, or on the connectivity side?
Yeah. Okay, good question. One, I think this isn't an area we've been unfamiliar with, too. If you think back in Seating, obviously, we're disproportionate with one customer, and we were able to do a nice job of balancing across multiple customers. Very similar to what we're seeing in E-Systems, where we had a good portion of, and we talked about the numbers in China with CAF, almost 20% of the total sales down to 10% for last year. We're looking at 5% of the total business in 2019. I think we're being prudent and smart given what we've seen over the last several months. As far as levers, one thing, I don't want to say excited, but one thing we're really good at, our operational excellence and how we get at not just our cost, but the overall business.
We have the ability to modify and renegotiate some of the agreements we have or productivity that we have with our customer. We're very good at getting at the right sizing within the facilities. I think last year, some of that was intermittent. It was coming at us extremely quick. It was difficult for us to really manage because of some of the clarity on where we thought it was going to be long term. We're going to get at that much faster than we probably did at the second half of last year. Then we have all kinds of other levers that we can get at. I think from an E-Systems perspective, you look at what we did, and we've always talked about this billion dollars of quoted business. I think there's something we're learning with some of these new technologies.
It's taking a little bit longer to award those programs. Specifications, our customers are getting very sophisticated at looking at how they can scale those across multiple platforms, legislative changes. What we ended up with was about 50% of that being awarded. What's exciting is, and we've always talked about winning 25%-30% of what we're quoting. That's exactly what we did in the electrification connectivity. We were awarded about $150 million. We're at that rate that we've talked about. Within that, about 2/3s of that is electronics. That obviously gets a premium, a more higher margin. That's another element we're looking at. I'm not going to say I'm not concerned with it, Rod, but I absolutely think we have everything within our control to get those margins back up.
We're just going to have to get at it through the cost levers that we have and the growth that we're seeing in the more premium high-power electronics components.
You believe that as we look out maybe into 2020 and beyond, that that historical range maybe getting back towards that 14% is very doable?
Yeah, definitely it's going to go up. When you look at, I think another element here, too, is what's exciting. It's a positive story. We've introduced new customers, significant growth with Geely, significant growth with Audi, significant growth with Mercedes, significant growth with Volvo. Those customers that we're bringing on, and you said it's still really good margin, but there's a maturity within that where we had programs that were older, more mature, were added through VA/VE, cost savings, right-sizing the facilities, all the efficiencies that we're really good at. These are brand-new customers that we're launching with. We're protecting those customers, make sure our reputation's in line because that's all part of us being awarded business. Over time, those programs are going to mature at a higher level of profitability.
I'll pass it along in a second, but last year you said that there was $1 billion of potential opportunity that you looked at prospectively. Can you just give us some thoughts on what you see this year looking forward?
Yeah.
Sounds like there's just a lot of activity in electrification and some other areas.
Yeah, there's been a lot. I think, go back to WLTP and some of the changes, some of our customers took a step back from 48-volt to what they want to do with their portfolio. 50% of that's carried over into 2019. $500 million of that is carried over. We're looking at a billion dollars right now. I think, Rod, if you go back to this time last year, we were talking around $700 million, that number grew significantly.
We don't see that changing. We think over the next several quarters, that number will increase as far as programs we're quoting. I think it's important to note, everyone knows Lear, the DNA, it's profitable growth to us. There's a lot of opportunities to quote business. When we talk about the quotes that we're looking at, it's not where there's a program that could lose money or a program that has a captive supply base that we'd have to spend a significant amount of pay to play or those type of things. That's the business that we believe that we can obtain and still get a really good, fair return for our shareholders. We think that's going to increase throughout the next couple of quarters.
Thank you.
Got it. Yeah, it's David Tamberrino from Goldman Sachs. Jeff, in your script, you talked about $300 million of headwinds to backlog in E-Systems from programs being canceled. Can you give us a little information as to what regions or what OEMs those programs were canceled with?
I think part of that is associated with the GM and Ford announcements, that the cumulative effect over that timeframe is roughly $300 million. It's the Volt, for example, on E-Systems and in those type of programs.
Got it. From a CapEx perspective, I believe it's $700 million for the year, which looks a little high relative to sales from a historical perspective. Does that start to dissipate exiting 2019 and perhaps after you get through some of the launches in the first half? Does it end up normalizing back down to maybe sub 3% of revenue? Is that fully dependent upon what the new business opportunities look like going forward?
I think a little bit of both. I think the uptick in the, if you judge it by a percent of sales, historically, we've been in the high twos. What we've seen associated with the type of business that we're winning, specifically in E-Systems and even more specifically in electrification and connectivity, there's more investment dollars that are associated with those programs. As E-Systems becomes a bigger part of the overall company, we should see an increase in CapEx. I think that the increase that we're seeing here is maybe at a high point, and I don't think it'll go back to maybe what we've seen several years ago, because E-Systems will continue to be a bigger portion of the company. It's going to moderate somewhat downward, but not in a meaningful way.
Just maybe to follow up on the $300 million of backlog that evaporated with the automakers changing programs. Just curious, how do those conversations go? Is there sort of a make-whole provision and when that cancellation comes through, is there a makeup in the future on backlog or economics? How have you dealt with those conversations, and do you think those are all largely done in what we're seeing in product cancellations in these sort of quick shifts that we've seen in product portfolios?
Yeah, I'm not sure I picked up the second part of the question.
Are we done with these quick shifts or sort of these cancellations in programs in short order, which are unusual?
Okay, let me give you our experience. One, I think having the type of relationship we have with our customers is going in and trying to first figure out how we can take care of a particular situation or canceled program. Example, with the focus with Ford Motor Company, we were awarded the Ranger/Bronco. That was a great switch for us. From our perspective, every time there's an announcement or there's clarity on what the changes that they're considering, we go in and work in a very collaborative way. In a lot of cases, those will work to our benefit.
As far as things being done, I think our customers, there's still some things that we probably need to work through, but I think in our guidance, we took that into consideration, even though there might be not absolute clarity, but we're looking at probably some other actions that may occur that may impact us. We're looking at that within our 2019 guidance.
Just a second question, also kind of following up what Rod was asking before on margins on E-Systems, but maybe not just on margins. Seating is relatively consolidated. It's a great business. You guys are running it well. The industry's running reasonably well, except maybe one of your biggest competitors, but that's a different discussion. When we think about E-Systems, we were just out at CES last week, everybody's all over this stuff. Everybody. From the non-traditional players to the traditional players, to the big players like ZF and Magna, and you're in this game as well.
As we think about sort of the competitive set and where this segment needs to go over time, do you think you have the wherewithal to be one of the big players, and is this something that we should look at as being consolidated in the sort of the fashion that Seating has been over time? It just seems like everybody's jumping into the car here, and not everybody can win, and some of the economics that look very good right now might not look as good 5, 10 years down the line.
Well, okay. From our perspective, I think you see it through the actions we're taking with collaboration and partnerships. We're very selective in our space. We're not the mega supplier trying to do a lot of different things to every single customer. We're very specific in where we want to strategically go after business in our E-Systems business, and it's worked for us. We've been very successful. We have a collaborative working relationship with our customer. To sit here and say you have the mega suppliers are out there that have a lot of different experiences and capabilities, Lear Corporation was awarded with Audi, the most sophisticated gateway, for a number of different reasons. One, I think it's because of our position with our customers. They do see Lear differently.
I don't know about a consolidation would benefit because our customers are still looking at different types of applications and products from the supply base. I do think that how you look at innovation technology, and like I said, we've always been an operational excellent company. It's at the DNA, how we operate our plants. Now we are transitioning and being recognized as innovation technology and some of those collaborations, even last week with the things that we're doing, those are smart plays because you have limitations in investment in human capital. I think the bridge between collaboration is going to extend, but I still think we have a great space and it's being recognized by our customers today.
Can you just give a little more detail about the underlying market assumptions in the, it sounds like you said down five H1 plus ten H2, and then also the margin cadence as we go through the year?
I think Industry assumptions, yeah. The cadence with margins.
As I said in the presentation with respect to North America and Europe, our assumptions are pretty much in line with IHS in terms of their volume on our top platforms. With respect to what are our top platforms, obviously the K2XX, which has some fairly significant downtime in all of next year, but primarily in the first half of the year, the Ford Explorer, there's several of them. We're aligned with IHS in general, and I think the same thing holds true for Europe. With respect to China, I think IHS has historically not been as credible an indicator or forecaster of volumes there, and I think we see it now with respect to China. Also we've taken a little bit of a different approach on Ford, for example.
What we've guided to or what we're guiding to that supports the top platforms in China down over 10% is a view that the run rate that CAF in China has experienced in the back half of the year and what we're seeing in releases from them in the first half of the year will run through the remainder of the year. As a result, that customer is down significantly on a year-over-year basis. Not so much as comparison to their second half, but as comparison to their first half, and as a result, their year as a whole in 2018. That coupled with the downtime, we said this in our third quarter earnings call.
Next year, what you'll see from a top-line perspective is because of the downtime and the launches being heavier in the first half, you'll see the sales cadence go up from the first half rather to the second half. What you'll see from a margin perspective is the same thing. It'll go plus or minus from the full-year margin guidance of 8% in Seating and 12% in E-Systems. In that, because sales are going to be lower in the first half, you'll likely see margin lower than that overall average for the year. In the back half of the year, you should see margins a little bit higher than that full-year average.
Just to be clear, I think Jeff said next year. You can't get out of 2018. We're talking about 2019.
Stuck on 2018. I was younger in 2018 than I am now.
Can I just clarify one thing on your answer? These are Lear's assumptions for how these customers are going to be going, CAF and so forth. This is what you've decided to factor into what you're communicating today. This is not necessarily what you're hearing from your customers?
That's right. What it is effectively is we've made the assumption with respect to that customer that the run rate that we are seeing in the releases in the first quarter will extend through the remainder of the year.
Maybe just to rephrase that, there'll be a bit of a destock at that customer in the first half, demand levels will stay constant from, say, the last half of 2018, such that business is probably flattish second half. Is that the right way to think about it?
I didn't hear you.
Just to be clear, yeah, we're talking about the last quarters that we've seen. That's what we'll recognize as the run rate going forward for 2019.
Armintas from Morgan Stanley. My question is, we had the Investor Day in late June. Presumably, we knew about the maturity element of the customers. I'm just curious, as we think about the Investor Day in June versus today, how much of the change to the margins has been macro versus micro related?
Percentage-wise, it's a combination. If you think about, we've already discussed some of the premium customers and the volume drop since the Investor Day, a significant issue. I think the WLTP issue, because we are more vertically integrated in Europe with Terminals and Connectors and wiring is more of an issue that we've talked about short term. I think even evidence today would suggest that I think there was a lot of down volume in Europe last year that was attributed to WLTP, but I think post what happened, they're kind of crediting 50% of WLTP with the down volume, the rest being the macro climate. That was an issue. I think we got to mention that we continue to invest.
There's an easy way to just sit here and cut R&D, we said that we're going to hold steadfast in our investment in these systems with good reason for growth. It was a combination kind of between China and Europe primarily, then some other factors that we chose to invest in the business.
All right. Then we had WLTP last year. I don't know if you're having any conversations with customers on RDE, what are your thoughts on the impact that could have into the end of the year?
I'm not sure I understand the question.
Last year WLTP was ahead in the production, this year you're going to have RDE on September 1st. Just curious what your thoughts are and if you've had any conversations with customers around that.
Yeah. At this point I'm not going to really address those conversations, we are having conversations in respect to any potential issues that may arise.
Hi, thank you. Dan Levy, Credit Suisse. Apologize if I missed it before, your Seating backlog increased materially versus last year about $450 million or so. Could you just give us some color on what happened within the backlog? Was that some wins on the competitive side or is it just doing better on core platforms that you have? Just a follow-up, I assume that most of the Seating platforms that you have are dual-sourced or maybe even tri-sourced. To the extent that you're dual-sourced on a platform, how much can the volumes change on that platform? Meaning what's in your backlog, how much can volumes skew upward if the OEM decides to change the mix between the suppliers on a dual source platform?
Okay. To give you a little bit of insight, we get asked this question, too, on conquest business. About $1.1 billion of our Seating backlog was representative conquest business from some of our, obviously from our competitors. That's a net number. We've talked about business that we refuse to quote or even take because the margin profile wasn't there, that's a net number. A significant amount of that business came from conquest from our competitors. As far as the dual sourcing, I can't think of a position that we're in that would create a risk. A lot of our programs are single-sourced. There might be directed components within the seat system, we don't have too many programs that have multiple suppliers supplying the exact same system.
We're very unique in that respect, I can't think of a program that we'd have that would create that type of problem. I don't see it as an issue with the sourcing and where we're at today.
Well, I guess to turn it around, if there is a supplier that an OEM is not particularly pleased with.
I like that way of turning it around.
Maybe you have one variant of that platform.
Yeah
Is it possible that mid-cycle of a program you could be allocated more business that wouldn't have otherwise been reflected in your backlog?
I think that's always a possibility. I think that's happened in the past that we've been the beneficiary of. I don't see anything today that is screaming it's going to happen, but that's always a possibility.
Great. I think one more question.
Maybe just to build off conquest business. You talked about how you're in a good position to win business. You also talked about how you were allocated from Ford, for instance, some new product when they took away a program. How much of an advantage is being the incumbent from a facility perspective, particularly in North America, and how difficult is it to take over? What exactly happens if you do take over business from a different supplier?
Well, there's a big advantage if you're the incumbent. If you have the footprint in place. Again, our customers, it's all about reputation. Are you delivering quality? Do you have efficiencies? Are you managing your cost? You have to hit all the other metrics that go along with it. Then that puts you in a very good position. As far as taking over business with an incumbent, we've done that in the past before too. There's challenges to it, but it absolutely isn't limited. We can absolutely do those type of things and we've done that multiple times around the world too, not just North America.
Great. With that, I think we're out of time.
Okay.
I want to thank you, Ray and Jeff for.
Yeah. Great. Thanks you guys. Appreciate it. Yeah, great. Thank you.