All right. Welcome back everyone to the 2026 UBS Auto and Auto Tech Conference. Super pleased to have with us next, from the new kid on the block, I guess, on the auto scene, although been here for a while, I guess. Douglas Ostermann, Chief Financial Officer from Versigent. Doug, thanks for joining us today.
Yeah. Thanks for having us, Joe.
I think a lot to get to. There's obviously been a lot of interest in the name, and I think it's a pretty unique and interesting story. Maybe just to, right off the bat to start, you laid out, in your outlook, some certain targets and assumptions for vehicle production for this year. There's been some changes, I guess, to third party estimates here since then. We're also hearing some various different things about whether there was maybe some pull forward of demand earlier on in the year and maybe some incremental concern over schedules in the back half of the year.
You guys typically have some pretty good visibility, at least for the quarter ahead. I guess maybe you can just comment broadly on how you're seeing production play out in the quarter and what your view and expectation is for the year. What would be the factors that would cause production to come in maybe a little bit better than you expected versus some potential downside?
Yeah. To your point, we do have a good relationship with our OEM customers. We have a fairly broad set of customers, as we've talked about. We do manufacture for all 10 of the largest OEMs around the globe. In addition to receiving, of course, their schedules, we also have a regular dialogue with them about how they're seeing the environment, various macro elements that are playing out. Right now, I would say all the schedules that we're seeing, the discussion and dialogue that we're having, we think the volumes throughout the year will be supportive and consistent with our full year outlook. We don't see, right now, significant deviations that could cause that to be an issue. That being said, there are a lot of macro factors in play, as there always are in auto. That's what makes it such an interesting business, right?
We talked about some of those headwinds. Of course, we saw IHS bring the market down a little bit, particularly in Asia towards third and fourth quarter. We, of course, are always monitoring copper prices very closely. That's a big impact for our business in particular. We've seen higher gas prices, and we're watching to see how that plays out. The American consumer at least seems to be pretty resilient at this point. Of course, there are always the individual events, progress in the discussions in the war in the Middle East, et cetera. Right now, we see schedules being fairly supportive, really, of the outlook that we've put out right now. Of course, our performance is somewhat different than general market performance.
Our revenue is growing faster than general vehicle production because of some of the issues we talked about on content and things like that. Of course, you saw the differentiation in our production and our results in the first quarter where we outperformed the market, I think significantly. We had absolute growth in revenue, about 9%, adjusted growth of 3%, in a market that was down a couple percent. With particular strength in the APAC region.
Yeah.
Our results are a bit different than general market. That being said, we think the outlook looks fairly supportive still.
Yeah. I want to touch specifically on that last point you mentioned, which is the outlook, particularly in China, which as you mentioned, was pretty strong in the first quarter above market. Maybe you could just help us, and we can for the audience, what drove the strength in the region and how you view those trends progressing over the balance of the year. Also, if you don't mind, just for a refresher, maybe you could also talk a little bit about the exposure within China, whether that's domestic versus foreign OEMs or if you even know export versus domestic demand, because there's been some changes there, high-end versus low end. Anything to help us with some of that color.
Yeah. Asia has been a real strength for us, with a big focus of it being China.
In China, we have a strategy which is consistent with our strategy around the globe, really to try to work on and target those wiring harnesses, those electrical architectures that are the most complex. That's where we think we can add the most value. That's where customers frankly seek us out because we have such a strong global engineering team, and this kind of proprietary tool set that we've developed over time to help them out. I would say what's different about China is we specifically there's a huge number of OEMs in China, over 100 OEMs. We specifically have targeted the bigger players with more complex wiring harnesses, and specifically those that are involved in export.
Really, because of that, we are over-indexing with those exporters, and you saw that in our first quarter results. If you look at the China market as a whole in first quarter, domestic consumption of automobiles was down, right? I think something like 20%. Export was, and it continues to grow every single quarter.
The growth was very significant in the first quarter. I think year over year was 50-plus % growth, and that's why our results were so strong. Now, I would say, we also have a unique value proposition to these OEMs, which is a real differentiator. In wiring harnesses, there are really only about three or four truly global players.
Part of our discussion with the Chinese OEMs has been, "Look, we can help you with your domestic vehicles for sure. We can help you understand the requirements for international markets, and we can help you with export," which is what we're doing today. Importantly, we can also help you progress along that journey, because eventually you're going to localize. Localize Right? Because we're one of the very few global players, we can help you along that entire journey. That's been very effective in building the relationships that we have today.
Well, you front-ended all my questions, I guess, but maybe to sort of piggyback off that, have you been having those discussions about Because some of these companies already are beginning plans, if not already starting some localization.
Yeah.
How are those conversations going, and how would you say your strategy has paid off in terms of a win rate with them as they look to localize?
Yeah, it's really paying off, I think, right now in the export, but increasingly we're seeing more awards and more opportunities to bid on their localizations.
Based on our good work to date. I think that's going to pay off long-term because obviously we see the penetration numbers they're having, particularly in markets like Europe.
Yeah.
for example. Increasingly they are all looking to localize within those markets. I think there is a shift there because I think it will be difficult for them to achieve the levels of vertical integration that you see in China as they move into these new markets. A lot of their local suppliers will not be able to make that journey with them. I think it's going to create opportunities in the Tier 1 space. I think it's important that Tier 1 really think through that strategy and position themselves well to be a player as those opportunities open up. I think we've done that.
Yeah. That's an interesting comment. I guess maybe on that and maybe the competitor set within China, I know you mentioned there's only a handful of global wire harness players. There are clearly some Chinese for China sort of harness players.
Right.
I don't want to presume here, but I guess by your comments what I'm gathering is that you think your level of sophistication and being able to handle harnesses is above that local competition. Is that what you're seeing, that where there is more local Chinese competition, it's more at the lower end, simple parts of the harness?
Well, what I would say is that when you look at our team in China, and I think this is a broader lesson that we've all learned over time, is that our team in China is extremely China-focused. Any expats in that team. It's all locals, right? They run at the same speed as the local Chinese OEMs. That's what you have to do to be successful there.
What I'm saying is that as those Chinese OEMs increasingly look to international markets, the fact that we are a global player, and we can provide those services in multiple markets, and we can carry through solutions, and we can help them across markets, that's a real differentiator. In China, we're extremely China-focused, right?
With a very China-focused engineering team that really operates at a very fast pace.
Has that China fast-paced knowledge, are there lessons you can take from those operations and scale them to operations in the Americas and Europe to better improve the processes there? Or is it really more dependent on the customers, because the customers there are just moving faster and maybe some of the legacy automakers don't move at the same pace?
I'd say it's a combination of things. One, we have the highest levels of automation in all of our plants in China.
Now we are working to extend that automation to many of our plants around the world, which I think is going to allow us really to have significant margin increase over time.
The other thing is that we just see the pace of innovation in China is extreme. Right. A lot of the things that we are learning and that we're building on and working with local OEMs on, wiring harnesses, where we're tearing down vehicles in China and looking at what the competition is doing, even wiring harnesses that we don't do, that maybe have been done in-house by certain competitors, et cetera. We're taking those lessons and those learnings, and we're applying them to our customers around the world. It's been a real opportunity for us because the pace of change in China is dramatic.
Right? If you're well-positioned there, you're a big player, and you can really be on the inside track, I think you can provide a lot of value.
I want to touch back on a comment you made on just the automation and the highest level of automation being in China, because I know this is something we've talked about in the past that I think is maybe actually underappreciated because I think people think of wire harnesses, they think of very labor-intensive processes. I think there are other areas around the plants and facilities that you are able to automate.
Maybe you could just talk a little bit about what functions have been automated in China that maybe are not yet automated in other parts of the world, and really also how you view that automation path over time, whether it's in China or the rest of the world. What can still be done there?
Right. I think, for the most part, when you look at final assembly of a wiring harness, it still is a very manual-intensive process, right?
Mm-hmm.
I have huge respect for the people who work on the line doing that. I've tried it myself. It's not easy work. I would say, when we see advancements in electrical architecture, there is more automation that can be done on final assembly, for sure. A lot of that is frankly dependent on the advancements that the OEMs make, and we don't want to be held up by that or waiting for that. Right?
What do you mean by that? Why is it dependent on the automakers? On their assembly process, you mean?
On some of the innovation of the wiring harnesses themselves.
I see. Okay.
We're helping to do that, to make the manufacturability of the wiring harness itself easier and more automated. That's kind of a long path, right? We will take advantage of those opportunities where and when they occur, right? The kind of low-hanging fruit, if you will, the big opportunity that we've been exploring is all the peripheral activities. These are areas where automation, I think, has been employed in plants around the world. Much of that technology is very mature, but we haven't applied it as much within the wiring harness industry. You don't see it applied that much.
We're talking about how goods are received into the plant, how they're warehoused, how they're picked out of the warehouse, how they're prepped, how they're brought to line side, how they're presented at line side, how the wiring harness is tested at the end of the line. How it's packaged, how it's shipped. All those are ripe for automation.
Is there any quantification of how much savings you've been able to see as you've implemented some of these factors in China, just so we get a sense of scale for the opportunity in the rest of the world?
Yeah. We haven't shared specific plant-to-plant comparisons for obvious competitive reasons. We have talked about the fact that we think that that opportunity over the next three years will add 50 basis points to our margin.
Okay, perfect. Let's actually go back to the outlook because we got a little sidetracked there. Just one thing I wanted to also sort of touch on, which just sort of comes up a lot with investors is the margins. You look at sort of what you did in the first half. You look at sort of margin guidance for the year. It does imply a step up, I guess, over the course of the year or so.
Right.
Maybe just a little bit of the puts and takes that you sort of see that drive the margins higher and how some of those efforts are progressing.
Right. The first thing to recognize is that seasonally, historically, in this business, Q1 is typically the lowest margin period.
Right.
It would be normal for our margins to progress throughout the year. Typically, seasonally, third quarter is typically the highest margin for us. The reason is really relates to production. As you know, in the automotive industry, first quarter typically is the lowest production quarter. We're coming out typically of a Q4 that typically ends with a lot of pull ahead incentives, activity, you have some downtime for the holidays. You're trying to ramp back up from that in early January. Of course, if you're a global player like Versigent, you have your customers with the Chinese New Year typically shut down, right? First quarter tends to be the lowest production quarter. Because our business does respond to volume, our contribution margin is roughly around 23% on average. The higher volume in Q2, Q 3, and Q4 helps margins overall.
In addition, this year, we should see some copper catch up, which was a drag on margins in the first quarter. As our contracts adjust second quarter and on, that should go from being a headwind to a tailwind. It's basically our productivity efforts that kind of play out over the course of the year should help as well. We do expect margins to advance over the course of the year.
You mentioned copper and you mentioned that as an important, even earlier on, that's an important factor for the business to consider. I know as you mentioned, there's sort of the contractual pass through. I think you also do some hedging as well. Maybe you could just sort of walk us through a couple of things on copper here. How big is the annual buy? How does the contractual sort of pass along really work? I think you said in the past about three or four months maybe lag.
Yeah.
How do you handle sort of the portion that's sort of more exposed?
Right. Really, because copper is the biggest exposure from a commodity standpoint by far, you'll find that over 75% of our contracts have a specific clause related to the escalation of copper prices. The issue that we have, though, is that within those contracts, typically it's a three to four-month lag between the time when the copper price moves up and when we adjust the pricing. With our wire suppliers, we're typically adjusting the price every month. That creates this gap. On the other 25% or so of our exposure that doesn't have a specific escalation clause, we do hedge those exposures, and we typically hedge them over a two-year period. Given where copper has gone over the last two years, you can imagine those hedges are pretty attractive prices.
Right.
That's why even when you see a really significant impact, a really significant move in copper like we saw in the first quarter, like 25% move, the impact, I would say, relative to the amount of copper we use for it to be $28 million is not that large, I would say, for a 25% move in the price of the material. That's because of these hedges and things like that. Certainly, there is a timing aspect to the escalation. We are looking forward to getting some catch up on that in the second quarter as those escalations take place. To the extent that copper continues to move up, that is a bit of a headwind for us, of course.
A few things there. One, roughly how much copper do you buy annually?
Yeah. We don't share that figure, but it's a significant buy for us. I would say that, in some ways, we've found this period is an opportunity because it also has stimulated a lot of discussions with our customers because they obviously feel the impact as our contracts escalate.
It's early to say.
We come back and we say, "Hey. Can you guys help us think this through? Like, how can we substitute for copper? How can we reduce the copper content?" Because we have the strongest engineering team, it allows us, again, to show value in the relationship with our customers.
Okay. The second thing, and this is sort of maybe a little bit of sort of semantics, but when you sort of say you're buying copper every month, right? Those contracts reset every month. Then 75% of those contracts, you get sort of reset three months later, let's say.
Yeah.
There's no retroactive part, right? Like, you're not able to sort of go back and say, "Hey, over the last three months, we were able." Basically, you're saying copper's going up. Three months from now, we're charging you based on sort of where copper is now.
Right. This is overly simplified, right? The way I think about it is, if in the first quarter, we produce all the wiring harnesses we normally would for our customers, but because of the move in copper, they cost me net of hedges, $28 million more than normal.
That's gone.
Right.
Yeah.
My adjustment happened the second quarter. Again, overly simplified. I get the $28 million additional in my revenue, and then it still is in my COGS, right? It equals out my ability to earn money at the dollar time is restored. What they don't do, to your point, is they don't go back and say, "Versigent, we feel so bad that you paid that extra $28 million. Let's make that up to you.
You'd cut third of an industry for that.
Right. It's a one-time impact that stays with us. That being said, if we see mean reversion in the price of copper.
Exactly. You got a good guy. Yeah.
Yeah.
Maybe actually, since we have you up here as CFO, just bigger picture. I know this year's sort of set, but as we sort of think about Versigent into 2027 and really beyond, how would you sort of describe your approach towards handling copper in your outlook and your guidance? The only reason I sort of ask is because as you sort of mentioned, it is such an important input and can be such a factor. How do you think about sort of communicating what's embedded or even sort of planning for the business for copper?
Yeah. I think anytime we put out guidance, we want to be clear about what our assumptions are so that the investment community can understand the context in which those projections are made. We are actively looking at our strategies in those regards. Part of the exposure, of course, is of our own making, right? Because we've agreed with our suppliers to escalate every month.
Right.
We've agreed with our customers to escalate only every three or four months, right?
Is that structural or can that change?
No, there are opportunities. Most of the wiring suppliers that we talk to are open to us locking in for longer periods of time. That's something that we're looking at. We are actively looking at the ways in which we handle this exposure. Far, I think if you look at, like I said, in the first quarter, relatively big move in copper, you only have a net impact of $28 million, I think shows that we do a decent job of managing the exposure. That being said, there's always room for improvement, right?
Sure. Yeah. You mentioned it a couple of times, right? The strength of the engineering team and the complexity of the wire harnesses, I think you focus on those high-value programs relative to the build-to-print type of programs.
Just maybe you could sort of remind us and sort of talk a little bit about why you feel it's sort of more important to focus on those higher, more complex programs, and how that is balanced by OEM's desire to maybe try to simplify or reduce some of the wiring.
Right. Yeah. I think it plays out in a couple of ways. Clearly, we have a strategy to go after the most complex wiring harnesses, the most complex electrical architectures in the industry. We have built a team around excellence in that area. We have 8,000 engineers, 1,000 of which sit at our customers, helping them develop and optimize those solutions.
We've developed proprietary pieces of software that help in that. Roughly a suite of five different software tools that we call iHarness, that allows us to really do a good job in those areas. Really, I think the trends are playing in our favor because with the massive increase in feature set, the increase in powertrain complexity, hybrids and BEVs, and new architectures like zonal architecture.
There's plenty of opportunity for a highly engineered team, a team that is strong in engineering like ours, to increasingly add value. That's why if you look at all the wiring harnesses that we produce today, over 75% of them are ones in which we have contributed to the design or optimization along the development path. If you look at that statistic just three or four years ago, it was more like 50%-55%. What we see is OEMs increasingly turning to us for help and value-add in these areas.
Now, why is that important to us? Well, it plays out really in two ways. One is the extent to which OEMs turn to us increasingly for that type of help, those relationships tend to make the business very sticky.
Mm hm.
We have a very high incumbency win rate. The second way it plays out, of course, is in margin, because to the extent that we can provide more creative solutions, reduce the cost for our customer, that allows us to still provide great value to them and maybe keep a bit for us.
Sure. You mentioned zonal, and I think one overarching way that people think about that is a simplification and a reduction in the wiring. Your argument would be actually, there's more engineering involved in getting to that point. It's actually not necessarily a headwind.
Yeah, I would agree with that. We've helped a number of customers, particularly in China.
with solutions that are in the direction of zonal architecture, right? I would say the other thing is that typically when we see the transition to zonal, it's on all new platforms. Those new platforms tend to be EV or hybrid, and they also tend to be extremely feature-rich.
Most of our customers, particularly in China, who have gone in that direction with new architectures, those vehicles just have an incredible feature set. The total content, even though, yes, the zonal architecture allows for a bit more elegant solution for wiring hardware space, net helps to reduce total content. The overall content when we look at it on those vehicles is very high.
Yeah. I know this is always a little bit of a gray area and a fine line, and I think some of your customers like to say they're in charge of things when very often, even if you were to walk through, you see there's engineers from suppliers sort of embedded with these teams. There have been a number of examples. We just had Ford on stage, and I sort of toured their next generation platform. They're very clearly talking about how they design the electrical architecture, and that they will just have someone make it for them build to print.
I understand the sort of truth might be a little bit more in between, how do you counter that narrative, or what are you actually seeing in terms of automakers actually looking to design and then sort of make it build to print? If you believe that narrative, your value-add engineer build to print mix seems like it might shift over time.
Yeah, I wouldn't want to speak to a specific customer.
I was just using that as an example.
Yeah.
Yeah.
But in general-
Yeah.
look, what I have seen or what we've seen is that when it comes to designing, for instance, going from traditional architectures where you have a whole bunch of boxes in the vehicle with kind of simpler chipsets that are driven by different sets of software, oftentimes that are designed by the supplier, the Tier 1, right? The transition to Zonal that a lot of the OEMs are working on, and some are pretty far down the path on, frankly, is to fewer boxes, if you will, with a stronger chipset.
That runs on a common software. Oftentimes, it's designed by the manufacturer themselves. Not an easy transition by any means.
Most of the time, they're focused on what is the right chipset, what is the right number of boxes, what functions do we want to combine into these boxes, and how do we make that software happen?
Which is really tough. The wiring that connects it all oftentimes not something they want to focus their valuable engineering time on, frankly.
Got it.
Oftentimes, that piece of it is, "Look, we're very focused on the software and all that. Why don't you help us with the wiring?
Connect it all.
Connect it all. That's the function that we play, and is oftentimes not where they want to focus their efforts.
Let's shift gears a little bit. I think a big focus, increasing focus among investors here in the auto space is sort of looking at core competencies and where else those core competencies might be applied, especially to some non-automotive opportunities. I know you're selling a commercial vehicle, if you take out just vehicles, this is a very small percentage of your revenue today.
Yeah.
You have sort of talked about certain capabilities. You did announce an award on a BESS system, for instance.
Yeah.
Maybe you could just talk about, one, what you're seeing, whether it's sort of push or pull demand, what the sort of effort is to try to diversify the company, how those conversations go. More importantly, I know this is something we were talking a little bit about offline, is what the timeline and process looks like. I think in auto, we're all very familiar with you're winning business two, three years ahead of time, and then that program will run for seven years, and so you've got good visibility. Here, it seems like when you win business with somebody like that, it might come on pretty quickly. How does that contract and duration and durability of that look like?
Right. When we look at the adjacent market opportunities, they're attractive for a number of reasons. One, because a lot of those areas seem like they're going to have a pretty strong CAGR.
Yeah.
Even though they're small today, the growth projections are impressive. We believe that if we can become a preferred supplier there, the margins also might be very attractive.
We have seen that really the fit in terms of our existing engineering skill set, our existing tool set, our existing manufacturing footprint is very organic.
It's very encouraging at this stage. I would say that when we think about the ways in which we add value through our engineering teams, it's not just in the upfront design, but it's also in making a wiring harness, whether it's for a vehicle or a battery energy storage, also optimized for the manufacturing within our plants.
Which OEMs don't understand necessarily. It's something that we can optimize and again, produce a better cost for them.
Ultimately how that wiring harness then makes its way into the final product and make sure it's also optimized for that installation. When we look at these adjacent opportunities, you're right, some of them can come to fruition much quicker. We see in China, for instance, a quicker path from award to start of production, even in the OEM space. This piece of battery energy storage business, for instance, that was awarded in the third quarter, it went into serial production in the first quarter. Again, an even shorter time period from award to production.
We're pretty excited about those opportunities. I would caution, though, to say that when we look at our three-year horizon and the three-year numbers that we've shared, these adjacent markets are not a significant portion of that outlook.
Beyond that.
It's beyond that. Really, it could be upside to that. If some of them come on quicker. It's not a heavy component of us making those numbers. I would say, I would caution people, if you see awards in this area, it's not that if you don't see a certain amount of awards, we won't be able to make our three-year numbers.
Yeah.
Battery energy storage, exciting area. We've had our first piece of business. It allows us to demonstrate our skill set.
We really are developing a go-to-market team that can really address that and try to get more of that business for us. When we look at commercial business, as you said, most pieces of automotive will go into production. They might be in production for five, six, seven years. A lot of commercial vehicles will be in production for 10 years, right? It's really attractive from a CapEx profile and returns profile. We want to get more of that business.
Whether it's on-highway with our existing OEMs, but also increasingly off-highway opportunities.
Think like agriculture, construction, even things like personal watercraft or ATVs, those are all opportunities for us. Then, certainly a little bit further afield, humanoid robots.
We are doing some prototyping for, again, OEM customers, where they have decided to explore those adjacencies.
said, "Well, why don't you come along?" Right?
We're doing the prototyping, one in North America, another one in China. Again, we feel like we can add a lot of value from an engineering standpoint, and from a manufacturing standpoint should fit right into our existing facilities.
Obviously, when you start talking about something like humanoid robots, that's sort of a new area. When you talk about other areas, whether it's BESS or commercial vehicle or maybe, I don't know, maybe A&D or some other areas. What does sort of the incumbency look like? Is that sort of just like because it was historically a small area and didn't have a lot of focus and have a lot of sort of sophistication and now you with your processes are able to offer these customers a lot more efficient and cost savings and robust product?
Yeah, I mean, we have looked at that in all these adjacent markets, and what you find is a mix.
Some of it is traditional suppliers that we've run up against in automotive.
Yeah.
Many, many times over the years. Others are more smaller, kind of specialized players.
Really, we think we have kind of two natural inroads in these areas, right? One is, of course, the existing one.
Which is a lot of these adjacencies are being explored by our existing OEM customers. In particular, for instance, a number of our customers in North America find that they have lots of battery capacity and expertise, they want to go into that area. They know us, they know our capabilities, they know the quality that we produce, they're asking us to bid on those projects.
I would say the other, though, is that we can bring a skill set, a tool set, and a scale, frankly, that a lot of these local players just can't.
Yeah.
Bring to the party, right? I think that's another real opportunity for us to displace some people in these kind of growing markets.
USMCA was in the news again last week, and there's reports that the government is pushing for 50% U.S. content. Clearly, if you look at your sort of Americas footprint, you're more in Mexico. How do you sort of see this evolving, and what sort of changes, if any, do you think you might need to make your business to sort of help customers?
Yeah, it's something we're monitoring, and we'll see how it evolves. My gut is that even if we do go to a higher percentage of U.S. content, that wiring harnesses are probably not high on the list.
in terms of where the OEMs would seek to reach that content.
Obviously-
Is it possible there's an exclusion for things like wire harnesses, or you just think they'll look for other areas to like just boost.
I think both, because there are very, very few, if any, very, very few wiring harnesses being produced in the U.S. today. It's very difficult. It is very labor intensive. Sure.
I guess maybe just to close, capital allocation, which I think is a big part of the story, right? You were talking about billion dollars of free cash over the coming three years. You put the dividend out there. There's a repurchase program. You mentioned wanting to fund buybacks with operational cash flows. How should we think about the timing of some of that cash relative to when you look to buy back stock and when you want to take advantage of what you think is a dislocation on valuation?
Yeah. We have talked about $1 billion of free cash flow generation over the three-year horizon. That's beyond kind of a built-in 3% of revenue that we would use as CapEx-
which is high for our historical averages, right? That's because we're trying to address some of these really attractive opportunities in automation and things like that, right? Now, of course, if I could pull ahead some of those, that'd be my preference, rather than giving money back through buybacks or things like that, right? Right now, all of those opportunities we see right now as being contained within the 3% CapEx.
Okay.
The $1 billion is something that we wanted the clarity to the investment community on. We've talked about the fact that we will go back to the board after we have Q2 earnings and talk about the dividend. We gave what we think is the right target for the board. Obviously, that's a board decision ultimately. We would like to declare $0.13 a share quarterly dividend. When we talked to the board about a buyback program, they did approve $250 million. Up to $250 million of buybacks. We would like to time that with the cash flow of the business. This business historically has significant ramp up as we talked about the seasonality of working capital in first and second quarters, so typically not much cash generation in that period. Historically, third and fourth quarter is when all the cash is generated.
My expectation is that we wouldn't get active or think about utilizing that authorization until probably third or fourth quarter.
Okay. Maybe just to close, and I know we're running out of time here, so this can be a fairly simple yes/no answer. When we talk about some of the other opportunities you see in some of these other adjacent end markets or just other end markets.
Yeah.
Do you feel you have the capabilities to compete there? Could there be some assets that could be worth a look to acquire inorganically to help participate in those markets?
I think there's a lot of opportunity that is very organic.
Okay.
I think commercial vehicles, robotics, energy storage, et cetera, very organic. There are some further afield stuff that we've been looking at.
That could be attractive down the road. We'd like to diversify our revenue base. It could be that there are opportunities, aviation, defense, et cetera.
Sure.
Where you might need to look at different certifications and things like that. I think there's plenty of opportunity within the existing target set right now.
Okay, perfect. With that, we're out of time. Doug, really appreciate you joining us today.
Thanks very much for having us, Joe.
Take care.
Appreciate it. Thank you.