Shreyas Patil

Shreyas Patil asked about the market share dynamics in the rapidly growing AI segment, noting that one competitor appears significantly ahead in revenue. He inquired if TE Connectivity sees an opportunity for the market to become more balanced over the long run, potentially positioning TE as a firm number two player.

Answer

CEO Terrence Curtin acknowledged the concentrated nature of the market due to the need for specific technology and rapid ramp-up capabilities. He emphasized that TE Connectivity must continue to compete on technology, customer ramp-up, and ecosystem engagement. Curtin stated that the company will look for technology inflections as opportunities to gain share and will compete every day to increase its market position.

Shreyas Patil from Wolfe Research asked about the future trajectory of margins, given that both segments are at 20%, restructuring savings are pending, and some end markets are turning, questioning if strategic investments might offset incremental margin gains.

Answer

CFO Heath Mitts responded that ongoing investments in engineering and manufacturing capacity are already embedded in the company's run rate. He reiterated that for modeling purposes, a 30% incremental flow-through on organic growth is a fair assumption. He suggested this rate could be higher with strong volumes but might be pressured in a low-growth environment, but this remains the core business model for driving margins.

Shreyas Patil asked about the pace of tariff cost recovery in the automotive market versus industrial, and about capital allocation priorities between buybacks and M&A following the Richards acquisition.

Answer

CEO Terrence Curtin first reiterated that tariff exposure is mainly in the Industrial segment. CFO Heath Mitts then addressed capital allocation, stating that despite the $2.3B Richards deal, TE's strong cash generation supports a balanced approach. The company will continue to pursue a pipeline of smaller, bolt-on M&A while also being in the market daily with share buybacks.

Shreyas Patil from Wolfe Research asked for more detail on the path to 20% total company operating margins and how to reconcile the $600 million AI revenue guidance with what appears to be a much higher quarterly order rate.

Answer

CFO Heath Mitts clarified the 20% margin goal is a multi-year target, with the new Industrial segment providing the main uplift opportunity from its current high-teens level. CEO Terrence Curtin addressed the orders question by explaining that the large order figures for the segment include business beyond just AI, such as traditional cloud and enterprise, which is why the total order value is higher than the specific AI revenue forecast for the next year.

Shreyas Patil from Wolfe Research sought a better understanding of DynaPower's strategic positioning, particularly expanding on its potential applications in data centers and whether customer engagements are occurring in grid storage, utility, or data center markets.

Answer

Stephan von Schuckmann, Sensata Technologies' Chief Executive Officer, clarified that the main focus for DynaPower revolves around high-energy requirements, creating use cases primarily around grid stabilization for data centers from the current perspective.

Shreyas Patil asked for further details on the strategic positioning of the Dynapower business, specifically its potential applications in data centers and customer engagements in grid storage, utility, or data center markets.

Answer

Stephan von Schuckmann, Sensata Technologies' Chief Executive Officer, stated that the primary focus for Dynapower revolves around high-energy requirements, creating use cases for grid stabilization, which is currently the major application for data centers.

Shreyas Patil asked for the size of Sensata's China auto business and the competitive landscape there, and also inquired about outgrowth expectations for the Heavy Vehicle & Off-Road (HVOR) business.

Answer

CFO Andrew Lynch stated China represents about 12% of total revenue, with new wins sufficient to return to low-to-mid single-digit auto outgrowth. CEO Stephan von Schuckmann noted the HVOR market is soft, particularly in North America, and expects to undergrow the market for the balance of the year due to higher content on Western OEMs whose production is down.

Shreyas Patil inquired about the expected incremental margins for the Sensing Solutions business and asked for clarification on whether the planned 2026 European EV launches are being delayed.

Answer

Chief Executive Officer Stephan Von Schuckmann stated he does not see significant push-outs for the 2026 European EV launches, as OEMs need these technologically advanced, second-generation vehicles to meet CO2 targets. He also noted that the strong operational margin trend in Sensing Solutions is expected to continue.

Shreyas Patil asked for details on cost reduction measures, the remaining runway for savings, and how normalizing price downs might affect margin improvement in a weak market.

Answer

CFO Brian Roberts explained that Q1 is seasonally challenging for margins due to price downs, which are offset by productivity efforts that layer in over time. He emphasized a new discipline in adding costs. While the 2025 plan is still in development, the goal is to expand margins year-over-year from the 2024 level.

Shreyas Patil asked about the competitive landscape for Surround ADAS and the bidding process for the second award. He also inquired about Drive becoming a material revenue contributor by 2027, the relatively high upfront revenue stream, and how Mobileye plans to reduce vehicle costs to improve robotaxi unit economics.

Answer

Amnon Shashua, CEO and President, emphasized that Surround ADAS is a highly cost-optimized product where Mobileye's EyeQ6 High chip offers both high performance (on par with Orin-X) and superior cost-efficiency and power consumption, giving them a first-mover advantage. Nimrod Nehushtan, EVP of Business Development and Strategy, added that EyeQ6 High's passive cooling capability is a significant competitive differentiator. For Drive, Amnon Shashua explained that economics comprise a one-time fee and revenue sharing (price per mile), with flexibility to adjust the mix. He stressed that execution to remove safety drivers by H1 2026 will unlock significant volume (tens of thousands of vehicles by end of decade). Dan Galves, Chief Communications Officer, noted that Mobileye's low costs allow for profitability even with reduced upfront fees, replaced by recurring revenue.

Shreyas Patil inquired about the competitive landscape for surround ADAS, specifically Mobileye's strategy and the bidding process for the second award. He also asked Amnon Shashua to elaborate on Drive becoming a material revenue contributor by 2027, discussing the $40,000-$45,000 upfront revenue stream and how it might be reduced to improve robotaxi unit economics.

Answer

Amnon Shashua, CEO and President, highlighted Mobileye's cost-optimized IQ6 High chip, which offers high performance comparable to competitors at a significantly lower price point, giving them a first-mover advantage in the highly competitive surround ADAS market. Nimrod Nehushtan, EVP of Business Development and Strategy, added that the IQ6 High's power efficiency allows for passive cooling, reducing overall system cost and complexity. Amnon explained that robotaxi economics involve both a one-time fee and revenue sharing per mile, with flexibility to adjust the upfront fee for recurring revenue, emphasizing that execution to remove safety drivers by H1 2026 will unlock significant volume.

Shreyas Patil asked about the typical lead time for securing Surround ADAS awards in relation to the 2028 European standards and questioned how Mobileye gains confidence in future vehicle volumes on rideshare platforms like Uber, which use a multi-partner strategy.

Answer

CEO Amnon Shashua confirmed a 2-2.5 year lead time for Western OEMs, with EVP Nimrod Nehushtan adding that current RFQs target 2027-2028 SOPs. Regarding rideshare, Nehushtan argued that while platforms initially partner broadly, the ultimate winners will be the most cost-efficient and scalable solutions. He expressed confidence that Mobileye's inherent advantages, like lower power consumption, will secure high volumes long-term.

Shreyas Patil questioned if the 2025 guidance still includes benefits from share gains and ADAS penetration, and asked if the recent Uber and Lyft deals signal accelerating momentum for robotaxis.

Answer

CFO Moran Rojansky confirmed that the expected 1.4 million incremental units from share gains and new launches are tracking in line or better than expected. CEO Amnon Shashua affirmed that robotaxi momentum is accelerating, highlighting their scalable technology and partnerships with major players like VW, Uber, and Lyft, with additional opportunities in Europe and with other OEMs.

Shreyas Patil inquired about the adoption timelines for advanced automation like SuperVision among legacy OEMs, their confidence level in securing near-term design wins, and the gross margin outlook for 2025.

Answer

CEO Amnon Shashua and EVP Nimrod Nehushtan confirmed that the 2027-2028 timeframe remains the sweet spot for advanced system adoption, driven by competitive and regulatory pressures. They expressed confidence in converting the current pipeline, noting steady progress and the ability to meet timelines. CFO Moran Rojansky projected a 1.5 percentage point increase in 2025 gross margin, primarily due to a lower mix of SuperVision revenue.

Shreyas Patil sought clarification on the "couple of thousand dollars" per vehicle tariff cost, asking if it includes the U.S. manufacturing reimbursement program and if batteries are the primary exposure. He also asked about remaining material cost reduction opportunities for R1 and the drivers for Q1's COGS improvement.

Answer

CFO Claire McDonough confirmed the per-unit tariff impact estimate includes reimbursement benefits and that the company is exploring long-term sourcing opportunities, particularly for batteries. She attributed the $3,300 per-unit COGS improvement in Q1 primarily to operational efficiency and fixed cost leverage from higher production volumes, despite a less favorable delivery mix.

Shreyas Patil asked about the software and services revenue opportunity excluding the Volkswagen agreement, specifically on take rates for Connect+ and ADAS adoption. He also asked for confirmation that the 2027 Analyst Day targets did not include the VW deal and how an IRA repeal might affect R2 pricing.

Answer

CEO RJ Scaringe emphasized the value of the vertically integrated software stack in creating paid feature opportunities but did not provide specific take rates. He also stated that the R2's cost structure was designed to be robust with or without the IRA credit. CFO Claire McDonough clarified that while the original 2027 EBITDA positive target did not include the VW deal, achieving it now requires the JV's benefit to offset a more negative policy outlook.

Shreyas Patil from Wolfe Research asked for confirmation of the foreign exchange benefit in the updated guidance and inquired about the process and expected timing for recovering tariff costs from OEMs.

Answer

CFO Patrick McCann confirmed a ~$1.5 billion revenue benefit from FX, which was primarily offset by lower North American volumes impacting the BES and Seating segments. CEO Seetarama Kotagiri stated that the tariff recovery process would be similar to that used during the semiconductor crisis, where over 95% of costs were recovered. He expects a collaborative process, though some timing lags are possible.

Shreyas Patil sought to understand the implied vehicle production decline in the second-half outlook framework, noting the discrepancy with third-party forecasts like IHS. He also asked about Aptiv's performance in China, where its 2% revenue growth lagged the market's 10% production increase.

Answer

CEO Kevin P. Clark and CFO Varun Laroyia clarified that the outlook framework is not guidance but a tool for modeling scenarios based on their internal customer schedule data, not IHS. They explained the math that leads to an implied 7% second-half decline at the low end of their original range. Regarding China, Clark attributed the revenue growth lag to a significant production decline at a single major global EV customer, while noting underlying market trends and bookings with local OEMs remain strong.

Shreyas Patil of Wolfe Research, LLC asked for clarification on the drivers for the 2027 EBITDA margin expansion, particularly the 'scale' component, and inquired about the trend in cluster bookings and the future growth outlook for that product line.

Answer

SVP and CFO Jerome Rouquet explained that 'scale' refers to leveraging sales growth over a controlled SG&A and engineering cost base, with the other half of margin improvement coming from operational efficiencies like vertical integration. President and CEO Sachin Lawande added that while stand-alone clusters are being replaced by CDCs and large displays in high-end vehicles, they are seeing increased volume in mass-market vehicles, leading to a natural evolution of the product mix with higher overall content value.

Shreyas Patil followed up on commentary that the displays business could soon match the size of the clusters business, asking about its market position and margin profile. He also inquired about the competitive threat from local Chinese suppliers, both within and outside of China.

Answer

CEO Sachin Lawande confirmed the displays business has a strong margin profile and that its rapid growth will be driven by the significantly higher average selling price of large, premium displays. Regarding China, an executive stated that while local players are price-aggressive, their business models are often unprofitable. Visteon remains cost-competitive and sees its global footprint as a key advantage in partnering with Chinese OEMs for their export business, mitigating the threat of those suppliers expanding globally.