TSE:LNR Linamar Q1 2024 Earnings Report C$48.15 +1.37 (+2.93%) As of 04/17/2025 04:00 PM Eastern Earnings HistoryForecast Linamar EPS ResultsActual EPSC$2.59Consensus EPS C$2.12Beat/MissBeat by +C$0.47One Year Ago EPSN/ALinamar Revenue ResultsActual Revenue$2.72 billionExpected Revenue$2.70 billionBeat/MissBeat by +$21.40 millionYoY Revenue GrowthN/ALinamar Announcement DetailsQuarterQ1 2024Date5/8/2024TimeN/AConference Call DateWednesday, May 8, 2024Conference Call Time5:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress ReleaseEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Linamar Q1 2024 Earnings Call TranscriptProvided by QuartrMay 8, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the Linamar Q1 20 24 Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded today, Wednesday, May 8, 2024. I would now like to turn the conference over to Linda Hasenfratz, Executive Chair and CEO. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you. Good afternoon, everyone, and welcome to our Q1 conference call. Joining me this afternoon are members of our senior teams, Mark Stotter, Dale Schneider, Ali Berger, Kevin Allianz and some members of our corporate IR, marketing, finance and legal team. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast. I'll start off with a high level review of the quarter. Speaker 100:01:01Q1 was an excellent quarter and a strong start to what looks to be another solid year for us at Linamar. Financially, we once again have delivered double digit top and bottom line growth for the quarter. And on a 12 month basis, I'm very pleased to report that we have exceeded $10,000,000,000 in annual sales, a goal that we set for ourselves way back in 1999 when we were approaching $1,000,000,000 in sales. What an exciting milestone to achieve. I am so proud and grateful to our incredible team at Linamar to have made that happen. Speaker 100:01:36Strategically, we also achieved a milestone with the completion of our Bordeaux acquisition announced late last year. Integration has begun and we are very excited to welcome the Bordeaux team to the Linamar team. Markets are flat to modestly growing this year, but market share growth in both segments is driving record sales in the quarter. And finally, on the innovation and new business side, we are seeing continued new business wins in the balance of technology and propulsion areas and new award winning innovations getting market attention. Let's take a closer look at each of these areas and we'll start with the financial results. Speaker 100:02:16Sales for the quarter hit a new record of $2,720,000,000 up 19% to last year on solid launches, market share growth, acquisitions as well as better pricing. Normalized EPS for the quarter was up 31% to $2.59 which is outstanding, and net normalized margins expanded to 5.9%. Organic earnings growth was also at a strong double digit level. I think it was particularly notable to see the solid performance of the mobility segment this quarter with normalized OE growing a fantastic 58% and margins improving meaningfully to 6.2% after a challenging few years. Some of the key factors impacting results in the quarter were the 2023 2024 acquisitions in both Mobility and Industrial segments, both contributing to our results this quarter. Speaker 100:03:17Launching business and better pricing in the Mobility segment is also driving great sales and earnings growth. Our agricultural businesses are performing strongly in the quarter, notably at MacDon. Q1, I will also note, is normally Sulfur's strongest quarter seasonally. And finally, additional launch costs, higher SG and A and fixed costs business. It's great to see the continued positive trends in our financial results over the long term. Speaker 100:03:54We continue to be on track for a new record level of earnings performance for 2024. Turning to the balance sheet, we see a similarly positive performance. Our balance sheet has remained consistently strong despite higher acquisition activity and a resumption of more normal CapEx spending after a couple of light spending years during COVID. Net debt is sitting at $1,830,000,000 at the end of Q1, which is 1.24 times EBITDA, up from year end and last year at this time. Our 3 acquisitions impacted our leverage levels in comparison to both periods. Speaker 100:04:33We are still well below our goal of staying under 1.5 times EBITDA even with our higher than normal spending. We expect to be back under one times EBITDA within 12 to 18 months. We saw a small negative in free cash flow in the quarter of $39,300,000 as we normally do in the Q1 of the year with this big jump in sales and AR. We expect to see subsequent quarters this year positive in terms of free cash flow to finish the year overall strongly positive. We also expect 2025 to see strongly positive free cash flow. Speaker 100:05:14CapEx was higher than Q1 last year, but down from highs seen over the last few quarters. CapEx as a percentage of sales was 7%, right in line with the normal range of 6% to 8% to drive double digit growth. We expect CapEx to continue to moderate somewhat in dollar terms compared to last year and end up at the low end of our normal range of spending as a percent of sales for the year. Next year will see us again at the low end of our normal range of 6% to 8% to drive continued double digit growth. Turning to strategy and operations, we had a few notable items, including the grand opening of our new Skyjack facility in China with great support from local government and customers, and of course the completion of our acquisition of Borgo Industries on February 1. Speaker 100:06:07The integration is underway and is progressing very well. I'd like to take a minute again to remind you of the powerful synergistic diversification model that Linamar has developed. We have 2 key businesses, as you know, mobility and industrial. The mobility business is very large and global with excellent technology systems and a deep talent pool. There are significant growth opportunities for this business, which is capital intensive. Speaker 100:06:36The industrial business is more regional with a stronger presence in North America, but less purchasing power than our mobility segment. That said, they have low CapEx requirements, making them a good generator of cash. They also do an excellent job of managing their various brands of Skyjack, MacDon, Salford and Bordeaux and have excellent global growth potential. So here's how it works. The Mobility Group helps improve the performance of the industrial group by supplying talent, system expertise, a global network to ensure global growth and significant purchasing power to improve profit and cash flow. Speaker 100:07:14The industrial group then provides much needed cash for investment to the mobility segment as well as knowledge around effective brand management. It is a unique model, but it works exceptionally well to help us drive strong and consistent profitable growth, positive free cash flow and all the while maintaining a strong balance sheet. You don't need to take my word for it that this model drives consistent sustainable results. You only need to look at our track record. Year in year out with very few exceptions, we are delivering top and bottom line growth. Speaker 100:07:49The strong majority of those years as denoted by the star in the green box is double digit growth as well as free cash flow and double digit return on capital. Return on capital has been in double digits 93% over the last 14 years, every single year but when and that exception being 2020, the peak year of the pandemic. And we have generated free cash flow, 11 out of the last 14 years, every single year for the last 11 years, and we do expect to grow again in 2024. We are very proud of this track record of performance and it is one that we intend to continue to deliver on. Turning to market to market share, I would say we've had a very successful quarter again in terms of growing our market share. Speaker 100:08:37As just shown, Linamar has a great track record of growth, often in the double digit range. We achieved this year in and year out by growing market share. When markets are flat or declining, growing market share offsets market conditions to allow growth to continue. In the mobility business, we saw growth in content per vehicle in every region globally in the quarter with North America getting a new quarterly record level. In the access market, we increased global market share in syzolis, our largest product family at Skajak. Speaker 100:09:11And in the agricultural market, we saw excellent market share growth for our core palmine draper headers, which is our largest product family at MacDon. You can see here summarized market data for 2024 2025. On the mobility side, we're looking for flat production globally this year with industry expectations of 16,000,000, 17,500,000 and 51,700,000 vehicles produced in North America, Europe and Asia, respectively. This represents a plus or minus 2% change depending on the region. Next year, we expect to see modest market growth in most regions. Speaker 100:09:52The big story this year in the mobility business continues to be the dial back on battery electric vehicles in favor of more traditional internal combustion and hybrid electric vehicle models. Lindemar's flexible strategy of securing business in every type of propulsion and utilizing flexible equipment that can shift from one type of product to another is very helpful in this more volatile production environment. On the access side, industry experts are predicting flat markets in the access industry globally this year, plus or minus 1% to 2%, depending on the global region and product. Booms are the only product seeing modest growth in all regions, which is a key area of market share growth for us. Our backlog at Skyjack is strong and remains ahead of historical norms as we work to fill customer orders. Speaker 100:10:44With reasonably stable markets and predicted market share growth, we feel confident we can again grow Skyjack in double digits this year. Next year, markets will see moderate growth resume, helping Skyjack to continue its growth path. We see the flat 2024 as a resettlement period post COVID growth as opposed to the start of a downward cycle. We expect the following years to return to more conservative and historic growth patterns with a change from fleet growth to fleet replenishment. In North America, rental companies remain bullish about manufacturing activity on the back of the Inflation Reduction Act, on shoring and a large number of mega projects to extend beyond 2024. Speaker 100:11:30In China, after a flat 24, we see growth returning. And while it may not be at recent historical levels, it does represent a significant volume opportunity. On the agricultural side, industry expectations, of flat market for the combined draper header market this year in North America with declines in other parts of the world. The Windrow market will also see fairly flat global markets this year. Nevertheless, the order book remains strong for MacDon. Speaker 100:11:59Orders for combine papers, our largest product family are ahead of orders at this point last year. Sulfur products and tillage and crop fertilization equipment more aligned with the high horsepower tractor market is also seeing flat to down markets this year on a global basis. Our current forecast is for mid single digit growth for MacDon and Salford combined this year. Finally, the order book for our new Bordeaux business is consistent with historical levels and looking for a stable year in terms of performance. As a reminder, this business runs at about $450,000,000 in annual revenue, and we acquired it as of February 1 this year. Speaker 100:12:42The combination of growth at Back Down Salford and our new business, Borgo, will result in double digit growth for our agricultural business this year. Next year, markets will again be flat to down. With market share growth globally and cross selling opportunities, we expect to see moderate continued growth for our ag business in 2025 at a more muted level given market conditions. We saw another quarter of solid market share growth in our mobility business with global content per vehicle up over last year. All three regions saw content per vehicle growth on launching business and North America has reached a new quarterly high of almost $2.95 of content per vehicle. Speaker 100:13:31As noted, we're growing market share in key products and regions within our Industrial segment businesses. Here you can see the mapped on global Draper header market share, which is on a solid upward trend, reflecting the continued adoption of MacDon Flex Draper Technology over legacy auger headers on a global basis. Turning to innovation and new business, we've seen another strong quarter in wins for the mobility business. The wins are a great balance of propulsion agnostic components and powertrain products for a variety of propulsion types in alignment with our strategy to maintain strong content potential and sales exposure to each. In our access business, our micro scissor program rollout continues to generate positive market reaction. Speaker 100:14:19And in our ag business, we have had 2 new innovative product launches. Some interesting mobility wins in the quarter were for propulsion agnostic structural components, including knuckles and housing, and some great wins for gears and differential for ICE and hybrid vehicles. With respect to our launch book, we're seeing ramping volumes on launching programs, which are predicted to reach 30% to 40% of material levels this year, generating incremental sales of $600,000,000 to $800,000,000 Next year, we will see another $700,000,000 to $900,000,000 of incremental sales as volumes on these programs continue to ramp up. The programs will peak at nearly $3,400,000,000 in sales. I'll note nearly $200,000,000 of programs moved from launch to production last quarter. Speaker 100:15:10You can see here the split of Lindemar's business once we get out into the 20 28 timeframe as a result of all of those launches. But again, a good blend of propulsion agnostic, which again is basically anything for the driveline, body and chassis systems, as well as electric vehicle powertrain and ICE powertrain driving out of this good mix of business wins. Close to 40% of business in 2028 is propulsion agnostic, 60% is powertrain with a split, about 1 third to EV and 2 thirds to ICE within that. I think this is a good position to be in to weather potentially shifting market adoption of different technologies, have a solid chunk of propulsion agnostic business, a good blend of powertrain for different forms of propulsion. As time goes on, the proportion that is EV powertrain will naturally grow as these vehicles become more prominent. Speaker 100:16:05In 2028, there will still be plenty of ICE vehicles, hence the heavier ICE powertrain focus and sales at that time. That will shrink over the ensuing 5 years to become more and more hybrid electric and battery electric and ultimately fuel cell electric powertrain concentration in alignment with the market. Flexibility and a wide range of platform coverage is the name of the game during the next decade as the mobility market transitions. In fact, flexibility is really the key to managing any major transition of technology. No technology adoption will be a straight line. Speaker 100:16:42There's always going to be ups and downs just as we're seeing now on the EV side with the dial back in the market. At Linne Road, we've always believed that our levels of flexibility should directly correlate to levels of uncertainty. There will be uncertainty with respect to timing and volumes of different vehicle platforms over the coming years. That means we need to stay as flexible as possible. We've done that in a few really important ways. Speaker 100:17:09First, we created a product portfolio with equal potential for any type of vehicle propulsion. Next, we've tried to ensure we have content across a wide variety of platforms to optimize sales potential based on market demand. And finally, we have maximized the use of flexible equipment wherever possible to shift capacities between programs based on market demand. We can, in many cases, use the very same equipment for components we're making for electric vehicles to use for ICE vehicle components and vice versa. This flexibility is key to ensure we minimize underutilization of assets. Speaker 100:17:47In fact, 84% of our assets in our mobility business are flexible and can be reallocated to a different project, whether general combustion, hybrid electric, battery electric or fuel cell electric. That kind of flexibility is key to managing this transition. Also key are the commercial terms that we agreed to with customers. We must be more commercially astute in terms of contracts, commitments and expectations and suppliers have typically been in the past with our OEM customers. Be assured we are doing all of this in order to successfully navigate and take advantage of opportunities that will come in these transition years in the mobility industry. Speaker 100:18:32And of course, our growing industrial business continues to help insulate us as well from being too exposed to any one industry. In fact, over half of our earnings are coming from our industrial businesses. Turning to this quarter's innovation update, I'd like to first highlight an example of the Linamar Structures Group light weighting capabilities. Here you can see an FTA semi trailing arm casting design that we produced in our newly acquired MOBEC site. This component goes into a battery electric vehicle life truck application. Speaker 100:19:07Originally, the engineering team at our OEM customer didn't believe that aluminum casting was feasible for this application and thought they would need to make it in cast iron. Our engineering team was able to deliver a lightweight design in aluminum using vacuum modulates and pressure modulates casting processes that saves nearly 9 kilograms of weight per vehicle. The design was recently recognized by the American Foundry Society for the best in class award in its annual casting of the year competition. Next at Skyjack, our new micro scissor models have officially launched. These scissor models fill a segment at the low end of product range with working heights of 13 19 feet. Speaker 100:19:52The new models of Pure Elective Drive and their micro footprint allows them to operate in tight workspaces and even navigate into elevators. The micro category within the overall fuselage market has been a growing segment the past few years. This Skyjack offering provides the leading product to now better address this. At Bacton, their new R1FR model was launched to the ag market on March 1. The front mount rotary disc series is a new mower conditioner that can mount to the front of a tractor. Speaker 100:20:25The new model expands upon our current rotary Hays portfolio and enables farmers to double their productivity when paired with the existing full type R1 mower conditioner. Another innovation focused on in field performance for MacDon, the industry's harvesting specialists. And lastly, you get a further sense of the type of technology leadership we acquired through Forgo. From this example, the XR8 series extended range harrows cover a lot of ground, up to 130 acres per hour, in fact, within the availability in both 90 and 110 foot widths. All settings and functions can be fully controlled from the cab of the tractor. Speaker 100:21:09The XR Series offers exceptional performance even in fewer conditions with tough yield revenue and extreme contours. The XR Heroes helps spread crop revenue to better prepare for next year's planting, another example of how Borgo is pursuing perfection. Let's turn to a summary of our outlook. As I've already noted, we expect to see double digit top line growth in both our agricultural business and Skyjack and therefore the industrial segment as a whole in 2024 and continued growth in 2025. We are expecting to see high single digit to low double digit top line growth in our Mobility segment for 2024 based on launches of $600,000,000 to $800,000,000 this year and current market production expectations. Speaker 100:22:032025 will see continued growth based on further launch ramp ups of 700 $100,000,000 to $900,000,000 and the market growth that's expected for next year. Growth in both segments will lead to double digit top line growth for Linamar overall this year and continued growth next year. Net margins will expand again in 2024 on growing sales driving mainly at meaningful margin expansion in the mobility business as you have already seen delivered in Q1. The industrial segment will continue to perform in its normal 14% to 18% range, again, as already seen in the Q1 of the year. 2025 will see the Mobility segment margins expand further and back into our normal 7% to 10% range, and the industrial segment will continue to perform in its normal 14% to 18% range. Speaker 100:22:56This will mean strong double digit growth in Mobility segment OE this year and another year of double digit OE growth in the Industrial segment as well, which of course will drive strong double digit EPS growth for us overall as well. For 2025, expect another year of strong double digit earnings growth in the mobility segment and continued growth in industrial for an overall expectation of continued double digit EPS growth for us in 2025. CapEx will be down in dollars from a very robust 2024 level of spending and at the low end of sorry, 2023 level of spending and at the low end of our normal 6% to 8% of sales. Next year, we'll also see spending at the low end of our normal 6% to 8% of sales, which of course is what drives our double digit growth. We expect strongly positive free cash flow this year and next year, leaving us in an excellent position from which to drive further growth. Speaker 100:24:00Looking specifically at Q2, you should expect double digit top and bottom line growth in comparison to prior year with OE margins compared to last year as well. The Mobility segment will see double digit sales and OE growth to prior year, driving from the 2023 acquisitions, launching business and continued impact of customer cost recoveries. I will note that the EV dialback as it's known today has been considered in this guidance, but is of course a fluid situation that we're keeping an eye on. The industrial segment will see double digit sales and OE growth to last year, thanks to a full quarter of forego and continued growth in both the underlying agricultural and industrial businesses. With that, I'm going to turn it over to our CFO, Dale Schneider, to lead us through a more in-depth in-depth financial review. Speaker 200:24:54Over to you, Dale. Speaker 300:24:55Thank you, Linda, and good afternoon, everyone. As Linda noted, Q1 was an exceptional quarter as we achieved double digit sales growth at 18.7 percent and net earnings growth of 52.6%. Mobility margins continue to expand from both Q4 and Q1 2023 levels. Q1 was also another strong liquidity quarter at 1,300,000,000 dollars For sales in the quarter, sales increased 18.7% to a new record of $2,700,000,000 Earnings are normalized for FX gains or losses related to revaluation of the balance sheet and potentially other items that may have occurred in the quarter. In the quarter, earnings were normalized for an FX gain related to the revaluation of the balance sheet, which impacted EPS by $0.31 per share. Speaker 300:25:48Normalized operating earnings for the quarter were $243,800,000 This compares to $175,800,000 in Q1 2023, an increase of $68,000,000 or 38.7 percent. Normalized net earnings increased 37 $900,000 or 31.1 percent in the quarter to 159,600,000 dollars Fully diluted normalized EPS increased by $0.61 or 30.8 percent to $2.59 Included in earnings for the quarter was a foreign exchange gain of $24,900,000 which resulted in from a $25,400,000 gain related to the revaluation of our operating balances and a $500,000 loss from the revaluation of our financing balances. As I mentioned, the net FX gain impacted the quarter's EPS by $0.31 From a business segment perspective, the Q1 FX gain of $25,400,000 related to the revaluation of operating balances was a result of a $19,500,000 gain in Industrial and a $5,900,000 gain in Mobility. Further looking at the segments. Industrial sales increased by 24.5 percent or $143,600,000 $728,600,000 in the quarter. Speaker 300:27:16The sales increase for the quarter was primarily due to the additional sales from the 1st 2 months of results from the Borgo acquisition and the substantial increase in agricultural sales driven by global market share growth on Draper's. Normalized industrial operating earnings for Q1 increased $22,700,000 or 23.3 percent over last year to $120,200,000 The primary drivers impacting industrial earnings were the increased contribution from the steep increase in agricultural equipment volumes, the increased contribution from the acquisition of Borgo, which were partially offset by increased launch costs related to new facilities for Skyjack in Mexico and China and also from increased SG and A costs that are supporting our growth. Turning to Mobility. Sales increased by $285,600,000 or 16.7 percent over Q1 last year to a new record of $2,000,000,000 The sales increase in the Q1 was driven by the additional sales from our Limb Restructures acquisitions in 2023, the increased volumes on launching and certain mature programs, plus the customer cost recoveries achieved in the quarter, which were partially offset by the lower volumes in certain programs that are naturally winding down to end of life. Q1 normalized operating earnings for mobility were up 57.9% over last year at 123,600,000 dollars In the quarter, mobility earnings were impacted by the added contribution related to the Structures acquisitions last year, the increased contribution from the higher volumes on launching and certain mature programs, the customer cost recoveries achieved, which are partially offset by lower volumes at ending programs and the increased SG and A costs that are supporting the growth in the segment. Speaker 300:29:16Turning to the overall Linamar results. Company's gross margin was $393,200,000 an increase of $92,700,000 compared to last year and was due to the same factors that drove the segment results. COGS amortization expense for the Q1 increased to $139,200,000 compared to Q1 2023 mainly due to the acquisitions in 2023 and 2024 related to Linamar Structures and Bordeaux in addition to launching programs. COGS amortization of the Priscilla sales though remained relatively flat at 5.1%. SG and A costs increased in the quarter to $151,700,000 from $124,700,000 last year. Speaker 300:30:03The increase is primarily the result of the incremental SG and A costs from the acquisitions related to the Structures Group and for BOGO. Additionally, we also had increased management sales costs that were supporting the growth. Finance expenses increased $19,700,000 since last year primarily due to the private placement notes issued in June 23 to fund the Linamar Structures acquisitions, the new term credit facility used to fund the Bargo acquisition, the added interest expense related to leases acquired part of the Structures acquisition and additional interest expense due to the Bank of Canada and the U. S. Spend rate increases compared to last year. Speaker 300:30:48Consolidated effective interest rate for Q1 was 5.2%. Effective tax rate for the 1st quarter decreased to 24.4% compared to last year, primarily due to the Q1 2023 withholding tax impact, which did not reoccur this year related to the repatriation of cash from China. Also the more favorable mix in foreign tax rates, these were partially offset by an increase in nondeductible expenses compared to last year and an increase in unused tax losses that have not been recognized as deferred tax assets yet. The Q1 effective tax rate was 24.4% and was within a range of 24% to 26%. For 2024, the full year effective tax rate is expected to be in that range as well of 24% to 26% and is currently expected to be similar to the 2023 full year tax rate of 25.6%, which is before the impact of the 2023 China withholding tax. Speaker 300:31:57Nemariz's cash position was $787,200,000 on March 31, an increase of $133,900,000 compared to December 3. The Q1 generated $150,100,000 in cash from operating activities, which was used primarily to fund CapEx. The net debt to EBITDA increased 101.24 times in the quarter from a year ago mainly due to the acquisitions in 23 of Linamar Structures and the acquisition of Borgo in Q1 of this year. Based on our current estimates, we're expecting 2024 to maintain our strong balance sheet and we're expecting to deleverage under 1x in the next 12 to 18 months. The amount of available credit on our credit facilities was $522,900,000 at the end of the quarter. Speaker 300:32:47Our available liquidity at the end of Q1 remained strong at $1,300,000,000 As a result, we currently believe we have sufficient liquidity to satisfy our financial obligations throughout the year. To recap, sales and earnings for the quarter was a story of improving performance in both segments, which drove double digit sales growth of 18 point 7% and normalized EPS growth of 30.8%. The Industrial segment continued to grow sales significantly by 24 point 5%. Mobility achieved a new record for sales with double digit sales growth over last year in addition to continuing to expand the normalized margins to 6.2%. Additionally, Q1 had strong liquidity levels at $1,300,000,000 It was a great quarter for outperformance in both sales, earnings while maintaining a strong balance sheet. Speaker 300:33:40That concludes my commentary. And I now would like to open up for questions. Operator00:33:48Thank you. Ladies and gentlemen, we will now conduct the question and answer session. Your Your first question comes from Jonathan Goldman from Scotiabank. Your line is now open. Speaker 200:34:15Good evening and thanks for taking my questions. So the first one, significant step up in the mobility margins quarter on quarter. Can you discuss the underlying drivers of the performance and whether Q1 margins are the appropriate starting point going forward, obviously outside of the typical seasonality? Speaker 100:34:34Yes, absolutely. Yes, we did see a great recovery in the mobility segment, both in terms of looking at same quarter last year as well as last quarter. Key drivers are quartz acquisitions that we made last year, the impact of launching business, negotiated price release to offset higher costs that we were experiencing last year are also starting to be realized. So all of that was a factor in the higher earnings and in the higher margins. With respect to the rest of the year, I think that Q1 mobility margin level is probably a reasonable proxy for the year, up or down a little depending on the quarter. Speaker 200:35:27Okay. That's great color. Thanks. And maybe switching to ag, just a couple here. How is Borgo performing relative to your original expectations when you originally announced the acquisition? Speaker 100:35:38Yes. I mean, it's performing well. As I say, it's running at expected levels of sales. The integration is going very well, so meeting expectations. Speaker 200:35:53Perfect. And then I guess one more on ag. It's the 2nd quarter in a row now that you call those share gains and combine drapers. Can you elaborate on the drivers of those gains? And do you expect that momentum to continue through the balance of the year? Speaker 100:36:07Yes. I mean, growing our share in all of our industrial businesses is a key strategy, both in terms of product expanding our product line up as well as global expansion, so selling more of these products on a global basis. So I mean that's exactly what we're seeing with MacDon. We're seeing great adoption of their Draper's in global markets. So that's a key driver of their market share growth and they continue to have very strong market share in North America as well. Speaker 200:36:52That's great to see. Thanks for taking my questions. Pleasure. Operator00:36:58Your next question comes from Christoph Friesen from CIBC. Your line is now open. Speaker 400:37:06Hi. Congrats on the quarter. Very strong showing, especially in Mobility, great margins there. I was just wondering if you can speak to how we should think about the cadence of margins through the rest of the year and maybe if this level is sustainable and if there's upside from here? Speaker 100:37:27Yes. I think that the Q1 mobility margin level is a reasonable proxy for the year. It might be up or down a little depending on the quarter, but I do think it's sustainable. Speaker 400:37:44Okay, great. And then maybe just on Skyjack. You're clearly seeing a lot of growth there and expect to see continued growth. And I believe some of that is through the geographic expansion and product line expansion. Can you speak to how things are going with the geographic expansion and what other countries you might be focused on? Speaker 100:38:08Yes. I mean, as you know, we've built 2 new facilities for Skyjack, 1 in Mexico to better serve the southern part of the U. S. And one in China to take advantage of an exciting market there. So that is definitely part of what's driving our growth at Skyjack. Speaker 100:38:34I think also the China facility gives us better access to the Asian market overall just from a logistics perspective. We're a lot closer to market, for instance, to Australia or other points within Southeast Asia than we are from North America. So that makes us a lot more competitive in those markets. So I think we'll see some great growth there as well. Speaker 500:39:02Yes. Chris, just to elaborate, definitely for us with the Mexican operation, getting the telehandler production moved down into there has been going quite well. We've now got product coming out and as Linda said really servicing that sort of Southern U. S. From a logistics side of things, I mean the product doesn't ship well. Speaker 500:39:26So we're able to get the product in for good logistics cost. And really, China is the expansion for the Asia Pacific area. Again, just on the product shipping logistics is a big issue and now being there, manufacturing in the region is much better. Speaker 400:39:48Great. And maybe if I can just ask one more. Just wondering what sort of interest you're seeing on your on the Giga casting plant. I appreciate that it's not opening until next year, but just wondering what you're hearing from some of the OEMs there? Speaker 100:40:05Yes. We're seeing interest from several different potential customers in the technology, both for the facility here and we also have a machine in place in Europe at the moment as well where we're doing some initial testing. So there's a potential in Europe potentially as well. Speaker 500:40:30And we're also seeing customers sort of change their strategy around Giga Castings and we have had meetings with customers that a year or a year and a half ago felt that the strategy of utilizing the large castings wasn't in their product mix and that seems to be shifting now. I think they're starting to realize the benefits of it and also just seeing what the their competition is doing. Operator00:41:06Your next question comes from Brian Morrison from TD Cowen. Your line is now open. Speaker 600:41:12Thanks very much and good evening. CreditWear, dude, well done. Nice beaten race. Can I ask a question on mobility? So what has changed to take the mobility margin to meaningful expansion from expansion? Speaker 600:41:26And then to take it one step further, what gets you back 7% in 2025? Is it margin increments from volume and then the maturation of acquisitions? Speaker 100:41:36Yes. I mean, as you've seen, we did see a meaningful expansion on the margin side. So I think that's an appropriate way to describe the performance of Q1 and where we expect the rest of the year to be. Again, key drivers are acquisitions made last year, last year. When I look out to 2025, I do expect further expansion on the mobility margin side and really that's driving out of continued launch rollout. Speaker 100:42:20So as noted, we have another significant increment up in terms of incremental sales from launching business. So all of that helps to drive better margins. Speaker 600:42:32Okay. Thanks. But maybe I can ask it another way. Are the contributions from Dura and from Mobex, are they margin enhancing? Or is that a tailwind as they ramp and mature? Speaker 100:42:44So I mean, it's a combination of margin enhancing and some business that's launching. So even within those businesses, some plants are still ramping up, others are more mature. So it's a combination, but acquisitions absolutely as a whole did help on the margin side. Speaker 600:43:13Okay. And then, Linda, the increased pricing on cost recovery not in the prior year, is this permanent pricing mechanism for inflation? Or should we think about it as one time? Speaker 100:43:23Well, I mean, this is related to much higher costs that we were seeing last year that we've had discussions with customers around how we can deal with. So it is a combination of piece price increases, sometimes some one time increases as well or one time settlements as well. But as noted, we do expect margins to stay in this range for the year. So obviously, there's this is not all lump sum. Speaker 300:44:07Yes. I'd add to that Brian that keep in mind 2023 was similar to 20 22 where we are absorbing cost increase basically in the first half as we're negotiating with customers. We started to get those recoveries in the second half and this is just the carryover to get those 23 recoveries. So it's very similar pattern that you would have saw in 20 22. Speaker 200:44:28Okay. Thank you, Dale. Okay. Speaker 600:44:30And then industrial, is the launch and the move cost to Mexico and China, are they complete? And did they actually impact the operating margin this quarter? Speaker 100:44:42I mean, in fact, the plants in China and Mexico are still ramping up. So there are some launch costs related to those facilities that actually were offsetting some of the earnings growth on the industrial side. So we expect to see that settling down once we get into next year. Okay. Speaker 600:45:04And then last question for me, Virgo, and maybe this is for Mark. Is the margin below that of the group upon acquisition? And then as you go through the integration, are you finding more procurement synergies within the segment or across segments as well? Speaker 100:45:24Yes. Well, I'll just comment on the margin side and then Mark can comment on the cross selling. So margin wise, they are in the range of our normal industrial segment, I would say on the lower end of the range, but we see lots of opportunity just as we did with Salford and MacDon and frankly Skyjack before them, opportunity to help enhance profitability through supply chain management, purchasing, streamlining lean systems, etcetera. So that's a big part of what of our overall strategy as I was describing earlier of bringing those lean systems and purchasing power and supply chain management capabilities to the table to improve profitability of acquired businesses and cash flow. Speaker 600:46:29Okay. I guess, in terms of procurement opportunities, Mark? Speaker 500:46:34Yes. As we talked about putting together the Lindemar Ag Group with MacDon Sulfur and Borgo now, We're definitely looking at utilizing the purchasing within all three groups to commonize parts and suppliers. So with Borgo just coming on in February, that's still ongoing, but we definitely see a lot of opportunities for cost savings for the industrial ag side and also maximizing the 3 brands from our product side. So a lot of that activity is just in the works now with Borgo being finalized at the beginning of February. Operator00:47:23Your next question comes from Michael Glen from Raymond James. Your line is now open. Speaker 700:47:29Hi, good evening. Just a starting question just on input cost on the industrial business. Like how have you seen input cost trend there over the past year? Have you seen input costs in general come in a bit or stable? Just trying to understand how that side of the equation is working. Speaker 100:47:49Yes. I mean, certainly, we had supply chain issues over the last couple of years. So that has some impact in the segment. From a commodity perspective, we've seen some commodity prices settling back down a little bit. So that has an opposing impact. Speaker 100:48:13I would say overall, we haven't seen a huge shift in just the last few months. We certainly saw some big increases over the last couple of years, which we have to deal with. But I do think things have settled out a little bit better at the Speaker 700:48:31moment. Okay. And then with and then just moving to pricing in Access Equipment specifically, have there been any changes in pricing behavior among your peers? Like do you have any expectation that the business could become more competitive with pricing? Speaker 100:48:54Yes. I mean, it's always a competitive market in terms of pricing. So I don't expect that to change. I mean, everybody is chasing the business. So I don't see big changes, but I mean, it's always been competitive and it will continue to be competitive pricing. Speaker 700:49:20Okay. And then just on just going back to the customer cost recoveries, are these I think a similar question was asked before, but just trying to get some clarification. Is this is there a component of these costs in the quarter that were one time in nature? Or is it it will persist through the balance of the year? Just trying to get some specific clarity on that. Speaker 100:49:47Yes. So I mean, there wasn't anything significant that was a lump sum in the quarter or we would have indicated that. So this is piece price increases. Speaker 700:50:03Okay. And the cadence on free cash to think about for the rest of the year, would it I think in prior years, it does typically come in quite heavy in Q4. Would we expect a similar pattern for this year? Speaker 100:50:21I mean, it's my expectation to see positive free cash flow in each subsequent quarter. Q1 is normally down just with usually it's a big jump in terms of sales in Q1 compared to Q4. So there's a draw on non cash working capital. But subsequent quarters, I expect to all be good positive free cash flow. Speaker 700:50:56Okay. Yes. No, recognize that there's seasonality in the free cash profile for you. Okay. Thank you. Speaker 100:51:03Thank you. Operator00:51:07Your next question comes from Sami Chen from BMO Capital Markets. Your line is now open. Speaker 800:51:14Hi, good afternoon. Thanks for the question. Sticking with the recoveries here, I was just wondering, are you as you look at the business now, I guess particularly in mobility, with respect to recoveries from customers, do you feel at point you've caught up to the cost inflation you had been experiencing and absorbing last year and the year before? Or do you expect you still need to have continued negotiations and discussions to keep pace with your costs? Speaker 100:51:43Yes. I mean, we've dealt with many of the cost issues, but there's certainly ongoing commercial issues that we're dealing with customers on. It's a volatile timeframe with volumes shifting around and costs shifting around. So there's a more than normal level of commercial discussion activity over the last couple of years and there's certainly still some ongoing discussions. Speaker 800:52:18Okay. Got it. And Linda, I found the slide where you gave breakdown of purpose equipment special purpose equipment and what's flexible and redeployable helpful. The 16% to 84%, I mean should we think about that I think about your business, the 16%, is that largely reflecting the Zura Shiloh business? And over time, would that also grow as your gigacasting facility comes online? Speaker 100:52:52Those figures actually don't even include Urushalo and Mobex. It's a small footnote, but it does note on the slide that we don't have all of their asset information in this analysis just yet. But so in the 15%, 16% is really more assembly equipment, I would say, in the odd special purpose type equipment, which generally our machining, casting, forging equipment is all fully flexible to do a wide variety of products. It's really more the assembly equipment that tends to be a little more special purpose. And I would say just notionally, Mobex and Dura would actually be quite similar. Speaker 100:53:37I mean, a lot of the equipment that they have, even on the DuraSci, robotics, welding equipment, all of that can be reallocated as well. But I don't have it in these numbers at the moment. Speaker 800:53:54Okay. Thanks for clarifying that. And on the gigacasting in Welland, I was wondering if you could talk about how you're progressing on that. I know you've been doing some of the traveling in Europe. Can you remind us of when that will start coming online? Speaker 800:54:09And do some of the recent OEM announcements of certain EV delays impacted? And do you have volume commitments from the one customer you've secured so far there? Speaker 100:54:20Yes. So I mean, obviously, a lot of EV programs have seen volume cuts or delays to launch. And our Giga project is of course impacted as well. So we are expecting some delay on that program. That said, as I say, any casting equipment is flexible. Speaker 100:54:45So obviously, we're going to see what else we can find to utilize the equipment and then work with our customers around how do we manage the situation. I can't disclose specifics around contracts and with specific customers and projects. But I can tell you that in general around major investments like this or in the EV space, as I mentioned in my formal comments, we try to be quite careful in terms of mitigating our risk, sharing risk with our customers in a variety of ways. So that's certainly been the case. Speaker 500:55:36And it should also be noted that the capacity was coming in and being staged over time. We weren't going to a deadline where from start of production we had to have all the capacity in place. So we do have a ramp that goes over time with that. So any delays is not impacting the full capacity. Speaker 800:56:03Okay. Got it. If I could squeeze in one more here on Skyjack. It sounds like your 2 other large competitors are capacity constrained recently. I'm just wondering, do you find that some of your recent share gains have been partially helped by that situation there? Speaker 800:56:21Because I think they're opening additional capacity sometime next year. So I'm just wondering how you're thinking about that. Thank you. Speaker 100:56:31Yes. I mean, it's always good to have competitors who are capacity constrained. So is that playing a role potentially? But I have to say that we've been regularly growing our market share for our Skyjack products, which our customers love for their simplicity, reliability and high quality. That is a mandate of the design of the SkyJacks that we have long utilized and that our customers really appreciate. Speaker 100:57:09And I think that's why they're buying our product. Speaker 800:57:15Great. Thanks for taking my question. Operator00:57:32There are no further questions at this time. Linda, please proceed with your closing remarks. Speaker 100:57:37Thank you so much. Well, to conclude this evening, I'd like to leave you with 3 key messages. First, we are thrilled to have met our long time goal of reaching 10 $1,000,000,000 in sales. It was a long time coming and really proud of the team for that. 2nd, we are also very pleased to have delivered such a strong quarter of double digit top and bottom line growth and to be poised for the same for our full year again. Speaker 100:58:02And finally, we are particularly happy with the performance of our Mobility segment, which has bounced back from lows seen last year and is on the way back to getting back to normal operating margin levels. Thanks very much and have a great evening. Operator00:58:21Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallLinamar Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release Linamar Earnings HeadlinesDespite the downward trend in earnings at Linamar (TSE:LNR) the stock increases 3.0%, bringing five-year gains to 56%April 14, 2025 | uk.finance.yahoo.comStocks Perk Ahead of Tariff ReleaseApril 3, 2025 | theglobeandmail.comTrump Orders 'National Digital Asset Stockpile'‘Digital Asset Reserve’ for THIS Coin??? Get all the details before this story gains even more tractionApril 18, 2025 | Crypto 101 Media (Ad)TSX Closer: The Index Books a Rare Flat Session as Tariff Worries Dominate MarketsMarch 27, 2025 | msn.comTSX Closer: The Index Moves Lower as Trump Set to Announce Auto TariffsMarch 27, 2025 | msn.comWill Tariffs Crush These Canadian Manufacturing Stocks?March 25, 2025 | msn.comSee More Linamar Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Linamar? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Linamar and other key companies, straight to your email. Email Address About LinamarLinamar (TSE:LNR), together with its subsidiaries, produces engineered products in Canada, Europe, the Asia Pacific, and rest of North America. It operates through two segments, Mobility and Industrial. The Mobility segment focuses on light metal casting, forging, machining, and assembly for electrified and powered vehicle markets. It also focuses on components and systems for global mobility market; and design, development, and testing services. The Industrial segment manufactures scissor, boom, and telehandler lifts for the aerial work platform industry. This segment also manufactures draper headers and self-propelled windrowers for the agricultural harvesting industry, as well as supplies farm tillage and crop fertilizer application equipment. Linamar Corporation was founded in 1964 and is headquartered in Guelph, Canada.View Linamar ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 9 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the Linamar Q1 20 24 Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded today, Wednesday, May 8, 2024. I would now like to turn the conference over to Linda Hasenfratz, Executive Chair and CEO. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you. Good afternoon, everyone, and welcome to our Q1 conference call. Joining me this afternoon are members of our senior teams, Mark Stotter, Dale Schneider, Ali Berger, Kevin Allianz and some members of our corporate IR, marketing, finance and legal team. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast. I'll start off with a high level review of the quarter. Speaker 100:01:01Q1 was an excellent quarter and a strong start to what looks to be another solid year for us at Linamar. Financially, we once again have delivered double digit top and bottom line growth for the quarter. And on a 12 month basis, I'm very pleased to report that we have exceeded $10,000,000,000 in annual sales, a goal that we set for ourselves way back in 1999 when we were approaching $1,000,000,000 in sales. What an exciting milestone to achieve. I am so proud and grateful to our incredible team at Linamar to have made that happen. Speaker 100:01:36Strategically, we also achieved a milestone with the completion of our Bordeaux acquisition announced late last year. Integration has begun and we are very excited to welcome the Bordeaux team to the Linamar team. Markets are flat to modestly growing this year, but market share growth in both segments is driving record sales in the quarter. And finally, on the innovation and new business side, we are seeing continued new business wins in the balance of technology and propulsion areas and new award winning innovations getting market attention. Let's take a closer look at each of these areas and we'll start with the financial results. Speaker 100:02:16Sales for the quarter hit a new record of $2,720,000,000 up 19% to last year on solid launches, market share growth, acquisitions as well as better pricing. Normalized EPS for the quarter was up 31% to $2.59 which is outstanding, and net normalized margins expanded to 5.9%. Organic earnings growth was also at a strong double digit level. I think it was particularly notable to see the solid performance of the mobility segment this quarter with normalized OE growing a fantastic 58% and margins improving meaningfully to 6.2% after a challenging few years. Some of the key factors impacting results in the quarter were the 2023 2024 acquisitions in both Mobility and Industrial segments, both contributing to our results this quarter. Speaker 100:03:17Launching business and better pricing in the Mobility segment is also driving great sales and earnings growth. Our agricultural businesses are performing strongly in the quarter, notably at MacDon. Q1, I will also note, is normally Sulfur's strongest quarter seasonally. And finally, additional launch costs, higher SG and A and fixed costs business. It's great to see the continued positive trends in our financial results over the long term. Speaker 100:03:54We continue to be on track for a new record level of earnings performance for 2024. Turning to the balance sheet, we see a similarly positive performance. Our balance sheet has remained consistently strong despite higher acquisition activity and a resumption of more normal CapEx spending after a couple of light spending years during COVID. Net debt is sitting at $1,830,000,000 at the end of Q1, which is 1.24 times EBITDA, up from year end and last year at this time. Our 3 acquisitions impacted our leverage levels in comparison to both periods. Speaker 100:04:33We are still well below our goal of staying under 1.5 times EBITDA even with our higher than normal spending. We expect to be back under one times EBITDA within 12 to 18 months. We saw a small negative in free cash flow in the quarter of $39,300,000 as we normally do in the Q1 of the year with this big jump in sales and AR. We expect to see subsequent quarters this year positive in terms of free cash flow to finish the year overall strongly positive. We also expect 2025 to see strongly positive free cash flow. Speaker 100:05:14CapEx was higher than Q1 last year, but down from highs seen over the last few quarters. CapEx as a percentage of sales was 7%, right in line with the normal range of 6% to 8% to drive double digit growth. We expect CapEx to continue to moderate somewhat in dollar terms compared to last year and end up at the low end of our normal range of spending as a percent of sales for the year. Next year will see us again at the low end of our normal range of 6% to 8% to drive continued double digit growth. Turning to strategy and operations, we had a few notable items, including the grand opening of our new Skyjack facility in China with great support from local government and customers, and of course the completion of our acquisition of Borgo Industries on February 1. Speaker 100:06:07The integration is underway and is progressing very well. I'd like to take a minute again to remind you of the powerful synergistic diversification model that Linamar has developed. We have 2 key businesses, as you know, mobility and industrial. The mobility business is very large and global with excellent technology systems and a deep talent pool. There are significant growth opportunities for this business, which is capital intensive. Speaker 100:06:36The industrial business is more regional with a stronger presence in North America, but less purchasing power than our mobility segment. That said, they have low CapEx requirements, making them a good generator of cash. They also do an excellent job of managing their various brands of Skyjack, MacDon, Salford and Bordeaux and have excellent global growth potential. So here's how it works. The Mobility Group helps improve the performance of the industrial group by supplying talent, system expertise, a global network to ensure global growth and significant purchasing power to improve profit and cash flow. Speaker 100:07:14The industrial group then provides much needed cash for investment to the mobility segment as well as knowledge around effective brand management. It is a unique model, but it works exceptionally well to help us drive strong and consistent profitable growth, positive free cash flow and all the while maintaining a strong balance sheet. You don't need to take my word for it that this model drives consistent sustainable results. You only need to look at our track record. Year in year out with very few exceptions, we are delivering top and bottom line growth. Speaker 100:07:49The strong majority of those years as denoted by the star in the green box is double digit growth as well as free cash flow and double digit return on capital. Return on capital has been in double digits 93% over the last 14 years, every single year but when and that exception being 2020, the peak year of the pandemic. And we have generated free cash flow, 11 out of the last 14 years, every single year for the last 11 years, and we do expect to grow again in 2024. We are very proud of this track record of performance and it is one that we intend to continue to deliver on. Turning to market to market share, I would say we've had a very successful quarter again in terms of growing our market share. Speaker 100:08:37As just shown, Linamar has a great track record of growth, often in the double digit range. We achieved this year in and year out by growing market share. When markets are flat or declining, growing market share offsets market conditions to allow growth to continue. In the mobility business, we saw growth in content per vehicle in every region globally in the quarter with North America getting a new quarterly record level. In the access market, we increased global market share in syzolis, our largest product family at Skajak. Speaker 100:09:11And in the agricultural market, we saw excellent market share growth for our core palmine draper headers, which is our largest product family at MacDon. You can see here summarized market data for 2024 2025. On the mobility side, we're looking for flat production globally this year with industry expectations of 16,000,000, 17,500,000 and 51,700,000 vehicles produced in North America, Europe and Asia, respectively. This represents a plus or minus 2% change depending on the region. Next year, we expect to see modest market growth in most regions. Speaker 100:09:52The big story this year in the mobility business continues to be the dial back on battery electric vehicles in favor of more traditional internal combustion and hybrid electric vehicle models. Lindemar's flexible strategy of securing business in every type of propulsion and utilizing flexible equipment that can shift from one type of product to another is very helpful in this more volatile production environment. On the access side, industry experts are predicting flat markets in the access industry globally this year, plus or minus 1% to 2%, depending on the global region and product. Booms are the only product seeing modest growth in all regions, which is a key area of market share growth for us. Our backlog at Skyjack is strong and remains ahead of historical norms as we work to fill customer orders. Speaker 100:10:44With reasonably stable markets and predicted market share growth, we feel confident we can again grow Skyjack in double digits this year. Next year, markets will see moderate growth resume, helping Skyjack to continue its growth path. We see the flat 2024 as a resettlement period post COVID growth as opposed to the start of a downward cycle. We expect the following years to return to more conservative and historic growth patterns with a change from fleet growth to fleet replenishment. In North America, rental companies remain bullish about manufacturing activity on the back of the Inflation Reduction Act, on shoring and a large number of mega projects to extend beyond 2024. Speaker 100:11:30In China, after a flat 24, we see growth returning. And while it may not be at recent historical levels, it does represent a significant volume opportunity. On the agricultural side, industry expectations, of flat market for the combined draper header market this year in North America with declines in other parts of the world. The Windrow market will also see fairly flat global markets this year. Nevertheless, the order book remains strong for MacDon. Speaker 100:11:59Orders for combine papers, our largest product family are ahead of orders at this point last year. Sulfur products and tillage and crop fertilization equipment more aligned with the high horsepower tractor market is also seeing flat to down markets this year on a global basis. Our current forecast is for mid single digit growth for MacDon and Salford combined this year. Finally, the order book for our new Bordeaux business is consistent with historical levels and looking for a stable year in terms of performance. As a reminder, this business runs at about $450,000,000 in annual revenue, and we acquired it as of February 1 this year. Speaker 100:12:42The combination of growth at Back Down Salford and our new business, Borgo, will result in double digit growth for our agricultural business this year. Next year, markets will again be flat to down. With market share growth globally and cross selling opportunities, we expect to see moderate continued growth for our ag business in 2025 at a more muted level given market conditions. We saw another quarter of solid market share growth in our mobility business with global content per vehicle up over last year. All three regions saw content per vehicle growth on launching business and North America has reached a new quarterly high of almost $2.95 of content per vehicle. Speaker 100:13:31As noted, we're growing market share in key products and regions within our Industrial segment businesses. Here you can see the mapped on global Draper header market share, which is on a solid upward trend, reflecting the continued adoption of MacDon Flex Draper Technology over legacy auger headers on a global basis. Turning to innovation and new business, we've seen another strong quarter in wins for the mobility business. The wins are a great balance of propulsion agnostic components and powertrain products for a variety of propulsion types in alignment with our strategy to maintain strong content potential and sales exposure to each. In our access business, our micro scissor program rollout continues to generate positive market reaction. Speaker 100:14:19And in our ag business, we have had 2 new innovative product launches. Some interesting mobility wins in the quarter were for propulsion agnostic structural components, including knuckles and housing, and some great wins for gears and differential for ICE and hybrid vehicles. With respect to our launch book, we're seeing ramping volumes on launching programs, which are predicted to reach 30% to 40% of material levels this year, generating incremental sales of $600,000,000 to $800,000,000 Next year, we will see another $700,000,000 to $900,000,000 of incremental sales as volumes on these programs continue to ramp up. The programs will peak at nearly $3,400,000,000 in sales. I'll note nearly $200,000,000 of programs moved from launch to production last quarter. Speaker 100:15:10You can see here the split of Lindemar's business once we get out into the 20 28 timeframe as a result of all of those launches. But again, a good blend of propulsion agnostic, which again is basically anything for the driveline, body and chassis systems, as well as electric vehicle powertrain and ICE powertrain driving out of this good mix of business wins. Close to 40% of business in 2028 is propulsion agnostic, 60% is powertrain with a split, about 1 third to EV and 2 thirds to ICE within that. I think this is a good position to be in to weather potentially shifting market adoption of different technologies, have a solid chunk of propulsion agnostic business, a good blend of powertrain for different forms of propulsion. As time goes on, the proportion that is EV powertrain will naturally grow as these vehicles become more prominent. Speaker 100:16:05In 2028, there will still be plenty of ICE vehicles, hence the heavier ICE powertrain focus and sales at that time. That will shrink over the ensuing 5 years to become more and more hybrid electric and battery electric and ultimately fuel cell electric powertrain concentration in alignment with the market. Flexibility and a wide range of platform coverage is the name of the game during the next decade as the mobility market transitions. In fact, flexibility is really the key to managing any major transition of technology. No technology adoption will be a straight line. Speaker 100:16:42There's always going to be ups and downs just as we're seeing now on the EV side with the dial back in the market. At Linne Road, we've always believed that our levels of flexibility should directly correlate to levels of uncertainty. There will be uncertainty with respect to timing and volumes of different vehicle platforms over the coming years. That means we need to stay as flexible as possible. We've done that in a few really important ways. Speaker 100:17:09First, we created a product portfolio with equal potential for any type of vehicle propulsion. Next, we've tried to ensure we have content across a wide variety of platforms to optimize sales potential based on market demand. And finally, we have maximized the use of flexible equipment wherever possible to shift capacities between programs based on market demand. We can, in many cases, use the very same equipment for components we're making for electric vehicles to use for ICE vehicle components and vice versa. This flexibility is key to ensure we minimize underutilization of assets. Speaker 100:17:47In fact, 84% of our assets in our mobility business are flexible and can be reallocated to a different project, whether general combustion, hybrid electric, battery electric or fuel cell electric. That kind of flexibility is key to managing this transition. Also key are the commercial terms that we agreed to with customers. We must be more commercially astute in terms of contracts, commitments and expectations and suppliers have typically been in the past with our OEM customers. Be assured we are doing all of this in order to successfully navigate and take advantage of opportunities that will come in these transition years in the mobility industry. Speaker 100:18:32And of course, our growing industrial business continues to help insulate us as well from being too exposed to any one industry. In fact, over half of our earnings are coming from our industrial businesses. Turning to this quarter's innovation update, I'd like to first highlight an example of the Linamar Structures Group light weighting capabilities. Here you can see an FTA semi trailing arm casting design that we produced in our newly acquired MOBEC site. This component goes into a battery electric vehicle life truck application. Speaker 100:19:07Originally, the engineering team at our OEM customer didn't believe that aluminum casting was feasible for this application and thought they would need to make it in cast iron. Our engineering team was able to deliver a lightweight design in aluminum using vacuum modulates and pressure modulates casting processes that saves nearly 9 kilograms of weight per vehicle. The design was recently recognized by the American Foundry Society for the best in class award in its annual casting of the year competition. Next at Skyjack, our new micro scissor models have officially launched. These scissor models fill a segment at the low end of product range with working heights of 13 19 feet. Speaker 100:19:52The new models of Pure Elective Drive and their micro footprint allows them to operate in tight workspaces and even navigate into elevators. The micro category within the overall fuselage market has been a growing segment the past few years. This Skyjack offering provides the leading product to now better address this. At Bacton, their new R1FR model was launched to the ag market on March 1. The front mount rotary disc series is a new mower conditioner that can mount to the front of a tractor. Speaker 100:20:25The new model expands upon our current rotary Hays portfolio and enables farmers to double their productivity when paired with the existing full type R1 mower conditioner. Another innovation focused on in field performance for MacDon, the industry's harvesting specialists. And lastly, you get a further sense of the type of technology leadership we acquired through Forgo. From this example, the XR8 series extended range harrows cover a lot of ground, up to 130 acres per hour, in fact, within the availability in both 90 and 110 foot widths. All settings and functions can be fully controlled from the cab of the tractor. Speaker 100:21:09The XR Series offers exceptional performance even in fewer conditions with tough yield revenue and extreme contours. The XR Heroes helps spread crop revenue to better prepare for next year's planting, another example of how Borgo is pursuing perfection. Let's turn to a summary of our outlook. As I've already noted, we expect to see double digit top line growth in both our agricultural business and Skyjack and therefore the industrial segment as a whole in 2024 and continued growth in 2025. We are expecting to see high single digit to low double digit top line growth in our Mobility segment for 2024 based on launches of $600,000,000 to $800,000,000 this year and current market production expectations. Speaker 100:22:032025 will see continued growth based on further launch ramp ups of 700 $100,000,000 to $900,000,000 and the market growth that's expected for next year. Growth in both segments will lead to double digit top line growth for Linamar overall this year and continued growth next year. Net margins will expand again in 2024 on growing sales driving mainly at meaningful margin expansion in the mobility business as you have already seen delivered in Q1. The industrial segment will continue to perform in its normal 14% to 18% range, again, as already seen in the Q1 of the year. 2025 will see the Mobility segment margins expand further and back into our normal 7% to 10% range, and the industrial segment will continue to perform in its normal 14% to 18% range. Speaker 100:22:56This will mean strong double digit growth in Mobility segment OE this year and another year of double digit OE growth in the Industrial segment as well, which of course will drive strong double digit EPS growth for us overall as well. For 2025, expect another year of strong double digit earnings growth in the mobility segment and continued growth in industrial for an overall expectation of continued double digit EPS growth for us in 2025. CapEx will be down in dollars from a very robust 2024 level of spending and at the low end of sorry, 2023 level of spending and at the low end of our normal 6% to 8% of sales. Next year, we'll also see spending at the low end of our normal 6% to 8% of sales, which of course is what drives our double digit growth. We expect strongly positive free cash flow this year and next year, leaving us in an excellent position from which to drive further growth. Speaker 100:24:00Looking specifically at Q2, you should expect double digit top and bottom line growth in comparison to prior year with OE margins compared to last year as well. The Mobility segment will see double digit sales and OE growth to prior year, driving from the 2023 acquisitions, launching business and continued impact of customer cost recoveries. I will note that the EV dialback as it's known today has been considered in this guidance, but is of course a fluid situation that we're keeping an eye on. The industrial segment will see double digit sales and OE growth to last year, thanks to a full quarter of forego and continued growth in both the underlying agricultural and industrial businesses. With that, I'm going to turn it over to our CFO, Dale Schneider, to lead us through a more in-depth in-depth financial review. Speaker 200:24:54Over to you, Dale. Speaker 300:24:55Thank you, Linda, and good afternoon, everyone. As Linda noted, Q1 was an exceptional quarter as we achieved double digit sales growth at 18.7 percent and net earnings growth of 52.6%. Mobility margins continue to expand from both Q4 and Q1 2023 levels. Q1 was also another strong liquidity quarter at 1,300,000,000 dollars For sales in the quarter, sales increased 18.7% to a new record of $2,700,000,000 Earnings are normalized for FX gains or losses related to revaluation of the balance sheet and potentially other items that may have occurred in the quarter. In the quarter, earnings were normalized for an FX gain related to the revaluation of the balance sheet, which impacted EPS by $0.31 per share. Speaker 300:25:48Normalized operating earnings for the quarter were $243,800,000 This compares to $175,800,000 in Q1 2023, an increase of $68,000,000 or 38.7 percent. Normalized net earnings increased 37 $900,000 or 31.1 percent in the quarter to 159,600,000 dollars Fully diluted normalized EPS increased by $0.61 or 30.8 percent to $2.59 Included in earnings for the quarter was a foreign exchange gain of $24,900,000 which resulted in from a $25,400,000 gain related to the revaluation of our operating balances and a $500,000 loss from the revaluation of our financing balances. As I mentioned, the net FX gain impacted the quarter's EPS by $0.31 From a business segment perspective, the Q1 FX gain of $25,400,000 related to the revaluation of operating balances was a result of a $19,500,000 gain in Industrial and a $5,900,000 gain in Mobility. Further looking at the segments. Industrial sales increased by 24.5 percent or $143,600,000 $728,600,000 in the quarter. Speaker 300:27:16The sales increase for the quarter was primarily due to the additional sales from the 1st 2 months of results from the Borgo acquisition and the substantial increase in agricultural sales driven by global market share growth on Draper's. Normalized industrial operating earnings for Q1 increased $22,700,000 or 23.3 percent over last year to $120,200,000 The primary drivers impacting industrial earnings were the increased contribution from the steep increase in agricultural equipment volumes, the increased contribution from the acquisition of Borgo, which were partially offset by increased launch costs related to new facilities for Skyjack in Mexico and China and also from increased SG and A costs that are supporting our growth. Turning to Mobility. Sales increased by $285,600,000 or 16.7 percent over Q1 last year to a new record of $2,000,000,000 The sales increase in the Q1 was driven by the additional sales from our Limb Restructures acquisitions in 2023, the increased volumes on launching and certain mature programs, plus the customer cost recoveries achieved in the quarter, which were partially offset by the lower volumes in certain programs that are naturally winding down to end of life. Q1 normalized operating earnings for mobility were up 57.9% over last year at 123,600,000 dollars In the quarter, mobility earnings were impacted by the added contribution related to the Structures acquisitions last year, the increased contribution from the higher volumes on launching and certain mature programs, the customer cost recoveries achieved, which are partially offset by lower volumes at ending programs and the increased SG and A costs that are supporting the growth in the segment. Speaker 300:29:16Turning to the overall Linamar results. Company's gross margin was $393,200,000 an increase of $92,700,000 compared to last year and was due to the same factors that drove the segment results. COGS amortization expense for the Q1 increased to $139,200,000 compared to Q1 2023 mainly due to the acquisitions in 2023 and 2024 related to Linamar Structures and Bordeaux in addition to launching programs. COGS amortization of the Priscilla sales though remained relatively flat at 5.1%. SG and A costs increased in the quarter to $151,700,000 from $124,700,000 last year. Speaker 300:30:03The increase is primarily the result of the incremental SG and A costs from the acquisitions related to the Structures Group and for BOGO. Additionally, we also had increased management sales costs that were supporting the growth. Finance expenses increased $19,700,000 since last year primarily due to the private placement notes issued in June 23 to fund the Linamar Structures acquisitions, the new term credit facility used to fund the Bargo acquisition, the added interest expense related to leases acquired part of the Structures acquisition and additional interest expense due to the Bank of Canada and the U. S. Spend rate increases compared to last year. Speaker 300:30:48Consolidated effective interest rate for Q1 was 5.2%. Effective tax rate for the 1st quarter decreased to 24.4% compared to last year, primarily due to the Q1 2023 withholding tax impact, which did not reoccur this year related to the repatriation of cash from China. Also the more favorable mix in foreign tax rates, these were partially offset by an increase in nondeductible expenses compared to last year and an increase in unused tax losses that have not been recognized as deferred tax assets yet. The Q1 effective tax rate was 24.4% and was within a range of 24% to 26%. For 2024, the full year effective tax rate is expected to be in that range as well of 24% to 26% and is currently expected to be similar to the 2023 full year tax rate of 25.6%, which is before the impact of the 2023 China withholding tax. Speaker 300:31:57Nemariz's cash position was $787,200,000 on March 31, an increase of $133,900,000 compared to December 3. The Q1 generated $150,100,000 in cash from operating activities, which was used primarily to fund CapEx. The net debt to EBITDA increased 101.24 times in the quarter from a year ago mainly due to the acquisitions in 23 of Linamar Structures and the acquisition of Borgo in Q1 of this year. Based on our current estimates, we're expecting 2024 to maintain our strong balance sheet and we're expecting to deleverage under 1x in the next 12 to 18 months. The amount of available credit on our credit facilities was $522,900,000 at the end of the quarter. Speaker 300:32:47Our available liquidity at the end of Q1 remained strong at $1,300,000,000 As a result, we currently believe we have sufficient liquidity to satisfy our financial obligations throughout the year. To recap, sales and earnings for the quarter was a story of improving performance in both segments, which drove double digit sales growth of 18 point 7% and normalized EPS growth of 30.8%. The Industrial segment continued to grow sales significantly by 24 point 5%. Mobility achieved a new record for sales with double digit sales growth over last year in addition to continuing to expand the normalized margins to 6.2%. Additionally, Q1 had strong liquidity levels at $1,300,000,000 It was a great quarter for outperformance in both sales, earnings while maintaining a strong balance sheet. Speaker 300:33:40That concludes my commentary. And I now would like to open up for questions. Operator00:33:48Thank you. Ladies and gentlemen, we will now conduct the question and answer session. Your Your first question comes from Jonathan Goldman from Scotiabank. Your line is now open. Speaker 200:34:15Good evening and thanks for taking my questions. So the first one, significant step up in the mobility margins quarter on quarter. Can you discuss the underlying drivers of the performance and whether Q1 margins are the appropriate starting point going forward, obviously outside of the typical seasonality? Speaker 100:34:34Yes, absolutely. Yes, we did see a great recovery in the mobility segment, both in terms of looking at same quarter last year as well as last quarter. Key drivers are quartz acquisitions that we made last year, the impact of launching business, negotiated price release to offset higher costs that we were experiencing last year are also starting to be realized. So all of that was a factor in the higher earnings and in the higher margins. With respect to the rest of the year, I think that Q1 mobility margin level is probably a reasonable proxy for the year, up or down a little depending on the quarter. Speaker 200:35:27Okay. That's great color. Thanks. And maybe switching to ag, just a couple here. How is Borgo performing relative to your original expectations when you originally announced the acquisition? Speaker 100:35:38Yes. I mean, it's performing well. As I say, it's running at expected levels of sales. The integration is going very well, so meeting expectations. Speaker 200:35:53Perfect. And then I guess one more on ag. It's the 2nd quarter in a row now that you call those share gains and combine drapers. Can you elaborate on the drivers of those gains? And do you expect that momentum to continue through the balance of the year? Speaker 100:36:07Yes. I mean, growing our share in all of our industrial businesses is a key strategy, both in terms of product expanding our product line up as well as global expansion, so selling more of these products on a global basis. So I mean that's exactly what we're seeing with MacDon. We're seeing great adoption of their Draper's in global markets. So that's a key driver of their market share growth and they continue to have very strong market share in North America as well. Speaker 200:36:52That's great to see. Thanks for taking my questions. Pleasure. Operator00:36:58Your next question comes from Christoph Friesen from CIBC. Your line is now open. Speaker 400:37:06Hi. Congrats on the quarter. Very strong showing, especially in Mobility, great margins there. I was just wondering if you can speak to how we should think about the cadence of margins through the rest of the year and maybe if this level is sustainable and if there's upside from here? Speaker 100:37:27Yes. I think that the Q1 mobility margin level is a reasonable proxy for the year. It might be up or down a little depending on the quarter, but I do think it's sustainable. Speaker 400:37:44Okay, great. And then maybe just on Skyjack. You're clearly seeing a lot of growth there and expect to see continued growth. And I believe some of that is through the geographic expansion and product line expansion. Can you speak to how things are going with the geographic expansion and what other countries you might be focused on? Speaker 100:38:08Yes. I mean, as you know, we've built 2 new facilities for Skyjack, 1 in Mexico to better serve the southern part of the U. S. And one in China to take advantage of an exciting market there. So that is definitely part of what's driving our growth at Skyjack. Speaker 100:38:34I think also the China facility gives us better access to the Asian market overall just from a logistics perspective. We're a lot closer to market, for instance, to Australia or other points within Southeast Asia than we are from North America. So that makes us a lot more competitive in those markets. So I think we'll see some great growth there as well. Speaker 500:39:02Yes. Chris, just to elaborate, definitely for us with the Mexican operation, getting the telehandler production moved down into there has been going quite well. We've now got product coming out and as Linda said really servicing that sort of Southern U. S. From a logistics side of things, I mean the product doesn't ship well. Speaker 500:39:26So we're able to get the product in for good logistics cost. And really, China is the expansion for the Asia Pacific area. Again, just on the product shipping logistics is a big issue and now being there, manufacturing in the region is much better. Speaker 400:39:48Great. And maybe if I can just ask one more. Just wondering what sort of interest you're seeing on your on the Giga casting plant. I appreciate that it's not opening until next year, but just wondering what you're hearing from some of the OEMs there? Speaker 100:40:05Yes. We're seeing interest from several different potential customers in the technology, both for the facility here and we also have a machine in place in Europe at the moment as well where we're doing some initial testing. So there's a potential in Europe potentially as well. Speaker 500:40:30And we're also seeing customers sort of change their strategy around Giga Castings and we have had meetings with customers that a year or a year and a half ago felt that the strategy of utilizing the large castings wasn't in their product mix and that seems to be shifting now. I think they're starting to realize the benefits of it and also just seeing what the their competition is doing. Operator00:41:06Your next question comes from Brian Morrison from TD Cowen. Your line is now open. Speaker 600:41:12Thanks very much and good evening. CreditWear, dude, well done. Nice beaten race. Can I ask a question on mobility? So what has changed to take the mobility margin to meaningful expansion from expansion? Speaker 600:41:26And then to take it one step further, what gets you back 7% in 2025? Is it margin increments from volume and then the maturation of acquisitions? Speaker 100:41:36Yes. I mean, as you've seen, we did see a meaningful expansion on the margin side. So I think that's an appropriate way to describe the performance of Q1 and where we expect the rest of the year to be. Again, key drivers are acquisitions made last year, last year. When I look out to 2025, I do expect further expansion on the mobility margin side and really that's driving out of continued launch rollout. Speaker 100:42:20So as noted, we have another significant increment up in terms of incremental sales from launching business. So all of that helps to drive better margins. Speaker 600:42:32Okay. Thanks. But maybe I can ask it another way. Are the contributions from Dura and from Mobex, are they margin enhancing? Or is that a tailwind as they ramp and mature? Speaker 100:42:44So I mean, it's a combination of margin enhancing and some business that's launching. So even within those businesses, some plants are still ramping up, others are more mature. So it's a combination, but acquisitions absolutely as a whole did help on the margin side. Speaker 600:43:13Okay. And then, Linda, the increased pricing on cost recovery not in the prior year, is this permanent pricing mechanism for inflation? Or should we think about it as one time? Speaker 100:43:23Well, I mean, this is related to much higher costs that we were seeing last year that we've had discussions with customers around how we can deal with. So it is a combination of piece price increases, sometimes some one time increases as well or one time settlements as well. But as noted, we do expect margins to stay in this range for the year. So obviously, there's this is not all lump sum. Speaker 300:44:07Yes. I'd add to that Brian that keep in mind 2023 was similar to 20 22 where we are absorbing cost increase basically in the first half as we're negotiating with customers. We started to get those recoveries in the second half and this is just the carryover to get those 23 recoveries. So it's very similar pattern that you would have saw in 20 22. Speaker 200:44:28Okay. Thank you, Dale. Okay. Speaker 600:44:30And then industrial, is the launch and the move cost to Mexico and China, are they complete? And did they actually impact the operating margin this quarter? Speaker 100:44:42I mean, in fact, the plants in China and Mexico are still ramping up. So there are some launch costs related to those facilities that actually were offsetting some of the earnings growth on the industrial side. So we expect to see that settling down once we get into next year. Okay. Speaker 600:45:04And then last question for me, Virgo, and maybe this is for Mark. Is the margin below that of the group upon acquisition? And then as you go through the integration, are you finding more procurement synergies within the segment or across segments as well? Speaker 100:45:24Yes. Well, I'll just comment on the margin side and then Mark can comment on the cross selling. So margin wise, they are in the range of our normal industrial segment, I would say on the lower end of the range, but we see lots of opportunity just as we did with Salford and MacDon and frankly Skyjack before them, opportunity to help enhance profitability through supply chain management, purchasing, streamlining lean systems, etcetera. So that's a big part of what of our overall strategy as I was describing earlier of bringing those lean systems and purchasing power and supply chain management capabilities to the table to improve profitability of acquired businesses and cash flow. Speaker 600:46:29Okay. I guess, in terms of procurement opportunities, Mark? Speaker 500:46:34Yes. As we talked about putting together the Lindemar Ag Group with MacDon Sulfur and Borgo now, We're definitely looking at utilizing the purchasing within all three groups to commonize parts and suppliers. So with Borgo just coming on in February, that's still ongoing, but we definitely see a lot of opportunities for cost savings for the industrial ag side and also maximizing the 3 brands from our product side. So a lot of that activity is just in the works now with Borgo being finalized at the beginning of February. Operator00:47:23Your next question comes from Michael Glen from Raymond James. Your line is now open. Speaker 700:47:29Hi, good evening. Just a starting question just on input cost on the industrial business. Like how have you seen input cost trend there over the past year? Have you seen input costs in general come in a bit or stable? Just trying to understand how that side of the equation is working. Speaker 100:47:49Yes. I mean, certainly, we had supply chain issues over the last couple of years. So that has some impact in the segment. From a commodity perspective, we've seen some commodity prices settling back down a little bit. So that has an opposing impact. Speaker 100:48:13I would say overall, we haven't seen a huge shift in just the last few months. We certainly saw some big increases over the last couple of years, which we have to deal with. But I do think things have settled out a little bit better at the Speaker 700:48:31moment. Okay. And then with and then just moving to pricing in Access Equipment specifically, have there been any changes in pricing behavior among your peers? Like do you have any expectation that the business could become more competitive with pricing? Speaker 100:48:54Yes. I mean, it's always a competitive market in terms of pricing. So I don't expect that to change. I mean, everybody is chasing the business. So I don't see big changes, but I mean, it's always been competitive and it will continue to be competitive pricing. Speaker 700:49:20Okay. And then just on just going back to the customer cost recoveries, are these I think a similar question was asked before, but just trying to get some clarification. Is this is there a component of these costs in the quarter that were one time in nature? Or is it it will persist through the balance of the year? Just trying to get some specific clarity on that. Speaker 100:49:47Yes. So I mean, there wasn't anything significant that was a lump sum in the quarter or we would have indicated that. So this is piece price increases. Speaker 700:50:03Okay. And the cadence on free cash to think about for the rest of the year, would it I think in prior years, it does typically come in quite heavy in Q4. Would we expect a similar pattern for this year? Speaker 100:50:21I mean, it's my expectation to see positive free cash flow in each subsequent quarter. Q1 is normally down just with usually it's a big jump in terms of sales in Q1 compared to Q4. So there's a draw on non cash working capital. But subsequent quarters, I expect to all be good positive free cash flow. Speaker 700:50:56Okay. Yes. No, recognize that there's seasonality in the free cash profile for you. Okay. Thank you. Speaker 100:51:03Thank you. Operator00:51:07Your next question comes from Sami Chen from BMO Capital Markets. Your line is now open. Speaker 800:51:14Hi, good afternoon. Thanks for the question. Sticking with the recoveries here, I was just wondering, are you as you look at the business now, I guess particularly in mobility, with respect to recoveries from customers, do you feel at point you've caught up to the cost inflation you had been experiencing and absorbing last year and the year before? Or do you expect you still need to have continued negotiations and discussions to keep pace with your costs? Speaker 100:51:43Yes. I mean, we've dealt with many of the cost issues, but there's certainly ongoing commercial issues that we're dealing with customers on. It's a volatile timeframe with volumes shifting around and costs shifting around. So there's a more than normal level of commercial discussion activity over the last couple of years and there's certainly still some ongoing discussions. Speaker 800:52:18Okay. Got it. And Linda, I found the slide where you gave breakdown of purpose equipment special purpose equipment and what's flexible and redeployable helpful. The 16% to 84%, I mean should we think about that I think about your business, the 16%, is that largely reflecting the Zura Shiloh business? And over time, would that also grow as your gigacasting facility comes online? Speaker 100:52:52Those figures actually don't even include Urushalo and Mobex. It's a small footnote, but it does note on the slide that we don't have all of their asset information in this analysis just yet. But so in the 15%, 16% is really more assembly equipment, I would say, in the odd special purpose type equipment, which generally our machining, casting, forging equipment is all fully flexible to do a wide variety of products. It's really more the assembly equipment that tends to be a little more special purpose. And I would say just notionally, Mobex and Dura would actually be quite similar. Speaker 100:53:37I mean, a lot of the equipment that they have, even on the DuraSci, robotics, welding equipment, all of that can be reallocated as well. But I don't have it in these numbers at the moment. Speaker 800:53:54Okay. Thanks for clarifying that. And on the gigacasting in Welland, I was wondering if you could talk about how you're progressing on that. I know you've been doing some of the traveling in Europe. Can you remind us of when that will start coming online? Speaker 800:54:09And do some of the recent OEM announcements of certain EV delays impacted? And do you have volume commitments from the one customer you've secured so far there? Speaker 100:54:20Yes. So I mean, obviously, a lot of EV programs have seen volume cuts or delays to launch. And our Giga project is of course impacted as well. So we are expecting some delay on that program. That said, as I say, any casting equipment is flexible. Speaker 100:54:45So obviously, we're going to see what else we can find to utilize the equipment and then work with our customers around how do we manage the situation. I can't disclose specifics around contracts and with specific customers and projects. But I can tell you that in general around major investments like this or in the EV space, as I mentioned in my formal comments, we try to be quite careful in terms of mitigating our risk, sharing risk with our customers in a variety of ways. So that's certainly been the case. Speaker 500:55:36And it should also be noted that the capacity was coming in and being staged over time. We weren't going to a deadline where from start of production we had to have all the capacity in place. So we do have a ramp that goes over time with that. So any delays is not impacting the full capacity. Speaker 800:56:03Okay. Got it. If I could squeeze in one more here on Skyjack. It sounds like your 2 other large competitors are capacity constrained recently. I'm just wondering, do you find that some of your recent share gains have been partially helped by that situation there? Speaker 800:56:21Because I think they're opening additional capacity sometime next year. So I'm just wondering how you're thinking about that. Thank you. Speaker 100:56:31Yes. I mean, it's always good to have competitors who are capacity constrained. So is that playing a role potentially? But I have to say that we've been regularly growing our market share for our Skyjack products, which our customers love for their simplicity, reliability and high quality. That is a mandate of the design of the SkyJacks that we have long utilized and that our customers really appreciate. Speaker 100:57:09And I think that's why they're buying our product. Speaker 800:57:15Great. Thanks for taking my question. Operator00:57:32There are no further questions at this time. Linda, please proceed with your closing remarks. Speaker 100:57:37Thank you so much. Well, to conclude this evening, I'd like to leave you with 3 key messages. First, we are thrilled to have met our long time goal of reaching 10 $1,000,000,000 in sales. It was a long time coming and really proud of the team for that. 2nd, we are also very pleased to have delivered such a strong quarter of double digit top and bottom line growth and to be poised for the same for our full year again. Speaker 100:58:02And finally, we are particularly happy with the performance of our Mobility segment, which has bounced back from lows seen last year and is on the way back to getting back to normal operating margin levels. Thanks very much and have a great evening. Operator00:58:21Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by