Q4 2020 Magna International Inc Earnings Call

Yes.

Greetings and welcome to the Q4, 'twenty and 'twenty results and 'twenty 'twenty, one outlook conference call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time and do you have a question.

And please press the one followed by the foreign your telephone if at any time during the conference and need to reach and operator. Please press star Zero and as a reminder, this conference is being reported Friday February 19, and 'twenty 'twenty, one and now let's turn the conference over to Mr. Louis Tonelli VP Investor Relations. Please go ahead Sir.

Thanks, Maria Hello, everyone and.

And welcome to our conference call covering our 'twenty and 'twenty results as well as our 'twenty one outlook.

Joining me today are swamy quota, Gary and Vince Cliffy, yes.

Yesterday, our board of directors met and approved our financial results for 'twenty and 'twenty as well as our financial outlook, we issued a press release this morning and each of these.

You'll find the press release today's.

This conference call webcast. The slide presentation to go along with the call and our updated quarterly financial review, all and the Investor Relations section of our website at Magna Dot com.

Before we get started and just as a reminder, the discussion today may contain forward looking information or forward looking statements within the meaning of applicable securities legislation.

Distillation and such.

Such statements involve certain risks assumptions and uncertainties, which may cause the company's actual or future results and performance to be materially different from those expressed or implied and these statements.

Please refer to today's press release for a complete description of our safe Harbor disclaimer.

Please also refer to todays remarks.

Minder slide included in the deck related to our commentary today.

This morning, we will cover our 'twenty and 'twenty highlights and our Q4 results will then provide our 'twenty one outlook and lastly run through our growth. Our go forward financial strategy and with that I'll pass it over to Swamy.

Thank you Louis.

And good morning, everyone.

I am excited to be speaking with all of you again, especially in my new role as CEO before.

Before I start I would like to thank Don.

And a great leader and mentor to me helped.

Helping me prepare for the succession for a number of years and the result has been.

And a smooth transition.

Today, I'll recap 2020.

Comment on our results and briefly cover our positioning and the industry.

When we think about 2020, the first few things that naturally come to mind are COVID-19 day.

From here and life changing gear.

Each of which I know, we can all relate to.

Having said that I am extremely proud of the way we have navigated through the pandemic and the outstanding rebound our operations had and the second half of the year.

Youre going to hear a lot of information today, but bottom line we are able.

However quickly.

No one has been immune to the impacts of COVID-19, including the CVR decline and industrial production experienced and the first half of the year.

However, production volumes started to recover at the end of the second quarter and the recovery accelerated.

And in Q4 across our key markets.

Leading to very strong operating performance for the quarter.

Relative to Q4, 2019 sales increased by 12% and adjusted EBIT margin expanded by 410 basis points.

Adjusted.

To the guests more than doubled to a record $2 83.

And we generated $1 7 billion.

Our free cash flow.

<unk> also grew our dividend for the 11th straight year.

<unk> will share more details around our performance, but I wanted to highlight that these.

Positive results and a testament to our employees, who have executed in the midst of challenging circumstances throughout the year.

Looking at some of our accomplishments for the year I have to start with a focus on our employees.

Keeping our employees safe throughout the pandemic.

<unk> and will continue to be our top priority.

The story, so far and employees resilience this past year.

<unk> me.

Not only have they executed near flawlessly and the midst of unprecedented challenges, but they also volunteered to help deliver PPE.

And other supplies to frontline workers and rent above and beyond to support our communities.

And Magna has been recognized four consecutive years with fortune's, most admired companies and Forbes.

Employers awards.

We never lose.

Lose sight of the importance of our operational excellence and.

In 2020, we took necessary restructuring actions that will lead to $200 million.

Our recurring cost savings annually.

Our team also managed the shutdown and ramp up of over 300 facility.

It is due to the COVID-19 pandemic.

Our focus and operational excellence and innovation leads to customer recognition.

Just last year, we received 97 customer recognition awards, including a record six awards from GM and the most ever given to.

Any one supplier and a single year.

Now, let me turn my attention to growth.

All of those sales for the full year fell as a result of the large declines in vehicle production, we had a strong recovery and the second half of the year with sales growing 5% year over year.

We also managed to outgrow the market and 2020 by 4% and in fact achieved.

<unk> that outgrowth and each of our major regions North America, Europe and Asia.

Finally, I would like to touch on our innovation.

We continued to expand our collaboration with a growing.

Growing ecosystem of companies working with some of the best minds and technological advancements to help accelerate time to market for our innovative products.

We also have successes and new innovation area.

I would point to three examples from across our business.

New battery.

Battery trade program and body and next few years, our new clear view digital vision system and power envision and our proprietary free four <unk> technology and seating.

Magna composite space frame liftgate reinforcement solution, which debuted on the Toyota Supra earned a 2020.

Automotive news pace Award.

The award marks Magnus for the Pace award in the last six years.

These customer wins and industry awards reflect how many of our solutions that are aligned with the secular industry trends.

And our commitment to innovation and continued despite the.

The challenges posed by Covid and 2020.

And we maintained our R&D spend.

And I'll pass it off to you.

And thank you Swamy and good morning, I hope, everyone is staying safe and healthy.

I'm going to do a shorter version of our quarterly reviews, including on our segment until a lot.

More time for our outlook more detail is included in our appendix.

2020 of course was significantly impacted by COVID-19.

Sales declined 17% for the year, however, on our magna weighted basis, our sales performed 4% better than production.

<unk> for the year this.

This continues the trend that we've seen at Magna for many years and considering the dramatic decline in sales for the year, we posted an impressive five 1% adjusted EBIT margin.

2020 was in many ways a tale of two half the first half was severely impacted by the pandemic.

Net sales were down 37% and the second quarter, we posted our first operating loss since the great recession of 2009.

However across the company, we took steps to reduce discretionary and structural costs as well as capital, which helped us set.

Helped set us up for a return to strong performance when the.

Began to recover in the second half of the year.

Let me briefly cover off the fourth quarter.

Total sales were $10 6 billion and increase of $1 $2 billion over the fourth quarter of 2019. This represents 6% weighted growth over market for the quarter.

Our sales were paused.

Positive impacted by new program launches the negative impact of the labor strike at GM and 2019 currency translation, which was about a $285 million tailwind higher vehicle production and increased assembly sales.

Adjusted EBIT increased 86%.

Industry from 1 billion, our adjusted EBIT margin also increased by over 400 basis points to 10, 4% and Q4.

The increase and margin mainly reflects pull through on higher sales and improved operational performance the labor strike at GM, and 2019 and lower <unk> costs.

US, including as a result of our exiting our Lyft partnership at the end of 2019.

Each of our segments generated better adjusted EBIT per center sales and compares to last year.

Net income attributable to magna increased by over 400 million to $851 million.

Mainly reflecting the higher EBIT, partially offset by higher interest expense and higher income tax expenses.

And diluted EPS more than doubled from a record $2 83 for the quarter compared to $1 41 last year.

The increase reflects the higher net income and 2% fewer shares.

Outstanding.

During the fourth quarter of 2020 free cash flow amounted to $1 7 billion compared to $1 1 billion last year.

This increase reflected our higher earnings as well as 180 $186 million and increased cash from working capital.

Working.

Capital came in lower than expected at the end of 2020, largely as a result of earlier than anticipated collections from customers and higher restructuring and other accruals compared to last year we.

We expect to see working capital returned to more normal levels in 2021.

Drawing the dividend remains.

Working priority at Magna and <unk>.

Maintained our dividend during last year's Covid crisis from a number of our peers cut their dividend and yesterday our board approved at.

At 8% increase and our quarterly dividend to <unk> 43, <unk> per share, reflecting our strong results and the second half of 2020 and our solid outlook.

And we have increased dividends per share at a CAGR of 13% going back to 2010.

And now I will pass it over to Swamy for a few introductory comments prior to getting into the specifics of our outlook.

Before we look ahead to 2021 and beyond.

I wanted.

And to take a step back and share some thoughts on what makes magna and unique and why we are well positioned for the industry changes.

Keep this brief today because we will go further into this at our April Investor event.

Our story really starts with our business model.

While our business.

<unk> pants individual product areas, all the way to complete vehicles.

Our one company that is a top three player and most of the areas where we compete.

Takes a system level approach that allows us to think like an automaker and optimized solutions.

And our building block technologies.

So it meets the different customer needs with scalable modular and easy to integrate configuration.

Additionally, we are deliberate and disciplined and our actions.

We enhanced cash generations and generations through our world class manufacturing initiatives.

We continue to.

Scientists and drive innovation in particular and high growth areas and you have heard and our past calls.

Magnus performance is made possible by the DNA of the company, which comprises our people the entrepreneurial culture and the deep expertise and manufacturing that allows us.

And as to consistently exceed customer expectations.

And our capabilities and disciplined execution together enable a unique competitive position and mobility for magna.

Linking our unique approach with our alignment to the secular trends is what gives me confidence.

<unk> and magna's future.

We continue to advanced mobility with a sharp eye on the needs of people, while also doing the right things for the planet.

On electrification, we continued to enhance our portfolio of E powertrain products.

And our joint venture with LG and important building.

To further strengthen our position while also allowing us to participate in the fast growing global market for electrified powertrain components.

Beyond this JV, our core business has the product range to support customers along the transition towards full evs.

Blocked in addition, our portfolio continues to win content on upcoming Evs across all of our capabilities and <unk>.

<unk> complete vehicles reached by 2023 is expected to have 50% of its production units on EV models on.

On autonomy we offer.

For a full range of Adas capabilities, including complete systems. We were recently awarded the full Adas stack on the fifth corrosion demonstrating the depth and breadth of per capabilities, and we expect <unk> sales to grow at about 20% on average per year over.

<unk> 2023 period.

We continued to invest to develop cutting edge and our solutions and.

And lastly, we are actively pursuing opportunities to leverage new business models and create value across new mobility ecosystem.

And our JV with BJ EV is launching.

And a full electric vehicle the first of four variance.

And our ongoing collaboration with fiscal demonstrates our unique ability to support and new entrants with systems full vehicle engineering and manufacturing capabilities.

This adjusted snapshot of how we are well positioned to take advantage.

The secular trends in the industry.

Now, let's shift gears to talk about our business outlook for 2021.

Before wins takes you through the details the overall message I want to emphasize is that I'm really excited about our outlook.

<unk>, who we have a plan in place that will allow us to continue our leadership position and the sector are.

And our business continues to grow and you should have confidence and our outlook as over 90% of our 2023 sales are already booked.

Margins are expected to expand and each.

We believe outlook, we continued to invest for the future, including about $600 million annually and engineering spend before customer recoveries in the megatrend areas in our power and vision segment engineering spend in 2020 represented about five 5% of sales.

Lastly forecast free cash flow generation from our business remained strong this should allow us to both invest for growth and returning capital to shareholders.

With that let me hand, it over to Wayne and.

And thanks again for me.

Our outlook reflects increased vehicle production and each of our key regions.

While 2020.

And North America, and Europe, our two largest markets volumes and 2023.

And at or below levels experienced in 2019.

With respect to the semiconductor shortage, we see near term disruptions to OEM production. However at this point any shortages.

And from the <unk> is expected to be made up by the end of 2021.

We assume exchange rates and our outlook for approximate recent rates. This reflects a weaker average U S dollar relative to 2020, which positively impacts our reported sales point forward.

As I review, our outlook I will provide insight.

And some of the drivers of sales growth going forward.

For margins given the unusual nature of 2020, I will roll from 2019, which we believe is a more comparable full year starting points.

I'm going to start with our consolidated outlook.

Before I do let me briefly.

And interest on our actions to simplify the legal structure of our three contracts joint ventures, and China before the end of 2020, we disposed of our interest and as Dongfeng contract joint venture, which had unconsolidated sales of less than $100 million last year.

And we obtained the financial controlling interest and are.

Common nature with James Wang, which we call <unk>.

We also entered into an agreement with Ford to dissolve our good track for transmissions joint venture based in Europe.

As part of this transaction, we will assume one division of the joint venture located and per adult France.

As a result in.

Joined 'twenty, one we will begin to consolidate the results of the <unk> business and therefore, it's all facility.

This impacts both our sales and margin.

As we gain sales at a lower than average margin and we lose equity income.

We expect consolidated sales to grow by 10% to 12.

<unk> and on average per year out to 2023, reaching $43 billion and potentially as high as.

$45 5 billion.

The growth is driven by the higher vehicle production content growth, including as a result of many new technologies across our portfolio the consolidation of the former.

Per cent joint venture entities, and foreign exchange and the acquisition of hardly seating.

In addition, we are expecting significant sales growth from unconsolidated joint ventures over the next few years, including from our complete vehicle manufacturing JV and integrated E drive JV, both based in China.

And as well as our LG E powertrain joint venture expected to close and the second quarter of this year.

We expect our consolidated margin to expand in 2021, and then again to 2023.

Relative to 2019, our 'twenty, one margin benefits from World class manufacturing.

Travelling initiatives and restructuring benefits.

Trending to a more normalized level of Adas engineering costs and labor strike at GM, and 2019 and license income.

These are expected to be partially offset by higher engineering costs for electrification and new mobility lower equity income and the.

Factors that could track entities.

We expect additional margin expansion to 2023, driven by contribution on higher sales and further world class manufacturing initiatives and restructuring benefits and higher equity income.

These are expected to be offset by lower license income relative to 2021.

Sedation and early last year, we provided a consolidated margin outlook for 2022, and the range of seven 6% to 8%.

And while we're not providing a 2022 hour today I'm happy to say that we still expect to be in that range. Despite lower vehicle production in both Europe and China.

Many of the same factors that are driving higher consolidated sales and margins out to 2023 are also impacting our segment.

And the interest of time, we will not run through the segment detail. However, they are included in the appendix and we are happy to discuss any questions on them.

Big picture, we expect continued solid sales growth.

Margins across all of our segments.

Next I'd like to cover some of the highlights of our financial strategy.

And we've been consistent and communicating our capital allocation principles over the years.

And to maintain a strong balance sheet ample liquidity and high investment grade ratings.

And Martin and invest for growth through organic and inorganic opportunities along with innovation spending and return capital to shareholders.

After exercising discipline and reducing spending and response to the significant volume decline and 2020 for 2021, we expect capital spending.

Approximately $1 6 billion and relatively at the same level out to 2023.

And.

We anticipate ongoing strong free cash flow generation, including between five five and $6 billion over the next three years.

Working capital swings have had a considerable.

The impact on free cash flows and as you can see excluding working capital, we expect higher free cash flow over each of the next three years relative to 2020 driven by increased earnings.

And here's our projected uses of operating cash flow over the 'twenty one to 'twenty three time frame.

And net internal investment spending is expected to represent 50% to 55%. This includes capital and other assets spending less proceeds from disposition.

Dividends should account for 10% to 15% of operating cash flow consistent with the past several years.

We expect 35% to 40% to be available.

Corporate and incremental investments and share repurchases without adding any additional leverage to the balance sheet and of course that capacity increases EBITDA growth.

Together this provides significant capacity to invest for the future.

So in summary, we plan.

Available to grow our business executed and our plans to expand margins and generate strong free cash flow and continued to invest for the car of the future.

And we hope to see many of you and April at our Investor event, where we will go into more detail around how unique our how our unique positioning and strategy.

And to fly into the secular trends and ability.

Thanks for your attention and would now be happy to answer your question.

Sure.

If you would like to register a question. Please press. The one is all about a four and your telephone and you'll hear it from foam pumps and Alterra request.

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Alicia Please press the one followed by the strength.

The first question comes from the line of John Murphy from Bank of America.

Please go ahead.

Yes.

Good morning, guys.

And congrats from me I'm doing this call all along and it's great call.

As we look at.

<unk> 28.

Right.

And so theres a lot of moving parts and <unk>.

<unk> alluded with the shifts and to get dragged jv's and it looks like the 10% to 12% CAGR would indicate sort of at the midpoint about seven 5% growth above market just doing some simple math, but with the sort of the other moving parts around the JV that might not be quite correctly and just trying.

And I understand if that is correct and what we should be thinking about about growth above market rents.

And while we've been talking a bit.

Yes.

<unk> growth over market and just clarifying one page that kind of stripped out.

Organic sorry acquisitions, and FX and can deal with organic growth.

And <unk> got it and give you that yes and yes.

Do you know if you look at our expectations and the 'twenty to 'twenty three time frame it would imply 1% to 3% outgrowth.

Weighted growth over that period.

And I would say that some of that some of what's being impacted there is complete vehicles, which is.

Impacting us by about 1%.

Okay. That's helpful. Yeah, just must be some moving parts that are that make it a little bit different we can follow up on that Bob.

Second question.

On slide 33, and when you when you are talking about cap allocation and is this.

35% and 40% that is incremental.

Incremental investments and share repurchases.

I'm just curious as you think about it a lot of the auto tech.

Smaller companies that become very expensive, obviously this backbone and there's a tremendous amount of interest here I'm just curious as you go out there and you're doing.

And in your due diligence and trying to find.

Good.

Investments are you running into much higher valuations and does this kind of preclude you maybe from making external investments and it really more focusing on organic and share buybacks.

But John and that's kind of.

Interesting question certainly over the last little while we've seen some valuation, especially for <unk>.

And of these.

Start ups and.

Kris and a pretty significant way.

And our strategy and it hasnt changed at all obviously invest organically and we've got a really good business and when I say invest organically that's more than just brick and mortar is investing in engineering and building net core capability developing.

Swamy would always talk about the building blocks that we can provide.

<unk> provides a complete system solution to a customer and given our unique positioning across the company like we've shown with best care I think that a real advantage, but having said all that John we still look at.

And some of the newer technologies out there.

Payment and add to our capabilities.

And when Youre looking at technology. Some of the things are always weighing out is if I wanted to try to do this on my and what's the cost of the time to time to get this completed whats the risk associated with that and then maybe something else there that's already 30% or 40%.

Content.

Completed and you can look at that and say well that makes so much sense financially so.

We continue to work.

And to continue to focus on our swamy talked about and his comments.

Some of the megatrend areas, which is a big focus for our organization.

And I.

And John.

And it goes on and we're going to continue to look at <unk>.

Transactions M&A transactions that helped to build our capabilities.

Good morning, John Deters from me and just to add to Vince's comments in the past we have talked about.

As a part of our technology mining process.

Identify what we believe.

And in part from going forward for the kind of the future.

And through our scanning process, we've been able to work through universities research institutions and startups at a very early phase.

And it's kind of a symbiotic gross book base, we are able to bring.

Call it the discipline and design for manufacturing and ski.

Expect growth.

And worked through specs with some of these start ups and in the process. We have a very early viewpoint.

And where the tech is.

So that has also helped us to kind of address.

Carl and Vanessa <unk> are the future for the car.

That's one way of how we're looking at.

Scale not wait for it to become.

Already proliferate right.

Okay. That's helpful. And then just lastly on the fleet.

Vehicle.

Discussion you said you mentioned higher earnings on engineering and sales.

I'm, just curious over time and inspire our complete.

And where you want to quantify it.

It seems like there is a growing opportunity as youre getting more of these startups.

And our Pittsburg that youre going to have engineering and sales that might carry much higher margin I'm, just curious how big and part of the pie that can become.

And you complete vehicle segment, and what kind of opportunities you see there.

Vehicle from.

Total Waco.

Capability perspective, John I think.

And we kind of look at it is going together because the new entrants are anybody even the current customers when they come to us.

They look at the overall capability that we bring which is.

Understanding the system interfaces, bringing the systems together.

Looking at design for manufacturing.

So that part of engineering is call. It the initial step towards the conversations most of the time.

And then it leads to.

And the systems of Magna being supplied.

<unk>.

Uh huh.

Assembly of the full vehicles or sometimes both us and the case of <unk>. So we think of our engineering capability as an enabler.

And in some cases, it adjusted engineering and some cases.

It's both so.

We received going hand in hand.

Okay. Thank you very much.

Our next question comes from the line of Macau.

And Macau Li from Citigroup. Please go ahead.

Great. Thanks, good morning, everyone and congrats.

Just a question.

<unk> 10, 4% margin.

And in the fourth quarter, it looks like and just over $42 billion of annualized revenue. Yes. We think it had just wanted to maybe go through a bridge of what would prevent you from repeating that type of margin performance.

And that comparable level of revenue in the fleet and maybe just talk about the puts and takes of the bridge going forward.

And maybe investments youre, making and so forth.

And I'd say.

And.

And I talked about and my comments that 2020 is really not a good base.

Basis of comparison for the outer years.

And I'll tell you what I kind of looked at and said the organization and I looked at there and.

And a margin run rate and the sector.

Second half of 'twenty.

2020, and kind of try to wrap my head around and how does how does that relate to.

One.

And if you look at the second half of our margins for EBIT margin.

Just two things you got to just knock off and 95% and kind of.

Normalize that to what the run rate was in 2020 per second half of 2020.

And just about 30 basis points.

Government support programs.

And that impacted positively our margin and the second half and when I look at the full year.

The impact of an investor.

And because we had sort of a bunch of costs from first half and you get some recovery and the second half of second half the positive impact of about 30 basis points.

And I did talk to you about what we're doing.

Joint ventures, and the consolidation of <unk> and the four door facility and that's adding.

Net sales and setting margins at less and the Magna average and reducing our equity income kind of when you run through the math.

Look at that that's about 30 basis points or so.

We're below 9% non us kind of run rate for 2021.

And you look.

I and seven 1% to 75 still a big gap from.

And my perspective, but just a couple of things to keep in the back of your mind.

You look at kind of at a bunch of year end.

Small items.

A favorable settlement here something over.

And adjustment to non accrual this small amounts add up to quite a bit and kind of the second half. So that's kind of I would say non reoccurring.

Think about it and it could be a win next year that could confidence and money, but that was a wind this year.

We're going to have lower equity income in 2021 versus.

The second half of 2020, even if we exclude.

Detract entities and there is a couple of reasons for that one is we're excited about the LNG joint venture.

It's an investment and its growing its business. So we're going to have some losses, there, which impacts equity income and we've got one of our.

And our equity accounted joint ventures is and the investment mode.

And the near term so that's going to be a drag on equity income even if you look at the cadence of volumes.

Hi.

Compare that for 'twenty one.

Europe, and China were considerably higher second half of 2020 versus.

And where we think they're going to be 21.

Tooling income was relatively higher and second half.

Magnus tire some program mix, which was positive and kind of all of 2020 will be kind of negatively impacted margin.

And then.

One thing that Swamy and I have been talking to the organization.

And about is we've done a good job on.

Clamping down on costs, but.

I don't think it's realistic to assume that we're going to be able to run 21 like we did the second half 2020.

We expect travel to start.

Start to help and we expect some of the discretionary items.

Items that.

Didn't happen are good and started to happen and so thats going to help and that's going to help move some.

Some costs are and reduce overall margin. So thats, how we kind of roll from about eight nine.

Adjusted second half to kind of seven 1% to 75% for 2021.

That's very helpful. I appreciate.

And all that color and maybe a quick follow up on the on slide 54, and on the Adas CAGR of 19% to 23% is that book consistent with the roughly $900 million of revenue you were expecting for 'twenty and 'twenty three I think.

Last year at the Investor day, or is that and improvements and maybe if you could just talk a little about what youre seeing on the Adas sourcing and booking side.

Yeah.

So P J.

We ended the year and getting the references to 2019 and we've talked about 2019.

550 odd million dollars and.

And you kind of.

Right and whatever 20% CAGR and nicely easy a range there.

And that takes us.

Just under.

And dollars and 23, so it isn't it is ahead of where we thought we were going to be.

And I look at our bookings this year.

We had kind of your <unk> business planning here, you kind of look at opportunities that here's what I think is going to get.

Hit all of that plus zone.

And so we've been pretty pleased with.

And 1 billion with the progress that we've been making and that one.

Area of the business I think.

And as I've said and the comments before.

We believe the building block strategy that <unk> been working on as hoped.

Our leadership position and cameras to leapfrog technology and greater and.

And bringing the.

And with both solid state Lidar system.

Production.

We booked a lot of business in 2020, and as I said in my comments, we expect to grow at about a 20% CAGR over the outlook period.

And it's good to also see that almost 80% and for 2020.

Three expected sales you've booked here.

And the focus of us being debt free you're going to stay focused from the LTM two plus programs.

He is also an advantage to keep the organization focused.

That's great to hear and thanks again everybody.

The next question comes from the line of Chris Mcnally from Evercore ISI. Your line is open.

Yeah.

Thanks, So much Inc.

Sure there'll be.

Some questions on the strength and margin so we could pass over those and maybe just two questions and plumbing on auto Tech the first.

And light reading and and body it doesn't get a lot of attention but.

Typical body content per vehicle, maybe a $1000 per car, but kind of curious.

Nextgen body solutions for electric vehicles for light weighting to save money with battery costs could you go through maybe some of the potential content per vehicle.

And one was really to take all the options that magna body was able to provide.

Right.

Yes, good morning, Chris Great question and me.

Talk about the light weighting and it was primarily driven in the past by some.

Key reasons right one.

Like you said increase the battery range and that's obviously going to be a balancing act as the the trap.

Trajectory of the Bachelor and cost continues to go down right.

So they start putting value on how much premium are they wanted to spend on light weighting and the second part of it was.

The front to rear.

Rates split off a vehicle and we have vaccines and in the front.

And I do have that 50, 50 or close to a 50 50 split.

And you would focus on light weighting some components and the front like be shocked.

Shocked hours and rails, and so on and so forth with different materials and all.

Reduce the CG of vehicles from top to bottom, but if you start looking at the battery and put on.

The other side of the vehicle.

All of those variables change a little bit right.

But looking at the process that we have a belief.

And to Luca.

So to me off the variance of steel or aluminum or other materials and including different processes, whether it is.

You know stamping growth, forming hydroforming or hot stamping casting and so on and so forth we have the tools and the toolbox for sure.

Design impacts that I would.

C of the floor will look different.

Rail structures.

You know that will integrate the.

The safety.

And the battery trays that are coming which is actually a new addressable market for us from the viewpoint.

And we're able to do the battery.

And we already have two significant awards from customers.

That is.

Important for us.

So that could be a content growth opportunity for us in total.

If you look at our exteriors, we're looking at and lot of college sensor integration piece. So there is a.

A lot of process and material.

Advantages there coming through.

So these are I would say some of the asps.

Aspects that I think food and govern light weighting and the amount of light weighting and weighted happens, but the important thing is to have the flexibility of different processes.

Trace and address without constrained whatever the vehicle architectures are from different Oems.

Finally, if I could just push from <unk>.

Maybe some of the numbers I mean is it sort of a 20% to 30% uptick opportunity or is there almost and order of magnitude, we're spending that extra $1000.

And body and lightweight.

And composites, you can get the payback and and <unk>.

Longer range or lower battery cost this quarter of magnitude because I know it's across various products, but I'm just trying to think of that.

And next Gen eds.

Yes, if you look at the.

The way I, usually look at it Chris is what is the trend and some of the.

The processes and the next vehicle structures right, whether it's hot stamping and casting and we have a good visibility on what's happening in 2003 through 2005 timeframe already.

If I look at that I would say and the.

15% range.

We'll continue going forward.

But it's a battle.

Costs come down to 100 are sub 100, and then that equation will change.

Perfect.

And just.

One question on entire I mean, we've seen this big uptick in and.

And margins and just to follow on sort of.

<unk> logic.

And you start to press forward lots of.

Discussion around new companies that you're working with and in the press is this new level of margin call. It four 5% plus is that sort of a.

Where the negotiations are happening and.

Mid teens ROIC.

Or.

Are you willing to work with new customers.

Baxter lower margin for a much larger book.

Business.

Chris I guess, the first thing on overall margin.

You got to figure out how how you calculate margin.

Value added contract.

Paul.

At vehicle that we're selling back to the customer.

And the.

Case, a fifth or assumption.

And it's going to be a value added content.

And that all has to be taken into account and the mix.

And from my perspective.

I would focus on return on capital and return on investment.

And kind of putting out.

It's capital, whether it's engineering, Inc.

And kind of look at day the risk profile.

And the revenue stream coming and.

And we're looking for it and appropriately currently back into margin, but we're not kind of using margin and set the price and were actually looking and making sure we're getting the appropriate.

And our.

Yes.

And the value and bring to the customer I think when you look at margins you know Magna, Sarah and they had been moving up and.

If you go back a few years of really the Lora.

And the.

Margin numbers right now are more representative.

Subject to mix changes.

The business going forward and rather than us.

Next couple of years ago.

One thing that I.

Got it and emphasized we talked a bit.

Tableau.

And a lot of value.

Yes.

And we.

Took in 2020, and some of the benefits going forward, but.

And our Magna Sarah.

And.

We are focused on what they do from them.

Perfect standpoint, whether it's engineering and manufacturing.

And we've seen the benefits of that.

And our margin numbers and we expect that to continue going forward.

Okay, and then just one more if I could any update and I apologize I know assets quite.

Quite often but any update on what it would take them to pull the trigger sort of proactively.

To build in North American facility per precise it clearly seems like the demand of the customers that it is there I imagine it takes a couple of contracts of size of just curious if there's any updated thoughts.

Yes.

And it really isn't.

No update there we are.

Certainly.

And our mind ready to make the.

And the right investment and North America like we did in China for example, and we've got some capacity there before our capacity in Europe, not that long ago.

But.

Chris and I'll be.

And kind of the rate and business mix for us and.

And I know there will be risks coming into North America as with any new plant start ups, but we have to be able to measure that risk quantify it and be comfortable with the risk, we're taking and the returns we're going to generate and.

And I think just to add.

Like we have roughly about 180000.

And it's got to be units per year and.

Capacity and our JV in China.

Depending on the type of and makes it more kind of maybe to 200000 and our.

And <unk> approaches.

And with you there.

Yeah.

If you look at it.

Pipeline of bids.

And the road map, we could start with the lower number of units given the.

The flexibility, we have and manufacturing and what our team has done there. So as long as there is a path to get to get to an appropriate level of business, Chris I think.

We would be open to that obviously, there is a bunch of variables whether it's painted on non.

This method and so on and so forth battle.

And to the decision process.

That's really encouraging.

The next question comes from the line of Ryan Brinkman from Jpmorgan. Your line is open.

Great. Thanks could you discuss and a bit more detail your joint venture with LG electronics, how would you compare your integrated E drive system capabilities. Following closing of the JV relative to the competition would you say that your planned suite of electrification offerings is now pretty much complete or does it also makes sense to I don't.

For batteries, and perhaps some sort of more formal tie up with the battery manufacturers and we've seen with one of your E drive competitors at least on the commercial side.

Or would you consider that to be more non core.

Yeah.

And good morning, Brian I think.

And we've talked about and.

And you mentioned the building block strategy was.

And now also have the key top process, which we started a few years ago.

Addressing the overall system.

And.

Awarded E drive systems, one just being launched and the other one following.

And in China, and non high school JV.

And as.

The overall value stream.

Figure and that it was important to look at.

E Motors and Inverters part of it and we are really excited to have LG as a partner there.

With that and place.

Two important blocks and the technology.

As we look now with our software.

And the overall integration capability that we have we believe it's going to.

<unk> increased the pace and we're already having some very good conversations with our customers.

Customers.

As you know some of the customers.

And as.

Field is evolving and we're looking at doing some of the systems in house.

But with <unk>, we have the opportunity to address the component side of motors and and mergers with them.

And the overall Tam actually as it progresses towards EPS increases for us right because we.

And we will drive four wheel drive.

Systems today as it is moving forward our overall addressable market increases. So we believe we are and a really good position, we'll always continue to look for.

Specific technologies that might leapfrog going forward as this bill is passed changing.

From a seller perspective, I think it's a pretty significant area. That's been there for a long time.

At this point, we believe video monitor, but our focus is on the E drive systems and how do we.

Start getting our fair share.

And the customers yes.

Hi, Matt.

And when I think about the joint venture as well, we're not starting from zero that joint venture does have and established revenue base and a 19% about $150 million in revenue and.

<unk>.

And that's expected to grow and over 50% CAGR over the next number of Europe. So.

Yes.

As we look at combining our forces.

Book of business.

Joint venture already high and we should be able to drive opportunities for the for the joint venture ourselves and a total of LG exactly.

Very helpful. Thank you and just lastly, there might have been some illusion earlier speculation regarding any potential applecart I just wanted to.

Check in with you with regard to your ability to manufacture of battery electric vehicles for newer startup manufacturers of course, you've discussed fisker on this call and others are there any other startups that have shown interest, including any non b J E companies in China can you remind us of your capacity and your spare capacity in China I think the original press release from 'twenty.

You mentioned 180000 vehicles and I just wanted to check when the automakers oftentimes first announced the plant, though also sometimes buy up some of the land around that plant and give them optionality to expand and future just curious if that might be the case here too.

Yeah, I think Chris.

We have said in the past.

<unk> thousand 18, we continue to have conversation with various new entrants and.

And.

Yes.

Establishing customers from.

And this platform.

And I believe that has a unique position for magna and.

In terms of our capacity as I said, we are in.

150.

Capacity range.

In China.

Obviously, we cannot talk specifics about the volume, but we have the flexibility with the.

The agreement that we can look at non <unk>.

Related opportunities that can come and China.

And.

And Vincent I just spoke about.

Openness to do a footprint in North America, if there's the right business case, so really exciting discussions, but nothing specific that we can talk about.

Great. Thank you.

Our next question comes from the line of Mark Neville from Scotia Capital. Your line is open.

Hey, good morning, guys.

Welcome and quarter.

Maybe just first and just to square away the conversation on the margin.

So I understand you're sort of telling us the starting point is call it eight 9%.

And for next.

Seven three and there's sort of a bunch of sort of discrete items and sort of explain away. The difference Davies next stuff like that that sort of what you thought.

Yes, sorry.

The eight nine and getting it started.

And Mark I was just getting out and eat and I, just I would say to two items and stack I think you should take into account one is.

<unk> and.

Place for programs and just the consolidation and could track entities and they are both each about 1.3 or eight nine.

And when I kind of look through the pluses and minuses.

There'll be some some cost escalation as we move into 'twenty, one compared to 2020, I think part of it and big picture.

Vehicle when you look at our run rate our volumes in the second half and you kind of think about 2021 and certain regions and they were running.

Really really high volumes, which are not expected in 'twenty, one and so that have an impact on inc.

Incremental and decremental margin.

And tooling was.

We have some more tooling revenue in the second half.

Yes.

There's a bunch of other kind of small things.

One of the causes I would say sorry is just kind of continued restructuring benefits right.

And that's going to continue to benefit us and <unk>.

'twenty one.

No more than it did in 2020 and it will be incremental again and in 'twenty, two and by time, we kind of get to the end of 'twenty, two we pretty well got to the benefits we're expecting from our restructuring program that we started in 2020.

And when you have seen much benefit and the second half for that restructuring.

And we saw some benefits of it.

We did.

We talked about.

And kind of about a $200 million.

Benefit from the restructuring cost per but a number of about 150 and $60 million and that we booked in Q2.

We probably got about.

Okay.

Quarter of that and.

Throughout 2020.

And what have been some of that in Q2.

Probably about 25 per cent of it and 'twenty, two and kind of the.

The balance of it is in 'twenty one.

And kind of order of magnitude.

Okay.

So and the Capex discussion and I guess, the complete vehicle discussion just to be clear the and.

The guidance for the next few years of one 6 billion and Capex roughly.

Is that sort of contemplated any.

Capacity build or a complete vehicle.

I'm not going to specifically talk about it.

Part of our business I can tell you that.

There's capital being invested.

And all of our business units.

And it really depends on program launches and so on.

Mark I, just want to remind you to that.

And when we talk about capital.

And historically, we've always talked about capital, but just a couple of other big chunks of investment spending that we kind of just.

Mentioned and the odd time, but one is investment in other assets and you can and that's all tied to production you can see that that has been growing over time.

Net engineering right and we've been talking about engineering and Swamy talked about the.

$600 million.

Roughly and the megatrend areas, but those are.

Pretty significant investments, we're making and our business to position ourselves for growth.

Future.

Yes.

And last one just one last question just on buyback.

And just curious when.

And it might come back and the market.

Yes, that's a really good question Mark and.

So you kind of look at the.

Balance sheet at the end of the year, we did it and that's with a lot of cash.

If you run.

Presentation.

And kind of run the math and you look at.

Adjusted net adjusted EBITDA at the end of Q4.

One six.

From my perspective.

We've got more cash and what I would have liked to have shouldnt you'd like to pay down some debt and I cant because its opex I think if you.

You.

And <unk>.

Surplus cash and my my mind, not all of the cash surplus cash and we're probably running.

A one two times churn at the end of the year.

That's kind of our sweet spot one to one and a half so we're kind of.

And the physician at this point too.

And look at.

The book.

Starting to buy back some stock in 2021 subject to obviously.

And what we see from an opportunity standpoint.

On an inorganic basis.

Alright, Thanks I appreciate it.

Okay.

And.

Our next question comes from the line of Dan Levy from Credit Suisse. Please go ahead.

Hey.

Good morning, and and thank you for taking the questions.

I wanted to start.

A question on the outlook specifically revenue for our complete vehicle then you are effectively.

Forecasting revenue flat over the next few years.

And actually down slightly at the midpoint versus.

2019.

We've heard about this curve and presumably youre, having discussions with others. So can you help us understand and.

And to what extent upside may materialize.

Police vehicles.

And while it seems like this business is really hitting its stride. There is appeal to you know our customers as a as a way to get a ticket their asset light exposure and to address EV manufacturing. So why aren't we seeing more of that and the AR and the revenue outlook for complete vehicle.

Dan I think you've got to take into account a couple of things.

As we've talked about Fisher coming onboard and.

And the plans are to launch that business.

At the end of 2022.

And so.

You'll start to see more of a normal impact.

And you get into 2023 on the revenue line and our assumption that we built and to our outlook is that thats going to be and value added contracts that are fully priced contracts. So.

Our assumption is that the.

And materials are a big chunk of the material and they're gonna be non pass through.

And packages.

And so that has.

No impact at all on EBIT and Bottomline, but certainly on the revenue line.

I think when you also look at the programs that we have today and Matt.

<unk> and <unk>.

As programs come closer to end of life volume tends to drop.

Bob.

So that will have a negative impact on overall.

<unk>.

And when.

And when we look at our kind of two.

'twenty three revenue across the organization and 90% of the businesses booked and we have contracts in place so the extent.

<unk>, new business and a question, whether we're going to be starting net in 'twenty, two 'twenty three or some time thereafter.

And what's kind of.

And you think about our complete vehicle business, that's what's kind of impacting the numbers and when you look at our range and in 'twenty, one and 23 and kind of roughly the same top zone I think are lower and in.

And couple of hundred million dollars lower than our low and in 'twenty, one, but for all intensive purposes and the range at about the same but there are a bunch of moving pieces and there Keith.

Keep in mind that and we're also ramping up in China, but youre not going to see that and our consolidated sales volume is going to rise sales going arises just is not consolidated.

Uh huh.

2000, Okay. So yes, so to the extent that you are having.

Other discussions we'd.

And we'd see that beyond 2023.

Mike.

Okay.

And then.

Sorry.

And Thats Fine go ahead.

Yes.

And then.

Second question you obviously the theme.

And the market is really to understand.

I understand how much each company's exposure benefits from EV I think we've heard about complete vehicle that has a play on EV and we've heard about your battery tray exposure tried units light weighting and can you just help us understand as we add everything up by 22, and a three or 2020.

The net mix and the portfolio that ultimately.

The positive.

Good morning, Dan.

If you just look at it I think the way you explained it we can look at the sector of the full vehicle that's one piece.

<unk> I would say is.

And one that would be most impacted not just purely by E V but.

And along with the.

EV.

So if that goes along with it.

I'm going to start really have an impact from the product and how the products are designed and via the computer systems are sitting and so on and so.

And what are some of the interesting things that you mentioned are also an a b.

V C.

The new product as I would like to colleagues and battery tray.

Thanks, Brady and grid continue.

And again as I mentioned before it would be.

And dependent on the drop and the battery prices.

And so on.

If you step back and look at it I think it will have an impact on how some of the components and the body and the <unk>.

<unk> systems will change over time.

If you take just the powertrain and piece of.

Magnus.

And our business.

And look at the other state is about 80% of the business right.

One interesting fact for example, and lot of that UBS has become.

And we'll have most of the systems going forward.

And we kind of looked at as one data point the boat.

Great.

And I think $3400 worth of.

Content has increased to 3700.

So as most Oems migrate from the current to the <unk>.

<unk>.

78 per center for business, we continue.

To be.

Right and on the powertrain and makes you said we are moving towards there.

E drive we're looking at day, electrical architecture, which I think is and.

And enabler for the new entrants and possibly.

And for some variance and the established customer base.

That's how we have to look at it cant put a specific.

Pick a number on it but hopefully give some color guidance.

Maybe I can just add swamy.

Swamy you look at kind of.

And just the electrified part of our business.

And so we're seeing quite a bit of growth.

Like a pure evs.

And some of the joint venture so we've talked about.

Sorry.

Adjusted by <unk> was launched and the dry system and the second one is coming along.

And.

With the completion of the joint venture with LG.

Help to accelerate.

And our capabilities.

And our presence with customers and we're seeing.

<unk> got Eric while sitting across from me here and.

And I know he has been and a lot more discussions about our capabilities and complete capabilities right now with evs with our customers. So.

Thank you again and see a lot more of that growth beyond the 'twenty three time frame.

But we're starting to see the impact of that also in our bid.

And it centers from here until the end of 'twenty three.

And I think we can say the greatest exposure is powertrain, but we added LG.

And this continues and the content opportunity. We believe will go from a book 1900, and ice vehicles to about $2300 and TV.

Great. Thank you very much.

The next question comes from the line of Peter Sklar from BMO capital markets. Your line is open.

Thanks, Good morning.

First and then I just wanted to go back on your comment on.

The chip shortage, and how you incorporated that and into the forecast.

I think what you are saying and and correct me if I'm wrong is that any loss volume that youre seeing globally. As a result of the chip shortage do you anticipate that there'll be made up in the and the latter part of the year. So net net the.

On the chip shortage has had no impact on your guidance for full year 2021, and although it does move the quarterly timing around is that the right way to think about it.

Yes, Peter that's the right way to think about it.

<unk> already seen.

We haven't disrupted our customers.

So we've been able to even with the month of January meet our production.

We've had to shift things around within our plants and some inefficiencies as a result of assets. So far so good but our customers have shut and have taken down some of their plants.

And the units are going to we're expecting that they're going to come out.

In the first quarter second quarter.

And our assumption and our outlook as those units will be made out by the end of the year. So net neutral.

Peter So you've kind of Europe.

And you are stealing from the first half to spring.

And so that's the assumption and our outlook.

Look.

And what we haven't kind of model it out.

Is the cost of some of those inefficiencies to start and stop.

My view is Peter Thats really not going to be significant significant can move kind of the guidance. We've given you, but I do anticipate that there will be.

Inefficiencies as a result of kind of start and stopping things, but we'll work through that and I don't think again, it's going to be any significant amount for us for the year.

I'd also point out if there is.

A little bit of volume loss and if you look at where IHS is and their most recent expectations here at <unk>.

South America, we're at 59, 2019, and Europe, we're at 18 five.

For it and China. We're at 24, so we're running right now below IHS.

Look so it gives us a little bit of protection and case volumes are off a little bit.

Okay. Thanks Louis.

My second question is.

And when you look at the segmented reporting.

Our bodies and exteriors group was particularly strong both in revenue and haven't had.

Like a very unusually high margin.

I'm just wondering is there anything in particular.

And point to and that segment.

GM light truck.

Volumes were strong so I would think that would be some of it but is there anything else that you would want to call out and that segment.

Yes, Theres, a couple of things I'm happy to call it Peter.

And in this segment.

You are looking Q4 to Q4, I'm, assuming right and you referenced yes, yes, I know, there's the GM strike last year.

But the.

Bally strike.

And last year it was.

One 2% on that segment.

So yes.

And you take your seventh.

We were <unk> 74 last year, you're at <unk> 86 versus 12 force sold a lot in there.

We have been.

And some time about focusing on some of the Underperformers that we had and this group and we've been chipping away and making progress and we continue to make progress and we don't expect that to go away that progress has been made and we're just going and continue to move forward from there.

The big contributor year over year.

We had commodity costs for.

A little bit of a benefit for us this quarter versus last quarter.

It's a little bit less launch costs.

And.

And we've got some.

And as positive adjustments I talked about that and my comments overall at Magna and I think the other.

Talking to this Peter with the higher volume they just had.

And a better pull through and just see do you think of it and the incremental margin and higher volumes and net debt.

Certainly helps the overall margin.

And you start adding it all up and all the pieces.

And as a pretty significant improvement.

Year over year.

Our top programs on the sale on the sales side, a couple rooms, and <unk> were really strong some of them are related to launch.

Including like the Suvs as you mentioned, but a few others, including some diamond business, but volume just strong volumes and our top programs there and the impact of launch.

Okay. Thanks.

And.

<unk> had one last question if I may per swamy.

Swamy as you know with these.

Ford and GM announcements.

And that we've had over the course of the last week or so.

Moving to vehicle electrification.

Appears to gone to a sprint now with everybody.

And then I just thought I would do themselves.

Shorter timeframe for the termination of making.

Ice powertrain vehicles, so I'm just wondering.

If.

And you thought there was any substance to those announcements or is it.

Just more.

And perception on their part and.

And yes, if this more.

Decelerated movement to battery electric vehicles.

What's caused you to pause and reassess your strategy at all and the investments you need to make.

Good morning, Peter Great question.

I think if you've seen us over the last three to five.

And you're trying to we've always said.

Do we develop this strategy of bringing power to the <unk>, which is our portfolio today.

Agnostic to the take rates to the extent possible obviously right.

And we always said, let's look at what are the key building blocks and how can we scale.

And as the market accelerates.

Yes.

I think the push towards electrification and make you said.

And I don't know to characterize it as a strength of our non definitely has accelerated compared to what youre seeing.

And based on.

Where Europe is where China is and now.

What's more conversation and U S.

But I think overall.

Sure.

Expertise and capabilities that behind that Magna.

The addition of LNG.

And just looking at the product portfolio overall, we actually see this as an opportunity going forward.

And not even talking about the new entrance and others that are.

Able to contemplate entry into the market, we think it's a great.

Great opportunity for Magna.

Okay.

Thanks for your comments.

Yeah.

The next question comes from the line of James Picariello from Keybanc. Your line is open.

Hey, good morning, guys.

Can you share the margin.

Can you share the margin profile of the $650 million.

<unk> get dragged.

And how much equity income was taken out from now.

And any of that and handy and.

Channel.

No civic and dig it out I can ask like yes, I could just ask my next question and if you find it and that's great.

Alright.

And just staying in the power and vision segment.

Can you provide.

Any color on what's baked into the LG JV financials over the next few years, specifically I mean, you have the marker of the 50% revenue CAGR and more so interested in and the equity income impact and kind of tying it to the.

Your total and consolidated revenue growing more than $2 billion alright from 'twenty, one to 'twenty three curious what's what's the breakout there.

And I think when you look at the.

And the margin side.

On the.

Power and vision side that is going to be diluted and 'twenty, one and 'twenty.

But otherwise.

Yes.

And then.

And then there is the business start to ramp up.

As we get into 'twenty, three and it gets a little too early to tell.

There's a number of opportunities that.

We expect to be working on and so it depends on really the cadence of that unless he still sees and engineering space.

And as well as the revenue starts to ramp up there'll be some incremental profit on all of that that's really the mix of assets.

It's still a little tricky talent as I look at kind of our consolidated numbers I mean, it's not going to move the needle that much one way or the other.

As you get past 2000.

<unk> three.

The joint venture is going to have a more significant impact.

On the equity income line.

And certainly.

Provide some opportunities for us on the Magna side as well as we look at complete E drive system.

So within the $2 billion.

And growth for your total and consolidated revenue righteous over and over two year period.

I mean this is the majority of that driven by by Hesco and and P. J a V or just kind of the breakout of the three J vs that are that are growing.

Yes.

Just talked about.

And.

The biggest contributors there are going to be harsco.

And it's going to be be JV, and I've talked about LGD and about $150 million and sales in 2019. So their sales are going to be more in 'twenty, one and I've been talking about the 50% CAGR. So theres some of that built into the unconsolidated joint venture sales as well.

Yes.

And I had got it okay, and just and at a high level. If we just bridge. This year's guidance to 2023, and you take the midpoint and you'll get a sense for what 2022 looks like and even after adjusting forget drag and the entire implied 'twenty and 'twenty. Two framework is almost identical to the 2022 targets you laid out last year. So just curious you know at a high level you know what.

What are the major driving forces you'd attribute to that story line in terms of the earnings resilience. Thanks.

And what this really.

Three things that stand out in my mind one is.

Thank you first kind of look back and say, where our volume and where we thought we were going.

And we think we're gonna be this year and 2002 volume or less so.

Negative.

And we've talked about the consolidation and to track.

That's a negative and we would have anticipated last year.

Thank you.

The biggest driver.

Going the other way.

And I realize really are focused on our overall cost structure.

We not only are we benefiting from some of the.

Right sizing and bringing down our structural cost.

We commenced that a 2020.

I just think it's the overall small and Tesco and doing stuff and a lot about world class manufacturing and.

Just a world class.

Way frame hunkering down and looking at what we're doing day to take cost out of the system.

And there is a.

Volume kind of moving pieces, but.

And I'd say that.

Probably the biggest part of it and you know and I look at 'twenty two to 'twenty two from a year ago to now.

Yes, thanks, guys and in terms of the equity income its about $50 million for the two joint ventures in 2020.

Our next question comes from the line of Kevin Chiang from.

And actually be Seaworld markets.

Your line is open.

Thanks, and thanks for squeezing me in here and it's been a long call I. Appreciate all the color maybe just just one from me just circling back on the chip shortage I appreciate the color you provided.

And the uncertainty you're facing.

Just wondering.

As this plays out and if you think of the downside risk.

And my right to think that the segment that might be from most impact there might be a complete vehicle manufacturing segment or or do you would you would.

Would you think another segment might be more.

There is more downside risk and the events as chip shortage.

Last longer than through 'twenty and 'twenty one.

Good morning, Kevin I think when you faithful.

And factoring it.

And how the Oems railroad and manage their mix, I think right and which model and sort of restart is gonna be.

Versus the other but that is something we have to kind of followed the lead.

Like Vince said, we've been fortunate and nontraditional.

Our type of thing from any of the product lines, but we've been.

Monitoring and extremely closely over the last two or three months and I think and you continue going forward.

But other than that there is a lot of.

It's a very dynamic situation right now I don't know, how we can put a finger on it other than say.

Based on the faster day, we believe the flow.

First half is where we have to watch closely and we might see those cash stops and.

And the.

Managing different variants, but.

And we still see.

And the capacities that are added and so on and so forth.

And it looks like.

And as a good possibility of making up and the second half, but like I said, it and sort of dynamics, we have to wait and watch.

Well no.

I appreciate the situation that's it from me. Thanks, Thank you very much.

And we are there any other type of any of the calls and they don't spend a pretty long.

Meeting.

Just one other call will take that but.

And we've got some other things we were committed to this morning that we need to get to as well.

Okay no problem.

So this will be the last question coming from day.

Adam Jonas from Morgan Stanley.

Please go ahead.

Guys I'm going to give you your time back I just wanted to say I continue to underestimate you don't bet against the Canadians.

Great presentation.

Really value added disclosure.

I have to really think my teeth into the transcript here so let's.

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Talk later, Okay, you guys be well and stay safe.

Thanks, Adam Thanks, Adam.

Take care.

Just to conclude the call I appreciate everybody, taking the time and ordered for the long haul and we went through a lot of detail like I said, our objective today was too.

Focus on the outlook and the fourth quarter results, but.

And I'm really hoping to and looking forward to meeting all of you and our April <unk>.

Investor event, where we want to provide color a little bit more on the product portfolio and the strategy going forward.

So until then thank you very much and stay safe.

Thank you.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.

Yeah.

Okay.

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