Q1 2024 Linamar Corp Earnings Call

Yes.

Operator: Good afternoon, ladies and gentlemen, and welcome to the Linamar Q1 2024 Earnings Conference. At this time, all lines are in listen-only mode.

Good afternoon, ladies and gentlemen, and welcome to <unk> Q1, 2024 earnings Conference call.

Operator: At this time all lines are in listen only mode.

Operator: Following the presentation, we will conduct a question and answer session.

Operator: If at any time during this call you require immediate assistance. Please press star zero for the operator.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. 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. Please go ahead.

Operator: This call is being recorded today Wednesday may eight 2024.

Linda S. Hasenfratz: I'd now like to turn the conference over to Linda Hudson Brad's Executive Chair and CEO. Please go ahead.

Linda S. Hasenfratz: Thank you. Good afternoon, everyone, and welcome to our first quarterly conference call. Joining me this afternoon are members of our senior teams, Mark Stoddart, Dale Schneider, Elliot Berger, Kevin Allahan, 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.

Linda S. Hasenfratz: Thank you good afternoon, everyone and welcome to our first quarter Conference call. Joining me. This afternoon are members of our senior teams Mark Charter Gil Schneider Elliott Berger, Kevin Olean, and some members of our corporate IR marketing finance and length of haul.

Linda S. Hasenfratz: Before I begin I'll draw your attention to the disclaimer that is currently.

Linda S. Hasenfratz: Yes.

Linda S. Hasenfratz: I'll start off with a high-level review of the quarter. Q1 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 this quarter. And on a 12-month basis, I'm very pleased to report that we have exceeded $10 billion in annual sales, a goal that we set for ourselves way back in 1999 when we were approaching $1 billion in sales.

Linda S. Hasenfratz: I'll start off with a high level review of the quarter Q1 was an excellent quarter and a strong start to what looks to be another solid year aircrafts at landmark financially. We once again have delivered double digit top and bottom line growth for the quarter and on a 12 month basis I am very pleased to report that we have.

Linda S. Hasenfratz: Exceeded $10 billion in annual sales of all that we set for ourselves way back in 1999, when we were approaching $1 billion in sales what an exciting milestone to achieve I am so proud and grateful to our incredible team at landmark to have made that happen.

Linda S. Hasenfratz: What an exciting milestone to achieve. I am so proud and grateful to our incredible team at Linamar to have made that happen. Strategically, we also achieved a milestone with the completion of our Borgo acquisition announced late last year. Integration has begun, and we are very excited to welcome the Borgo team to the Linamar team.

Linda S. Hasenfratz: Strategically we also achieved a milestone with the completion of our Borgo acquisition announced late last year integration has begun and we are very excited to welcome the borgata team to the landmarks.

Linda S. Hasenfratz: 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. Sales for the quarter hit a new record of $2.72 billion, up 19% from 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%.

Linda S. Hasenfratz: Markets are flat to modestly growing this year, but market share growth in both segments is driving record sales in the quarter.

Linda S. Hasenfratz: Finally on the innovation and new business side, we are seeing continued new business wins, and a balance of technology and propulsion areas, Our new award winning innovations getting market attention.

Linda S. Hasenfratz: Let's take a closer look at each of these areas and we'll start with the financial results.

Linda S. Hasenfratz: Sales for the quarter, a new record of $2 $17 billion up 19% to last year on solid launch and market share growth acquisitions, as well as better pricing.

Linda S. Hasenfratz: Normalized EPS for the quarter was up 31% to $2.59, which is outstanding and net normalized margins expanded to five 9% organic earnings growth was also at a strong double digit level I.

Linda S. Hasenfratz: 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 percent and margins improving meaningfully to 6.2 percent after a challenging few years. Some of the key factors impacting results in the quarter were the 2023 and 2024 acquisitions in both the mobility and industrial segments, both contributing to our results this quarter.

Linda S. Hasenfratz: I think it was particularly notable to see the solid performance of the mobility segment this quarter with normalized <unk> growing a fantastic, 58% and margins improving meaningfully to six 2% after a challenging few years.

Linda S. Hasenfratz: Some of the key factors impacting results in the quarter, where the 2023 and 2024 acquisitions in both mobility and industrial segments, both contributing to our results this quarter launching business and better pricing in the mobility segment is also driving great sales.

Linda S. Hasenfratz: Launching new businesses 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 Salford's strongest quarter seasonally.

Linda S. Hasenfratz: And earnings growth.

Linda S. Hasenfratz: Our agricultural businesses are performing strongly in the quarter, notably at knocked on Q1 I will also note is normally salford strongest quarter seasonally.

Linda S. Hasenfratz: And finally, additional launch costs, higher FG&A, and fixed costs supporting growth are offsetting growth in all of these areas, as would be expected in a growing business. It's great to see the continued positive trend in our financial results over the long term. We 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.

Linda S. Hasenfratz: And finally additional launch costs higher SG&A and fixed costs supporting growth are offsetting growth in all of these areas as would be expected and a growing business.

Linda S. Hasenfratz: It's great to see the continued positive trends in our financial results over the long term, we continue to be on track for a new record level of earnings performance for 2024.

Linda S. Hasenfratz: Turning to the balance sheet, we see a similarly positive performance our balance sheet has remained consistently strong despite higher acquisition activity at a resumption of more normal capex spending after a couple of life's spending years John Cogan.

Linda S. Hasenfratz: Net debt is sitting at $1.83 billion at the end of Q1, which is 1.24 times EBITDA, up from year-end and last year at this time. Our three acquisitions have impacted our leverage levels in comparison to both periods. We are still well below our goal of staying under 1.5 times EBITDA, even with our higher than normal spending.

Linda S. Hasenfratz: Jeff is sitting at $1 8 billion at the end of Q1, which is 124 times EBITDA up from year end and last year at this time.

Linda S. Hasenfratz: Three acquisitions impacted our leverage levels in comparison to both period, we are still well below our goal of staying under one five times EBITDA, even with our higher than normal spending we expect to be back under one times EBITDA within 12 to 18 months.

Linda S. Hasenfratz: We expect to be back under 1 times EBITDA within 12 to 18 months. We saw a small negative in free cash flow in the quarter of $39.3 million, as we normally do in the first quarter 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.

Linda S. Hasenfratz: We saw a small negative in free cash flow in the quarter of $39 3 million as we normally do in the first quarter of the year with its big jobs in sales than.

Linda S. Hasenfratz: We expect to see subsequent quarter. 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.

Linda S. Hasenfratz: Capital expenditure was higher than Q1 last year, but down from highs seen over the last few quarters. Capital expenditure 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.

Linda S. Hasenfratz: Capex was higher than Q1 last year.

Linda S. Hasenfratz: <unk> seen over the last few quarters Capex as a percentage of sales was 7% right in line with our 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 ended up at the low end of our normal range of.

Linda S. Hasenfratz: Pending 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.

Linda S. Hasenfratz: Next year, we'll 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 Orgo Industries on February 1st. The integration is underway and is progressing very well.

Linda S. Hasenfratz: 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 forego industries on February 1st integration is underway and has progressed.

Linda S. Hasenfratz: Thank very well.

Linda S. Hasenfratz: I'd like to take a minute again to remind you of the powerful synergistic diversification model that Linamar has developed. We have two 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. The industrial business is more regional, with a stronger presence in North America, but it has less purchasing power than our mobility segment.

Linda S. Hasenfratz: I'd like to take a minute and again to remind you of a powerful synergistic diversification model that Linda Mara has developed we had two key businesses as you know mobility and industrial and mobility business is very large and global with excellent technology systems and a deep talent pool there are <unk>.

Linda S. Hasenfratz: Michigan growth opportunities for this business, which is capital attempt at the 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.

Linda S. Hasenfratz: 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, Sulford, and Borgo, and have excellent global growth potential. Here's how it works.

Linda S. Hasenfratz: Brands are skyjack markdown, Salford embargo and have excellent global growth potential.

Linda S. Hasenfratz: 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. The industrial group then provides much-needed cash for investment in 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. 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.

Linda S. Hasenfratz: Here's how it works the mobility group helps improve the performance of the industrial group by supplying talent system expertise, our global network to ensure global growth and significant purchasing power to improve profit and cash flow. The industrial growth that provides much needed cash for investments to the mobility segment.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: You don't need to take my word for it that this model will drive consistent sustainable results you only need to look at our track record here and in Europe with very few exceptions, we are delivering top and bottom line growth. The strong majority of those years as denoted by the star in the Green box is double digit growth.

Linda S. Hasenfratz: Year in and year out, with very few exceptions, we are delivering top and bottom line growth. The strong majority of those years, as denoted by the star in the green box, have been double-digit growth, as well as free cash flow and double-digit return on capital. Return on capital has been in double digits 93% of the last 14 years, every single year but one, and that exception being 2020, the peak year of the pandemic.

Linda S. Hasenfratz: As well as free cash flow and double digit return on capital return on capital has been in double digits, 93% of the last 14 years every single year, but one and that exception being 2020, the peak years of pandemic.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: 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 markets and market share, I would say we've had another very successful quarter in terms of growing our market share.

Linda S. Hasenfratz: Turning to market the market share I would say we've had a very successful quarter again in terms of growing our market share as just shown Linda Moore 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.

Linda S. Hasenfratz: As just shown, Linamar has a great track record of growth, often in the double-digit range. We achieve 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 our global market share in Sysilis, our largest product family at Skyjack.

Linda S. Hasenfratz: Soft 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 scissor lifts, our largest product family at Skyjack.

Linda S. Hasenfratz: And in the agricultural market, we saw excellent market share growth for our core Combined Draper headers, which is our largest product family at Mapton. You can see here the summarized market data for 2024 and 2025. On the mobility side, we're looking for flat production globally this year with industry expectations of 16 million, 17.5 million, and 51.7 million vehicles produced in North America, Europe, and Asia, respectively. This represents a plus or minus 2% change depending on the region.

Linda S. Hasenfratz: And in the agricultural market, we saw excellent market share growth for our core combine Draper headers, which is our largest product family at knockdown.

Linda S. Hasenfratz: You can see here summarized market data for 2024 and 2025 on the mobility side, we're looking for flat production globally. This year with industry expectations at 16 million $17 5 million and $51 7 million vehicles produced in North America Europe.

Linda S. Hasenfratz: And Asia, respectively. This represents say plus or minus 2% change depending on the region next year, we expect to see modest market growth in most regions.

Linda S. Hasenfratz: Next year, we expect to see modest market growth in most regions. The big story this year in the mobility business continues to be the dialing back on battery electric vehicles in favor of more traditional internal combustion and hybrid electric vehicle models. Linamar'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.

Linda S. Hasenfratz: So we did 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 model. One of my flexible strategy of securing business and every type of propulsion and utilizing flexible with what they have that can shift from one type of product.

Linda S. Hasenfratz: Another is very helpful. In this more volatile production environment.

Linda S. Hasenfratz: On the access side, industry experts are predicting flat markets in the access industry globally this year, plus or minus one to two percent, depending on the global region and products. Booms are the only products 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.

Linda S. Hasenfratz: 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 mix are the oldest products seeing modest growth in all regions, which is a key area of market share growth for us.

Linda S. Hasenfratz: Our backlog at Skyjack is strong and remains ahead of historical norms as we work to fill customer orders was reasonably stable markets and predicted market share growth. We feel confident we can again grow skyjack and double digits. This year.

Linda S. Hasenfratz: With 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 SkyJax to continue its growth path. We see the last 2024 as a resettlement period, post-COVID growth, as opposed to the start of a downward cycle.

Linda S. Hasenfratz: Nextgen markets will see moderate growth, Brazil, helping skyjack to continue its growth path, we see the flat 2024, as hey, we settlement period post COVID-19 growth as opposed to the start of a downward cycle. We expect the following years to return to a more conservative than historic growth Todd.

Linda S. Hasenfratz: 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 megaprojects to extend beyond 2024. In China, after a flat 2024, we see growth returning, and while it may not be at recent historical levels, it does represent a significant volume opportunity.

Linda S. Hasenfratz: With a change from fleet growth to fleet replenishment in North America rental companies remained bullish about manufacturing activity on the back of the inflation reduction Act onshoring and a large number of mega projects to extend beyond 24 in China. After a flat 24, we see growth return.

Linda S. Hasenfratz: And while it may not be at recent historical levels. It does represent a significant volume opportunity.

Linda S. Hasenfratz: On the agricultural side, industry expectations are for flat markets for the combine draper header market this year in North America, with declines in other parts of the world. The windrower market will also see fairly flat global markets this year. Nevertheless, the order book remains strong for MacDon.

Linda S. Hasenfratz: On the agricultural side industry expectations of flat markets for the combined Draper header market. This year in North America with declines in other parts of the world. The window market. We'll also see fairly flat global markets. This year.

Linda S. Hasenfratz: Nevertheless, the order book remains strong from act on orders for combine Drapers, our largest product family are ahead of orders at this point last year.

Linda S. Hasenfratz: Orders for combine drapers, our largest product family, are ahead of orders at this point last year, while sulfur products and tillage and crop fertilization equipment are more aligned to the high-force powertractor market. It's also seen flat-to-dam 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 Borgo business is consistent with historical levels and is looking for a stable year in terms of performance.

Linda S. Hasenfratz: Salford products intelligence chop fertilization equipment more aligned to the high horsepower tractor market is also seeing flat to down market. This year on a global basis.

Linda S. Hasenfratz: Our current forecast is for mid single digit growth for Mac Dawn in Salford combined this year finally, the order book for our new forego 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 million in annual <unk>.

Linda S. Hasenfratz: As a reminder, this business runs at about $450 million in annual revenue, and we acquired it as of February 1st this year. The culmination of growth at MacDon 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.

Linda S. Hasenfratz: Revenue and we acquired that asset February one this year the culmination of gross add background, 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.

Linda S. Hasenfratz: 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 for vehicles up over last year. All three regions saw content for vehicle growth when they launched their business, and North America has reached a new quarterly high of almost $295 in content for vehicles.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: 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 a content per vehicle growth on launching business and North America has reached a new quarterly high of almost $295 of content for vehicle.

Linda S. Hasenfratz: As noted, we're growing market share in key products and regions within our industrial segment businesses. Here you can see the Macton Global Draper header market share, which is on a solid upward trend, reflecting the continued adoption of Macton Flex Draper technology over legacy Augur 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 EA. In our Access business, our micro-scissor program, ROLA, continues to generate positive market reactions.

Linda S. Hasenfratz: As noted we are gaining market share in key products and regions within our industrial segment businesses here as you can see the mapped on global Draper header market share, which is on a solid upward trend, reflecting the continued adoption of markdowns black Draper technology over legacy Auger Heather's on a Google.

Linda S. Hasenfratz: The latest.

Linda S. Hasenfratz: Turning to innovation and new business, we've seen another strong quarter in wins for the mobility business. The Windsor, a great balance of propulsion agnostic components and powertrain products for a variety of propulsion types and alignment with our strategy to maintain strong contract potential on sales exposure to each inner.

Linda S. Hasenfratz: In our access business, our Microsensor program rollout continues to generate positive market reaction.

Linda S. Hasenfratz: And in our Ag business, we had two 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 differentials for ICE and hybrid vehicles. With respect to our launch book, we're seeing ramping volumes on launch programs which are predicted to reach 30 to 40 percent of material levels this year, generating incremental sales of $600 to $800 million. Next year, we will see another $700 to $900 million of incremental sales as volumes on these programs continue to ramp up. The programs will peak at nearly $3.4 billion in sales.

Linda S. Hasenfratz: And in our AG business, we have had two new innovative product launches.

Linda S. Hasenfratz: Some interesting mobility wins in the quarter were for propulsion agnostic structural components, including Knuckles and housing and some great wins for gears and differentials for ice and hybrid vehicles.

Linda S. Hasenfratz: With respect to our launch, but we're seeing ramping volumes on launching programs, which are predicted to reach 30% to 40% of mature levels. This year generating incremental sales of $600 million to $800 million next year, we will see another $700 million to $900 million of incremental sales as volumes on these programs continue.

Linda S. Hasenfratz: New to ramp up the programs will peak at nearly $3 4 billion in sales I'll note nearly $200 million of program moved from launch to production last quarter.

Linda S. Hasenfratz: I'll note that nearly $200 million of program moves from launch to production were made last quarter. You can see here the split of Lindamar's business once we get out into the 2028 timeframe as a result of all of those launches with, again, a good blend of propulsion agnostic, which 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 wings.

Linda S. Hasenfratz: You can see here the split of Linda My business once we get out into the 2028 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.

Linda S. Hasenfratz: Powertrain driving out of this good mix of business wins close to 40% of business in 2028 propulsion agnostic, 60% is powertrain with the split about one third to EV and she says to ice within that I think this is a good position to be in to whether potentially shifting market adoption of differ.

Linda S. Hasenfratz: Close to 40% of business in 2028 is propulsion agnostic, 60% is powertrain with a split about one-third to EV and two-thirds to ICE within that. I think this is a good position to be in, potentially as markets adopt different technologies, have a solid chunk of propulsion agnostic business, and 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.

Linda S. Hasenfratz: <unk> 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 come more prominent in 2020, it will still be plenty of ice vehicles, hence the heavier ice powertrain focused in.

Linda S. Hasenfratz: In 2028, there will still be plenty of ICE vehicles, hence the heavier ICE powertrain focused on sales at that time. That will shrink over the ensuing five years to become more and more hybrid electric and battery electric and ultimately fuel cell electric powertrain concentration in alignment with the market.

Linda S. Hasenfratz: Stay up at that time that'll shrink over the ensuing five years to become more and more hybrid electric and battery electric and ultimately fuel cell electric powertrain concentration in alignment with the market flexibility in a wide range of pack for a wide range of platform coverage is the name of the game during the next day.

Linda S. Hasenfratz: Flexibility and a wide range of platform coverage will be 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. There'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 Lindamar, we've always believed that our levels of flexibility should directly correlate to levels of uncertainty.

Linda S. Hasenfratz: As the mobility market transition.

Linda S. Hasenfratz: In fact flexibility is really the key to managing any major transition of technology No technology adoption will be a straight line, there's always going to be ups and downs just as we're seeing now on the EV side that the dial back in the market and literally we've always believed that our levels of flexibility should directly correlate to a level of uncertainty.

Linda S. Hasenfratz: There will be uncertainty with respect to the timing and volumes of different vehicle platforms over the coming years. That means we need to stay as flexible as possible. And we've done that in a few really important ways.

Linda S. Hasenfratz: There will be uncertainties 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 first we created a product portfolio with equal potential for any type of vehicle propulsion next we tried to.

Linda S. Hasenfratz: First, 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. For example, 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 that we minimize underutilization of assets.

Linda S. Hasenfratz: Sure we are 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 were made.

Linda S. Hasenfratz: <unk> for electric vehicles.

Linda S. Hasenfratz: He is for ice vehicle components and vice versa. This flexibility is key to ensure we minimize the under utilization of assets in fact, 84% of our assets in our mobility business are flexible and can be re allocated to a different projects whether internal combustion.

Linda S. Hasenfratz: In fact, 84% of our assets in our mobility business are flexible and can be reallocated to a different project, whether internal 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 agree to with customers.

Linda S. Hasenfratz: Hybrid electric battery electric fuel cell electric.

Linda S. Hasenfratz: That kind of flexibility is key to managing this transition also here the commercial terms that we agreed to with customers we must be more commercially astute in terms of contract commitments and expectations and suppliers. It's typically been in the past with our OEM customers be assured we are doing all of this in.

Linda S. Hasenfratz: We must be more commercially astute in terms of contracts, commitments, and expectations than suppliers have typically been in the past with their 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. And, of course, our growing industrial business continues to help insulate us as well from being too exposed to any one industry.

Linda S. Hasenfratz: Order to successfully navigate and take advantage of opportunities that will come in these transition years in the mobility industry and of course, our growing industrial business continues to help insulate us as well for being too exposed to any one industry in fact over half of our earnings are coming from our.

Linda S. Hasenfratz: 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's light weighting capabilities. Here you can see an STA semi-trailing arm casting design that we produced at our newly acquired Movex site. This component goes into a battery-electric vehicle light truck application. Originally, the engineering team at our OEM customer didn't believe that an aluminum casting was feasible for this application and thought they would need to make it in cast iron.

Linda S. Hasenfratz: <unk> businesses.

Linda S. Hasenfratz: Turning to this quarter's innovation update I'd like to first highlight an example of the Linda Marsh structures script light weighting capability here as you can see an S. T. A semi trailing arm casting design that we produce in our newly acquired <unk> X sight. This component component goes into a battery electric vehicle light truck App.

Linda S. Hasenfratz: Location originally the engineering team at our OEM customer didn't believe that aluminum casting feasible for this application and thought they would need to make it in cost or our engineering team was able to deliver a lightweight design and aluminum using vacuum modulus and pressure arrived with casting processes.

Linda S. Hasenfratz: Our engineering team was able to deliver a lightweight design in aluminum using vacuum riserless and pressure riserless 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 the product range with working heights of 13 and 19 feet.

Linda S. Hasenfratz: That saved nearly nine kilograms of weight per vehicle. The design was recently recognized by the American Foundries Society for the best in Class Award and its annual casting of the year competition net.

Linda S. Hasenfratz: Next step Skyjack, our new micros, because your models have officially launched these sooner models still a segment at the low end our product range with working Hypes of 13 and 19 feet.

Linda S. Hasenfratz: The new models are pure electric drives, and their micro footprint allows them to operate in tight workspaces and even navigate into elevators. The micro category within the overall scissor lift market has been a growing segment over the past few years. This SkyJack offering provides a leading product to now better address it. At Mapton, their new R1FR model was launched to the ag market on March 1st. The Front Mount Rotary Disc Series is a new mower conditioner that can be mounted to the front of a tractor.

Linda S. Hasenfratz: The new models of pure electric drive and their micro footprint allows them to operate and tight workspaces and even navigate into elevators. The micro category within the overall scissor lift market has been a growing segment. The past few years that skyjack offerings provide the leading product to now better address it.

Linda S. Hasenfratz: At knocked on their new <unk> F. Our model was launched to the AG market on March 1st the front Mt Rotary disc series and the new more lower conditioner that can mount to the front of a tractor that new model expands upon our current rotary hey, prop portfolio and enabled farmers to double there.

Linda S. Hasenfratz: The new model expands upon our current rotary hay 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 from Macton, the industry's harvesting specialist. And lastly, you get a further sense of the type of technology leadership we acquired through Borgo. For example, the XR-8 Series Extended Range Harrows cover a lot of ground, up to 130 acres per hour, in fact, with an availability in both 90 and 110 foot widths.

Linda S. Hasenfratz: Productivity when paired with the existing full type or one more lower conditioner.

Linda S. Hasenfratz: Another innovation focused on infield performance for Mac on the industry's harvesting specialist and.

Linda S. Hasenfratz: And then lastly, you get it further stats at the type of technology leadership, we acquired through Bourgault from this example, the F. R. H series extended range heroes cover a lot of around <unk> hundred 30 acres per hour in fact wasn't that availability above 90, and 100 and churn but with all.

Linda S. Hasenfratz: All settings and functions can be fully controlled from the cab of the tractor. The XR Series offers exceptional performance, even in field conditions with tough field residue and extreme contours. The XR Heroes help spread crop residue to better prepare for next year's planting. Another example of how Borgo is pursuing perfection.

Linda S. Hasenfratz: All settings and functions can be fully control from the cab as attractive the extra series offers exceptional requirements even into a condition with chatfield residue and extreme contours nexstar heroes help spread crop residue to better prepare for next year's planting. Another example of how <unk> worked out.

Linda S. Hasenfratz: Is pursuing perfection.

Linda S. Hasenfratz: 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 SkyJet, 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 in 2024, based on launches of $600 million to $800 million this year and current market production expectations.

Speaker Change: Let's turn to a summary of our outlook.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: Sales in our mobility segment for 2024 based on launches of $600 million to $800 million this year and current market production expectations.

Linda S. Hasenfratz: 2025 will see continued growth based on further launch ramp-ups of $700 to $900 million 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 a 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 seen in the first quarter of the year.

Linda S. Hasenfratz: 125, we'll see continued growth based on further launch ramp up of $700 million to $900 million and the market growth that's expected for next year.

Linda S. Hasenfratz: Growth in both segments will lead to double digit top line growth for Linda Meyer overall this year and continued growth next year net margins will expand again in 2024 on growing sales driving mainly at a meaningful margin expansion in the mobility business as you have already seen delivered in Q1.

Linda S. Hasenfratz: The industrial segment will continue to perform in its normal 14% to 18% range again as already seen in the first quarter of the year.

Linda S. Hasenfratz: 2025, we 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. This will mean strong double digit growth in mobility segment O E. This year and another year.

Linda S. Hasenfratz: 2025 will see the mobility segment margins expand further and back into our normal 7-10% range, and the industrial segment will continue to perform in its normal 14-18% range. This 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 the industrials for an overall expectation of continued double-digit EPS growth for us in 2025.

Linda S. Hasenfratz: Of double digit AOI 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.

Linda S. Hasenfratz: A continued double digit EPS growth for us in 2025.

Linda S. Hasenfratz: CapEx will be down in dollars from a very robust 2024 level of spending and at the low end of, oh sorry, 2023 level of spending and at the low end of our normal 68% of sales. Next year we'll also see spending at the low end of our normal 68% of sales, which of course is what drives our double digit growth. We expect strongly positive pre-cash flow this year and next year, putting us in an excellent position from which to drive further growth.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: Next year, we'll also see spending at the low end of our normal 68% of sales, which of course is what drives our double digit growth.

Linda S. Hasenfratz: We expect strongly positive free cash flow this year and next year, leaving us in an excellent position from which to drive further growth.

Linda S. Hasenfratz: Looking 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.

Linda S. Hasenfratz: Looking specifically at Q2, you should expect double-digit top and bottom line growth in comparison to the prior year, with OE margins compared to last year as well. The mobility segment will see double-digit sales and OE growth compared to the prior year, thriving from the 2023 acquisitions, launching new businesses, and continuing impact of customer cost recovery. I will note that the ED dial-back, 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.

Linda S. Hasenfratz: 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 dial back as it's known today has been considered in this guidance, but it is of course a.

Linda S. Hasenfratz: Lewis situation that we're keeping an eye on the.

Linda S. Hasenfratz: The industrial segment will see double-digit sales and OE growth compared 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 financial review of retail.

Linda S. Hasenfratz: The industrial segment will see double digit sales and OE growth to last year. Thanks to a full quarter of Fargo 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 financial review and Joe.

Dale Schneider: Thank you, Linda, and good afternoon, everyone. As Linda noted, Q1 was an exceptional quarter as we achieved double-digit sales growth of 18.7% and net earnings growth of 52.6%. Mobility margins continue to expand from both Q4 and Q1-23 levels. Q1 was also another strong liquidity quarter at $1.3 billion.

Dale Schneider: Thank you Linda and good afternoon, everyone.

Dale Schneider: As Linda noted Q1 was an exceptional quarter as we achieved double digit sales growth between 7% and net earnings growth of 52, 6%.

Dale Schneider: Mobility margins continue to expand from both Q4 and Q1 'twenty three levels.

Dale Schneider: Q1 was also another strong liquidity quarter at $1 $3 billion.

Dale Schneider: For the quarter, sales increased 18.7% to a new record of $2.7 billion. Earnings are normalized for FX gains or losses related to the 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 31 cents per share. Normalized operating earnings for the quarter were $243.8 million.

Dale Schneider: For sales in the quarter sales increased 18, 7% to a new record of $2 $7 billion.

Dale Schneider: Earnings were normalized for FX gains or losses related to revaluation of the balance sheet and potentially other items that may have occurred in the quarter.

Dale Schneider: In the quarter earnings were normalized for an FX gain related to the revaluation of the balance sheet, Jim Packer EPS by <unk> 31 per share.

Dale Schneider: Normalized operating earnings for the quarter were $243 8 million. This compares to 175 8 million in Q1, 23, an increase of $68 million or 38, 7%.

Dale Schneider: This compares to $175.8 million in Q1'23, an increase of $68 million, or 38.7%. Normalized net earnings increased $37.9 million, or 31.1% in the quarter, to $159.6 million. Fully diluted normalized EPS increased by 61 cents, or 30.8%, to $2.59.

Dale Schneider: Normalized net earnings increased 37, 9 million or 31, 1% quarter to $159 6 million.

Dale Schneider: Fully diluted normalized EPS increased by 61 cents.

Dale Schneider: Or 38% to $2.59.

Dale Schneider: Included in earnings for the quarter was a foreign exchange gain of $24.9 million, which resulted from a $25.4 million gain related to the revaluation of our operating balances and a $500,000 loss from the revaluation of our financing balance. As I mentioned, the net effect gain impacted the quarter's EPS by 31 cents. From a business segment perspective, the Q1 FX gain of $25.4 million related to the re-evaluation of operating balances was the result of a $19.5 million gain in industrial and a $5.9 million gain in mobility.

Dale Schneider: Included in earnings for the quarter was a foreign exchange gain of $24 $9 million.

Dale Schneider: Further looking at the segments, industrial sales increased by 24.5% or $143.6 million to $728.6 million in the quarter. The increase for the quarter is primarily due to the additional sales from the first two months of results from the Barbo acquisition and the substantial increase in agricultural sales driven by global market share growth on Draper. Normalized Industrial Operating Earnings for Q1 increased $22.7 million, or 23.3 percent over last year to $120.2 million. The primary drivers impacting industrial earnings were the increased contribution from the stiffening increase in agricultural equipment volumes.

Dale Schneider: Which resulted from $25 $4 million gain related to the revaluation of operating balances and a $500000 loss from the revaluation of our financing.

Dale Schneider: Yeah.

Dale Schneider: As I mentioned, the net FX gains impacted the quarter's EPS by <unk> 31.

Dale Schneider: On a business segment perspective, the Q1 FX gain of $25 4 million related to the revaluation of operating balances was a result of 19 5 million gains in industrial and a $5 9 million dollar gains in mobility.

Dale Schneider: Further looking at the segments industrial sales increased by 24, 5% or $143 6 million seven or $28 6 million in the quarter.

Dale Schneider: Sales increased for the quarter was primarily due to the additional sales from the first two months of results from the <unk> acquisition and the substantial increase in agricultural sales driven by global market share growth Andre Pires.

Dale Schneider: Normalized industrial operating earnings for Q1 increased $22 7 million or 23, 3% over last year to $122 million. The primary drivers impacting industrial earnings for the increased contribution from this given the increasing cultural equipment volumes.

Dale Schneider: The increased contributions from the acquisition of Borgo were partially offset by increased launch costs related to new facilities for Skyjack in Mexico and China and also from increased S&A costs that are supporting our growth. Turning to mobility, sales increased by 285.6 million, or 16.7%, over Q1 last year to a new record of $2 billion. Sales increase in the first quarter was driven by the additional sales from our Linamar Structures acquisitions in 2023, 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.

Dale Schneider: <unk> contribution from the acquisition of <unk>, which were partially offset by increased launch costs related to new facilities for Skyjack, Mexico and China.

Dale Schneider: And also from increased SG&A costs that are supporting our growth.

Dale Schneider: Turning to mobility sales increased by $285 6 million or 16, 7% over Q1 last year to a new record of $2 billion.

Dale Schneider: The sales increase in the first quarter was driven by the additional sales from our loan restructures acquisitions in 'twenty three.

Dale Schneider: The increased volumes on launches in certain mature programs plus the customer cost recoveries achieved in the quarter, which were partially offset by lower volumes in certain programs internationally winding down to end of life.

Dale Schneider: Okay.

Dale Schneider: Q1 normalized operating earnings for mobility were up 57.9% over last year at $123.6 million. In the quarter, mobility earnings were impacted by the added contribution related to the structure acquisitions last year and the increased contribution from higher volumes on launching and certain mature programs.

Dale Schneider: Q1 normalized operating earnings for mobility were up 57, 9% over last year and $123 6 million in.

Dale Schneider: During the quarter mobility earnings were impacted by the added contribution related to the structure of the acquisitions last year the increase.

Dale Schneider: <unk> comp contribution from the higher volumes on launching future programs.

Dale Schneider: The customer cost recovery is achieved, which is partially offset by lower volumes at ending programs and the increased SG&A costs that are supporting the growth in the segment. Returning to the overall Linamar results, the company's gross margin was $393.2 million, an increase of $92.7 million compared to last year, and was due to the same factors that drove the segment results. Cogs Amortization. Expense for the first quarter increased to $139.2 million compared to Q1-23, mainly due to acquisitions in Q23 and Q24 related to Linamar structures and Borgo, in addition to launching programs. Cogs amortization as a percent of sales, though, remained relatively flat at 5.5%.

Dale Schneider: The customer costs.

Dale Schneider: <unk> achieved which are partially offset by lower volumes of new programs and the increased SG&A costs that are supporting the growth in this segment.

Dale Schneider: Turning to the overall minimum result, company's gross margin was $393 2 million, an increase of $92 7 million compared to last year and was due to the same factors that drove the segment results.

Dale Schneider: Cogs amortization.

Dale Schneider: Expense for the first quarter increased to $139 2 million compared to Q1, 'twenty three mainly due to the acquisitions in 'twenty, three and 'twenty four related to the limit of our structures embargo. In addition to launching programs.

Dale Schneider: <unk> as a percent of sales, though remained relatively flat at five 1%.

Dale Schneider: SG&A costs increased in the quarter to $151.7 million from $124.7 million last year. The increase is primarily the result of the incremental SG&A costs from the acquisitions related to the structures group and for BOGO. Additionally, we also had increased management and sales costs that were supporting the growth. Finance expenses increased $19.7 million since last year, primarily due to the private placement notes issued on June 23 to fund the Linamar Structures acquisition. The new term credit facility used to fund the Bargaud Acquisition

Dale Schneider: SG&A cost increased in the quarter to $151 7 million from $124 7 million last year. The increase primarily as a result of the incremental SG&A costs from the acquisitions related to the structures group and for Bob go.

Dale Schneider: Additionally, we also had increased management sales costs that were supporting the growth.

Dale Schneider: Finance expenses increased $19 7 million since last year, primarily due to the private placement notes issued in June 23 to fund the loan restructures acquisitions, the new term credit facility used to fund the bargo acquisition.

Dale Schneider: The added interest expense related to leases acquired as part of the structure's acquisition and additional interest expense due to the Bank of Canada and the U.S. Fed rate increases compared to last year. The Consolidated Effective Interest Rate, Q1, was 5.2%. In fact, the tax rate for the first 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.

Dale Schneider: The added interest expense related to leases acquired as part of the structure is acquisition and.

Dale Schneider: And additional interest expense due to the bank of Canada, and the U S fed rate increases compared to last year.

Dale Schneider: Consolidated effective interest rate for Q1 was five 2%.

Dale Schneider: The tax rate for the first quarter decreased to 24, 4% compared to last year, primarily due to the Q1 2023 withholding tax impacts, which did not reoccur this year related to the repatriation of cash from China.

Dale Schneider: Also, the more favorable mix in foreign tax rates. However, this was partially offset by an increase in non-deductible expenses compared to last year and an increase in unused tax losses that have not been recognized as a deferred tax asset 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, 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 Act.

Dale Schneider: Also the more favorable mix and 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 asset.

Dale Schneider: The Q1 effective tax rate was 24, 4% and was within our range of 24% to 26% for 2020 for full year effective tax rate is expected to be in that range as well as 24% to 26%.

Dale Schneider: Currently expected to be similar to the 23 full year tax rate of 25, 6%, which is before the impact of the 23, China withholding taxes.

Dale Schneider: Lamar's cash position was $787.2 million on March 31st, an increase of $133.9 million compared to December 2023. The first quarter generated $150.1 million in cash from operating activities, which was used primarily to fund CAPEX. The net debt to EBITDA increased 1.24 times in the quarter from a year ago, mainly due to the acquisitions in 23 of Linamar's structures and the acquisition of Borgo in Q1 of this year. Based on our current estimates, we're expecting 2024 to maintain a strong balance sheet, and we're expecting to deleverage under one times in the next 12 to 18 months.

Dale Schneider: Numerous cash position with $787 2 million as of March 31.

Dale Schneider: <unk> of $133 9 million compared to December 2023.

Dale Schneider: The first quarter generated $150 1 million in cash from operating activities, which was used primarily to fund capex.

Dale Schneider: The net debt to EBITDA increased to 100 124 times in the quarter from a year ago, mainly due to the acquisitions and 23 of one of our structures and the acquisition of <unk> Borg.

Dale Schneider: Q1 of this year.

Dale Schneider: Based on our current estimates we are expecting 2024 to maintain a strong balance sheet and we're expecting to deleverage under one times in the next 12 to 18 months.

Dale Schneider: The amount of available credit on our credit facilities was $522.9 million at the end of the quarter. Additionally, our available liquidity at the end of Q1 remained strong at $1.3 billion. 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 were a story of improving performance in both segments, which drove double-digit sales growth of 18.7% and normalized EPS growth of 30.8%.

Dale Schneider: The amount available credit on our credit facilities was $522 9 million at the end of the quarter our available liquidity at the end of Q1 remained strong at $1 3 billion. As a result, we currently believe we have sufficient liquidity to satisfy our financial obligations throughout the year.

Dale Schneider: 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, 7% normalized EPS growth with growth of 38%.

Dale Schneider: The industrial segment continued to grow sales significantly by 24, 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 six 2%.

Dale Schneider: Additionally, Q1 has strong liquidity levels at $1 3 billion.

Dale Schneider: A great quarter for outperformance in both sales and earnings while maintaining a strong balance sheet.

Dale Schneider: The industrial segment continued to grow sales significantly by 24.5 percent. Mobility achieved a new record for sales with double-digit sales growth over the last year, in addition to continuing to expand the normalized margins to 6.2 percent. Additionally, Q1 had strong liquidity levels at $1.3 billion. It was a great quarter for outperformance in both sales and earnings while maintaining your strong balance sheet. That concludes my commentary, and I now would like to open up for questions.

Speaker Change: That concludes my commentary and then I would like to open up for questions.

Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. Please ensure that you lift the handset if you're using a speakerphone before pressing any key. Your first question comes from Jonathan Goldman from Scotiabank. Your line is now open.

Speaker Change: Thank you, ladies and gentlemen, we will now conduct the question and answer session. If you have a question. Please press star followed by the number one on your telephone keypad.

Operator: If you wish to cancel your request please press star two.

Operator: Since you had to lift the handset if you're using a speaker phone before crashing in the keys.

Operator: Your first question comes from Jonathan <unk> Goldman from Scotia Bank.

Jonathan Goldman: Good luck.

Jonathan Goldman: Your line is now open.

Jonathan Goldman: Good evening, and thanks for taking my questions. So the first one, a 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?

Jonathan Goldman: Good evening and thanks for taking my questions. So the first one significant step up in the mobility margins quarter on quarter.

Jonathan Goldman: Can you just discuss the underlying drivers of the performance and whether Q1 margins will be appropriate starting point going forward, obviously outside of the typical seasonality.

Jonathan Goldman: Yeah, absolutely, yes, we did see a great recovery in the mobility segment, both in terms of.

Linda S. Hasenfratz: Yes, we did see a great recovery in the mobility segment both in terms of looking at the same quarter last year as well as last quarter. Key drivers are, of course, the acquisition that we made last year, the impact of launching new businesses, and negotiated price relief 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 the Q1 mobility margin level is probably a reasonable proxy for the year, up or down a little depending on the quarter.

Linda S. Hasenfratz: Looking at same quarter last year as well as last quarter.

Linda S. Hasenfratz: Key drivers are of course acquisitions.

Linda S. Hasenfratz: Know that we made to add last year the impact of launching business negotiated price relief to offset higher costs that we were experiencing last year are also starting to be realized so all of that.

Linda S. Hasenfratz: Was that a factor in the higher earnings and in the higher margin.

Linda S. Hasenfratz: 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.

Linda S. Hasenfratz: Okay, that's a great color. Thanks. And maybe switch to ag, just a couple here. How is Borgo performing relative to your original expectations when you originally announced the acquisition?

Speaker Change: Okay, that's great color, thanks, and maybe switching to <unk>.

Linda S. Hasenfratz: Just a couple here how is borgo performing relative to your original expectations. When you originally announced the acquisition.

Linda S. Hasenfratz: Yeah, I mean it's performing well. As I say, it's running at expected levels of sales. The integration is going very well, so it's meeting expectations.

Linda S. Hasenfratz: Yeah, I mean, it is performing well as I say, it's running at expected levels of sales and the integration is going very well so meeting expectations.

Linda S. Hasenfratz: And then I guess one more on agriculture, the second quarter in a row now that you call those share gains and combine drapers. Can you elaborate on the drivers of those games, and do you expect that momentum to continue through the balance of the year?

Linda S. Hasenfratz: Perfect and then I guess one more on.

Linda S. Hasenfratz: Second quarter in a row now that you've called out share gains in Columbine draperies.

Linda S. Hasenfratz: Can you elaborate on the drivers of those gains and do you expect that momentum to continue through the balance of the year.

Linda S. Hasenfratz: Yeah, I mean, growing our market share in all of our industrial businesses is a key strategy, both in terms of product, expanding our product lineup, 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 MacDong. We're seeing great adoption of their drapers in global markets, so that's a key driver of their market share growth, and they continue to have a very strong market share in North America as well.

Linda S. Hasenfratz: Yeah, I mean and growing our market share in all of our industrial businesses is a key strategy both in terms of product.

Linda S. Hasenfratz: Expanding our product lineup as well as global expansion, so selling more of these products on a on a global basis. So I mean, that's exactly what we're seeing with markdown, we're seeing great adoption of our their drapers.

Linda S. Hasenfratz: <unk>.

Linda S. Hasenfratz: In global markets. So that's a key key driver of their market share.

Linda S. Hasenfratz: Growth and they continue to have very strong market share in North America as well.

Linda S. Hasenfratz: No, that's great to see. Thanks for taking my question.

Speaker Change: No that's great to see thanks for taking my questions.

Linda S. Hasenfratz: Okay.

Krista Friesen: Your next question comes from Krista Friesen from CIBC. Your line is now open.

Christopher Prison: Your next question comes from Christopher prison from CIBC.

Krista Friesen: Your line is now open.

Krista Friesen: Hi, congratulations on the quarter. Very strong showing. Especially in mobility, great margins there. I was just wondering if you could 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.

Krista Friesen: Hi, congrats on the quarter.

Krista Friesen: Very strong showing them, especially mobility great margins. There I was just wondering if you could speak to.

Krista Friesen: How we should think about the cadence of margins through the rest of the year end and maybe if if this level is sustainable and kind of if there's upside from here.

Linda S. Hasenfratz: Yeah, 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 Change: Yeah, 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.

Speaker Change: On the quarter, but I do think it's sustainable.

Linda S. Hasenfratz: Yes.

Krista Friesen: Okay, great. And then maybe just on SkyJet. 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 Change: Okay, Great and then maybe just on Skyjack.

Krista Friesen: Youre clearly seeing a lot of growth there and expect to see continued growth.

Krista Friesen: And I believe some of that is through the geographic expansion.

Krista Friesen: <unk> line expansion can you speak to how things are going with.

Krista Friesen: With the geographic expansion and what other countries you might be focused on.

Linda S. Hasenfratz: Yeah, I mean, as you know, we've built two new facilities for SkyJack, one 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, you know, that is definitely part of what's driving our growth at SkyJack. I think also the China facility gives us better access to the Asian market overall, just from a logistical perspective. We're a lot closer to the 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 Change: Yeah, I mean as you know we built two new facilities for Skyjack, one eye in Mexico to better serve the southern.

Linda S. Hasenfratz: Part of the U S and one in China to take advantage of an exciting market there as so I you know the.

Linda S. Hasenfratz: That is definitely part of what's driving our growth at some at Skyjack I 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.

Linda S. Hasenfratz: For instance to Australia or other points within.

Linda S. Hasenfratz: Southeast Asia than we are from North America, So that makes us a lot more competitive in those markets. So I think we will see some great growth there as well.

Linda S. Hasenfratz: Yeah, no, Krista, just to elaborate, definitely, you know, for us with the Mexican operation, getting the telehandling production moved down there has been, you know, going quite well. We've now, you know, 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 ships well, so we're able to get the product in for good logistics costs. And really, China is an expansion for the, you know, Asia Pacific area. Again, just on product shipping, logistics is a big issue, and now that you're there, manufacturing.

Linda S. Hasenfratz: Yeah, no, Krista...

Speaker Change: Yes, Chris.

Linda S. Hasenfratz: To elaborate the definitely for us with the Mexican operation.

Linda S. Hasenfratz: Getting the tell what hamlet production move down and so there has been growing quite well, we've now got product coming out and as Linda said really servicing that sort of southern in the U S.

Linda S. Hasenfratz: From a logistics side of things being product as well, so we're able to get the product.

Linda S. Hasenfratz: For good logistics costs.

Linda S. Hasenfratz: China is the expansion for <unk>.

Linda S. Hasenfratz: Asia Pacific area.

Linda S. Hasenfratz: Again, just on the product shipping logistics is a big issue now being there from manufacturing in the region is much better.

Linda S. Hasenfratz: Yeah.

Krista Friesen: Great, maybe if I can just ask one more, just wondering what sort of interest you're seeing in your giga testing 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 Change: Great and maybe if I can just ask one more.

Speaker Change: Just wondering what sort of interest you're seeing.

Krista Friesen: On your on the Giga casting plant I appreciate that.

Speaker Change: Not opening until next year, but.

Speaker Change: Just wondering what you're hearing from some of the Oems there.

Linda S. Hasenfratz: Yeah, 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 potential in Europe as well.

Speaker Change: Yeah, we're seeing interest from from several different potential customers and the technology.

Linda S. Hasenfratz: Both for the facility here and we also add.

Linda S. Hasenfratz: A machine in place in Europe at the moment is while we're watching some of the initial testing so there's a potential I in Europe potentially as well.

Linda S. Hasenfratz: And we're also seeing customers sort of change their strategy around giga castings. We've had meetings with customers that, a year or a year and a half ago, felt that the strategy of utilizing 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 their competition is doing.

Linda S. Hasenfratz: We're also seeing customers sort of changed their strategy around digi casting.

Linda S. Hasenfratz: <unk> had meetings with customers that youre.

Linda S. Hasenfratz: A year year and a half ago.

Linda S. Hasenfratz: <unk> felt the strategy of utilizing the large castings wasn't in their product mix and that seems to be shifting now.

Linda S. Hasenfratz: They are starting to realize the benefits of it and also just seeing what the competition is doing.

Krista Friesen: Perfect. Thanks so much. I'll jump back in the queue.

Speaker Change: Perfect. Thanks, so much I'll jump back in the queue.

Brian Morrison: Your next question comes from Brian Morrison from TD Cowen. Your line is now open.

Krista Friesen: Your next question comes from Brian Morrison from TD Cowen. Your line is now open.

Brian Morrison: Thanks very much and good evening. Credit where credit is due. Well done. Nice beat and raise.

Brian Morrison: Thanks, very much and good evening.

Brian Morrison: Can I ask a question on mobility? What has changed to take the mobility margin to meaningful expansion from expansion and then, to take it one step further, what gets you back to 7% in 2025? Is it margin increments from volume and then the maturation of acquisitions?

Brian Morrison: Credit, where do well done nice beat in race can I ask a question on mobility. So.

Brian Morrison: What has changed to take the mobility margin two meaningful expansion from expansion and then the ticket one step further what gets you back to 7% in 2025 is it margin increments from volume and then the maturation of acquisitions.

Linda S. Hasenfratz: Yeah, 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, new business, and negotiated price release that's offsetting those higher costs that we were seeing last year. When I look out to 2025, I do expect further expansion on the mobility margin side, and really that's driving out continued launch rollout, so as noted, we have another significant increment in terms of incremental sales from the launch business, so all of that helps.

Speaker Change: Yeah, 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.

Brian Morrison: Okay, thanks. Maybe I can ask it another way.

Brian Morrison: The performance of Q1, and where we expect the rest of the year to us.

Brian Morrison: To be again key drivers are acquisitions made last year is launching business negotiated price relief. That's offsetting those higher costs that we were seeing last year when I look out to 'twenty 25, I do expect.

Brian Morrison: Further expansion on the mobility margins side and really that's driving out of continued launch rollout. So as noted we had another significant increment up in terms of the incremental sales from launching does that so all of that helps to drive better margins.

Linda S. Hasenfratz: Are the contributions from Dura and from Mobex margin-enhancing, or is that a tailwind as they ramp and mature?

Speaker Change: Thanks, but maybe I can ask it another way are the contributions from <unk> and from <unk> are they margin enhancing or is that a tailwind as they ramp and mature.

Linda S. Hasenfratz: So, I mean, it's a combination of margin enhancement and some business that's launching. So even within those businesses, some plants are still ramping up, others are more mature. So, you know, it's a combination, but acquisitions absolutely, as a whole, did help on the margin.

Speaker Change: So I mean, it's a combination.

Linda S. Hasenfratz: Of margin enhancing and I and some business that that's launching so.

Linda S. Hasenfratz: Even with and those businesses say some plants or are still ramping up others are more mature. So you know, it's a combination that acquisitions, absolutely as a whole did I help on the margin side.

Linda S. Hasenfratz: Okay, and then Linda, the increased pricing on cost recovery, not in the prior year, is this a permanent pricing mechanism for inflation, or should we think about it as a one-time thing?

Linda S. Hasenfratz: Okay, and then when does 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.

Linda S. Hasenfratz: Well, I mean, this is related to, you know, much higher costs that we were seeing last year and that, you know, we've had to have discussions with customers around how we can deal with them. 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, you know, stay in this range for the year, so obviously, this is not all lump sum.

Linda: Well I mean this is related to much higher costs that we were seeing last year and that you know we've had.

Linda S. Hasenfratz: Tough discussions with customers around how we can deal with so it is a combination of a PS price increases sometime some one time.

Linda S. Hasenfratz: Increases as well or one time settlements as well, but as noted we do expect margins to.

Linda S. Hasenfratz: Stay in this range for the year. So obviously there is a.

Linda S. Hasenfratz: You know this is not a lump sum.

Dale Schneider: Yeah, that does apply, and keep in mind, 23 was similar to 22, where we were absorbing cost increases basically in the first half as we were negotiating with customers. We started to get those recoveries in the second half, and this is just a carryover, to get those 23 recoveries. So it's a very similar pattern that you would have seen at 23. Okay, thank you.

Linda S. Hasenfratz: Does that is that finding that keep in mind 23 was somewhere in the 22, where we are absorbing costs increase basically in the first half as we were negotiating with customers. We started to get those recoveries in the second half and this is just the carryover.

Dale Schneider: To get those 23 recoveries.

Dale Schneider: A similar pattern that you saw in 'twenty two.

Brian Morrison: Okay, thank you Dale. Okay, and then industrial. The launch and the move cost to Mexico and China. Are they complete, and did they actually impact the operating margin this quarter?

Speaker Change: Okay. Thank you Don Okay, and then industrial is the launch and the move costs to Mexico, and China are they complete them did they actually impact the operating margin this quarter.

Speaker Change: I mean in fact, the plants in China, and Mexico are still ramping up so I'd say there are some launch costs are related to those facilities that actually we're offsetting some of the the earnings growth on the industrial side. So we expect to see that.

Linda S. Hasenfratz: In fact, the plants in China and Mexico are still ramping up, so there are some launch costs related to those facilities that actually are offsetting some of the earnings growth on the industrial side, so we expect to see that settling down once we get into next year.

Linda S. Hasenfratz: Settling down once we get into next year.

Brian Morrison: Okay, and then last question for me, Bergot, 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? Yeah, well, I'll just...

Speaker Change: Okay and then last question for me Berg go and maybe this is for Mark.

Brian Morrison:

Brian Morrison: 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.

Brian Morrison: Yeah.

Linda S. Hasenfratz: 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, of opportunity to help enhance profitability through Supply Chain Management, Purchasing, Streamlining, Lean Systems, etc So that's a big part 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 the profitability of acquired businesses and cash flow.

Speaker Change: Well I'll just comment on the micro side and then Mark can comment on the cross selling.

Linda S. Hasenfratz: So margin wise and they are in the range.

Linda S. Hasenfratz: 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 knocked on and frankly skyjack before them.

Linda S. Hasenfratz: Our opportunity to help our enhanced profitability through.

Mark: Well I can't management purchasing streamlining.

Linda S. Hasenfratz: Lean systems et cetera, So that's a big part of what of our overall strategy as I was describing earlier.

Linda S. Hasenfratz: Those lean systems, and purchasing power and supply chain management capabilities to the table to our improved profitability of our acquired businesses and cash flow.

Mark Stoddart: Okay, I guess, in terms of procurement opportunities, Mark? Yeah.

Linda S. Hasenfratz: Okay, I guess in terms of procurement opportunities Mark.

Mark Stoddart: Yeah, as we talked about, you know, putting together the Linamar Ag Group with Mactan 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 board in February, you know, that's still ongoing, but we definitely see a lot of opportunities for cost savings on the industrial ag side and also maximizing the three brands from a product side. So a lot of that activity is just in the works now, with Borgo being finalized at the beginning of February. All right, well, thank you.

Mark Stoddart: Yeah.

Mark Stoddart: As we've talked about putting together the group with Lockdown Salford.

Mark Stoddart: <unk>.

Mark Stoddart: We're definitely looking to utilizing the purchasing within all three groups to culminate as parts and suppliers. So with forego just coming on in February.

Mark Stoddart: Still ongoing, but we definitely see a lot of opportunities for cost savings.

Mark Stoddart: For the the industrial AG side.

Mark Stoddart: And also maximizing the three brands.

Mark Stoddart: <unk> side, so a lot of that activity.

Mark Stoddart: The works now with <unk>.

Mark Stoddart: Being finalized at the beginning of February.

Brian Morrison: All right, well, thank you for the color and congratulations.

Speaker Change: Alright, well, thank you for the color and congratulations.

Brian Morrison: So much.

Michael W. Glen: Your next question comes from Michael Glen from Raymond James. Your line is now open.

Brian Morrison: Your next question comes from Michael Glen from Raymond James Your line is now open.

Michael W. Glen: Hi, good evening. Just a starting question on input costs in the industrial business. How have you seen the input cost trend there over the past year? Have you seen input costs in general come down a bit or stay stable? Just trying to understand how that side of the equation is working.

Michael W. Glen: Hi, good evening just.

Michael W. Glen: Just a quick starting question just on input cost on the industrial business like how have you seen in input cost trend.

Michael W. Glen: Over the past year or have you seen input costs in general come come in a bit or stable just trying to understand how that side of the equation is working.

Linda S. Hasenfratz: Yeah, I mean, certainly, we had supply chain issues over the last couple of years, so that has some impact on the segment. But from a commodity perspective, we've seen some commodity prices settling back down a little bit, so that has an opposing impact. I 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've had to deal with, but I do think things have settled out a little bit better at the moment.

Speaker Change: Yeah, I mean, certainly we had supply chain issues over the last couple of years so that has.

Linda S. Hasenfratz: Some impact in our in the segments from a commodity perspective, we've seen some commodity prices settling back down a little bit so that has an opposing impact.

Linda S. Hasenfratz: I would say overall, we haven't seen.

Linda S. Hasenfratz: A huge shifts you know in just the last few months, we certainly saw some big increases over the last couple of years, which we had to deal with but I do think things have settled out a little bit are better at the moment.

Michael W. Glen: Okay, and then just moving to pricing for 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?

Linda S. Hasenfratz: Okay and then.

Michael W. Glen: With.

Michael W. Glen: And then just moving to pricing in access equipment, specifically have there been.

Michael W. Glen: Any changes in pricing behavior. Among your peers like D. Do you have any expectation that the business could become more competitive with pricing.

Michael W. Glen: Yeah.

Linda S. Hasenfratz: I mean, it's always been a competitive market, you know, in terms of pricing, so I don't expect that to change. I mean, everybody's chasing the business, so I don't see big changes, but I mean, it's always been competitive, and it'll continue to be competitive.

Michael W. Glen: Yeah I mean.

Linda S. Hasenfratz: It's always a competitive market are you now in terms of that in terms of pricing. So I don't expect that to 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 ever.

Linda S. Hasenfratz: It will continue to be competitive pricing.

Michael W. Glen: Okay, and then 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 there a component of these costs in the quarter that was one-time in nature, or is it, will persist through the balance of the year? Just trying to get some specific clarity on that.

Linda S. Hasenfratz: Okay and.

Michael W. Glen: Then just on just going back to the customer cost recoveries are these.

Michael W. Glen: Okay.

Michael W. Glen: And 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.

Michael W. Glen: One time in nature or is it is it.

Michael W. Glen: It will persist through the balance of the year, just trying to get some specific clarity on that.

Linda S. Hasenfratz: I mean, there wasn't anything significant that was a lump sum in the quarter, or we would have, you know, indicated that, so, you know, these are piece price increases.

Speaker Change: Yeah, So I mean the.

Michael W. Glen: There wasn't anything significant that looked a lump sum in the quarter or we would have.

Linda S. Hasenfratz: He indicated that so I you know just to piece price increases.

Michael W. Glen: Okay, 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?

Linda S. Hasenfratz: Okay, and the cadence on free cash to think about for the rest of the year would it.

Michael W. Glen: I think in prior years it does typically come in.

Michael W. Glen: Quite heavy in Q4, it would we expect a similar pattern.

Michael W. Glen: For this year.

Dale Schneider: I mean, it's my expectation to see positive free cash flow in each subsequent quarter at www.thevenusproject.com Okay, yep.

Michael W. Glen: I mean, it's my expectation to see positive free cash flow in each subsequent quarter.

Dale Schneider: Okay Q1 is normally a.

Dale Schneider: Down just with that.

Dale Schneider: Usually it's a big jump in terms of scale.

Dale Schneider: And in Q1 compared to Q4, so you know theres a draw on.

Dale Schneider: Noncash working capital.

Dale Schneider: But Chad subsequent quarters I expect to all be.

Dale Schneider: Good a positive free cash flow.

Michael W. Glen: Okay, yep, no, but recognize that there's seasonality in the free cash profile for you. Okay, thank you.

Speaker Change: Okay, Yeah, no recognized that there's seasonality in the free cash profile for you. Okay. Thank you.

Speaker Change: Thank you.

Tamy Chen: Your next question comes from Tamy Chen from BMO Capitals Market. Your line is now open. Hi, good afternoon.

Michael W. Glen: Your next question comes from Jimmy Chen from BMO capital markets.

Tamy Chen: Line is now open.

Tamy Chen: Hi, good afternoon. Thanks for the question. Sticking with the recoveries here, I was just wondering, as you look at the business now, I guess, particularly in mobility, with respect to recoveries from customers, do you feel at this point you've caught up to the cost inflation you had been experiencing and absorbing last year in the year before? Or do you expect you'll still need to have continued negotiations and discussions to keep pace with your costs? Yeah, I mean,

Tamy Chen: Hi, good afternoon. Thanks for the question.

Tamy Chen: 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 this point you you've caught up to the cost inflation you had been experiencing in absorbing watch and the year before or do you feel you still need to.

Tamy Chen: How continue negotiations and discussions to keep pace with your car.

Speaker Change: Yeah, I mean, we've.

Linda S. Hasenfratz: There are many 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 been a more than normal level of commercial discussion activity over the last couple of years, and there's certainly still some ongoing discussions.

Speaker Change: We've dealt with many of the cost issues, but there's certainly ongoing commercial issues.

Linda S. Hasenfratz: That said that we're dealing with customers on.

Linda S. Hasenfratz: It's a it's a volatile time frame with a volume shifting around us.

Linda S. Hasenfratz: Ah cost shifting around so.

Linda S. Hasenfratz: There is a more than normal level of commercial discussion activity over the last couple of years and there's certainly still some ongoing discussion.

Tamy Chen: Okay, got it. And Linda, I found the slide where you gave a 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. Is the 16% largely reflecting the Dura Shiloh business? And over time, would that also grow as your gigacasting facility comes online?

Speaker Change: Okay got it and when they saw me slide where you gave the breakdown of our purpose.

Tamy Chen: Special purpose equipment, and what's possible and redeploy bull hopeful that the 16 to 84 I mean should we think about that I think about your business that the 16% is that largely reflecting.

Tamy Chen: Does the garage Shiloh business and overtime would that also role as you take a casting facility comes online.

Linda: The those figures actually don't even include or saw them all back say, it's a small footnote, but it does a note on the slide that we don't have all of their asset information in this analysis just yet.

Linda S. Hasenfratz: Those figures actually don't even include Duracello 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, you know, in the 15-16% is really more assembly equipment, I would say, and the odd special purpose type equipment, which generally are 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, I mean, a lot of the equipment that they have, even, you know, on the Dura side, robotic welding equipment, all of that can be reallocated as well, but I don't have it in these numbers at the moment.

Linda S. Hasenfratz: But so in the 15% to 16% is really more assembly equipment I would say in the odd a special purpose type equipment, which generally are machining casting forging equipment is all fully flexible.

Linda S. Hasenfratz: To do a wide variety of products, it's really more of the assembly equipment that tends to be a little more special purpose.

Linda S. Hasenfratz: And I would say just notionally mow back and draw what would actually be quite similar I mean, a lot of the equipment that they have.

Linda S. Hasenfratz: Even you know on the tourist side robotic welding equipment all of that can be reallocated AD as well, but I don't have it in these numbers at the moment.

Tamy Chen: Okay, thanks for clarifying that. And on the giga casting in Welland, I was wondering if you could talk about how you're progressing on that. I know you've been doing some trialing in Europe. Can you remind us of when that'll start coming online? And did some of the recent OEM announcements of certain EV delays impact this? Do you have volume commitments from the one customer you've secured so far there?

Speaker Change: Okay. Thanks for clarifying that.

Tamy Chen: And I think the good casting and well and I was wondering if you could talk about how you're progressing on that I know you've been doing some of the trailing in Europe can you remind us of when that'll start coming online and.

Tamy Chen: And some of the recent OEM announcements of certain E V delays and passives and.

Tamy Chen: Do you have volume commitments from the one customer who procure so far there.

Linda S. Hasenfratz: Yeah, so, obviously, a lot of EV programs have seen volume cuts or delays in launch, and our Giga project is, of course, impacted as well, so we are expecting some delays on that program. That said, as I say, any casting equipment is flexible, so obviously, we're going to see what else we can find to utilize the equipment and then, you know, work with our customers around how we manage the situation.

Speaker Change: Yeah. So I mean, obviously a lot of EV programs have seen volume caps or delays to launch and as our Giga project is of course impacted as well. So we are expecting.

Linda S. Hasenfratz: Some delay on that that that program.

Linda S. Hasenfratz: That said as I say are any casting.

Linda S. Hasenfratz: The equipment is flexible so obviously.

Linda S. Hasenfratz: We're gonna see what else, we can find to add to utilize the equipment and then work with our customers around how do we manage the situation.

Linda S. Hasenfratz: Yeah, I I can't disclose specifics around Jack contracts and with specific customers or projects, but I can tell you that in general around our major investments like this or in a in the EV space as I mentioned.

Linda S. Hasenfratz: You know, 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, you know, that's certainly been the case. And it should also be noted that...

Linda S. Hasenfratz: In my formal comments, we tried to be quite careful in terms of mitigating our risk sharing risk with our customers and in a variety of ways and so you know.

Linda S. Hasenfratz: That's certainly been the case.

Linda S. Hasenfratz: And 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 the start of production, we had to have all of the capacity in place. So we do have a ramp that goes over time with that. So any delays are not impacting the full capacity.

Linda S. Hasenfratz: Should also be noted that the capacity was coming in and being staged over time.

Linda S. Hasenfratz: Going to a deadline where from start up production.

Linda S. Hasenfratz: All of the capacity in place so.

Linda S. Hasenfratz: We do have a ramp that goes over time with us.

Linda S. Hasenfratz: Any delays.

Linda S. Hasenfratz: In the full capacity.

Tamy Chen: Okay, got it. If I could squeeze in one more here on Skyjack, it sounds like your two 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? Because I think they're opening additional capacity sometime next year. So I'm just wondering how you're thinking about that. Thank you.

Speaker Change: Okay got it.

Speaker Change: I could squeeze in one more here on Skyjack. It sounds like there are two 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 because I think they're they're opening addition.

Tamy Chen: Capacity sometime next year. So I'm, just wondering how you're thinking about that thank you.

Speaker Change: Yeah, I mean, it's always good to have competitors, who are capacity constrained. So you know is that playing a role potentially but I have to say that our we've been regularly growing our market share.

Linda S. Hasenfratz: It's always good to have competitors who are capacity constrained, so, you know, 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 feature of the design of the SkyJack that we have long utilized and that our customers really appreciate, and I think that's why they're buying our products.

Linda S. Hasenfratz: Sure or skyjack products, which our customers love.

Linda S. Hasenfratz: I asked for their simplicity reliability and high quality.

Linda S. Hasenfratz: It is a mandate of the design of the Skyjack. So we have long.

Linda S. Hasenfratz: Long utilized and that our customers really appreciate and I think that's why they are buying our product.

Tamy Chen: Great, thanks for taking my question.

Speaker Change: Great. Thanks for taking my question.

Tamy Chen: Yeah.

Operator: Ladies and gentlemen, as a reminder, should you have any questions, please press star followed by the number one. There are no further questions at this time. Linda, please proceed with your closing remarks. Thank you so much.

Speaker Change: Ladies and gentlemen.

Speaker Change: Should you have any questions. Please press star followed by the number one.

Operator: Okay.

Linda: There are no further questions at this time window. Please proceed with your closing remarks. Thank.

Linda S. Hasenfratz: Thank you so much. Well, to conclude this evening, I'd like to leave you with three key messages.

Linda: Thank you so much well to conclude this evening I'd like to leave you with three key messages first we are thrilled to have met our long time goal of reaching $10 billion in sales I was a longtime coming and really proud of the team for that second. We are also very pleased to have delivered such a strong quarter of double digit top and bottom.

Linda S. Hasenfratz: First, we are thrilled to have met our long-term goal of reaching $10 billion in sales. It was a long time coming, and we are really proud of the team for that. Second, 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. And 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.

Linda S. Hasenfratz: <unk> growth and to be poised for the same for our full year again, and 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 level. Thanks, very much and have a great evening.

Linda S. Hasenfratz: Okay.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

Operator: Okay.