Linda Hasenfratz - CEO Roger Fulton - EVP, HR, General Counsel and Corporate Secretary Dale Schneider - CFO Jim Jarrell - President and COO Mark Stoddart - CTO and EVP, Sales and Marketing

Justin Wu - GMP Securities Mark Neville - Scotiabank David Tyerman - Canaccord Genuity Todd Coupland - CIBC World Markets Peter Sklar - BMO Capital Markets Ross Gilardi - Bank of America Merrill Lynch Brian Morrison - TD Securities

Thank you. Good afternoon, everyone, and welcome to our second quarter conference call.

Joining me this afternoon are members of my executive team, Jim Jarrell, Mark Stoddart, Roger Fulton, and Dale Schneider, and some members of our group and corporate finance teams. Before I begin, our General Counsel, Roger Fulton, will make a brief statement regarding forward-looking statements provided on this call.

Roger?

Thank you, Linda. Certain information regarding Linamar discussed in this teleconference, including management's assessment of the Company's future plans and operations may constitute forward-looking statements.

This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results may differ materially from those anticipated in the forward-looking statements due to factors such as customer demand and timing of buying decisions, product mix, competitive products, and pricing pressure.

In addition, uncertainties and difficulties in domestic and foreign financial markets and economies could adversely affect demand from customers. These factors, as well as general economic and political conditions, may in turn have a material adverse effect on the Company's financial results.

The Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements. Linda?

Thanks, Roger. I'll start off with sales, earnings, and content.

Sales for the quarter were 37 billion, up 24% from last year, exceeding our double digit growth target. Once again, the sales increase well exceeds growth in our markets, where global light vehicle and access markets were up 0.3% and 13% respectively, demonstrating that Linamar's growth continues to derive from excellent market share expansion.

Earnings saw another fantastic level of growth in the quarter, with net earnings up 34% over last year to 120.1 million, or $1.84 per share. Net earnings as a percent of sales in Q2 were 8.8%, extending once again our trend of margin enhancement over prior year.

We continue to run well above the top end of our normal annual net margin range of 5% to 7% thanks to continued control of launch costs, great results from lean initiatives, a strong performance at Skyjack, and a favorable mix of business in both segments compared to what we might have seen in the past. Given the continued strength in performance and a strong first half in 2015, we're now targeting net margins for the year to be in the range of 8% to 8.5%.

We target the same level of performance for 2016. Coupled with the sales growth I'll detail shortly, this should result in Linamar achieving double digit earnings growth again in 2015 and 2016, as targeted.

Earnings growth continued to drive solid performance in return on capital employed and return on equity, reaching 23% and 25% respectively in the quarter, a fantastic result against exceeding our 20% goal. We're very proud of this industry leading performance and shareholder return.

Investing in our future continues to be a priority for us at Linamar. In the second quarter, we saw strong cash flows again, which were used to invest in CapEx for launching programs.

CapEx in the quarter was CAD81 million, or 5.9% of sales. We expect to see CapEx gradually building over the next several quarters, given the heavy level of new business wins we're seeing.

Expect 2015 CapEx to be higher than last year as a percent of sales and approaching our normal range of 8% to 10%. This trend will continue into next year when we should certainly be back in the 8% to 10% range.

Acquisitions, of course, add to that, and will put us in our 8% to 10% range this year, given the SEI acquisition completed in January. Our balance sheet remains strong despite these investments, with net debt to EBITDA staying well below 1 and cash available for growth sitting at close to 690 million.

Plans for our strong level of cash and available debt include continued investment in the future, expansion through both greenfield and acquisitive opportunities. In North America, content per vehicle for the quarter was $148.07, up 15% compared to last year thanks to both higher content and growing platforms with a variety of customers and our new forging businesses.

Our Q2 automotive sales in North America were up 18% over Q2 a year ago, reaching 692 million compared to 586 million last year in a market that was up 3.1% in production volume. Linamar's trend line for content per vehicle growth in North America has been consistently positive over the past several years.

In Europe, content per vehicle for the quarter was $37.39, more than double last year's level thanks to our new forging acquisitions and other business launches. Our Q2 automotive sales in Europe were up more than double as well over Q2 a year ago, reaching 196 million compared to 97 million last year in a market that was down 1.9% in production volume.

Market share expansion in flat markets is particularly important to achieving consistent growth. Business in hand in Europe, including our recently completed acquisition, is expected to increase by almost 50% over the next four years, which should continue to drive meaningful content growth for us.

In Asia-Pacific, content per vehicle for the quarter was $6.86, up 1.9% from Q2 2014 levels. Vehicle production levels were 11.1 million units in the quarter, up 0.4% from last year, which resulted in Q2 automotive sales in Asia-Pacific up 2.3% to a total of 76 million.

In Asia, booked business will see sales nearly double their 2015 level in the next four years. Other sales were up 16.3% in the quarter at 404 million versus 348 million last year due to growth at Skyjack, which was tempered by slower off-highway and energy market sales.

Turning to a market outlook, we're seeing a reasonably positive outlook of moderate growth in most of our markets globally. For the global light vehicle business, the forecast is for 1.6% production growth globally this year.

Predictions are for moderate growth in light vehicle volumes in North America, Asia, and Europe of 2.9%, 2.6% and 0.9% respectively to reach 17.5 million, 45.6 million, and 20.3 million vehicles respectively. In a similar pattern, moderate growth is expected globally next year at 2.4%, 5% and 1.7% in North America, Asia, and Europe respectively.

Industry experts are predicting on-highway medium heavy truck volume to grow this year in North America, expected to be up 12.6% over last year with more moderate growth in Europe, up 0.7%, and a decline in Asia of 6.1%. Next year they predict flat volumes in North America and Asia and stronger growth in Europe, which is expected to be up 5.3%.

Off-highway medium duty and heavy duty volumes are now predicted to decline globally in 2015 and show some moderate growth next year of 2% to 3% on a global basis. Turning to the access market, outlook in the industry remains positive, with a very strong first half of the year for Skyjack.

Most Skyjack products and regions enjoyed strong double digit sales growth over prior year in Q2. Scissor and boom market share grew in North America, Europe and Asia, which is fantastic.

Market growth in the quarter was about 13% globally, and Skyjack expansion was double that level. The market is now expected to increase 10% to 15% in 2015 and 5% to 10% in 2016, an improvement over earlier forecasts.

Skyjack's strategy continues to be global growth and product line expansion to drive increased market share in all products and regions and the team is executing very well on that strategy. Our target is to see Skyjack hit 1 billion in sales by 2020.

Turning to new business, we've seen a solid start to the year in new business wins, as we continue to take advantage of several new transmission and engine platform changes in the coming years. Launching business continues to be a significant driver of substantial growth for us.

First, look for ramping volumes on launching transmission platforms to reach 20% to 30% of mature levels this year and grow another 50% to 60% next year. These programs will peak at nearly $2.15 billion in sales.

Volumes on launching engine platforms will reach 25% to 35% of mature levels this year and grow another 80% to 90% next year. These programs will peak at nearly $950 million in sales.

Volumes on launching driveline platforms are predicted to reach 45% to 55% of maturity this year and grow another 40% to 50% next year. They'll peak at more than 600 million in sales.

I should note close to $100 million of programs have shifted from launch to production since we spoke last quarter. I think it's important to understand the scope of launches in the various systems, as that illustrates a key element of our strategy, that being that involvement in more than one area of the vehicle, namely the engine, the transmission and the driveline systems means we have a variety of programs for a variety of platforms launching all at different times.

Once we look at that picture globally, we see even more potential touch points in which to win new business. And introducing the Skyjack business cycle and other markets like commercial vehicle, off-highway vehicle, agriculture and energy also adds additional cycles of planning for new platform launches, sourcing and growth.

It's this diversity in product, customer, market and geography that allows us to always have the prospect of finding new opportunities and therefore always be winning and launching new business, which drives more consistent and sustainable growth for us. To summarize our launches, we now have 168 programs launching, representing nearly $3.7 billion of annual sales.

Depending on industry volumes, programs currently in launch will add a total of another $450 million to $500 million to our top line this year. Launches for next year will add another $550 to $650 million in sales.

Skyjack should see continued growth at better than market growth levels, as market share penetration continues. Temper that growth with the loss of business that naturally ends each year, noting to expect somewhere near the low end of our normal range of 5% to 10% in both 2015 and 2016 and of course normal productivity givebacks as you try to estimate our sales for this year and next year.

Be sure in your analysis to consider that Q4 sales are typically weaker than Q3 sales. We have only very rarely seen them in line.

Skyjack and the ag sector both have extremely seasonality in Q4 that brings them down in comparison to Q3 and that must be considered in your estimates. Clearly, given the level of launches and market conditions, we're expecting to again see solid sales growth at Linamar this year and next.

And with margins staying strong, this should drive solid earnings growth as well. We target double digit top and bottom line growth each year at Linamar and feel very confident in our ability to deliver these results based on launching business and expected margin performance.

New business wins are of course also filling in growth for us in the midterm. At this point, we're looking at nearly $6.3 billion in booked business for 2019 based on current industry volume forecasts layered with new business wins, our forging acquisitions and of course adjusting for business leaving.

It's very exciting to see this level of secured growth for us in the midterm, in line with our targets. I'd like to highlight a few of our more interesting wins this quarter.

We had an amazing quarter in new business wins for camshaft programs. We picked up several jobs for a few different customers, including in Asian OEM we are rapidly growing with on engine components, which in aggregate represents more than $150 million in annual sales.

Programs launch in the 2017-2018 timeframe in both North America and Asia. Secondly, we saw another win in the recreational products area with a new crankcase program launching in 2017, this time for the motorcycle market.

The recreational products area is an interesting area of growth potential for us where we have seen several wins in the past few years. Third, we picked up an important new job in France with a French OEM, which we will be manufacturing in our new French machining facility.

We've been in the process of taking two of our small French plants and switching them into a newly renovated larger building to allow us to more effectively grow the business. This is the first win for this new larger facility.

We've been working hard to secure content with the French manufacturers so this was a key strategic win for us, and will be fantastic for our French plant to allow them to grow their business. Finally, we continue to secure great content on the 8, 9, and 10 speed transmissions currently being sourced, with another $30 million in annual sales secured there.

Turning to a strategic update, the big news this quarter is our announcement around entering the light metal casting business through our relationship with GF Automotive, a division of Georg Fischer AG. As we discussed on our call a few weeks ago, we're establishing a global partnership with GF, including JV in North America focused on large, light metal, high pressure die-casting for powertrain, driveline and structural components.

We will focus mainly on aluminum alloys, but magnesium is also a potential area of opportunity. To recap the key points of that deal, first our global partnership with GF will be focused on large, lightweight, high pressure die cast components such transmission cases and covers, structural components such as shock towers, side members and center consoles and potentially other large powertrain components.

Second, we will be establishing a 50/50 JV with Georg Fisher with GF located in the southeastern US, which will be named GF Linamar, LLC, that will produce these high pressure die-castings for the NAFTA market. We'll begin production in mid 2017.

In Asia and in Europe, we'll approach the market together on business opportunities to jointly design products and utilize both parties' existing facilities. Where additional capacity is required, we would look at a variety of solutions, including the option of the JV model that we're going to use here in North America.

Planning is proceeding well for the JV and our joint teams are working together to establish a cadence in accessing the market with our joint engineering and marketing teams. Light metals are a key element in light-weighting vehicles to drive lower emissions and better fuel economy and a key element in our strategy for driving innovation in the vehicle.

We're excited about this relationship and the opportunities that we're going to build together. In other areas of operations, our plants continue to perform extremely well both on mature business metrics and in terms of launch.

Our forging business continues to perform to expectations financially, strategically and technically. Our launching plans in India, China, North Carolina, and Guelph are also all performing to plan.

With that, I'm going to turn it over to Dale to lead us through a more in-depth financial review. Dale?

Thank you, Linda, and good afternoon, everyone. As Linda noted, Q2 was another solid quarter with sales and earnings growth, with sales hitting $1.37 billion, which resulted in strong net earnings of 8.8%.

For the quarter, sales were 1.37 billion, up 263 million, or 23.8%, from 1.1 billion in Q2 2014. Operating earnings for the quarter were 165.6 million.

This compares to 124.3 million in Q2 2014, an increase of 41.3 million, or 33%. Net earnings increased by 34% from the second quarter 2014 to reach 120.1 million.

Net earnings per share for the quarter increased $0.46, or 33%, from the second quarter of 2014, to reach $1.84. Included in net earnings for the quarter was a foreign exchange loss of 4.1 million.

This was caused by the revaluation of our balance sheet, which is comprised of a $4.2 million loss due to the revaluation of our operating balances and a $100,000 gain to the revaluation of our financing balances. The FX loss impacted the second quarter's EPS by $0.05.

From a business segment perspective, the FX loss due to the revaluation of our operating balances of 4.2 million was the result of a $5.1 million loss in the powertrain driveline segment and a $900,000 gain in the industrial segment. Further looking at the segments, sales in the powertrain driveline segment increased by 199.3 million, or 22.5%, in Q2 2015 compared to Q2 2014 to reach $1.1 billion.

The sales increase in the second quarter of 2015 was impacted by the following items, the acquisition of our forging business, which now forms the Linamar Seissenschmidt Forging Group; the significant number of newly launched programs in North America; higher sales from the favorable changes in FX rates; and the ramp up of launching programs in both Europe and Asia. Q2 2015 operating earnings for powertrain driveline were higher by 27.4 million, or 28.6%, over Q2 2014 to $111 million.

The increase in operating earnings is mainly the result of the increase in volumes, productivity and efficiency improvements achieved in the quarter, earnings related to the addition of the Linamar Seissenschmidt Forging Group and a favorable sales mix towards highly capital intensive programs, which was partially offset by increased management and sales costs that support the segment's growth. To clarify, there was no material impact to powertrain driveline operating earnings as a result of the change in FX rates, even though there was an impact to sales.

This is because the change in FX rate had an unfavorable impact to purchase costs, which offsets the sales impact. If we remove any foreign exchange gains or losses related to the revaluation of our operating balances, the adjusted operating earnings for powertrain driveline would have been 116.1 million for the quarter compared to 87.4 million in the second quarter of 2014, a 32.8% increase.

Turning to the industrial segment, sales increased 29%, or 63.7 million, to 284.1 million in Q2 2015 from Q2 2014. The sales increase was due to the increased demand in the access equipment markets globally, higher sales from the favorable changes in FX rates and boom and scissor market share growth in all three lead regions.

The industrial segment's operating earnings were 54.6 million in the quarter, an increase of 16.6 million, or 43.7%, over Q2 2014. This improvement was predominantly driven by the increased demand and market share growth in the access equipment market and higher margins resulting from the favorable changes in the foreign exchange rate, being partially offset by a less favorable customer and product mix and an increase in market management and sales costs supporting the segment's growth.

Removing any foreign exchange gains or losses related to the revaluation of the operating balances, the operating earnings for the industrial segment would have been 53.8 million for the quarter compared to 40 million in the second quarter of 2014, a 34.5% improvement in operating earnings. You may have noticed in the MD&A that we found an inconsistency in how the corporate overhead costs were allocated to the industrial and the powertrain segments in Q1 2015.

This resulted in the Q1 industrial segment's operating earnings being overstated by 2.3 million, and the powertrain driveline operating earning's being understated by the same amount. The restatement in operating earnings for Q1 industrial segment is 44.3 million, and the restated operating earnings for Q1 powertrain driveline segment is 111.5 million.

Note that this had no impact on the consolidated operating earnings for Linamar. Returning to the overall Linamar results, the Company's gross margin increased to 17.4% in Q2 2015 from 16.5% in Q2 2014.

Gross margin in the second quarter of 2015 increased due to the improved margins as production volumes increased in both segments, higher margins resulting from the favorable changes in foreign exchange rates in the industrial segment, better margins as a result of productivity and efficiency improvements, earnings related to the addition of Linamar Seissenschmidt Forging Group and higher margins as a result of the favorable sales mix to highly capital intensive programs in the powertrain driveline, being partially offset by less favorable customer and product mixes in the industrial segment. Cost of goods sold before amortization for the second quarter was up 7.4 million from the second quarter of 2014.

COGs amortization as a percent of sales decreased to 4.9% of sales compared to 5.4% in Q2 2014, which reflects the improved utilization of our fixed assets as a result of the increased volumes. Selling, general and administration costs increased to 68.5 million from 54.8 million in Q2 2014, and remain consistent as a percent of sales basis at 5%.

The increase on a dollar basis is the main result of the management in sales costs that support our growth and the addition from our acquired and expanded facilities. Financing costs have decreased by 1 million in Q2 2015 from Q2 2014 to $4.5 million due to higher interest earned on our financed long term receivables and lower borrowing rates as a result of maturities of the $40 million private placement notes on October 15, 2014.

That was partly offset by the increase in debt levels as a result of the acquisition of the forging businesses. As a result, the consolidated effective interest rate for Q2 2015 decreased to 3.7% compared to 4.5% in Q2 2014.

The effective tax rate for the second quarter of 2015 increased 0.9% to 25.4% compared to Q2 2014 due to a less favorable mix of foreign tax rates compared to Q2 2014. We are expecting the effective tax rate for 2015 to be in the range of 24% to 26% due to the mix of foreign tax rates in 2015, which is expected to be less favorable.

Linamar's cash position was 193.7 million on June 30th, 2015, an increase of 74.6 million compared to June 30th, 2014. The second quarter of 2015 generated 192 million in cash from operating activities, non-cash working capital increased from the second quarter of 2014 levels of 9% to 9.5% of annualized sales for the second quarter of 2015, primarily as a result of the addition of the Linamar Seissenschmidt Forging Group.

Debt to capitalization increased due to the addition of the new forgings group to 25.3% in Q2 2015 from 24.6% in the second quarter of 2014. We are pleased to see that debt to cap has continued to remain well within our target of 35%.

Net debt to EBITDA decreased by 0.5 times during the quarter from 0.6 times in Q2 2014. The amount of available credit in our syndicated revolving credit facility was 514.1 million at the end of the quarter.

To recap, Linamar enjoyed a terrific quarter that saw strong sales growth and earnings growth, which gave rise to record second quarter results for both sales and earnings. Sales were up 23.8% to reach $1.37 billion for the quarter.

The strong sales led to solid earnings performance in both operating segments, which resulted in net earnings improving by 34%. That concludes my commentary, and I would like to open it up for questions.

My first questions-- or my questions are related to the industrial business. I guess a number of your competitors in the access equipment market have spoken tepidly or cautiously of the outlook for I guess the balance of the year as well as 2016.

From your perspective, things look pretty positive and upbeat. So, I'm just wondering if you could help us reconcile the difference in the outlooks.

It sounds like market share gains on your part is playing a part in that, but I was wondering if you can give us a little bit more detail, what you see?

Yes, sure. Yes, we've seen those reports as well and frankly we're a little bit confused by them.

But, maybe it's because of our product mix. I mean, we're obviously skewed a little bit more towards the scissors which, if you look at Q2 this year compared to last year on a global basis, the market is up 23%.

So, it's growing pretty strongly and the outlook still looks positive for the rest of the year. Booms admittedly are pretty flat.

I mean, they're only up about 1%, and tele-handlers are down a little bit as well. So, I'm guessing it's because they are a little more skewed towards booms and tele-handlers.

So, for them in their key products, they're not seeing as positive an outlook as we are. But, if we look at all the products in aggregate, on a global basis the market is up 13% in terms of units.

And we continue to see a similar outlook going forward. I mean, obviously the back half of the year is always slower than the first half.

But, we've doubled checked this with our people, and they remain confident that the market is staying steady.

I think our backlog is strong as well, which is another indicator as well that shows that for the rest of the year.

Okay. And then, the 15% number you mentioned, is that your number or the industry growth?

The 10% to 15% is a combination of various industry sources and our own outlook of what we think the market is looking like. So, there is unfortunately not a great standard like IHS or something on the auto side that you can go to and point to in terms of forecasts.

You sort of have to come up with them yourselves. But, we do base them on data sources from a variety of places.

And I guess I was wondering whether, Jim or Linda, if you could just comment on what you're seeing in terms of the national rental companies in the US and what they're doing in terms of purchasing, and maybe comment on the pricing trends.

Well, I would say that the pricing has been fairly aggressive in the last quarter. And we're certainly making some trade-in type deals, which is normal course.

But, the volumes are still there, and -- but of course the -- each deal is on its own merit. And pricing has, I would say, been a bit more aggressive.

And in terms of trends, I mean, what we're seeing is still reasonably robust demand. I mean, if I look at our sales to some of our national customers, they're up in double digits to last year.

And we're expecting the trend to continue in the back half, and have not seen any sign as yet of those customers backing off on pre-booked orders that we have in the system.

Okay. And I guess just maybe more broadly in terms of the cycle for this business, I mean, I guess if you look back in history these cycles can range four to five years in length before you see a bit of a pullback.

And I guess depending on how you kind of look at this cycle we may be into kind of a third year of an up cycle. So, how should we think about this cycle?

I know you guys have a pretty positive outlook given your target of $1 billion by 2020. So, I'm just wondering if you can give us some -- how you guys feel about the cycle, if it's something different this time around or something different for you guys.

Yes, I mean, you're right. The market does come up and down.

I mean, in that same forecast that Skyjack does, that they're seeing 10% to 15% growth in the market this year, they are expecting to see some slowdown out in the 2017, 2018 timeframe is their current expectation. But, it's interesting because their expectation of that slowdown is actually tempered just in the last quarter.

I mean, what they thought they were going to see in 2017 and 2018, they're seeing much less of a drop now than they did just a quarter or two ago. So, their outlook is more positive than it's been, not just for this year and next but also for the ensuing couple of years.

But, they are expecting to see a little bit of a tail down out in that 2017, '18 timeframe.

And I think the other side is our product offering is probably different in this cycle timeframe coming around, where last cycle we wouldn't have had a full complement of booms. And that's a different animal all together which will help counter that cycle as well.

Yes, that's such a good point, because not only do we have the booms and the tele-handlers, but we're also increasing our lineup. So, we're launching new products over the next several years for those product areas.

So, it is absolutely our intent to continue to drive growth through these periods by market share penetration. So, that is certainly the strategy through this what looks like a pretty -- not a very significant downturn expected in 2017 and '18.

Hi just the first question just on Seissenschmidt, can you just -- the earnings looked like they were down in Q2, maybe if you can just comment on that versus Q1.

Yes. So, the first couple of quarters with our forging businesses kind of hopped around a little bit.

I mean, Q4 last year was just CFC, and then Q1 was obviously both of them. But, we did have some unusual transactions.

We accounted for new business. We did see some gains and whatnot as we were finalizing the accounting there.

So, performance is settling out now and should be a little more consistent going forward. So, annual performance in the 6% to 8% range is a pretty good expectation going forward.

And we do believe there's an opportunity to increase that to as much as 10% over time as we fill capacity and optimize performance. That's at the operating earnings level.

Right. And it looks like you gave a number for Seissenschmidt, but there was -- I don't know if you gave something for CFC.

At least I didn't see it. Did you provide a number for your revenue and earnings there?

No, we don't typically do that.

No. Okay, I just see in the notes that there are some notes on Seissenschmidt, but nothing for CFC.

Okay. Also, I guess on the Skyjack businesses, back to that, maybe you can just comment on the C dollar.

And you mentioned market share gains and you mentioned pricing being a bit more competitive. I just wonder, is that something that Skyjack is sort of leading, sort of the pricing?

Or, just maybe comment on the dollar and the impact on market share as well.

Yes. So, I mean, obviously the Canadian dollar helps Skyjack when -- because it's weakened against a variety of currencies, whether it be the U.S dollar, the pound, or the euro, because we're transacting in all of the above, right, for Skyjack because they've been growing a lot globally, not just in the U.S.

So, I mean, it's obviously a benefit to them. I mean, all of the manufacturing basically is in Canada, or a large majority of it, and we're transacting in all these other currencies.

So, they are seeing an impact. That's why you're seeing margins so high in the industrial segment deriving out of Skyjack.

So, I mean, it's obviously helping them.

And I guess are you using -- I mean, again on the pricing being more competitive, is that something Skyjack is leading again, because you sort of have the ability with the weaker dollar?

Well, I don't think we're leading it. I mean, we're not looking to buy market share with a stronger dollar.

I mean, that's not going to be a very good long term solution. The market is competitive and as noted booms and tele-handlers in particular are-- because the market is not growing as much as for the scissors, obviously our competitors are trying to stay in the game and not liking us stepping in and stealing away some of their market share.

So, that makes it a little more competitive.

Okay. And maybe just one question for Dale.

I mean, it looks like there was a fairly big provision in the quarter. Can you just maybe comment on what that is?

And is that a P&L impact or is it just balance sheet items?

Which provision are you referring to?

Sorry, it's about 9 million. I don't have it in front of me.

I did see it in the cash flow statements.

In the cash flow statement?

Yes.

Oh, so the increase and decrease in provisions?

Yes.

Yes. No, there's nothing unusual, and most of that is just normal course of operations.

We always have a level of provisions outstanding.

Yes, good afternoon. Linda, I was wondering if you could just-- you go very fast go over the numbers on what you expect for industrial for growth or Skyjack for growth for this year and next year?

Well, I didn't…

Or for the market?

Yes. Yes, I was talking about the market, which is expected to be up 10% to 15% this year and 5% to 10% next year.

Okay. And you would expect to outgrow that, I think you said?

That would be -- that's our target.

Certainly you've been doing it. Okay.

And then, on the margins for the segment, you've increased your overall net margin target a little bit and maintained-- or you're going to have the same level next year I'm wondering, do you see any trends on the individual segments? I think you've said 7% to 10% for powertrain drive train and 12% to 16% for industrial.

Do you see any trends in those from this year to next year?

Well, this year to next year we're giving basically the same margin guidance. So, that's-- I wouldn't expect to see much shifting.

Okay. I'm just wondering, because presumably industrial is going to grow faster than powertrain drivetrain.

And it's the higher margin segment, which would suggest to me that you're going to push your net margins up. Is there anything wrong with that logic?

Well, I mean, the industrial segment is smaller, so the growth level does tend to be higher in terms of a percentage growth. But, we have quite solid growth coming in for the powertrain division as well.

And then, don't forget with industrial being only about 15% of the overall, the impact on overall margins is pretty small.

Okay. And there was one comment in the text on the industrial, on the margins that grew obviously quite good anyway.

But, it did say there was lower margins due to this favorable customer and product mix in the quarter. Could you shed a little more light on that?

Yes. I mean, product mix can certainly impact Skyjack margins, which affects the industrial segment plus or minus based on customers and products.

So, for instance, the booms are a lower margin product right now than the scissors just because we're selling lower volumes and we're still ramping up and launching that business. So, in a quarter where we have heavier boom sales, it tends to bring margins down a little bit.

So, that's one example.

I wanted to ask about Skyjack as well. I was wondering if you could give us some color on why your scissor business is actually doing better than the other product categories.

Well, I was talking about the market, for one thing. When I was talking about the unit growth, that was not our unit growth levels that I was quoting, the 23%.

It's the market so, the market is up more. We've certainly, in fact, grown our market share as well in each global center, in North America, in Europe and in Asia.

And I mean, that's a fact of our-- in North America, I mean, we're by far the dominant player and the preferred choice. In other parts of the world, we're just doing a good job of selling this product, which is the premium product in North America or the top choice for our rental house customers.

I mean, we sell our products on a basis of simple, reliable product that is easy to operate, is going to be out there in the field in the morning and start up and work. And that's what our rental house customers are looking for, and they appreciate that in the Skyjack product.

It's why we're number one in North America and its how we're going to climb to number one in the other markets as well. So, we're doing a good job there, and we're growing market share, but the market's growing too.

And are there any specific verticals unique to scissor in the economy that's helping that market do better than the other two categories?

I don't think so, nothing really out of the normal side. And I think just -- again, as Linda said, we'd be the leader in the scissor market in North America, and we're taking that global.

And the introduction of our other product lines, like booms and tele-handlers, is something new for us over the last couple years. And our platforms will be increasing, so we'll have more to offer into the marketplace.

Thank you. And then, just on your new joint venture on the casting side, what kind of capital or CapEx commitments might that require over the next few years?

It seems that's a fairly capital intensive business. Can you give us some color on what we might expect there?

Thanks.

Yes. On our last call, we gave a little bit more detail around it.

So, we're expecting sort of 10 million to 15 million per year in CapEx for the joint venture. That's overall, not our portion.

Our portion would obviously be half, so with sort of 150 million expected over a 10 year time period to create sort of the full -- the plant at full capacity. So, I mean, we'll only spend with that as we win business.

So, it is -- the high pressure die cast business is a little bit more modular than, let's say, iron casting where you've got one great big line that you invest in and then try and fill the capacity. For die cast, you're buying standalone pieces of equipment, and you can stage them in as business requires.

So, I mean, obviously there's going to be more infrastructure upfront with furnaces and the building and all of the support structures. So, you're going to have to spend more upfront and then space in the machines after that.

Dale, you mentioned something about interest income on financed long term receivables. What is that all about?

Are you financing some of the like independent rental yards?

Yes, we do that. We do have some long term financing contracts with some of our customers.

We have always done it. It's just that the dollar amount is getting a little bigger as the industrial segment sales increase.

And can you give kind of an order of magnitude on what the receivable -- aggregate receivable balance is?

Yes. At the end of the quarter, our long term receivables were $126 million.

Okay. And is there any provision against that?

No, not today. Everything is collectible.

Right. Okay.

Were you -- look, do you think you were impacted by the downtime for the Chrysler minivan, or you really can't see through to see how that's impacting your draw -- like your orders from Chrysler?

No, we have not seen that, Mark, I don't think.

No. Peter, what you need to keep in mind is we're not shipping product to the actual assembly plant, to the vehicle assembly plant.

We're shipping to the engine and transmission plants for Chrysler. And there's -- obviously there's always delays between the two.

And also, what's more important is typically the engine or transmission plants are not fully maxed out or have the capacity to do things on a five day basis. So, any time a vehicle assembly plant goes down, the engine or transmission plant uses that time to catch up and start to put some banks back in place that usually get depleted.

So, it takes a while before a vehicle assembly plant goes down before we start seeing orders dropping.

Yes, but we have not seen our releases impacted.

No.

Okay. So, your Chrysler releases have -- aren't showing any --?

Yes, that's correct.

Okay. Dale, there's 4.4 million of other expense that was reported in the quarter.

Does that relate to the FX balance sheet translation?

Yes, that's where the FX gains and losses of the revaluation of the operating balances would show up, along with some other things. But, that's the majority of it.

Okay. And then just lastly, if someone could comment just generally on the current level of launch and ramp activity at the Linamar plants in aggregate.

I mean, is activity at a high level compared to previous quarter, or it's steadying out, just kind of where are you at relative to previous quarters and what's the outlook for the next few quarters?

I mean, I think it's at sort of a normal level. We've got 168 programs launching.

That's pretty similar to what we've been over the last several quarters. We've been bumping around between 150 to 180 so that's all kind of a normal level I mean obviously the dollar level of sales that we're launching has increased.

I mean, we're sitting now at 3.7 billion, so that's up quite a bit from where we were a couple of years ago. But, that's not all launching today.

It's spread out over the next few years. So, I think it's overall a fairly normal sort of level and the launches are all proceeding very smoothly.

So, we're not seeing anything sort of excessive in terms of launch costs.

I just had a couple of questions. You've gotten tons of questions on access equipment.

I've got a couple more, apologies for that. But, I was just wondering, do you provide like a market share estimate?

What do you think your latest market share is for the North American access equipment market versus where it was, say, two to three years ago?

We don't typically disclose that level of detail. But, I can tell you in general that market share is growing.

So, if I look at actually any of our products, scissors, booms, tele-handlers, today compared to a couple of years ago, market share is up in each case on a global basis.

Can you give any order of magnitude instead of just giving the absolute market share numbers as to how much it's up?

Well, it depends on the product that you're looking at. I mean, obviously in something like booms and tele-handlers, the growth is going to be more dramatic because it's a smaller amount of our business.

So, I mean, scissor lifts, we're the number one manufacturer in North America, and continue to defend that position and even grow it. I mean, we did see market share growth in North America even this quarter over Q2 of last year.

And we're certainly the dominant player there. On the boom and tele-handlers side, I mean, we're at a much lower level but doing a great job of increase our market share.

And just on the scissors, given your response to one of the other questions about sort of identifying like are there any particular end markets that are growing faster, it sounded like that that wasn't really clear that anything is growing particularly faster. So, what gives you confidence that the growth you're seeing and the outperformance you're seeing in scissors versus the other categories is actually sustainable?

Well, it just in conversations with customers about what their needs are and what we're seeing happening in the marketplace, and where orders are and where backlogs are sitting all leads us to believe that the scissor market is continuing to be in a good place for the year.

And just lastly on your production strategy for access, how do you normally handle that? Are you building purely to order, or are you building to a forecast, particularly your 2016 forecast right now before orders are actually in hand?

We build to a forecast, but we're checking against actuals and reconciling our build plan almost on a daily basis.

Yes, it's one follow up just on the CapEx for this year. Are you expecting a step up in the second half then?

Yes, a little bit. As I was mentioning in my formal comments, you can expect to see CapEx increasing a little bit over the next several quarters as we start to spend a little bit for all of this launching work.

So, I mentioned that, outside of acquisitions, we would be closer to but not quite in the 8% to 10% range this year. And then, next year we will be inside the 8% to 10% range.

Linda, when you went through the sales bridge with respect to the powertrain driveline sales for 2016, I don't know if I caught it. Did you provide a growth outlook on increases on existing programs, or could you provide that?

For the market, you mean?

Yes, in general. On the existing programs that you currently have, what do you think the growth rate will be there?

Well, your best way to assess that, Brian, is to take our content per vehicle and flex it according to what you think the markets are going to do in terms of production. So, we don't typically give guidance on that because we know that everybody has their own estimation of where production levels are going to be.

So, that's the best way to predict existing business, and then you can just add to that launches and the forging business and that kind of thing.

Okay. And then, just in terms of the margins for 2016, it sounds like they're going to remain fairly consistent.

And is that really just scale and capital intensity offsetting the assembly and launch?

Yes. I mean, we do expect margins to stay consistent.

I mean, we're expecting still solid performance based on the mix that we see, the level of launches that we see, and the Skyjack performance that we see for next year. So, all of that is -- those are the three key contributors to where the margins come in.

Okay. And then just lastly, you did highlight a little bit of caution with respect to seasonality in Q4.

Obviously you had a very strong Q3 last year. Is this just anything out of the ordinary that you're highlighting, or is that just the way the business is going to trend?

Well, our business typically does track down in Q4...

But, there's nothing out of the ordinary that you are highlighting is what I'm trying to get at.

No, I'm just trying to draw that to everyone's attention because that's not sort of what the consensus is showing.

Okay, great. Well, to conclude this evening, I'd like to leave you with three key messages.

First, we're continuing to deliver on excellent financial performance, record sales and earnings, both North of 20%, driving excellent returns. And number two, we are delivering on our light metal strategy with the announcement of our global partnership with GF Automotive, a world leader in light metal casting.

And number three, our balance sheet just keeps getting stronger with solid free cash flow giving us great flexibility to continue to invest for future growth in this opportunistic timeframe in our industry. Thanks very much, and have a great evening.