Linda Hasenfratz - CEO Roger Fulton - EVP HR, General Counsel, Corporate Secretary Dale Schneider - CFO Jim Jarrell - President, COO

Justin Wu - GMP Securities Peter Sklar - BMO Capital Markets Mark Neville - Scotiabank David Tyerman - Canaccord Genuity Todd Coupland - CIBC World Markets Brian Morrison - TD Securities

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

Joining me this afternoon are members of my executive team, Jim Jarrell, Mark Stoddart, Roger Fulton and Dale Schneider, as well as some members of our corporate and group finance and legal 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 as usual with sales, earnings, and content.

Sales for the quarter were $127 billion, up 25% from last year and again exceeding our double digit growth target. Once again, the sales increase well exceeds growth in our market, where global vehicle -- light vehicle and access markets were both up only 1% to 2%, demonstrating that Linamar's growth continues to drive from excellent market share expansion.

Earnings saw another fantastic level of growth in the quarter, with net earnings up 36% over last year to $107.6 million, or $1.65 per share. Net earnings as a percent of sales in Q3 were 8.4%, remaining at a very strong overall level of 8% to 8.5%.

We continue to run well above the top-end of our normal annual net margin target range of 5% to 7% thanks to continued control of launch costs, great results from lean initiatives and strong performance at Skyjack, as well as a favorable mix of business compared to what we might have seen in the past. We continue to target net margins for the year in the range of 8% to 8.5%, notwithstanding the normal seasonal slowdown and margin compression we will see in Q4.

We target the same level of performance for 2016 for our core Linamar operations. Our results will naturally be impacted by whatever level of Montupet we are successful in acquiring.

Acquiring only 50% would of course reduce net margins, given the resultant minority interest. If we obtain 100% of the company, we would still target overall net margins in the 8% to 8.5% range 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 continues to drive solid performance in return on capital employed and return on equity, 23% and 21% respectively in the quarter, a fantastic result that again exceeds 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 third quarter, we saw strong cash flows again, which were used to invest in CapEx for launching programs. CapEx in the quarter was $78 million, or 6.1% of sales.

We expect to see CapEx build over the next several quarters, given the heavy level of new business wins we are seeing. 2015 CapEx will be somewhat higher than last year's as a percent of sales, although not quite yet in our normal range of 8% to 10%.

Next year's spending will ramp up a little bit more, putting us 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 with the SEI acquisition we completed in January and well above such next year with our pending Montupet acquisition.

Our balance sheet remained strong despite these investments, with net debt to EBITDA staying well below 1 and cash available for growth sitting at more than $780 million. Plans for our strong level of cash and available debt include continued investment in future expansion both through greenfield and acquisitive opportunities, the priority of course being our pending Montupet deal.

In North America, content per vehicle for the quarter was $150.01, up 16% compared to last year thanks to both higher content on growing platforms with a variety of customers and our new forging business. Our Q3 automotive sales in North America were up 22% over Q3 a year ago, reaching $677 million, compared to $555 million last year in a market that was up 5% 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 $43.43, more than double last year's level thanks to our new forging acquisitions and other business launches.

Our Q3 automotive sales in Europe were up more than double as well over Q3 a year ago, reaching $208 million compared to $94 million last year in a market that was up 5% in production volume as well. Business in hand in Europe, including our SEI 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 $6.52, up 3.7% from Q3 2014. Vehicle production levels were 10.4 million units in the quarter, down 1.1% from last year, which resulted in Q3 automotive sales in Asia-Pacific up 2.6% to a total of $67.5 million.

In Asia, booked business will also see sales increase by more than 50% from their 2015 level in the next four years, with a significant amount of business being quoted today which should add to that backlog soon. Other sales were up 5% in the quarter at $321 million compared to $306 million last year due to growth at Skyjack, which was tempered by slower off-highway sales and energy market sales.

Turning to 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 0.8% production growth globally this year.

Predictions are for moderate growth in light vehicle volumes in North America and Europe and flat performance in Asia at 17.5 million, 20.7 million and 44.5 million vehicles respectively. That represents growth of 2.6%, 2.9%, and 0.2% in North America, Europe and Asia.

In a similar pattern, moderate growth is expected globally next year, again 2.8%, 1.9%, and 2.8% in North America, Europe and Asia respectively. Industry experts are predicting on-highway medium heavy truck volumes to grow this year in North America, up 9.1% over last year, with more moderate growth in Europe and a decline in Asia of 18%.

Next year is predicted to see flat volumes in North America and growth in Europe and Asia, up 4.7% and 6.6%. Off-highway medium duty and heavy duty volumes are predicted to decline globally this year and show more moderate growth in 2016, up 2% to 3% in North America and Europe and flat to small further declines in Asia.

Turning to the access market, outlook in the industry remains positive with the very strong performance of Skyjack year-to-date. Skyjack saw strong double-digit revenue growth in the quarter, driven by continued solid market share growth in booms globally and a very strong performance in North America in all products in particular this quarter.

Year-to-date, we've seen double digit revenue growth in each of North America, Europe, and Asia and in both our scissor and boom products on a global basis. The market is now expecting to increase 5% to 10% this year and 10% to 15% in 2016.

This has shifted a little from last quarter thanks to an expected shift of market demand from Q4 this year to Q1 of next. Last year, for instance, Skyjack declined about 25% in sales in the fourth quarter compared to the third.

We may see a bigger drop this year of 35% or 40% for Q4 compared to Q3, as major accounts have indicated delayed but not reduced CapEx due to reduced pre-buy activity. For the last few years, prices have increased January 1st due to increases in commodity costs.

Given softer commodity prices, equipment suppliers are unlikely to implement such an increase this year, thus not incenting customers to buy prior to year-end as we have seen them do in the prior years. As such, it is expected that 2016 in North America will be strong right out of the gate, particularly given the high number of large construction projects and mega projects going on in North America.

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 no later than 2020, and we are well on our way to that with the performance this year.

Turning to new business, we continue to see solid levels of new business wins and a solid book of business being quoted. Launching business continues to be a significant driver of substantial growth for us.

We have 168 programs in launch at Linamar today, representing more than $3.7 billion of annual sales at peak. Look for ramping volumes on launching transmission, engine and driveline platforms to reach 20% to 25% at mature level and grow another 60% to 70% next year.

Sales last year on these programs were $375 million. I should note that $170 million of programs shifted from launch to production since we spoke last quarter.

Depending on industry volumes, programs currently in launch will therefore add a total of another $450 million to $500 million to our top line in 2015. Launches next year should add another $500 million to $600 million in sales.

Skyjack should see continued growth at better than market growth levels, as market share penetration continues. And of course you need to factor in our Montupet transaction as well.

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 work to get an estimate of sales for this year and next. Clearly, given the level of launches and market conditions, we are expecting to again see solid sales growth at Linamar this year and next.

On top of this growth, again, will come the added sales from our proposed Montupet transaction, assuming we're successful. With margins staying strong, launching an acquired business should drive solid earnings growth as well.

We target double digit top and bottom line growth each year at Linamar, and feel 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 as well.

At this point, we're looking at nearly $6.4 billion of booked business for 2019 based on current industry volume forecasts layered with new business wins and the forging acquisition and after adjusting for business leaving. Montupet would add another $1 billion to that, meaning $7.4 billion by 2019.

I'd like to highlight a couple of our more interesting new business wins this quarter. We had another great quarter in new business wins for a connecting rod program.

We picked up three jobs for different customers in North America and Asia totaling nearly $20 million in annual sales. This is an exciting growth product for us.

We also continued to secure great content on the more fuel efficient, higher speed transmissions currently being sourced, with another $50 million in annual sales secured there. Turning to a strategic update, the big news this quarter of course is our announcement regarding our intention to file a tender offer for 100% of the outstanding shares and voting rights of Montupet S.A.

This was an important next step in the development of our light metal casting strategy. As we discussed on our call last month, Montupet specializes in the design and manufacture of cast aluminum components for the automotive industry, mainly aluminum cylinder heads and the company is recognized as a leading player in this field.

Linamar of course is a global leader in the machining of cylinder heads, both rough machined and fully machined and even assembled. Today we produce almost seven million cylinder heads a year.

Together we will provide our customers with collaboratively designed products to optimize lightweight solutions and an integrated one stop shopping approach to manufacturing to minimize logistics cost and maximize quality. Together we will have enormous opportunity to penetrate the significant and opportunistic cylinder head market estimated are more than $16 billion of global market potential.

Light metals are a key element in lightweighting 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 our progress in the light metals area, and look forward to bringing the Montupet operation into the Linamar family.

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 continued to perform to expectations financially, strategically and technically.

Our launching plants in India, China, North Carolina and Guelph are all also 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, Q3 was another solid quarter for sales and earnings growth, with sales reaching $1.27 billion, which resulted in strong net earnings of 8.4%.

For the quarter, sales were $1.27 billion, up $253 million, or 25%, from $1.02 billion in Q3 2014. Operating earnings for the quarter was $144.2 million.

This compares to $109.8 million in Q3 2014, an increase of $34.4 million, or 31%. Net earnings increased by 35.5% from the third quarter of 2014 to reach $107.6 million.

Net earnings per share for the quarter increased $0.42, or 34%, from the third quarter of 2014 to reach $1.65. During the third quarter of 2015, we did incur two significant impacts to our results.

The first impact related to the investments made to reallocate three facilities to enhance growth, maximize operating efficiencies and minimize logistics cost, which resulted in a $2.9 million impact to the powertrain and driveline segment. The second significant impact occurred in the industrial segment related to higher than normal levels of used access equipment trade-in allowances that occurred in the quarter for an impact of $2.8 million.

These items impacted EPS for the quarter by $0.06. Included in net earnings for the quarter was a foreign exchange gain of $12.5 million caused by the revaluation of our balance sheet, which was composed of an $11.2 million gain due to the revaluation of our operating balances and a $1.3 million gain related to the revaluation of our financing balances.

The FX impacted the third quarter results by $0.14. From a business segment perspective, the FX gain due to the revaluation of our operating balances of $11.2 million resulted in a $4.1 million gain in powertrain and driveline and a $7.1 million gain in industrial.

Further looking at the segments, sales for the powertrain and driveline segment increased by $211.1 million, or 25%, in Q3 2015 compared to Q3 2014 to reach $1.06 billion. The sales increase in the third quarter of 2015 was impacted by additional sales from the acquisition of our new forging businesses in Q1 2015 and Q4 2014, favorable changes in FX rate, launching programs in North America and Europe, partially being offset by market softness in the off-highway commercial vehicle markets in all three regions.

Q3 2015 operating earnings for powertrain and driveline were higher by $25 million, or 30%, over Q3 2014. In Q3 2015, the powertrain and driveline segment experienced earnings improvements as a result of earnings from the increased launch volumes, favorable sales mix to higher margin programs, favorable changes in foreign exchange rates across multiple currencies due to our growing global presence and earnings from our new forging businesses, partially offset by lower earnings related to the lower volumes on the off-highway commercial vehicles, the costs associated with the three facility relocations and the increased management and sales costs supporting our growth.

If we remove any foreign exchange gains or losses related to the revaluation of our operating balances and the costs associated with the facility relocations, the adjusted operating earnings for our powertrain and driveline would have been $106 million for the quarter compared to $84.4 million in the third quarter of 2014, or a 25.7% improvement. Turning to the industrial segment, sales increased 25%, or $41.8 million, to $210.2 million in Q3 2015 from Q3 2014.

The sales increase was due to the favorable changes in foreign exchange rates, market share growth for booms in North America and Europe, and market share growth for telehandlers in North America. Industrial segment operating earnings for Q3 2015 increased $9.5 million, or 34.7%, over Q3 2014.

The increase in industrial operating earnings was predominantly driven by the changes in foreign exchange rates, the market share increases in booms and telehandlers, partially offset by a less favorable customer and product mix of the units sold in the quarter, higher than normal level of trade-in allowances and the increased management and sales costs that are supporting our growth. Removing any foreign exchange gains or losses related to the revaluation of our operating balances and the cost associated with the higher than normal trade-in allowances, the operating earnings for the industrial segment would have been $32.6 million for the quarter compared to $26.8 million in the third quarter of 2014, or a 21.8% improvement in operating earnings.

Returning to the overall Linamar results, the company's gross margin percentage decreased to 15.6% in Q3 2015 from 16.4% in Q3 2014. Gross margin in the third quarter of 2015 increased by $30.8 million due to the favorable changes in FX rates across multiple currencies, the increased launch volumes in powertrain/driveline, the favorable sales mix due to the higher margin programs in powertrain/driveline, the increased market share growth in booms and telehandlers, the earnings related to our new forging businesses and being partially offset by lower earnings related to the off-highway commercial vehicle and a less favorable customer and product mix in industrial.

Cost of goods sold amortization expense for third quarter of 2015 was up $10 million from Q3 2014. COGS amortization as a percent of sales decreased to 5.4% of sales as compared to 5.8% in Q3 2014, which reflects the improved utilization of our assets as a result of the increased volumes.

Selling and general administration costs increased to $64.8 million from $56.1 million in Q3 2014, and decreased as a percent of sales basis to 5.1% from 5.5% in Q3 2014. The increase on a dollar basis is mainly a result of additional costs from acquired and expanded facilities and increased management and sales costs supporting our growth.

Finance expenses decreased by $0.4 million during Q3 2015 from Q3 2014 to $4.6 million. The decrease was a result of the increased earnings on the higher levels of financed long-term receivables, the payment of the $40 million private placement notes on October 15, 2014, partially offset by lower borrowing levels related to -- sorry, higher borrowing levels related to the forging business acquisition in Q1 2015.

As a result, the consolidated effective interest rate for Q3 decreased to 4.3% compared to 4.6% in Q3 2014. The effective tax rate for the third quarter of 2015 was 22.9%, a decrease from 24.2% in the same quarter of 2014.

The effective tax rate in Q3 2015 was decreased due to downward adjustments recognized in Q3 2015 in relation to the tax of prior periods that did not occur in Q3 2014 and decreased due to the favorable mix of foreign tax rates in Q3 2015 compared to Q3 2014, being partially offset by an increase in the unrecognized benefit of losses experienced primarily in Europe. 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 $204 million on September 30, 2015, an increase of $89 million compared to September 30, 2014. The third quarter of 2015 generated $170 million in cash from operating activities.

Non-cash working capital increased from the third quarter of 2014 levels of 9.9% to 10.3% of amortized -- annualized sales for the third quarter of 2015, primarily as a result of the addition of Linamar Seissenschmidt Forging. Debt to capitalization remained flat at 23% and continues to be well within our range of 35%, our target range.

Net debt to EBITDA decreased by 0.4x during the quarter, from 0.5x in Q3 2014. The amount of available credit on our syndicated revolver credit facility was $578 million at the end of the quarter.

To recap, Linamar enjoyed a terrific quarter that saw a strong sales growth and earnings growth. The sales were up 25% to reach $1.27 billion for the quarter.

The strong sales led to the solid earnings performance in both operating segments, which resulted in net earnings improving by 35.5%. That concludes my commentary and I'd now like to open up for questions.

Operator, we can move to questions now.

Good afternoon. My first question is on I guess Montupet.

I'm just curious, with the upcoming acquisition and your existing relationship or partnership with Georg Fischer, if you see any kind of overlap or potential conflicts in terms of managing the business or potential quoting, or are these processes and products quite different?

Yes. They are quite different.

So our relationship with Georg Fischer is around high pressure die cast. And with -- Montupet's process is completely different with gravity die cast and low pressure die cast.

So there is no overlap in the businesses. You wouldn't cast the same components, the same designs in those various types of technologies.

So they are in fact complementary and help us to have a more fulsome product lineup.

Okay. I was wondering if you can update the progress of the Montupet acquisition process and what you've seen in terms of reception from shareholders.

Yes, absolutely. I think it's all proceeding quite well.

As you know, we had a conference call last month, which I think went well. We've had good reception from our customers.

We've had good feedback from the Montupet employee base. We've been out to talk with some of our own shareholders and seen some positive reaction there as well.

So I'm pretty happy with the reaction overall. In terms of the process, we continue to follow through with the various elements of the process, including AMF approval, as well as an opinion from the Works Council and the Board.

The Montupet Board needs to get an independent valuation as well. So all of that's proceeding and we should be in a position to open the tender offer in December as originally expected.

Okay, in December. Okay.

But, you mentioned earlier something about a 50%, I guess, ownership, I guess presuming if minority shareholders choose not to tender. So there is a scenario where you could be a 50 -- well, whatever the percentage that do tender, you could be -- you could have a minority share, minority interest in this business.

Well, we would not be less than 50%. There is a 50% regulatory minimum.

So if we for some reason had less than 50% tender -- which is probably unlikely given that the founding shareholders own 37% and have already agreed to tender their shares. So it's only another 13% to get to the 50%, so it just makes that hurdle more -- easier to get to.

But, there's a regulatory minimum of 50%, so it won't be less than 50%. So we -- hopefully we'll see ourselves somewhere between 50% and 100%.

Okay. And is there a point where minority shareholders would be forced to tender if you get above a certain threshold?

Yes. If we get over 95%, we can squeeze the rest out.

Okay. Okay, great.

And just my last question is on the industrial side. Linda, I was wondering if you can repeat what you said about the impact of customer pre-buys on the fourth quarter.

Yes, sure. So in many years we have -- we see price increases that Skyjack and its competitors would put through in January related to growing commodity prices.

The access market is a beautiful place where you can increase prices to your customers, something we're not very used to. But, in any case, given commodity prices not having increased, in fact that's not driving towards a likelihood of price increases coming through.

As a result the pre-buy that would normally exist in Q4 of people wanting to get their purchases in before the January price increase happens is not in play. So that's why we think there is a likelihood that the decline in Q4 compared to Q3 would be a little bit higher than what we would normally see.

I mean we're not talking anything dramatic here, right? Like, I mean, normally it's down -- last year it was down 25%, so we're saying now it could be 35% or 40%.

So it's not a dramatic difference from the normal pattern, but I think it's worthwhile highlighting to you. I think most of the analysts' forecasts are already looking for a drop of around 30%.

So it's not that different.

And I think also importantly is these are not lost sales. They're just pushed into Q1, right?

So the pre-buy won't happen. It'll just mean a stronger Q1 than we'd normally see.

That's a very good point.

Yes. So it just gets pushed out.

Okay, that's helpful. And maybe if I could, I guess last quarter you had talked about the scissor business being quite strong.

And it sounded like the boom and telehandler business was flat to not as strong. I guess this quarter you've talked about both those other products being quite -- it sounds like they're more robust.

I was wondering if you can comment or give us some color on what's causing the increase and whether you see that as being sustainable.

Yes. What I was talking about last quarter was the boom and telehandler markets.

Like if you look at the market growth, it's been -- it hasn't been very strong this year in telehandlers and booms. But, if you recall, I talked about the fact that our sales in booms in particular is up quite a bit.

And that's because we're gaining market share. So for instance, if I look at the last four quarters in the market, booms in the overall market are actually down a bit in terms of the market, but we're up significantly, strong double-digit growth.

So we're enjoying market share growth. And we were last quarter as well, so I apologize if that wasn't clear.

It's the market that's flat. We continue to grow our products and our market share.

Okay, great. Thank you.

Thanks. Dale, on the income statement there's a line, $10.9 million other income.

I think that's largely the FX gains that you were talking about and segmented them for us between powertrain/driveline and industrial.

That's absolutely correct. That line is among other things, but mainly that line does have the FX gains or losses related to the revaluation of the operating balances.

Okay. My next question is you mentioned two items that negatively impacted results.

One was a higher level of trade-in allowances at Skyjack and also these relocation costs you have. Three plants are relocating within the powertrain/driveline segment.

I'm just wondering if you or Linda could answer why you think these are unusual items that warranted you identifying them.

Yes. I can answer that.

The trade-ins, for instance, for Skyjack, I mean, trade-ins are a common part of deal making. But, what we saw was a little bit of a spikier level that was higher than we would normally see in one particular deal.

So we thought it was worthwhile because it was actually a fairly big number. So we thought we'd point it out as something that was not the normal sort of pattern.

The plants, I mean, this is something that very rarely happens, right? I mean, we took two very small facilities in leased buildings in France that really didn't show very well to customers and moved them into a much larger, newly refurnished renovated building that actually looks really fantastic to allow us to grow more effectively.

And in fact, I think it was a key part in us winning that big project in France last year. And the other -- the third facility was a small -- a very small facility that came along with the SEI acquisition in northern Michigan that just made sense to marry up with our CFC business in North Carolina, given it was the same industry.

So you don't see us doing this every day at all. So we thought, again, worthwhile to point those out that were unusual costs in the quarter that we thought you should be aware of.

And these plant relocation costs, will they carry into Q4 or are they done?

No, they're done.

Okay. And on the higher level of trade-in allowance, did you say that it's just related to one particular deal or --?

Yes, that's right. We had a large trade-in deal that we did with a customer.

Okay. And then, my last question is, I believe you have a substantial amount of ramp that's coming on nine and 10 speed transmissions.

Could you just map out for us where you are on that ramp? I get the sense that it starts to get going about a year from now.

And maybe you can just tell us like when are you capitalizing for it. When do the ramps begin?

How fast do they ramp, et cetera?

Yes. We're going through some later year PPAPs this year to get ready for production, Peter and then we start to slowly ramp up next year.

There has been some delays on a couple of the variants to the ramp up plan. So what we can tell you is that we are doing PPAPs and we're starting to ramp at a slow level, but there has been some delays to the ramp ups at the customer side.

So this isn't uncommon, quite frankly, to have this change of ramp ups because they've got to coordinate with all the vehicle platforms and things like that. So I think the positive side is, one, that we continue on the six speed production levels, which is good.

And secondly, we're going to continue the ramp up on the nine, 10 a little bit later. So CapEx will be probably a bit lower than we expected this year on the nine, 10, but then we'll ramp up, as Linda stated, next year again.

And this delay, Linda, is that -- I noticed too in your commentary that you lowered the high-end of your incremental sales guidance. You were at $450 million to $550 million and now you're at $450 million to $500 million.

Does that largely reflect this delay in the nine and 10 speeds?

No, not at all. That's a fact of the programs that shifted from launch to production.

So, they're no longer in my launch book where I'm talking about the business that's launching. So we had a fair number of programs, actually, that shifted into production last quarter, so I'm no longer counting them in that.

They are now going to be part of mature business and the growth there. So if we add that back in, it would not be dissimilar to what I was talking about last quarter.

And I would also say, Peter, these delays are not like significant delays. And also, the CapEx, we minimize it.

Every month we're looking at this, coordinating it to the ramp up plan. So as I said, the delay is probably just a little bit longer than we had anticipated.

Yes. That's such a good point.

So it's not like we're sitting on a bunch of unused capital that we were expecting to see launch. The push out on launch is not really short-term.

It's a little bit longer term.

Yes.

Okay. Thank you.

Hi. Just to follow up on Peter's last question, in 2016 I think there is a similar shift or sort of a decrease in the revenues for the launch.

I assume it's the same thing, launch moving to production in the quarter.

Exactly.

Okay. For Skyjack, sorry, did you say the access market in Q3 was up 1% or 2%?

Did I catch that correctly?

Yes. If you look at the overall market globally, there wasn't much growth.

Global growth just for the quarter was 1.2%.

Okay. And the 10% to 15% growth for next year, is that sort of apples to apples comparison of both markets?

Yes. I mean, it's looking at units next year compared to units this year.

I'm not looking at revenue because that can skew depending on what the units are, but the units expected this year compared to next year.

Okay. So it sounds like, I guess, a pretty big jump next year in volumes versus Q3.

Was there anything in Q3, I guess?

Well, don't forget, I mean, Q3 is just one quarter, right? Like, I mean, the expectation for 2015 as a whole is between 5% and 10%.

So Q3 was a little bit softer, but the earlier quarters of the year were stronger. So the overall expectation for the year is still not bad, and then next year it's expected to be a little bit stronger.

Okay. But, that 10% to 15%, that's not your number, but you feel sort of comfortable with it just looking at your own book?

That's right. That is a compilation of industry forecasters and industry knowledge that -- from which we derive that figure.

Okay. And I think previous calls you've said you're comfortable in your ability to sort of outgrow that.

Would that be -- I guess the expectation is similar for next year?

That's right.

Okay. And then, just final clarification, did you sort of -- for guidance for next year, the 8% to 8.5%, with 100% of Montupet that would still be the same?

Yes.

Okay. All right.

Thank you very much.

Yes, good evening. First question's just on the industrial margin.

So if I use the adjusted number that Dale gave us, it looks that came in around 12.8%, which is down quite a bit year-over-year. I was just wondering if you could give us some thoughts on why that is.

Yes. If you adjust not just the FX but also that unusual trade-in, the adjusted margin is actually 15.5%, not 12.8%.

I'm not sure where that comes from, so -- which is pretty similar, I think, to our last year. Last year was also around 15.5%, 16%, 15.9% adjusted, so not that different.

And really, that kind of a small difference would really be more mix related. If I look at the margin compared to Q2, given sales came down $74 million, 26%, that's a pretty normal decline.

And if I think about the earnings impact of a $74 million decline, I actually think the margin is a little bit better than what you might expect it to be.

Right. Okay, fair enough.

I think I might have done my math wrong then. I think that's all I had, actually.

The rest of it's clear. Thank you.

Okay.

Yes. Good evening, everyone.

I wanted to ask a question on Skyjack as well, if I could. So some of your customers have talked about spending less on replacement.

And I'm just wondering if you're seeing that dynamic and so what you're talking about for 2016 are just new construction projects that are coming on that'll drive demand.

We're not hearing that on the replacement side. It's really, I would say, new demand that's coming out.

And with our new product introduction, it's really taking up the increase as well for us. So no, we're not hearing the replacement.

It's new.

Okay. So you're not seeing soft outlooks on the replacement side of the market?

No.

Okay. My second question had to do with fourth quarter margin.

So with a little bit less industrial growth in the fourth quarter, would that pull in the margins so the net margins in Q4 actually come in lower than they were last year?

Well, I mean, I'm talking about a reduction compared to Q3, right, or -- I'm sorry, you're right. You're wondering about the decrease Q4 versus Q3 this year compared to last year.

So, I mean, obviously Q4 is always a little bit lower of a margin performance, so you should certainly expect that. I don't think it'll be dramatically different from last year's, I mean, considering we're running at a bit of a higher rate.

But, it will affect it, obviously.

Okay. Those are my questions.

Thanks very much.

Hi. Good evening.

I just have a few follow up questions. And just going back to Skyjack and the higher than normal level of trade-ins, can you just maybe explain how this process worked?

Is there any upfront residual guarantee upon the sale? And then also, what does happen to this product upon taking it back in?

Is it simply sold in the secondary market?

Yes, there is no guarantee on residual. So you'll make a deal on the valuation.

And typically it's a customer to supplier relationship where you'll factor in potentially new business, factor in historical business, factor in pricing, factor in all those elements and then you will create a deal. And then, they do go into the secondary market.

And that market -- we have access into that market to sell off and so you'll see either a gain or you'll see a loss. And sometimes we rebuild these, do unit exchanges and sell them through a unit exchange concept as well.

And I'd just like to emphasize as well, Brian, that these trade-ins are nothing new. I mean, this is something that has long been part of the access business.

It's always been a part of the way that we do business. So it's not something we really highlighted before, but chose to do so this quarter just because we had a little bit of a spikier level this quarter and it was skewing the results a little bit.

So it's not something new or different. It's how business is done in the access market.

Okay. Just switching gears, it's kind of more higher level.

Back when we announced the casting acquisitions, one of the benefits you noted was the potential for expanding relationship with customers, this translating into new business wins or heightened potential. Now that you've had them under your belt for nine to 12 months, are you seeing this actually come to fruition as expected, or potentially exceeding expectations?

On the forging business, which we've actually now owned for almost a year, we have seen absolutely an increase in quotations and we've actually increased business through new business wins. We've also increased a bit insourcing in regards to certain product lines.

Of course, we need to have suppliers in the forging business. The casting is all -- the light metal side is all momentum and customer enthusiasm at this time because, number one, we don't own Montupet as of yet, and secondly, we haven't build the Georg Fischer Linamar casting facility.

But, I can say on both of those customer enthusiasm is outstanding. And I think, when we do get through the Montupet, we'll hit the ground running very hard in regards to building up new business.

And with Georg Fischer and ourselves, the structural casting side looks very promising as well in the North American market.

Pardon me, I misspoke on the forging classification. Last question, very small, just I know you did a press release on the VW event, no impact as it is not classified as a material customer.

Are you seeing any disruption in your ongoing business with them, or no?

I mean, not really. What we do with Volkswagen, as you point out, first of all, is they're a smaller customer, less than 5% of our sales.

And the portion that we make for diesel engines is even smaller of a slice of that. So we're seeing a little bit of impact here and there on some programs, but it's interesting to see how VW has maintained their sales levels.

I mean, if you look at the VW brand, they were flat in October and the group as a whole was up 5% in October. So they're not seeing a lot of market impact as yet, which is obviously a positive for them.

Thank you.

Thanks very much. Well, to conclude this evening, I'd like to leave you with three key messages.

First, we are continuing to deliver on excellent financial performance, record sales and earnings, both north of 20%, driving excellent returns. Secondly, we're continuing to deliver on our light metal strategy with the announcement of our intent to acquire Montupet this quarter, a world-leader in the light metal casting of cylinder heads.

And thirdly, our balance sheet and global team is very strong, making us well-positioned to continue to grow consistently, capably and with excellent results. Thanks very much and have a great evening.