Linda Hasenfratz - CEO Roger Fulton - General Counsel Dale Schneider - CFO Jim Jarrell - President and COO

Mark Neville - Scotiabank Meaghen Annett - TD Securities Todd Coupland - CIBC Peter Sklar - BMO Capital Markets

Thank you very much. Good afternoon, everyone, and welcome to our first 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 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 with sales, earnings, and content.

Sales for the quarter were $1.52 billion, a new quarterly record for us and up 19% from last year, again exceeding our double digit growth target. Once again, this sales increase well exceeds growth in our markets, where global vehicle markets were up 1.8% and access markets down 4.6%, demonstrating that Linamar's growth continues to derive from excellent market share expansion.

I think this is a critical point in this timeframe of market concern around flattening demand. Our growth at Linamar does not come from market growth.

Of course, it impacts mature business as market volumes contract. But we're strongly growing market share in every region, which is the primary driver of our growth.

It would absolutely be our intent, even in a scenario of flat or down volume, to still grow at Linamar. Earnings saw another fantastic level of growth in the quarter, with net earnings up 11% over last year to 126.4 million, or $1.94 a share, again meeting double digit growth goals.

We're proud of our consistent strong performance at Linamar, quarter-after-quarter and year-after-year. Net earnings as a percent of sales in Q1 were 8.3%.

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, and a favorable mix of business. We expect to see strong market performance continue throughout this year and next, resulting in net margins for 2016 and 2017 again in the range of 8% to 8.5% which will, of course, continue to drive strong earnings growth at targeted levels.

Earnings growth continues to drive solid performance in return on equity, still tracking above our 20% goal. Investing in our future continues to be a priority for us at Linamar.

CapEx in the quarter was $83 million or 5.4% of sales, a relatively light start to what will be a bigger year this year in terms of CapEx, when CapEx will be back in the 8% to 10% range we normally guide to. Of course, we more than made up for that light CapEx with our net investment in Montupet in the first quarter of $1.1 billion.

Despite heavy investment, our strong balance sheet and cash flows mean net debt to EBITDA sits us at 1.5, as expected. We continue to expect to be able to bring it back down under 1 within 12 to 18 months.

In North America, content for vehicles for the quarter was $163.07, up 9.6% compared to last year, thanks to both higher content on launching platforms with a variety of customers and Montupet. Our Q1 automotive sales in North America were up 15% over Q1 a year ago, reaching 751 million compared to 655 million last year in a market that was up 4.8% 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 $59.41, up 55% over last year thanks to Montupet and other business launches in the region.

Our Q1 automotive sales in Europe were up 58% compared to last year, reaching 329 million compared to 209 million last year in a market that was up 1.8% in production volume. Europe has developed into a significant business center for us, representing now more than 30% of our global sales and growing.

In Asia Pacific, content per vehicle for the quarter was $8.33, up 28% from last year. Vehicle production levels were 11.7 million units in the quarter, up 0.4%, which resulted in Q1 automotive sales in Asia Pacific up 28% to last year's 97 million.

It's our target to more than double our footprint in Asia by 2020. Other sales were up slightly in the quarter, at 341 million versus 339 million last year due to a slow start for the year for Skyjack and slower off-highway market sales.

Turning to our market outlook, we're seeing a positive outlook of moderate growth in most of our markets globally. For the global light vehicle business, the forecast is for 3.5% production growth globally this year.

Predictions are for moderate growth in light vehicle volumes globally to 18.2 million, 47 million, and 21.3 million vehicles in North America, Asia, and Europe, respectively. That represents growth of 4.1%, 3.8%, and 2%, respectively, over last year.

Next year, moderate growth is expected to continue at 1.3%, 3%, and 2.6% for those regions, respectively. The outlook for light vehicle production has improved globally compared to last year, most notably in Asia and Europe, but up again in North America as well, which is obviously helping to support our mature business.

Industry experts are predicting on-highway medium and heavy truck volumes to grow this year -- in Europe and Asia, up 3.2% and 6.5% respectively, but contract 3.4% in North America. Similarly, 2017 will see a small contraction in North America, down 1.7%, as well as in Europe and Asia at 9.5% and 5.2%.

Off-highway medium-duty and heavy-duty volumes continue to be soft, with no indication of pickup just yet. Turning to the access market, Q1 was a soft start to the year, as expected, thanks to slow buying on the part of national customers.

We saw sales rise with our independent rental house customers, which helped to offset the declines on the national side. National customers are an important part of the market, and they're reluctant to buy despite positive industry fundamentals.

It's dampening the outlook for 2016. On the earnings side, Skyjack was unfortunately also hit by a small write-down regarding an oil and gas customer.

Happily, this is a small part of our business, so not indicative of a continued issue in this regard. Outlook in the industry is an expectation for light growth in the global aerial work platform market of up to 5% this year, driven mainly by scissor growth in all regions, light boom growth globally, offset by a decline in telehandlers.

2017 is currently forecast to be flat globally, driven by softness in North America, offset by growth in Europe and Asia. Of course, that's a positive for us, given our heavier concentration on scissor products.

Our larger national customers continue to be restrained on equipment purchases, which is affecting market growth, certainly through the first half of the year although notably we do see continued growth with our independent customers. We continue to see positive industry metrics with utilization rates close to 70%, construction starts year to date in the U.S.

up 12.6%, and an ARA forecast of 5.6% growth. It's our goal to continue to outperform the market through continued market share growth in our boom and telehandler lines in particular, as we did see again in the first quarter.

It's our target to drive double-digit growth in this business again this year, which we still believe is achievable. Our target is to see Skyjack hit $1 billion in sales by 2020, and we're well on our way to achieving that goal ahead of schedule.

Turning to new business, we continue to see solid levels of new business wins and a strong book of business being quoted. Q1 was another very strong quarter for us.

We now have 179 programs in launch at Linamar representing nearly 3.7 billion of annual sales at peak. We shifted almost $300 million of launch business to production this quarter, so that gives you a good sense for the business wins we saw.

Look for ramping volumes on launching transmission, engine, and driveline platforms to reach 25% to 30% of mature levels this year and grow another 65% to 75% next year. Sales last year on these programs were 612 million.

This means, depending on industry volumes, programs currently in launch will add another 350 million to 450 million to our top line in 2016, plus you will also see about 60 million in incremental sales from those programs we just shifted to production, for a total of 400 million to 500 million in launches this year. 2017 will see launches at 650 million to 750 million.

In addition, of course, we have growth from our successful acquisition of Montupet. Average analyst estimates pre-acquisition for 2016 sales for Montupet were £548 million, with a £115 million of EBITDA.

As noted, Skyjack is targeting double-digit growth again this year 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 2016 and 2017 and also normal productivity give-backs as you work to get an estimate of sales for each year.

Clearly, given the level of launches, acquisitions, and market conditions we are expecting to again see solid sales growth of Linamar this year and next year in the double digits. With margins staying strong, sales growth will drive solid earnings growth as well, also in the double-digit level.

We target double-digit top and bottom line growth each year at Linamar and feel very confident in our ability to continue to deliver on that. New business wins are of course also filling in growth for us in the midterm as well.

At this point, we are looking at more than 7.7 billion in booked business for 2020, based on current industry volume forecasts layered with new business wins and acquisitions and after adjusting for business leaving. I'd like to highlight a couple of our more interesting wins this quarter.

We had another great quarter in new business wins for 10-speed transmission programs, a critical platform for the future of transmission in North America. Wins totaled more than 50 million per year in annual sales.

We had a significant win of a package of gears, representing more than 50 million as well in annual sales. Machine gears are a massive market globally, worth more than $20 billion.

Linamar has rapidly established ourselves as a premier supplier of highly sophisticated close tolerance gear machining, positioning us well to be a leader in this market. This win is just the latest in a series of critical deal projects for us.

Finally, we had a great quarter in new wins for our George Fisher automotive joint venture in high-pressure die-cast aluminum structural components. We picked up one structural component program and are finalizing four additional programs for another customer, representing in aggregate more than $30 million in annual sales for the five programs.

Notably, 85% of that work is for electric vehicles. Structural components are also a huge and growing market, which could conceivably represent nearly 50 billion of market potential in the future.

Note JV results will be accounted for using equity accounting for our 50% stake. We were also recently kicked off on another development project for an electric vehicle LE axle.

Working with partners globally, we're working hard to establish a strong presence in electric vehicle drivetrains. Turning to the strategic update, we're proceeding extremely well with our Montupet acquisition integration.

The team has been in place for months and is making great progress in marrying our two companies together. Montupet is an excellent company with a great staff of capable and skilled people and solid leadership, and we're just so pleased to have them part of the Linamar family.

Light metals in general as well as integrated design teams in both our light metal and our forging businesses are key elements in light-weighting vehicles and product design enhancements to drive lower emissions and better fuel economy and are a key element in our strategy for driving innovation in a vehicle. We're excited about our progress in the light metals area, both through Montupet and our GF automotive JV.

We are already seeing excellent customer response to our combined strengths, with several new business plans as I've described and quite a bit of opportunity in the hopper right now as well. In other areas of operations, our plants continue to perform extremely well, both on mature business metrics and in terms of launch.

We will break ground on our new high-pressure die-cast foundry shortly in North Carolina. Planning continues to go very well there.

We will soon break ground on our fourth Chinese plant in Chongqing. We continue to see exciting business opportunities in China broadly.

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, who can lead us through a more in-depth financial review.

Dale?

Thank you, Linda. Good afternoon, everyone.

As Linda noted, Q1 was not only a solid quarter for sales and earnings growth, with sales reaching 1.52 billion, which resulted in strong net margins of 8.3%. For the quarter, sales were 1.52 billion, up 240.6 million, or 18.8%, from 1.28 billion last year.

Operating earnings for the quarter were 172.1 million. This compares to 155.8 million in Q1 2015, an increase of 16.3 million, or 10.5%.

Net earnings increased by 11.2% from the same quarter last year to reach 126.4 million. And net earnings per share for the quarter increased $0.19, or 10.9% from prior year's, to reach $1.94.

Included in net earnings for the quarter was a foreign exchange gain of 4.4 million caused by the revaluation of our balance sheet, which was comprised of a 2 million gain due to the revaluation of operating balances and a $2.5 million gain from the revaluation of our financing balances. The FX gain impacted the first quarter's EPS by about $0.05.

From a business segments perspective, the Q1 FX gain was due to the revaluation of our operating balances of 2 million was a result of a $7.3 million gain in power train and a $5.3 million loss in industrial. Further looking at the segments, sales for powertrain/driveline increased by 252.5 million, or 23.8% in Q1 compared to Q1 last year, to reach 1.3 billion.

The sales increase in the first quarter was impacted by the acquisition of Montupet, the higher sales resulting from favorable changes in foreign exchange rates, and the significant levels of newly launched programs in North America and Europe. Q1 operating earnings for powertrain were higher by 32.5 million, or 29.1%, over last year.

In the quarter, powertrain/driveline experienced earnings improvements as a result of improved earnings as production levels increased on launched programs, earnings related to the acquisition of Montupet, and higher earnings resulting from favorable changes in foreign exchange rates. This was partially offset by increased management and sales costs supporting growth and acquisition costs related to the purchase of Montupet.

If we remove the foreign exchange gains and losses related to the revaluation of operating balances, the adjusted operating earnings for power train driveline would have been 136.7 million for the quarter compared to 117.2 million last year, or a 16.6% improvement. Turning to the industrial segment, sales decreased by 5.5%, or 11.9 million, to 203.6 million in the quarter.

The decrease was due to lower volumes driven by spending delays from our larger national customers, partially offset by higher sales from the favorable exchange rate and market share growth for telehandlers in North America, in addition to significant global market share growth for booms. Industrial operating earnings in Q1 decreased by 16.2 million, or 36.6%, over last year.

The decrease in industrial operating earnings was predominantly driven by delayed earnings as a result of the spending delays of larger national customers, lower margins as a result of the sales mix towards newly launched products such as booms and telehandlers, increased management and sales costs supporting the growth, and the result of the bad debt provision related to the Canadian customer that primarily operates in the oil and gas industry, partially offset by higher margins related to favorable changes in foreign exchange rates. Removing the foreign exchange gains and losses related to the revaluation of operating balances, the operating earnings for industrial would have been 33.5 million for the quarter compared to 41.2 million in the first quarter of last year, a decline of 18.7%.

Turning to the overall Linamar results, the company's gross margin decreased to 16.8% in Q1 from 17.1% last year. Gross margin in Q1 on a dollar basis increased by 36.1 million due to the improved margins as production volumes increased on launching programs in the powertrain driveline segment, higher margins resulting from the favorable changes in foreign exchange rates, the earnings related to the acquisition of Montupet, partially offset by lower margins as a result of the spending delays on the larger national customers in the industrial segment and decreased margins as a result of sales mix towards newly launched products in the industrial segment.

Cost of goods sold amortization expense for the first quarter was up 15.2 million from last year. COGS amortization as a percent of sales increased to 5.4% compared to 5.2% in Q1 last year, and this is mainly due to the amortization from the acquisition of Montupet and the significant number of programs we have in launch.

Selling and general administration costs increased to 84.8 million from 60.3 million in Q1 2015, an increase as a percent of sales to 5.6% from 4.7% in Q1 last year. The increase on a dollar basis is mainly a result of additional SG&A associated with Montupet, the acquisition costs related to the purchase of Montupet, the increased management and sales costs supporting the growth, and the results of the bad debt expense in the industrial segment.

Financing expenses increased by $700,000 during the quarter to reach $5 million. This increase is mainly due to the increase of euro borrowings related to the acquisition of Montupet, the higher interest earned on the finance long term receivables, and the foreign exchange gain on revaluation of the U.S.

dollar that dominated that. As a result, the consolidated effective interest rate for Q1 decreased to 2.3% compared to 4.3% last year.

This decrease in the effective interest rate is a result of the refinancing related to the acquisition of Montupet, since its total debt is now heavily weighted toward Euro denominated debt, and that the Euro borrowing rates are lower than both Canadian dollar borrowing rates and the U.S. dollar private placement notes.

The effective tax rate for the first quarter was 24.1% compared to 25% in the same quarter of last year. The effective tax rate was decreased based on a more favorable mix of foreign tax rates, partially offset by the increase due to a nondeductible expense incurred in Q1 related to the Montupet acquisition.

We are expecting the effective tax rate for 2016 to be similar to 2015 rates and to the range of 24% to 26%. Linamar's cash position was 408.4 million on March 31, 2016, an increase of 228.3 million compared to last year.

The first quarter generated 174.5 million in cash from operating activities. Net debt to capitalization increased to 45.8%, as a result of the acquisition of Montupet and is above our target of 35%.

But based on current information, we expect to be back below our normal range within the next 12 to 18 months. Net debt to EBITDA increased to 1.5 times during the quarter as planned due to the acquisition of Montupet, from the 0.9 times in Q1 2015.

We also expect this to be back within 1 times in the next 12 to 18 months. The amount of available credit on our syndicated revolving credit facility was 290 million at the end of the quarter.

To recap, Linamar had a solid quarter that saw strong sales growth and earnings growth in the quarter to finish off or to start another great year at Linamar. Sales were up 19% for the quarter.

The strong sales led to solid earnings performance, which resulted in net earnings improving by 11% for the quarter. That concludes my commentary.

I'd like to open it up for questions.

Just the first question on Skyjack. I guess based on our math, it looks like organic volumes were down about 10% to 15% year over year on the quarter.

Is that about right?

Well, we weren't down quite that much. We were only down by, I think, around 5.5% at Skyjack, which is not far off with the market was down.

But I mean, again, just on the organic volumes, just excluding any FX benefit, can we get any sense to the magnitude of that decline?

Yes. I mean, there was FX impact to the balance sheet, so we haven't really -- which Dale has described to you.

There was, I guess, 5.4 million for balance sheet adjustments. So you're right, FX does impact Skyjack.

But the magnitude of the FX impact is not something that we've ever disclosed. We talk about the fact that it is definitely a tailwind for Skyjack, but we haven't disclosed the actual dollar value of that.

Okay. I think last quarter you said that things were a little slower to start the year, but then they picked up in March.

I don't know if those were your exact words, but something to that effect. I'm just curious of, again, maybe what you're seeing so far in the Q2 in Skyjack.

Yes, so you're right, obviously. Slow start to the year, national customers not purchasing to the level that they have in the past.

I mean, obviously, Q2's picking up off of Q1; it always does. But we are still seeing not a normal level of buying activity from the national customers, which is why we tempered our market growth expectation that we had last year to say up to 5% for the year.

So obviously, Q1 is an impact to that. We do believe that Q2 and Q3 are going to be better, and we still believe that we will see a full year of growth for Skyjack in the double digits.

That is still our target, and we do still believe that that's achievable. So obviously expecting to see growth in the balance of the year.

Maybe the cat won't have anything to highlight there is if the communication with the key customers that Linda mentioned, the bigger ones. They're all still continuing to say the CapEx expenditures will be coming; it's just a matter of time.

And the other thing that we are tracking is fleet age, and we watch that all the time and notice some of the trends when scissors are down. So that's good news, right?

[Indiscernible].

Yes. Maybe on Montupet, is there any seasonality in that business?

I guess if we just annualize the number that's provided in the release, it looks a little light of the £550 million on an annual basis.

Yes, it would be. Don't forget we only had two months of Montupet, not three.

We acquired like 96% as of right at the end of January and then had 100% as of March 1 or end of February. So we had basically two months' worth.

And seasonality would be similar to the rest of our powertrain business.

Okay, so the 143.9 in the release -- that's two months?

Correct.

Oh, okay. I get it.

That was my mistake. Okay.

Maybe just one last question, just to clarify, just in the launch book, I think now with what's launching and what's been pushed from launch to production, I think the number, Linda, you said 400 million to 500 million this year in incremental sales. I think previously it was 500 million to 600 million.

So is there a difference just in how it's being calculated or timing? Or is there something else there?

Well, in terms of the impact on 2016 specifically, we did see a bit of a push-out on some of the new eight- and nine-speed programs, and that is likely due to continued low gas prices not incenting customers to push the new, more fuel-efficient technology. Now, the good news is if we aren't selling nine-speed, we're selling six-speed.

So although we, of course, have increasing overall content as we move to the eight-, nine- and 10-speeds, it's buffering, obviously, because we're selling the other technologies. And at the same time, we are seeing strong volumes in mature business globally, as I was mentioning.

We're seeing increased production forecasts in all the regions globally. So in fact, overall, we actually aren't seeing the dial changing much at all in terms of our overall forecast sales for the year.

Thank you. Just going back to the contribution from Montupet in the quarter, would you be able to comment on the operating margin in the quarter?

So Montupet margins are quite similar to the margin performance of our existing powertrain segment. So that's a good estimation for them.

Okay, and just one housekeeping item. Could you just quantify the magnitude of the bad debt expense?

Yes, I think I mentioned it was about 3 million.

Hi, good evening everyone. My first question is on Skyjack as well.

Just wondering, commentary from the national companies has been slowdown in their plans for replacement, and that was the biggest driver. And the other trends, such as non-res construction, et cetera, wasn't enough to offset that replacement cycle.

So are we essentially saying, with this call-out tonight, that you don't see that replacement market coming back this year, and it's your share gains and just a better position in the market that will drive that growth? Am I reading your comments right?

Well, I mean, what we're saying is that we do still believe the market is going to grow somewhat this year globally, so as an overall, up to 5%. Obviously, that is less than what we were thinking after the last quarter.

And really, the national customer perspective is what's driving it, because again, many of the indicators that would drive the market, from utilization rates to forecasts from ARAs and construction starts are also looking positive, which to me are really important underlying indicators of the market performance.

Yes, I think the other thing to keep in mind, too, for our side is we have launched three booms in the last couple of years. So we've got a new product introduction.

We're bringing out another one this year. So we are picking up growth and displacing market share.

So we're seeing that growth. United Rental, I think, is a good customer, national customer, that I think everybody focuses in on, and they look at their rental rates as maybe coming down a little bit, but volumes are coming up.

But it's not enough to offset some of the rates coming down. But the other key factor that we always watch is what are they saying about their CapEx spend?

And we watch that, and in discussions, they have not come to us and said they're curtailing that yet. So we are still optimistic that the volumes that we're hearing from them are going to come at a later time than we anticipated.

Okay. No, that's helpful color.

My second question was on powertrain business. So if we think about North American auto sales, they were pretty volatile in Q1, and then it bounced back in April.

How is that month-to-month volatility flowing into your business and outlooks? Are you essentially able to hold your production views, or have you had to make those month-to-month adjustments as well?

Just a little bit of color on that would be helpful. Thank you.

Todd, we wouldn't really see those kind of fluctuations hit us. Because don't forget, we're insulated a level away from the vehicle production.

So there's sales, which impacts vehicle production, and then a couple of months later it impacts engine transmission production. So we're not necessarily going to see the same kind of volatility that you might see in somebody who was more on the vehicle platform.

So we really haven't seen that.

And Todd, the ups and downs in regards to sales, like, say, from January to February and February to March, that would not even affect vehicle production. It's going to drive stuff that's sitting in inventory.

As far as the OEMs' production schedules, they would maintain the same. And I mean, a lot of the ups and downs were driven by incentives.

A lot of the OEMs got real heavy on incentives, obviously, in April to drive maybe what might have been a lackluster March. But yes, as Linda said, we wouldn't see anything for several months because you've got the vehicle production, and then you've got the inventories that are sitting between finished engines and transmissions.

And I think we have not seen any release, major release changes on anything. And again, we watch, as Mark says, inventories of platforms that we're pretty close to.

So we're really not seeing any disruption there.

And do you look at the April incent -- one follow-up, please? When you look at the April incentives, do you just view that as an adjustment to catch March up and not a problem for the market a few months down the road, where you actually will see the changes, if there are any?

No, that's strictly the OEMs trying to move vehicles and incentive, as one old customer competing against another on a specific product, whether it be pickup trucks or SUVs, at the end of the day, it really flows through to overall level production levels. And keep in mind, too again, when it comes down to individual vehicles, again, we're isolated from that because our product goes into the engines and transmissions, and those transmissions and engines go across multiple vehicle platforms.

Linda, this guidance that you give for incremental sales, so for 2016 was the 400 million to 500 million, and you discussed the things that are impacting that. But for 2017, your guidance is now 650 to 750, which I assume that's moved up because Montupet has launches as well.

Is that correct?

No, actually, that actually doesn't even include Montupet. We haven't gotten that far yet.

They're newly part of the fold, so priority one was getting closed for the quarter. So we'll get them involved with those figures later.

I actually didn't give a figure for 2017 last quarter. This is the first time I'm talking about 2017, so that's a new number for you.

It's a big number, I agree, but there is a lot of launch going on.

Okay. And like I agree it's a big number, is some of that, some of nine and 10 speed transmissions deferring that you were talking about, that slipped from 2016 to 2017?

Yes, yes. That was, I think we talked about a bit of a delay in some of those launches, and those are now coming in into 2017, and that's where you're seeing some of those numbers flow through.

Okay. And Jim, I have a question for you.

When you were talking about scissors, you said something I didn't understand. You talked about the fleet age declining, which is bad.

That's not good. You want an old fleet so that they're replacing.

I didn't understand that.

Say it again. What's the question?

Well, I didn't understand why a younger fleet is a positive. I would think that would be a negative.

No, yes, I probably misread that. With the fleet reduction, you're right; scissors have gone from about 47 months' year-over-year to 42.

So you're right; that signals something different. And booms and telehandlers are about the same year-over-year.

Okay. Dale, I have some questions for you.

You discussed in the write up that there were some Montupet acquisition costs. Can you quantify what the magnitude of those costs are?

I take it they're onetime acquisition costs.

Yes, they were onetime acquisition costs related to various folks who were helping us out on the acquisition.

And I'm just wondering if you can quantify them and also confirm that both the bad debt expense and the Montupet acquisition costs were in SG&A.

Yes, it was roughly 4 million.

Okay.

And yes, they're both in SG&A.

So it wasn't capitalized, then?

No.

No, you're not allowed to do that under IFRS.

Okay. And then, Dale, we're a little bit lost in all this foreign exchange stuff that's going on.

So there's three items that we're looking at that we're trying to reconcile. So there's the 2 million gain, at which I believe are balance sheet items.

Correct.

Which are comprised of a 7.3 million gain in powertrain, 5.3 million loss in industrial.

Correct.

In addition, in other income, there's something for 2,057,000, two zero five seven.

That is mainly where those net balance sheet gains and losses flow.

Okay. And then in finance expense, there's something called other, which is 4,274,000.

Yes, so we had a 2.4 million gain on the revaluation of the debt balances, and that flows through that.

Right, but there's an amount, but there's more, like it's 4.2 million.

Oh, there's other things in there as well, like interest earned on long term receivables and other expenditures.

Okay, and that 2.5 million gain, that's the 2.5 million you referenced in your presentation, I assume?

Right. We had 4.4 million total, 2 million of it in operating earnings and 2.4 million of it within finance expenses.

Right, okay. And lastly, I'm finding the SG&A given the acquisition of Montupet, it's a little problematic to forecast SG&A.

I'm wondering if you could provide some guidance on how you anticipate your SG&A margin to track.

Looking at it, I would say it's not going to be too dissimilar to how we have trended in the past. It's just that this quarter is distorted by the acquisition costs and the bad debt expense.

Just on the bad debt expense at Skyjack, and I think it said it was an oil and gas customer. Just curious of how big is that end market for Skyjack?

It's quite small. As I was mentioning, this is not at all indicative of a slippery slope or anything further that we're expecting on this side.

Oil and gas is a really small part of the business, and this was just an unfortunate situation.

Okay. And maybe just follow on to Skyjack -- sorry to harp on it -- but just in terms of geographic exposure, I understand most is US.

But just for modeling currency for our purposes, how much of the sales are in USD versus CAD versus other currencies, roughly?

Typically, anything you sell in North America is US-based. In Europe, it really depends on which country, but usually it's euro or pound.

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

First, we've achieved targeted double-digit growth, top line and bottom line, that we continue to realize, bringing us again to record levels of performance. Secondly, our strategic initiatives are creating meaningful opportunities for us, both in additive sales and earnings, but also in terms of new business opportunities won and under pursuit.

And finally, we're thrilled with our continued excellent progress in growing market share, an essential element to continued consistent growth. Content for vehicles is up and at record levels in every region.

And Skyjack continues to build market share in key products as well. Thanks very much and have a great evening.