Linda Hasenfratz – Chief Executive Officer Roger Fulton – General Counsel Dale Schneider – Chief Financial Officer Jim Jarrell – President and Chief Operating Officer

Mark Neville – Scotiabank Matthew Paige – Gabelli & Company David Tyerman – Cormark Securities Todd Coupland – CIBC Peter Sklar – BMO Capital Markets Mark Neville – Scotiabank

Thanks very much. 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, as well as our Global VP of Finance; Chris Merchant and 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 with sales, earnings and content.

Sales for the quarter were C$1.66 billion another new quarterly record for us and up 21% from last year, again exceeding our double-digit growth target. Once again, the sales increase well-exceeds growth in our market, where global vehicle markets were up 3.2% and access markets up 1%, demonstrating that Linamar's growth continue to drive from excellent market share expansion.

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

Of course, it impacts mature business if 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 volumes to still grow at Linamar.

Earnings saw another fantastic level of growth in the quarter with net earnings up 31% over last year to a C$157.3 million or C$2.39 per share. More than meeting double-digit growth goals and providing margin expansion as well.

We're proud with our consistent strong performance at Linamar quarter-after-quarter and year-after-year. Net earnings as a percent of sales in Q2 were 90.5%.

We continue to run at a strong margin levels, thanks to persistent control of the launch costs, great results from lean initiatives and a favorable mix of business. We expect to see a strong margin performance continued throughout this year and next, resulting in net margins for the full year of 2016 and 2016 in the range of 8% to 8.5%, which will continue to drive solid earnings growth.

Earnings growth continue to drive solid performance in return on equity as well which is still tracking well above our 20% goal. Investing in our future continues to be a priority for us at Linamar, CapEx in the quarter was C$85 million or 5.2% of sale.

CapEx spending will pick up a little in the back half of the year to support launch activity that's going on and being up close to the low end at the 8% range to 10% range, we normally guide to you by the end of the year. The strong earnings and light CapEx in Q2 produced solid gains in terms of leverage with net debt to EBITDA, now sitting at 1.37% down nicely from the 1.52% at close of the Montupet deal last quarter.

We continue to expect to be able to bring leverage back down under 1% within 12 months to 18 months. In North America, content per vehicle for the quarter was C$157.77, up 7% compared to last year, thanks to both higher content on launching platforms with a variety of customers and Montupet.

Our Q2 automotive sales in North America were up 9% over a year ago, reaching C$750 million compared to C$689 million last year in a market that was up 1.7% 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 C$64.45, up 76% over the last year, thanks to Montupet as well as other business launches in the region. Our Q2 automotive sales in Europe were up 88% compared to last year reaching C$376 million compared to C$201 million last year and in a market that was up 6.8% in production volume.

Europe has developed into a significant business center for us, representing about a third of our global sales and growing. It's great to see volumes picking up in the region.

In Asia-Pacific, content per vehicle for the quarter was C$8.11, up 18% from last year. Vehicle production levels were 11.2 million units in the quarter, up 1.8%, which resulted in Q2 automotive sales up 21% compared to last year's total of 91 million.

It's a target to more than double our footprint in Asia by 2020. Other sales were up 9.3% in the quarter at C$441 million compared to C$404 million last year thanks to some growth of Skyjack and higher tooling sales.

Turning to our market outlook, we're seeing a stable outlook of moderate growth in most of our markets globally with a couple of exceptions. For the global light vehicle business, the forecast is for 2.9% production growth globally this year.

Predictions are for moderate growth in light vehicle volumes globally to 18 million, 46.7 million, and 21.5 million vehicles in North America, Asia, and Europe, respectively. That represents growth of around 3% in each region.

Next year, except North America and Europe to be a little flatter with growth of 0.5% and 0.9% respectively and more meaningful growth in Asia at 2.1%. This sales reflect an expected impact of Brexit, which is actually lessening by the month.

Industry experts are predicting on-highway medium/heavy truck volumes to grow this year in Europe and Asia, up 0.8% and 6.3%, respectively. But it contracts 10.2% in North America.

2017, we will see moderate growth globally at 3.1%, 5%, and 3.8% in North America, Europe and Asia respectively. Off-highway medium duty and heavy duty volumes continue to be soft with no indication of a pickup just yet.

Turning to the access market, we are continuing to see market softness, thanks to slow buying on the part of our national customers. Outlook in the industry is an expectation for a slight decline in the global access market up to 5% this year driven mainly by declines in the North American market, almost offset by growth in Europe.

From a product perspective, this is a flat slightly up globally, booms slightly down and telehandlers down more meaningfully. Although notably, we are seeing excellent market share growth at Skyjack in both telehandlers and booms.

2017 is currently forecast to be up as much as 5%, driven mainly out of Europe. Our larger national customers in North America continue to be restrained on equivalent purchases due to continued global uncertainty economically.

On a positive note, we do continue to see encouraging industry metrics, with the clipping utilization rates in the 65% to 70% range. U.S.

Construction Starts up and an ARA forecast for the rental business to be up close to 5% this year. It is our goal to continue to outperform the market through market share growth and particularly our boom and telehandler line to offset market softness, and drives and grows, just as we did in our second quarter.

Turning to new business. We continue to see solid levels of new business wins and a very strong book of business being quoted.

Q2 was a very strong quarter for us. In fact new business wins year-to-date are up almost 50% over where they were last year at this time.

We now have 171 programs in launch at Linamar representing more than C$3.9 billion of annual sales at peak. We shifted about C$85 million of launch business to production this quarter.

You should look for ramping volumes on launching transmission, engine and driveline platforms to reach 20% to 25% of mature levels this year and grow another 65% to 75% next year. Sales last year on these programs were just over C$575 million.

This means that depending on industry volumes, programs currently in launch will add a total of another C$350 million to C$400 million to our top line in 2016. Add to that about C$70 million in incremental sales from all those programs that has shifted to production, so far this year for a total of C$400 million to C$500 million in launches this year.

2017 will see launches of C$600 million to C$700 million. In addition of course, we have growth from our successful acquisition of Montupet and as noted, Skyjack, is still targeting to drive some growth this year and that's despite soft markets 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% this year and middle of the range next year as well as normal productivity givebacks to get an estimate for sales for each year. Clearly, given the level of launches, acquisitions, and market condition, we are expecting to again see solid sales growth at Linamar this year and next.

With margins staying strong as well, sales growth will drive solid earnings growth as well each year. 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 C$7.9 billion in booked business for 2020. Based on current industry volume forecasts layered with new business wins and acquisitions after adjusting for business leavings.

I'd like to highlight a couple of our more interesting wins for you this quarter [indiscernible] gearing significant interim block machining wins for both our Canadian and Mexican operations representing an aggregate of more than a C$180 million in annual sales. Production will start in the next two years to three years on those programs.

We saw some significant wins for our forging plant in North Carolina working aggregate more than C$30 million in annual sales. This takes total forging wins this year to more than C$50 million.

Finally we had a great quarter in new wins from Montupet with two significant new programs secured worth more than C$80 million in annual sales. This takes year-to-date wins from Montupet to more than C$100 million which is fantastic.

Turning to the strategic update. We continue to proceed really 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 depth of capable and skilled people of 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 really a key element in our strategy for driving innovation in the 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 wins in hand and quite a bit of opportunity in the hopper right now as well. Turning to our technology update, we have a lot of exciting initiative underway in terms of new product design and material development and manufacturing processing innovation, all key to continue to drive our growth.

Customers who are working closely with us on our Driveline products with particular interest in [indiscernible] opportunities globally. Of course, we're targeting increasing our content in both electric and hydro vehicles to take advantage of these trends as they evolve.

Electric vehicles are today a tiny slice of the overall market, but we already have content in the product displays with great potential for growth in a variety of areas from Driveline products to structural aluminum cast components to other chassis and gear box components. Hybrid vehicles in my opinion will be an important bridging technology to the pure electric over the next decade, meaning is key to increase our content in these vehicles in particular.

We've already made great progress in that regard in fact our contemporary vehicle on hybrids in North America is already at about 40% up the level of our contemporary vehicle on internal combustion vehicle sitting at above $60 on an average per vehicle and growing. In Europe, content per vehicle on hybrid is already at half a level of our content on internal combustion vehicles which is also fantastic.

In other areas of operations, our plans continue to perform extremely well for our mature business metrics and in terms of launch. We've broken ground on our new high-pressure die cast foundry in North Carolina as planning continues to very well there as well.

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

Our launching plans in India, China, and North Carolina and Guam are all also performing to plan. With that I'm going to turn it over our Global VP of Finance, Chris Merchant, who will lead us through a more in depth financial review, Chris.

Thank you, Linda. Good afternoon, everyone.

As Linda noted Q2 was another solid quarter for sales and earnings growth, as sales grew by 21% and net earnings grew by 31% which resulted in net margins reaching 9.5%. For the quarter sales were C$1.66 billion up C$299.1 million or 21.1% from $1.37 billion in Q2 2015.

Operating earnings for the quarter were C$213.7 million, this compares to a C$165.6 million in Q2 2015 an increase of C$48.1 million or 29%. Net earnings increased by 31% from the same quarter last year to reach a C$157.3 million.

As a result, net earnings per share, on a fully diluted basis increased C$0.56 or 30.6% to reach C$2.39. Included in net earnings for the quarter was a foreign exchange gain of C$5.3 million which was comprised of a C$5.4 million gain due to the reevaluation of operating balances and a C$100,000 loss due to the reevaluation of financing balances.

The FX gain impacted the orders earnings per share by C$0.06. From the business segment perspective, the Q2 FX gain due to reevaluation of operating balances of C$5.4 million as a result of the C$3.4 million gain in Powertrain/Driveline and a C$2 million gain in industrial.

Further looking at the segments, sales for Powertrain/Driveline increased by C$283.1 million or 26.1% over Q2 last year to reach C$1.37 billion. The sales increase in the second quarter was impacted by the acquisition of Montupet, the significant levels of launching programs in North America and Europe, a higher sales resulting from favorable changes in foreign exchange rates and the higher sales on mature programs in North America and in Asia.

Q2 operating earnings for the Powertrain/Driveline were higher by about C$49.9 million or 45% over the last year. In the quarter, Powertrain/Driveline experienced earnings improvements as a result of the acquisition of Montupet, increased volumes on mature and launching programs; productivity and efficiency improvements and favorable changes in foreign exchange rates, partially offset by increased management and sales cost that are supporting the growth.

If we remove any foreign exchange gains and or losses related to the revaluation of operating balances, the adjusted operating earnings for Powertrain/Driveline would have been C$157.5 million for the quarter compared to C$116.1 million for the prior year's quarter of 2015, a 35.7% improvement. Turning to Industrial, sales increased by 2.1% or C$6 million to reach C$290.1 million in Q2.

The sales increase was due to market share growth for telehandlers in North America, partially offset by lower volumes driven by spending delays in our larger national customers. Industrial operating earnings for Q2 decreased by C$1.8 million, or 3.3% over last year.

The decrease in Industrial operating earnings was predominantly driven by lower volumes as a result of spending delays of our larger national customers, lower margins as a result of the sales mix towards new products such as telehandlers, partially offset by increased demand, new market growth in telehandlers. Removing any foreign exchange gains or losses related to the revaluation of operating balances, the operating earnings for the Industrial would have been C$50.7 million for the quarter compared to C$53.7 million in the second quarter of 2015, a 5.6% decline in operating earnings.

Turning to the overall Linamar results, the company's gross margin percentage increased to 17.6% from 17.4% in Q2, 2015. Gross margin increased C$83.9 million due to the acquisition of Montupet, increased volumes on the mature and launching programs, favorable changes from our exchange rates, productivity, and efficiency improvements and market share growth in telehandlers partially offset by the impact of the spending delays of our larger national industrial customers, decreased margins as a result of sales mix towards the new products in the Industrial segment.

Cost of goods sold amortization expense for the second quarter was up C$19.1 million. Cost of goods sold amortization as a percent of sales increased to 5.2% compared to 4.9% in Q2 2015 due to the additional amortization from the acquisition of Montupet.

Selling, general, and administration cost increased to C$84.1 million from C$68.5 million in Q2 2015, it remained relatively flat as a percentage of sales at 5.1% compared to Q2 2015. The increase on a dollar basis is mainly as a result of additional SG&A associated with Montupet, and the increased management and sales costs supporting the growth.

Financing expenses increased C$2.4 million during Q2 from Q2 2015 to reach C$6.9 million due to the increased increase euro borrowings related to the acquisition of Montupet, increased financing fees due to renewal of the current facility in Q1 2016 partially offset by the higher interest earned on the long-term receivables. As a result, the consolidated effective interest rate for Q2 decreased to 2.1% compared to 4% in the same period last year.

This decrease in the effective interest rate is a result of refinancing related to the acquisition of Montupet since the its total debt is now heavily weighted to euro-denominated debt which has lower borrowing rates than our other U.S. [indiscernible] paying dollar debt.

The effective tax rate for the second quarter was 22.7% compared to 25.4% in the same quarter of 2015. The effective tax rate was decreased based on a more favorable mix of foreign tax rates.

We are expecting the effective tax rate for 2016 to be in the range of 23% to 25%. Linamar's cash position was C$414.7 billion for June – as of June 30, an increase of C$221 million compared to June 2015.

Second quarter generated C$167.6 million in cash from operating activities and C$70.1 million in free cash flow, which has opened in net debt reduction of C$49 million, since Q1. Debt-to-capitalization decreased to 43.5% from the Q1 high of 45.3% it is above our target of 35%, but based on our current information, we expect to be back below our target within the next 12 months to 18 months.

Net debt-to-EBITDA decreased to 1.37 times in Q2 down from the 1.52 times reported in the last quarter. We expect within the next 12 months to 18 months, it will be back down to 1 times.

The amount of the available credit on our credit facilities was C$416.8 million at the end of the quarter. To recap, Linamar had a solid quarter that saw strong sales and earnings growth in Q2.

Sales were up 21% for the quarter, with strong sales led to solid earnings performance, which resulted in net earnings improving by 31% and the return on equity reaching 26.8% in the quarter. That concludes my commentary, we would like to now, open it up for questions.

All right. Good afternoon, everyone.

I was kind of looking to the margin a bit, for the year we are talking 8% to 8.5% net income margin. I was just curious on a segmented basis sort of expectations the Powertrain/Driveline now running it looks like above 11% with Skyjack seeing some pressure I guess on volume.

So maybe just speak to that.

Yeah. Sure.

I mean clearly, we had a very strong quarter for the Powertrain division, but don't forget, Q2 is normally our strongest quarter. So it's obviously going to dial back a bit in the back half.

That said, I think that expecting something in the sort of 10% to 11% range for Powertrain for the full year this year [indiscernible] is a pretty good bet. But, as you point out, Industrial is feeling a bit of pressure from a market perspective.

So, and, we're also heading into a seasonal low time for Skyjack. So, market conditions are going to put a bit of pressure on margins.

We do think they'll be in the 12% to 16% range on a full-year basis. And [indiscernible] maybe add or somewhat above that top end this year and next year, really how the market plays out in coming months is going to be an important factor in that regard.

Sure. Can you maybe just talk about pricing of Skyjack?

How competitive that is, how much that's investment versus maybe volumes?

I would say pricing globally is a bit of a struggle, it's a tough market in the price side. So you're competing for orders in a volume driven sort of market.

So we are seeing pressure on the price side.

Okay. And just sort of the commentary on mix booms, telehandlers, what's going we're gaining share.

And what your expectation say, can you still grow volumes this year?

Is the expectation what, sorry?

That you could grow volumes this year?

Well, certainly on the booms and telehandlers, we are actively growing – growing our business. In fact, we had it released from year on telehandlers this year where we are way up in terms of – in terms of volume.

So that's part of what's helping to drive – drive our market share up and drive our sales into a little bit of growth. Certainly on the boom side as well, we're looking to grow in volumes, but not as much as on the telehandler where we're seeing a lot of growth.

Yeah. And I think to add the introduction of some of the booms into the marketplace is really good, so that's helping us to grow.

And the telehandlers have been received greatly into the market. I mean a lot of the introductions have taken place have been really well – well received.

Okay. And then maybe if I can sneak one more question in.

Just on the book of business. For 2017, I believe you said C$600 million to C$700 million of revenues from launching business.

You're winning business, but I believe that number was C$650 million to C$750 million, so the delta is a timing or more of an industry volume over?

Well, I mean a little bit of each. Frankly, it's a pretty small adjustment of C$50 million, so...

Yeah.

I am not – it's not raising any risk right for me. I mean, it's a little bit of timing adjustment and a little bit of volume adjustment.

So nothing in my opinion to be concerned about.

Okay. Thank you.

Great quarter.

Thank you.

Hi, good afternoon. Thank you for taking my question.

With some of the negative commentary regarding the access to market from your North American peers, as well as your customers. What is it about your Skyjack certifieds that allows you to [indiscernible]?

Well, don't forget we are launching new business as Jim was just talking about. So, we've been primarily a scissor manufacturer and we have been expanding into boom and telehandler products.

So, we're sort of a newer addition in those areas, and our customers really like our product. So, we're having the opportunity to pick up market share as a result, and that is, that's really what's helping us to outperform our competitors.

Understood. And then, as you look at your major rental customers, lowering their purchases, do they typically buy at a higher content level, than some of your other independent customers?

Do they – well, we certainly buy at a higher volume level. I mean, pricing will obviously shift around in proportions of volume.

So, I would say that they're paying more if that's what you're suggesting.

Got it. Okay.

Well, thanks for taking my questions. Good luck.

Thank you.

Hi, good evening.

Hi.

First thing, Linda, could you just repeat the margin guidance to-date for Powertrain/Driveline and Industrial?

Yeah. I was saying that, staying above our normal 7% to 10% range on the Powertrain side is a good bet and that's something in the 10% to 11% range this year and next year is pretty reasonable based on our outlook of the mix and launch activity et cetera.

At TARDEC, we've always talked about as well the 16% range for the full year, obviously it goes up and down during the year. I think that's a good range takes back.

I do believe that will be at a high end possibly even a little above it, this year and next to face on this the strong fundamentals that have driven the margins high up till now.

Okay. That's helpful.

Thank you. And then just on the optimization of [indiscernible] slope of design bullet in the MD&A, it indicated that market pay a sales of a C$199.7 million in Q2.

So if I want to look at the organic growth, is it fair just to take that number out of the Q2 numbers to get an idea of the organic growth in the company?

Yes, yes. I think that's fair.

Okay. I just want to make sure.

And on – I'm sorry...

Hello. Oh!

Sorry, we lost you.

Okay. And then just on Asia-Pacific, the launch profile for Asia-Pacific.

It was right in the quarter as something it is going through a paused phase right now, when would you expect to see that business pick up again?

I'm sorry, you feel the launch is light in Asia is that what you said?

[Indiscernible] that high?

Right. I mean we're we have – we won a lot of business in Asia that we're going to be launching over the next couple of years.

Then the market has been, a little bit up and down in Asia as you now over the last few quarters. We're actually seeing a little bit of a more positive outlook for the back half of the year, so that that's a positive.

Okay. And last question is on the E-Axle so could you just talk about where you are with that product or that area?

And do you actually have any product in the marketplace right now or contract?

No. No, David we don't have any contracts, but I mean that handlers now a lot of vehicles that are out there.

We're working with sort of three to four programs customers, all of these are, they have longer sort of time lines than our traditional Powertrain, where we receive an order and we're at business in about two years, these programs are we're working on are kind of 2020, 2022 type programs, but we have a lot of activity happening.

Okay. And when would you expect to see some kind of reward on that regard?

I think within the next year, you'd see some stuff.

Okay. Okay.

And can you give an idea of roughly how big type of programs it would be like what would the [indiscernible] DTV of a product like this?

It will range [indiscernible] twin motor or a single motor, it all depends David on what the configuration is and what the inverter and what the motor and the box are. So, it's a specific design related to the vehicle application.

The OEMs still really haven't laid out sort of the – the process like if we're tier 1 and we're buying all of these components obviously the contracts are a lot larger, whereas they're going to buy motors from bought Siemens and the mechanical hardware from Linamar and put it together themselves, a lot of that still it's being debated and worked out, so as Jim said, yeah, the programs' magnitude could be significantly larger, if we were to be say tier 1 is...

I think, the other thing we able to know is, we have some of these products single, twin in prototype vehicles that we have been testing. So, I think we don't have anything that's out – sort of being seen in the market from customers.

And the good news is, if I've made a note that Mark said he is going to get a vehicle win within the next 12 months. He will be doing follow-up.

All right.

Thanks, David.

Thank you.

Yeah. Good evening, everyone.

Carry on, the discussion, I know you don't want to get into [Technical Difficulty] which you're seeing into 2020 or 2022, what kind of industry volume was that imply, is that a million vehicle and what are you seeing?

I mean a lot of the programs we are looking at are both hybrids and pure electric vehicles and volumes on the hybrids are in the low 100,000s and on the electric vehicles they are in the tens of thousands. We are not – there is not – there is a few big programs, but we are not seeing get it, it's not millions of units, so to start with, so as far as these programs go.

You don't forget Todd that if you look at industry forecast for electrification, you are looking at 10%, 12% at the most 15% of the market out in like 2020, 2022 timeframe sales in a 100 million vehicle market, if there is 10% that's only C$10 million EVs altogether, globally. So, just to keep it, a bit of a context of how big that pie, that potential pie is.

Sorry, that's not pure electric, that's a combination of hybrid and electric that we're looking at maybe 10 million vehicles and in that timeframe altogether.

Yeah, no, that's right. And I was just curious what you were seeing because suppliers like Continental had talked about that kind of number, Linda, and I was just wondering with everything you're seeing in your pipeline, would that be consistent?

Yeah, it is.

Okay. And just in terms of the types of players you're bidding on, is it your traditional OEMs or are your bidding on Silicon Valley as well?

We're talking to everyone that has or is looking to get into the industry.

Better said, it's global too.

Yeah.

It's not just limited to North America.

Yeah.

Right. I understand there's lots of opportunities in China [indiscernible] ask about the margins, industrial guidance, I wonder, certainly better than, [indiscernible] what cause the model to be – what would be the levers that will bring it down to 12, I guess the share gains and all of that, what will drive it down to 12%, what would have to happen?

Yeah, I mean if we were to go down to 12%, you need to see some – substantially more market compression. I mean, we're – we just performed that 17.5% as adjusted margin wins, volumes are down year-to-date in the industry.

So, well 12% to 16% is a broad range that covers tougher years, where volumes are down, to better years where volumes are in better shape. So, obviously the other factor for Skyjack is currency because they manufacture it here in Canada and sell in U.S.

dollars, in euros, in pounds, that has an impact as well on their results, which is part of what's keeping them at the high-end or across the high-end of our normal margin range.

Okay, that's helpful. Thanks a lot.

Hi, thanks. First, I just have a couple of questions going back to Skyjack.

Can you explain what is going on with telehandlers? Seems to be doing quite well in your telehandler growth.

Is that – have you reengineered existing models or it's just you broadened out your products portfolio of model, so rental yards would now compare to take them on?

A little bit of both, Peter. In regards to that, I think we've introduced it.

We refreshed it really last year and reintroduced it, and brought it out to the shows and have packages up to really have a commercialized production unit that we can now sell into the marketplace. So I think that's the one item.

And the second, I think, obviously we're in a good place with the pricing on the telehandlers due to the refresh and getting more competitive in the design.

And also Peter, all of our telehandlers now are Tier 4 compliant, so we're meeting all the latest emission standards without any penalties.

Okay. So, as in the other [Technical Difficulty] is like this is national accounts have been somewhat hesitant in the ordering and that story has been going on, really you first started talking about that I think toward last year.

What do you think is going on in the minds of the national accounts, but the things have been pushing out as far as taking decisions for a year now, it's almost likely going to lose this year because it has construction field.

Yeah, I mean I think what's important is to focus on some of these underlying fundamentals that I was talking about so, level of constructions are – if there is more construction starts going on which they're still growth in that network, then you've got, when you got more construction you need more equipment, right. So that's the fundamental driver of the industry as is utilization rate.

So looking at utilization rates in the 65% to 70% range is typically an indicator that they will continue to buy, the fact that they're holding off on the purchases because of these economic concerns might mean that there is some pent up demand opening up in the system. So that might mean little bit more positive of an outlook even for the back half of the year but more or so for next year.

So I think it's really important to keep an eye on those metrics that are really the drivers of what is a need equipment or not as opposed to something that's easy to turn on and off based on sentiment.

And I think we watch this every month to either like as Linda said we're looking at utilization percentages, construction. What is the rental association, say what that historical view year-over-year rental rates, scrap leakage and also customers.

We talk to customers every single month and yes this is the discussion we've had with the national since last – the fourth quarter last year about what their expectations are. So, we take all that and blended and decide this is where we think they are at and where they are going, so we really do look at the data to sort of drive our thinking.

Okay. And just one last question [Technical Difficulty] our engine block specific program for you and the block has been completely redesigned, so can you talk a little bit about how your block and when what you are doing on the block?

How that changing from the old block to the new block?

Yeah. We're maintaining our in the south, in the U.S.

our block volumes and we are working on the change and in fact in Mexico there has been some volume requirement. So, we're helping out they are in Mexico to do some volume with quite there as well.

And what's you are doing [Technical Difficulty]

No, no, no.

And I don't think that a redesign, it's really going to dramatically impact content and so.

No, no.

Okay. Thank you.

Yeah. I just had a couple of follow-ups.

CapEx for the year, I think, you guided to closer to the 8% range, I'm just curious 2017-2018 is there a year or sort of ramp backup to the high-end?

Yeah. We haven't given any forward-looking guidance on that.

I can probably give something for you in upcoming calls. I will say that as launches continue to ramp up, that will certainly see us spending a little bit more on the CapEx side.

So we do think 8% to 10% is a decent range to expect to drive double-digit growth in that sort of 10%, 15%, 20% range. So we're a little lightweight now, but I do think that we'll definitely be back up into that range pretty soon.

Okay. The C$30 million of incoming Montupet in the quarter, is that – that's an after-tax announcement?

Just let us check. Yes, it is.

Okay. And maybe just one follow-on on working capital bid in the investment this quarter.

I'm just curious has most of that come back in the second half or is that the expectation?

Sorry, what was that again?

Just working capital or there is – does that come back in the second half or it's going to be fairly sizable investment this quarter?

Yeah. We're certainly targeting continued working capital reductions.

Typically, it does dial back in the back half of the year for sure in the fourth quarter. So we do expect to see that start to improve.

Okay. Thank you.

Great. Well, thanks very much.

To conclude this evening, I'd like to leave you with three key messages. First, it's fantastic to deliver yet another record quarter in terms of both sales and earnings and great margin enhancements in sharp contrast to the concerns around the outlook for the automotive market.

Markets are stable, and we're growing at a much more rapid rate than they are. Secondly, we're also fulfilling our promise of rapidly delivering of the balance sheet after the Montupet acquisition and are well on our way to see net debt back under one times EBITDA.

And finally we're excited about the new business opportunities, we've already secured and are continuing to pursue. The level of wins and closing activity is quite high, meaning we should continue to see great opportunities to build our business going forward.

Thanks very much, and have a great evening.