Linda Hasenfratz - CEO Roger Fulton - General Counsel Dale Schneider - CFO

Mark Neville - Scotia Bank Matthew Paige - Gabelli & Company David Tyerman - Cormark Securities Michael Glen - Macquarie Todd Coupland - CIBC Brian Morrison - TD Securities David Tyerman - Cormark Securities

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

Joining me this afternoon are members of my executive team Jim Jarrell, Mark Stoddart, Roger Fulton, Dale Schneider as well as members of our corporate finance and legal team. 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 for looking statements due to factors such as customer demand and timing of buying decisions am a product mix, competitive products, and pricing pressure.

In addition, uncertainty and difficulties in domestic and foreign financial markets and economies could adversely affect demand from customers. These factors as well as general economic and local 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 will start off with sales, earnings, and content.

Sales for the quarter were 1.37 billion, up 11% from last year, another quarter of double digit sales growth as has been fairly consistently our pattern over the last seven years. Once again, the sales increase well exceeds growth in our market where global vehicle markets were at 4.9% and access markets up 1% demonstrating that Linamar's growth continues to drive 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 alone.

Of course, it impacts our mature business if market volumes were to contract, but we are strongly growing market share in every region which is the primary driver of our growth. It would absolutely be our expectations even in a scenario of flat volume to still grow at Linamar.

Earnings saw another strong level of growth in the quarter with net earnings up 22% over last year to 160 million or $1.76 per share. This represents our 22nd consecutive quarter of double digit operating earnings growth at Linamar.

We are proud of our consistent strong performance at Linamar quarter after quarter and year after year. Net earnings as a percent of sales in Q4 were 8.4%.

We continue to run at a strong margin level thanks to good control over launch costs, great results from lean initiatives, and the favorable mix of business. We expect to see an overall strong margin performance for the years 2017 once again in the range of 8% to 8.5%.

Full-year performance for 2016 was absolutely outstanding. We saw a 16% top line growth and 20% bottom line growth with net margins of 8.7%.

This represents another record year for us at Linamar and we are very proud of the consistent outstanding performance of our team globally. Earnings will continue to drive solid performance and return on equity above our 20% goal again for 2016.

Investing in our future continues to be a priority for us at Linamar. In the quarter was 19 million or 6.5% of sales.

As expected, Spending is pending someone and will continue to do so in 2017 and we expect to be back in our normal eight and we expect to be back in our normal 8% to 10% of sales spending range. The strong earnings and good reduction in working capital in Q4 produced solid gains the gains interns of leverage with net debt to EBITDA now sitting at.96, down significantly from the 1.52 at the close of the Brian Morrison three deal in the first quarter.

We had targeted leverage one-time within 18 months of the deal closing and achieved that goal and only three quarters which is outstanding. You will have noted a 20% increase in our dividends announced today with these reflected of that strong cash generation which we want to share with our value shareholders.

In North America, content per vehicle for the quarter was $143.26, down compared to last year as a result of production levels with some key customers declining at a steeper rate than the overall market in the quarter. On a year-to-year basis, CBD for North America was $153.82 million [ph], an increase of 2.3%.

It is great to see that consistent market share growth playing out again in this core market for us. 2015 automotive sales in North America were up 4% over 2015 at 2.8 billion compared to 2.7 billion last year in a market that was at 1.6% in production volume.

In Europe, content per vehicle for the quarter was $62.42, up 56% over last year thanks to Montupet and other business launches in the region. On a year-to-date basis, we reached $0.63, an increase of a 61% for a new record result.

Our 2016 automotive sales were up 66% compared to last year reaching 1.4 billion compared to 820 million last year in a market that was up 3.2% in production volume. In Asia-Pacific, content per vehicle for the quarter was $8.56, up 27% from last year.

On a year-to-date basis, we reached $8.32, an increase of a 24% for a new record result. Our 2016 automotive sales in Asia-Pacific were up 34% versus last year reaching $400 million compared to $300 million last year in a market that was at 7.6% in production volume.

Linamar continues to target more than doubling our current footprint in Asia by 2020. Other automotive sales not captured in these content regulations were $56 million from 30 million for the same quarter last year.

While nonautomotive sales were down 5.4% in the quarter at $226 million versus 239 million last year with growth at Skyjack offset by lower sales as well as lower energy [indiscernible] sector sales. Turning to a market Outlook, we are seeing an Outlook of flat to moderate growth this year and many of our markets globally with a couple of exceptions.

For the global light vehicle business, the forecast is for 1% production growth globally this year. Predictions are for flat volume in light vehicle volumes globally this year to 17.6 million, 48.9 million [ph] vehicles in North America, Asia, and Europe respectively.

[Indiscernible] industry experts are predicting on highly medium truck buying to grow this year in both North America and Asia predicted to be up around 9% in each region but be flat in Europe. Off-highway medium and heavy duty volumes continue to be soft with no indication of a pick up just yet.

Turning to the access market, we saw a small amount of growth this quarter in the market of about 1% contracting to a year at 1.6% globally. Outlook in the industry for 2017 is an expectation for growth at 327% in the global area platform market driven by growth in Europe and North America offset by a small decline in Asia.

Global close is expected in all product rates. We continue to see positive metrics with construction starts in the U.S.

up more than 9% this year and an ARA forecast of 3 to 5% rental revenue growth for the rental business. Skyjack backlog is higher than it was last year at this time which is a good sign as well.

It is our goal to continue to outperform the market through market share growth in our boom and telehandler lines in particular as we have seen played out over the last 12 months. Turning to new business, we continue to see solid levels of new business wins and a strong book of business being quoted.

Q4 was another very strong quarter for us. In fact, business wins for 2016 were at a record level and at more than 26% over 2015.

We now have 191 - 192 programs in launch at Linamar representing nearly 4.8 LE in dollars of annual sales at peak. We shifted about $40 million of launch business to production this quarter.

As noted, had a good quarter in business wins. In addition, we saw big jump in launch backlog because Montupet launches or not part of the total until this quarter.

If you recall, Montupet was being separately added in to the future sales estimate we were providing. We are now considering Montupet in both the launching and business figures that we shared with you.

Look for ramping volumes on launching transmission, engine, and driveline platforms to reach 3240% in mature levels this year. Sales last year in these programs were about 1 billion.

Incremental sales from launch in 2016 were 530 million, a little stronger than predicted. Depending on industry volume programs currently in launch will add a total of another 600 will add a total of another $600 million - $700 million to our top line in a 2017.

In addition, as noted, Skyjack is targeting to drive growth this year and slightly better markets. Growth with a loss of business that naturally ends each year noting to expect somewhere near the middle of our normal range at 5 to 10% in a 2017.

As well as normal productivity give backs to get an estimate of sales for this year. Our strong backlog of launching business this year will do a great job of driving growth for us in the mid to high single digit range this year despite [indiscernible] markets with similar margin ranges for 2017 as seen in 2016, that same pattern is expected on the earnings growth side.

New business wins are of course also filling in growth for us in the midterm as well. At this point, we are looking at nearly 7.5 and 8 billion in booked business for 2021 based on current industry volume forecasts layered with new business wins and adjusting for business leaving.

I would like to highlight if you of our more interesting wins this quarter. First we had a very strong quarter in the business wins 49 and 10 transmission program with quite a few wins right in aggregate represent nearly $250 million in annual sales.

We also picked up a couple of key program for our plants in China on transmission differential and disassembly programs. We picked up another to key camshaft programs for continued dominance for Linamar and it's important market.

We picked up a few different engine components and subassembly work for Europe with nearly 30 million in annual sales. Finally, we one another program for our new high pressure die cast - we are launching with GF automotive in North Carolina for a transmission case.

We continue to actively pursue opportunities for this new facility due to come online later this year. Turning to a strategic update, we continue to proceed extremely well with our Montupet acquisition integration.

The business is meeting expectations and continues to be a strong fit culturally with our team. Performance is strong, and they are a big contributor to this year's sales and earnings growth.

We also continue to work towards developing our strategies around long-term markets that we are targeting such as food and agriculture, water, power, and age management even as we continue to build our transportation and infrastructure businesses. Turning to and innovation update, we have lots of activity happening in all of our global centers.

Our innovation team continues to work with partners bringing us interesting technology opportunities to enhance Linamar's product offerings. We are about to launch and innovation hub to incubate some of these interesting innovation ideas to challenge existing markets and technology.

We have a team working hard on several initiatives in the artificial intelligence and machine learning areas to develop next-generation robotics including collaborative robots that can integrate seamlessly into our production line. Automated visual [indiscernible] to enhance the quality and consistency of our products more efficiently.

We're also working on driving digitalization, data collection, and analytics to create better efficiency and improved cycle times and machine uptimes on the shop floor. There is a huge market opportunity in these technologies which dramatically improve efficiency of our operations both on the shop floor and in the back office as well.

In terms of product innovation, our customers are working closely with us on our driveline products in particular with particular interest in e-axle opportunities globally. Of course, we are content above electric and hybrid vehicles to take advantage of these trends as they evolve.

Electric vehicles are today a tiny slice of the overall market will be party have content in these place great potential for growth in a variety of areas from a product to structural aluminium cast components to casting and [indiscernible] components. Hybrid vehicles our opinion will be an important bridging technology to.

Electric over the next decade meaning it is key to increase our content in these vehicles. We have huge content potential for hybrid vehicles and are actively pursuing several opportunities.

We have Artie made great progress in that regard. In fact, our content per vehicle on hybrids in North America are already forecast the to be more than 50% of the level of our content per vehicle and term - internal combustion engine within the next five years.

In other areas of operation, our plants continue to perform well both on mature business metrics and in terms of launch. The build of our new high pressure die cast in North Carolina continues to go well.

We broke ground on our [indiscernible] in the fourth quarter and continue to see exciting business opportunities in China broadly. Our launching plants in India, China, North Carolina and are also performing to plan.

With that, I will turn it over to our CFO, Dale Schneider to lead us through a more in-depth financial review.

Thank you, Linda, and good afternoon everyone. As Linda noted Q4 was another quarter sales and earnings growth with sales growing by 10.6% and earnings growing by 21.8% which resulted in net margins reaching 8.4%.

Like the quarter, the full-year had strong digits double-digit earnings and sales growth. Sales growing 16.3% and 19.6% and our margins hitting 3.7%.

For the quarter, sales were 1.3 7 billion up 131.8 million or 10.6% from 1.2 3 billion in Q4 2015. 2016 sales increased 16.3% over 2015 to reach 6 billion.

Operating earnings for the quarter were 147 million. This compares to a 131.4 million in Q4 2015, an increase of 15.6 million or 11.9%.

For 2016, operating earnings increased 16.7% over 2015 to reach 696.8 million. Net earnings increased by 21.8% from the same quarter last year to reach 100 Net earnings increased by 21.8% from the same quarter last year to reach 116 - for 2016, net earnings were 522.1 million compared to 436.7 million in 2015 which represents 19.6% increase.

As a result in that earnings per share on a fully diluted basis increased $.31 or 21.4% to reach $1.76. For the full year, net earnings per share or $7.92 on an increase of 19.5% for a $1.29 per share.

Net earnings for the quarter with the foreign exchange gain of a point 5 million which was comprised of a.8 going gain due to revaluation of operating balances and a $300,000 loss due to revaluation of financing balances. The FX gain and the impact of the quarter results by $.10 at EPS.

From a business segment perspective, the Q4 FX gain revaluation of operating balances of 8.8 million was a result of a $5.4 million gain in powertrain and driveline and a $3.4 million gain within industrial. Further looking at the segments, sales for powertrain and driveline increased by 11.8% over Q4 last year to reach 1.23 billion.

Sales increase in the fourth quarter was impacted by the acquisition of Montupet, the European and Asian program launches which is partly offset by lower volume automotive programs and lower volumes in North American and European commercial vehicle programs. Q4 operating earnings for powertrain driveline were higher 11.3 million or 10.2% over last year.

In the quarter, powertrain and driveline experienced earnings improvements as a result of the acquisition in a Montupet, the European and Asian launch volumes, we also had efficiency improvement which were partially offset by lower volumes on certain automotive programs of commercial vehicle programs. If you remove any foreign exchange gains or losses related dilution of our operating balances, the adjusted operating - powertrain driveline would've been 170 million for the quarter compared to 11.3 million in the prior year's quarter which represents 5.1% improvement.

Turning to industrial, sales increased by 1.5% or 2.2 million to reach 144.7 million in Q4. The sales increase was due to scissor sales growth related to good market growth and favorable mix in Europe and North America.

Strong market share growth, strong telehandler market share growth despite the softer market in North America partially offset by decreased boom sales due to the very soft conditions in both North America and Europe. Operating earnings in Q4 increased by 4.3 million or 21.2% over last year.

The increase in industrial offerings was [indiscernible] driven by better - net increase in margin in the favorable product mix and also the productivity improvement that were achieved. Removing any foreign exchange gains or losses related to the evaluation of operating balances, the operating earnings for powertrain - for industrial would have been 21.2 million for the quarter compared with 13.9 million in the fourth quarter 2015, 852.5% improvement in operating earnings.

Returning to the overall Linamar results, the company's gross margin percentage increased to 16.1% from 15.9% in Q4 2015. Gross margin increased by 23.5 million due to the acquisition of Montupet, the favorable product mix, and efficiency improvements that we achieved, higher volumes any European and Asian programs that we launched, the net increase in access equipment volumes were partially offset by the lower volumes on automotive and certain automotive programs.

Cost of goods sold amortization expense for the fourth quarter was up nine point - target amortization as a percent of sales of really increased to 5.7% compared to 5.6% in Q4 2015. The increase on the [indiscernible] 2015 is mainly due to the additional amortization from the acquisition of Montupet.

Selling and general it ministration costs increased to 82.8 million from 72.4 million in Q4 2015 an increase of percent of sales to 6% compared to 5.8% in Q4 last year. The increase on a dollar basis is mainly the result of the acquisition of Montupet.

Financing expenses increased 1.1 million from Q4 2013 to 3.9 million due to the increased borrowings related to the acquisition of Montupet, the partially offset by higher interest earned on investment of excess cash balances. As a result, the consolidated effective great for Q4 decreased to 2% compared to 4.4% in the same period last year.

2.1% for the full year 2016. This decrease from Q4 2015 effective interest rate was the result of refinancing related to the acquisition of Montupet acquisition since the total debt is now heavily weighted to euro denominated which has lower borrowing rates than our other U.S.

and Canadian debt. The effective tax rate for the fourth quarter was 18.1% compared to 25.9% in the same quarter 2015 and 22.3% for the full year 2016.

Effective tax rate decrease from Q4 2015 was based on a more favorable mix of foreign tax rates compared to last year. Adjustments for tax recoveries related to prior years partially offset by the increase of non-deductible expenditures in the quarter.

We are expecting the effective tax rate for 2017 to be in the range of 22% to 24%. Linamar is cash balance was 405 million on December 31, an increase of 65.9 knowing compared to December 20, an increase of 65.9 knowing compared to December 2015.

The fourth quarter generated 275.2 million in cash from operating balances and 185.1 million in free cash flow which resulted in net debt reduction of 209.7 million since Q3. Debt to capitalization decreased to 36.4% from Q1 high of 45.8%.

It is still above our target of 35 based on current information, we do expect to be back below our target within the next 6 to 12 months. Net debt to EBITDA decreased 2.96 times in Q4 down from the highs of 1.5 2.96 times in Q4 down from the highs of 1.52 times in Q1.

We are now within our target range of a one-time and we have reached our target range of approximately 9 months earlier than planned. The amount of available credit on our credit facility is now at 733.8 million at the end of the quarter.

To recap, Linamar has a solid quarter year - strong sales in earnings growth. Sales were up almost 11% for the quarter over 16% for the year.

The strong sales led to solid earnings performance resulting in net earnings improving 21% for the quarter and almost 1% for the year. [Technical Difficulty] free cash flow.

That concludes my commentary. I would like to open it up for questions.

Just first on the Montupet. In prior quarters, you gave an EBIT number.

I'm curious if you can give that number this quarter?

We are no longer disclosing that information now that we have completed all of the controls work that was required to be done.

Okay. I guess I'm doing some math and maybe I am wrong but I guess it looks like Montupet EBITDA was roughly flat for the year versus and LTM when you bought it.

Maybe I'm after the strong, but if you can comment on that if that is right and if so, what is behind that?

Yes. I think that the group performed extremely well in the year, right in line with expectations.

So I don't have any concern with their level of performance.

No. Their sales came in at expected levels, and there margins were expected as well.

Really there is no operation control issues as Jim mentioned. Keep in mind that in 2016, we did anchor integration costs that wouldn't be in the publicly available information in 2015.

Okay. Can you give a ballpark number for those integration notes?

We haven't disclosed that.

Okay. For Q4, you mentioned positive mix in industrial at Skyjack, can you just give a little more color on what product categories?

Mix can have a big impact in terms of margin for Skyjack - whether it is different products as well as different customers to some extent. We don't really get into that level of detail in terms of their margins.

What we do talk about is a general expectation around margins for the industrial segment which of course is largely Skyjack, 12% to 16%. Obviously, we are delivering at the high end of that range at the moment.

If we look at 2016, we were just over that 16%. We believe that the segment will continue to perform at or slightly above the high end of that 12% to 60% range just based on what we see coming down in terms of mix of product in the market.

For 2017 for Skyjack, I think you said market growth, 37%, Skyjack target - it the business grows 5% to 10% next your, is there any reason why margin would expand further just on the leverage alone?

Well again, it is a little bit about next. Telehandler seven little bit lower margin just because they are lower volume products.

They are growing, but they don't have them mature level of the product which has a much better margin associated with it. They will get their overtime, but we need to build the business, that factors in their as well.

We think sort of a similar level of performance for 2017 is more appropriate. I would just remind you that exchange balance when you are looking at that.

And then today is still 10% to 11% next year?

Project deadline we have a range of 7% to 10%. Again, we delivered at the high end of that in a 2016.

We believe that 2017 will also be at the high end or slightly above again. So similar kind of level of margin if you look at the adjusted margin for the driveline segment, 2016, it will be reasonably similar in a 2017.

You have now owned Montupet for about a year. Has there been any surprises as you have worked through the integration?

We have been very happy with the acquisition. It is meeting our expectations both in terms of the financials as we just mentioned as well as in terms of technology.

I think they have got a fantastic team, and we have been really happy with them. I wouldn't say there has been anything in the way of a negative surprise.

I would say actually surprise is more on the positive. As Linda mentioned, with technology there capability, their core incapability is probably the on to what we had anticipated when we got into it.

The global growth perspective of what they have is above what we thought as well.

And then you raised were dividend in the quarter as you mentioned. How do you balance your priorities and increase in dividend?

Yes. Looking at the dividend is something we do every quarter with the board, to look at our level of payout ratio and yield in comparison to our peers and the market more generally.

At the same time, we look at our levels of cash generation and expected cash use. We had done an extremely good job as I noted delevering over the last three quarters to bring our debt to EBITDA down below one and feel quite good about that performance.

Obviously, our Outlook - we think it is important to balance our needs of our customers come our shareholders, and our employees. We felt it was an appropriate time to make an increase to the dividends.

I guess along those lines, how do think about additional acquisitions now that you have come below your target? Is there a particular product area or geography that you may want to add to?

We are always looking at a variety of opportunities from an acquisition perspective. Typically, they have been technology or market focused.

That will certainly continue on. There is interesting opportunities out there.

There is always something to look at.

This is Timmy on for Peter. I have a couple of questions.

First question is in the interest expense, the interest expense is 7 million is netted against and underlined of 3.5. I'm just wondering what that includes because the FX was actually a loss.

That is where some of our interest gain would be showing up, interest earned on our cash balances.

Okay. And the next question is just I'm wondering if you could provide more details on the Outlook for Skyjack.

I know that United rentals, for example, given Guidance inclined double-digit 12% to 20% growth rate. I'm just wondering what your thoughts are about that?

Yes. As it was mentioning in my formal comments I'm of the Outlook for Skyjack for the access market I say has improved for 2017.

So we are now looking at some growth in the market, which is great. That would be consistent with what United rentals is deducting in terms of their expected.

We did see a pickup of backlog as a look at our backlog at the end of December compared to what it was a year ago. It is definitely up.

Again, that is a positive sign that the market is looking a little more positive.

To at a little bit more color, I think our current backlog which is set at the highest level we have seen daily intake of sales is up. The traffic aerial rental Association shall last week in the world of concrete, this week has been pretty high.

The sales intake looks pretty decent.

Okay. Just last question, what are you seeing in terms of the volume in China given the sales past has expired and have you seen any potential effect that it had or that it may have had on this year's --?

The forecast in the market, forecast for China growth this year is pretty muted. It is pretty flat, up a little bit.

So certainly the market expectation is for growth to plan off a little bit after a much stronger your last year than was expected.

Our plan hasn't changed since we put our plan in place for the year.

My question is on Montupet. Again, the net income margin is around 7.5% it looks like for the - that is lower than your overall level.

The asset turnover looks - it looks a lot more asset intensive. I was wondering why it would have a lower margins.

Is that simply the integration costs? Do expect that Montupet margin should be able to see the company's average?

Montupet has a typically very strong margins as bill already mentioned. We did have some integration costs that are obviously dragging on the business a little bit this year.

We absolutely believe that Montupet has the strength to have at least the same if not better margins within the -

Do you have a sense of how long it will take to get them there, Linda?

Can you repeat that, David?

Do you have a sense of how long it will take to get them there?

I would say within the next 12 to 18 months. They have several launches that are going on in Bulgaria.

We have launches going on in India. We have launches going on in Mexico that the capital is in place, and that would just be basically filling up the capital and we will get through that.

Okay. Is a possible then - it sounds like it should be possible that PD margins could actually fairly far beyond the top end of your target range over the next couple of years?

David, I wouldn't count on that. Frankly, having margins in the 10% range for that segment is fantastic and to expect for it to grow much beyond that is not really realistic particularly when you think about the significant level of launches that we have got going on in the next couple of years.

This year as an example, as I mentioned 192 programs in launch, we have got 700 million in incremental sales from those programs. Give you a sense compared to 530 million rental sales from launching programs last year.

So the launch activity is pretty solid. Obviously, assisted with that.

So that is dragging even as Montupet another areas are improving. You know, I wouldn't expect to see margins better.

I would look at the adjusted margin from segment. I would expect to see any improvement over that.

Certainly not this year.

Adjusted margin, you mean excluding FX and unusuals?

Yes, including FX. If I look at reported margins for the project guidelines segment, we are 10.7%.

If you adjust out to the exchange for the year 10.4.

Okay. So the message is don't expect a lot higher than that going forward.

That is the message.

Just in terms when you look at the industrial segment, are you able to get a sense of how the revenue breakdown across the scissors booms and telehandler's?

Yes. We have been seeing some great growth in terms of the boom and telehandler business is becoming a much more important part of our business.

Scissors, as you know, we are the number one scissor manufacturer globally. That had traditionally been the line share of the sales but now at least a third, maybe a bit more of the sales are starting to come from both the boom and telehandler segments.

We are seeing some nice pickup in a those areas.

In terms of the CapEx Outlook, for 2016, was there anything in particular that may have held back the CapEx spending and 16 and pushed it into 17?

We spend it when we need to spend it. We watch it all the time.

So of course in our plantings, we were probably a little higher and then coming down to the end, we didn't - we would defer.

Don't forget as we talked about a couple of times last year, some of the launch programs were delayed a little bit in 2016. So that could push a little of the CapEx into 2017 as well.

Okay. When we look at the backlog that you have out there, should we expect that to satisfy what is in that backlog?

We should see the CapEx fairly aggressively in the coming years? Is that a fair assumption?

I wouldn't say aggressively, but we do think it is going to be back in the 8% to 10% range this year. It is not going to be at the top end of that range, but it is going to creep back in to that a percent to 10% of sales range that we would consider a normal level of spending to drive double-digit top line growth.

You also have to keep in mind too that there is always new opportunities that we are winning in the quarter, and you need to add those in to capital expenditures sometime later in the year two.

Okay. Just in terms of the content per vehicle on the hyper, you talked about that forecasted growth 50% in the next five years.

In order to get there, how much content overlap is there between some of the internal combustion products you are doing and hybrid product right now?

Just for clarity, what we are seeing with the next five years is that our content per vehicle on hybrids gets to about half the level that we are already at internal combustion engines. So it is not growing 50%.

I just wanted to make sure you were clear on that point. Secondly, in terms of the type of content, obviously, there is going to be similarities.

A hybrid vehicle still has an engine and transmission onboard. So we are going to be winning product in those areas as well as in the driveline areas as well as in other products specific to the electric system within the vehicle.

As an example. You know we have seen some program wins in aluminium, battery, housing and for vehicles.

That would be something that would be more electric to some extent hybrid.

But in order to get to that target that you are speaking of, do you have everything internally right now to get there or is there something out there that you would have to go acquire in order to sort of meet that goal?

It is not a target. It is what we have booked already.

This is business we have one that over the next several years is going to be ramping up.

I wanted to talk about OEM inventory adjustments. We saw a bit of that in the fourth quarter and volatility around that is that out of the way for the foreseeable future?

Todd, continue to adjust its production schedule in Q1 this year, but that came earlier of been Q4. Overall, inventories were high in January but they came down significantly in February.

You know, we are really no indication that there will be any production changes been what has already been announced. There is a fair bit of consensus going on right now, and that will obviously continue to drive down the inventories back down into the normal levels.

Yes. I would just add that some of the customers that solve pretty steep production in Q4, although as Mark suggested, are still seeing some production trends a bit higher than what the market overall is doing in terms of production.

It is not to the scale that we saw in Q3 and Q4. It is a little bit more negative, but not to the extent that we saw last year.

Yes. I would say there is a couple product lines specific in maybe the powertrain that has down - nothing material against our plan.

Okay. The take away is even with those adjustments, it is not a material impact on the volatility - of material impact is not - you will get that typical seasonal balance?

You will for sure the typical seasonal balance. I'm just suggesting that there is still a bit of a drag from a couple of customers who are underperforming what the overall market is doing in production.

It is not to the extent that we saw in Q3 and Q4.

From what you see now, that gets cleaned up in Q1 so Q2 should be normal seasonality and back to business trends of you have been discussing on this call?

For the most part. Certainly for our biggest customers, there is still a key players out there that are looking at a lot lower production this year than next year.

But they are not as significant a player for us.

And I just want to go back to Skyjack for second is to make sure he understood what happened in the fourth quarter. So you actually had seen some pretty good business from them in Q2 and Q3 and then it seemed like it pulled back a little bit in Q4.

Am I interpreting that rate or was there nothing to see there on that point?

I don't think I would agree with that. I was actually pretty happy with Skyjack's performance in the fourth quarter.

They saw sales growth when all of their competitors had ceased decline. I think they perform extremely well.

Yes. Again, keep in mind that the competitors that we are up against - their portfolio already has a telehandler in full bloom.

We are coming out and starting to launch in this market with powerful portfolio now. So we are able to gain in the marketplace our product line.

Just the margin PE [ph] in Q4, adjustments with 9.5%. I guess the sequential drop was just a lower volume in some of the production cuts you were talking about.

So there was an adjustment for FX. Is that what you are referencing?

Yes. 9.5% margin in Q4.

You are running north of 10, maybe 10.5 year to-date. I guess the drop was just lower volumes and production cuts.

Yes, absolutely, also a bit seasonal, right? Q4 is always a little bit weaker.

Then as noted, we had a little bit of softer sales with customers so that impacted a little bit as well. It was nothing that really concerns me.

Okay. In the access business, you mentioned its highest ever backlog, could you maybe quantify in terms of maybe percentage growth over last year how much higher that backlog is?

Just give us a sense.

Over last year, about 20%.

Okay. And how much backlog do you have in the business?

Is it a couple of months nine months

We don't typically disclose that.

Okay. Just on the balance sheet, in your one-time, you raised the dividend but it shouldn't be too much of a drawing capital.

Going for a basis expectations should be paid on debt and then maybe some M& A?

Exactly.

Just one for Dale, on the FX gains, the numbers for the year, I got the numbers for the quarter. Just for the year so I can call for adjusted numbers.

Overall, for the full year, we are around 90 million.

Do have by segments on you?

That was powertrain.

Mark just asked my questions on the powertrain - Linda, in your 2017 guidance, I think you said mid to high signal digit top and bottom line. I think last court was-will digits.

You want to reconcile the change just simply lower auto forecast production volumes?

2015 results were a little stronger than expected so obviously, year-over-year comparison a little bit tougher. I'm actually thrilled with the great level of growth that we are expecting this year.

Markets are flat. That means the only companies that are growing are those that are expecting great market share growth, and that is us.

To be growing in the two-will digits I think it's fantastic in flat market. We are very happy.

Okay. Dale, a question for you.

This is pretty simplistic. There is a line here the last two quarters, equity method, what does this pertain to?

It is to joint ventures we had. One being the Linamar joint venture in North Carolina.

The second one is a joint venture in India that Montupet had, and we acquired with the acquisition.

The majority of that flowing through is coming from?

Both joint ventures are in startup mode.

How should we see this trend going forward just from a modeling perspective?

I would expect both continue to launch in 2017 so I would expect further launch--

To a similar rate we have seen this quarter?

Probably.

Linda, I just wanted to clarify. You are generating a free bit of free cash.

You have got your financial leverage down to around under EBITDA, so what would you prioritize the use of all that free cash going forward than between acquisitions, buybacks come a dividend increases or anything else?

Well as noted continued debt reduction would certainly be a priority, notwithstanding the fact that we are under one time - you today. We like to run a pretty conservative balance sheet.

So we will certainly continue to pay down debt and absolutely invest in growth. Our target, as you know, is consistent, sustainable growth, double-digit growth.

To do that, you need to invest both in terms of organic business and potentially new acquisition opportunities as well.

You know one thing to maybe add, David, is when you walk through the auto show this year, you walk and you see an F1-50 truck. You see an autonomous vehicle.

You see a hydrogen, you see electric vehicle. So all of these companies are investing heavily in these different areas which means the opportunities are occurring for us today is very high.

We see the opportunity right now, right? A lot of opportunities in our current space.

Right. But you are CapEx that you have, the budget that you have for this year, you were a percent to 10%, would you expect to step that up over time?

Because if you don't, I imagine most people model you to be in that range and you are still generating vast amounts of free cash. It has to go to something.

You would have presumably some limit on the downside on your financial leverage. You are not going to start pulling cash on the balance sheet I would think, like net cash or am I wrong on that?

As I say, I think there opportunities out there that are interesting to pursue. Certainly, we will always look at dividends potentially share buyback if we can get the share prices undervalued that that make sense for us.

So that is of course always an option. Acquisition is something that is a lumpy use of cash.

As we saw last year, you are buying a business that gives you a big chunk of growth right away, but it costs at the same time. So as that happens, that uses up cash as well.

Great. To conclude this evening, I would like to leave you as always with three key messages.

First, it's fantastic to deliver another strong quarter of double digit net earnings growth of 20% to reach another record year in both sales and earnings. This is our 22nd consecutive quarter of double digit operating earnings growth and we are very proud of that consistent performance.

Secondly, we're very pleased with the level of cash flow that we are generating which allowed us to reduce the debt load further and bring leverage back under one times EBITDA way ahead of schedule. Finally, we are excited about the new business opportunities we have already secured and are continuing to pursue on a global basis in a variety of markets.

The levels of wins and quoting activity is quite high, we should continue to see great opportunities to build our business going forward. Thanks very much and have a great evening.