Thanks 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, Dale Schneider, Roger Fulton, Mark Stoddart as well as members of our corporate IR, marketing, finance and legal teams. Before I begin, I will draw your attention to the disclaimer currently being broadcast.

I'll start-off with an overview on Linamar’s approach to the COVID-19 crisis that currently is top of mind of course for all of us. At Linamar, we approach dealing with this pandemic as we would any crisis.

The step one, assemble a team with all the right resources to drive decision making. We established our COVID-19 task force in early March.

NASDAQ gathered data, we're constantly gathering the latest in data globally, both broadly around the pandemic and more specifically for Linamar in terms of our own workforce and the impact on our team. Next step, make a plan which you follow up and execute on daily, our plan at Linamar was named Linamar health first, that meant the health of our people of course, but also our health as a company financially.

Our customers health and our community's health. And finally, and most importantly, communication, often in fact to our employees first and foremost, but of course also to our investors and customers.

We've communicated weekly or even more frequently appoints to our employees with the latest information. We have a series of shareholder meetings over the past few weeks to make sure you knew what we knew, and could have confidence in our plans and outlook.

And of course, close connection with customers to understand their needs and help them solve their problems and challenges as they arise as well. Our focus right now is very much on recovery.

First and foremost, to create a work environment where people feel and are as safe or safer coming to work, they are not coming to work. We need to shift from fear to hope which isn't easy to do when there's a lot of fear around.

We need to take some lessons learned from other countries ahead of us on this curve, both in terms of safety work protocol, and what has worked to realize that as well as what we can expect from them on economic and consumer behavior perspective. And we all need to play a role in trying to focus on rebuilding confidence to spur our economic recovery.

Confidence, obviously in our ability to work safely in the economy to weather the storm confidence in our governments to manage the debt incurred to try to mitigate that personal and economic impact and confidence that the lockdown in isolation will end. So let's take a quick look at each of these.

Our safe work protocol is based on five key principles, screening your people before they enter the building to ensure they are healthy and not a risk to others. PPE for them once they're inside to further mitigate the risk and mask [indiscernible] distancing of safety between people once inside at all times with revised seating for meetings or lunch rooms, dividers and common areas are examples of how we can do that.

Cleaning and hygiene are wrapped up and tracing has been established where possible. So for instance, we have assigned seating in our lunch rooms.

So we know exactly who was within what radius of each person in the event of a positive case. We've been running in China for 13 weeks using this protocol and we have had not one single positive case of COVID-19 in that entire time.

These protocols work. We have been back for a week in Europe and we expect to come back in North America next week.

Although some plans of course are already running on light shift here and some have been lightly running throughout. So let's take a look at how the consumer has reacted to this situation.

Now first, China obviously pretty big declines. The first month of lockdowns with a big drop of 80% coming back to about a 42% drop in March and finally a little bit of growth in April.

And notably the last week of April actually showed double-digit growth over the prior year. Now Europe little later than China, meaning we started seeing the impact of vehicle sales a month later in March and more so in April, but as a similar sort of magnitude to what we saw in China.

We're keeping a close eye on May and month of June, as many European countries are contemplating launching vehicle purchasing incentives in June, which should happen bring sales back, but now that the fact that these measures are being discussed but not implemented yet means with certainty May is going to be a very tough month as consumers hold-off on purchases, waiting for incentives to be put in place. So we should be prepared for low vehicle retail sales in May, in my opinion in Europe.

In the U.S., we've seen a much more resilient consumer, with markets dropping less than 50% in March and April despite lockdown starting really only a week or two after Europe in most areas that last week in April actually saw a 56% increase in vehicle registrations and marked the third consecutive week of week over week improvements, which is a very positive sign and may mean a quick ramp back up as customers look to fill rapidly emptying pipelines of vehicles. On the access side, we can see the impact of COVID-19 on forecasts in each region.

The orange bar is the pre COVID market forecasts for each of those regions and the gray bar is the latest market forecasts. All now significant double-digit declines in all three regions.

You can also see the Q1 actual market declines in that blue bar, which are all in the kind of low-to-mid 30% decline range. For agriculture on the right hand side we can see market declines and combined retails for the [indiscernible] months of the year.

And combined retails were down 22% through March in North America, but the gap is narrowed in April to just 16% declines. Notably Canada is down 37% on combined retails in the first quarter compared to the U.S.

being down 18%, so Canada is definitely getting hit part of. Markets are down based on a top harvest due to weather last fall and trade issues mainly between the U.S.

and China. Outlet for that market has not shifted materially from pre COVID estimates but of course we're continuing to keep a close eye on that.

Our financial action plan is comprehensive with cost control and cash conservation of course top of mind. We have moved rapidly to cut costs in a variety of areas, we're fourth adjustments of course cutting or differing any non-mission critical spending, cutting travel in person meetings for the balance of the year, not just this timeframe where we can't do so.

We've also established a dedicated global cost team to come up with additional cost and weight reduction ideas. Cash conservation is also a key focus, we immediately scaled back on capital spending, put our highest level cash payment controls in place, and have established a system and cadence for efficiently adjusting our financial forecasts and cash flow estimates for the next two quarters on a weekly basis to make sure we're staying on top of things.

Looking at the results, you can see that in less than two months, nearly $12 million in cost reductions have been implemented just out of that global cost team. And you can also see here the 25% cut to capital spending in the first quarter.

Our balance sheet is strong, and we're keeping it that way. We came into the year with €1.1 billion in available cash and we have grown at €1.2 billion at the end of the first quarter.

We are carefully stress testing our latest estimates every single week. And we are confident that even in the event of a more extended shutdown and slower ramp up than currently contemplated, we will continue to show 2020 full year results profitable with a positive free cash flow and not reaching any covenants.

This slide gives you a sense for what that stress scenario looks like. We have conservatively estimated earnings to draw to less than half of pre COVID expectations for the year.

And in the stress scenario we've cut that in half again. Of course comes from our outlook is changing constantly and the future right now is unfortunately very hard to predict.

But the key is keeping on top of the changes revising our outlook and taking required actions rapidly. And that is exactly what we will be doing on a weekly basis.

Another key area of focus right now is community work. We have four different ventilator projects undergo right now.

The first one is for Toronto medical, a great innovative Canadian company to make a product, which is actually much more than a ventilator is basically an ICU in a box. You can see the unit pictured here, which is actually made up of more than 1,700 different parts in the billed materials.

Our line is set and ready to roll you can see a picture here to fully assemble these units. And production is starting in another week or so.

I'd like to point out that we affect this product we got involved with supply chain procurement issues, and we tooled up to make these units in about six weeks. In fact, we were ready to produce earlier than that, but have had to wait for the delivery of testing equipment before we can begin production.

We're often asked how easy it would be for Linamar to pivot to make parts and systems for electric vehicles which differ from those used in traditionally powered vehicles. And I think this project is great evidence of just how quickly efficiently and effectively Linamar can pivot and be production ready on something that is literally completely different to the products that we have traditionally made.

Manufacturing is manufacturing and it is something that we are proud to say we are very good at regardless of the product. We are also making components for a variety of other ventilator companies.

O2 Medical is another innovative meeting company with this ventilator product, which is designed to be simple, easy to use and transportable. We are responsible for 43 different components for the O2 units and are currently in production.

For GM [indiscernible], we are making 15 different components and also are currently in production and have been for over a month now. The first completed ventilators was shipped to hospitals by GM on April 17, only about a month after they started the project.

We're also making a part for a ventilator made by Zol who is an associated company to our customer [Atlanta]. Lastly, we are currently tooling up another exciting community support project which is a UV based disinfection unit you can see pictured here to rapidly clean mobile phones and other electronic devices for use in hospitals and other places of business including retail operations.

In another extremely rapid project, we are going for purchase order from our customer clean slate to production in less than four weeks. And we will make up to 3,000 units for them over the next few months.

And finally, we've been involved in a whole variety of other community support initiatives from donations to innovative 3D printed PPE like the maps, you can see here, door closers to stop people from cutting doors, helping our communities in many other ways that they need us to as well. I think it's really fantastic the way that companies and individuals around the world have found ways to collaborate together and solve problems during this pandemic.

Okay with that, let's jump into some of the specifics about the quarter and we'll start-off with sales, earnings and content. Sales for the quarter were $1.55 billion, down 21.5% from last year.

The pandemic of course, was a key driver of our results having cost us $275 million in sales, and $80 million in operating earnings for decremental margins of 29% at the OE level. Adjusting [indiscernible] impact would have net sales would have only declined $150 million or 7.6% on already declining markets such as access and ag, as well as unfavorable exchange rates.

OE would only declined $11.6 million from normalized Q1, 2019 OE levels for decremental margins up 7.7%. And that's takes to you margin improvement, driving out a cost reduction initiatives and higher volumes on launching programs.

So the underlying business is performing much more strongly than it was a year ago. Normalized net earnings as a percentage of sales in Q1 was 4.4%.

On the positive side, our overall normalized EBITDA performance remains strong at 13.8% of sales for the quarter despite the pressures that we felt. In North America content per vehicle for the quarter was $171.06, down a little from last year but up from 2019 full year's levels.

In Europe, content per vehicle for the quarter was 88.68 and in Asia 11.05, both up nicely despite volatile markets. Production levels were down dramatically in each market most significantly, of course in Asia was felt the brunt of the lockdown in Q1.

Global content per vehicle was up 14% over last year, it's great to see that kind of market share growth playing out for us. Remember when volumes picked up as they are expected to do next year, that means growth really accelerates for us.

Commercial and industrial sales were down 37.3% in the quarter due to the lowest Skyjack sales on global markets down into double-digits as I showed you, as well as faster MacDon sales on those stock markets as well. As we saw the Draper header market was down in double-digits over the last year in North America and most heavily in Canada where MacDon has strong market share.

These declines were partially offset by great market share growth for MacDon in Europe and CIS in fact, MacDon sold in Europe 70% of the draper header sold in all of 2019 in just the first quarter of this year, so great acceleration for MacDon in Europe. This has been a key strategy of Macron since we acquired them and it is great to see them delivering on it so strongly.

Rapidly cutting back on CapEx was clearly a key priority in the quarter given the headwinds faced by that pandemic. We cut CapEx at 25% compared to last year and intend to finish the year targeting CapEx down a third from last year.

And another strong quarter of free cash flow we saw another $147 million of cash generated to take our liquidity to $1.2 billion, reduced debt further and bring leverage to 1.57 times. Free cash flow is something Linamar is quite that managing.

We have seen strong free cash flow over the last five years, and we target to see positive free cash flow this year as well. In addition, we are seeing strong levels of free cash flow yield as you can see on this chart.

Our strong balance sheet and liquidity means we have the ability to whether the financial impact of this pandemic over the next couple of quarters in a way that many suppliers simply do not have. This means we will have the ability to take on takeover work and other opportunities as they will arrive and drive even more market share growth to mitigate stock markets and accelerate future growth.

Turning to our market outlook. We are seeing down markets across the Board this year, which shouldn't be a surprise.

Industry experts are predicting steeply declining light vehicle volumes globally this year. The latest estimates are for $12.2 million, $15.9 million and $37.5 million units in North America, Europe and Asia respectively.

As we expected that each market will see strong double-digit recovery in 2021. On highly medium heavy truck volume was also expected to be down significantly this year with growth in most regions next year.

Turning to the access market, the industry is expecting significant declines while in the double-digit as we saw for the access market globally this year, driving out of the COVID-19 pandemic, that is going that is adding significant pressure to an already thought year in terms of demand. Next year shouldn't see demand to steady out, although it is difficult to predict at this moment.

Turning to the agricultural market, the industry expectation is for a declining combined draper head of market in the double-digits this year in North America, thanks to that [indiscernible] out last year and this year a political backlash issues I described. Europe and CIS are also expected to decline this year.

But Australia may see some improvement and South America is looking to stay fairly flat. The ag market seems to have not been adversely impacted by the current pandemic.

Our market expectations are basically unchanged from our last update. Linamar continues to build market share in international markets most notably in Europe as I described, to partially offset market declines.

But nevertheless, we will see sales down in double-digits for 2020. As noted almost all of these markets bounce back in 2021.

The decline in light vehicle production from peak to trough at this time represents a drop of about $19.6 million vehicles globally. This is higher than the drop back in 2009.

However, at that time, we could not see the drop in Asia, that we have this time around given the global nature of the pandemic. Also different is the fact that for 10 long years heading into 2009, production levels in North America had declined year after year after year.

That has not been treated for the last 10 years where we saw year-over-year increases right through 2017. That means that the industry went into this downturn a lot healthier than they did last time, which is a real positive 2020 is expected to be the trough for global production levels with increases across the Board starting next year.

Q2 will of course be the low point in production. You can see on this chart the drops to both Q1 and Q2 production levels compared to pre COVID forecasts, with the big hit in Q1 being Asia of course, and in Q2 ahead expected to all three regions.

This slide also illustrates where volumes are coming out globally for both the 2020 and 2021, which in both cases is again primarily Asia, but of course meaningful hits to North America and Europe as well. In terms of patterns of correction in North America, this does now set a fairly standard level of reduction, which is good news.

Although COVID-19 did accelerate this change painfully for us, it does mean we can now look forward to volumes starting to build again. Turning to an update on growth and outlook, you'll be pleased to know that new business plans have knocked round to a complete halt.

We did see some solid business wins in the quarter I'm going to highlight a couple of them for you in a moment. Electrified vehicles continue to provide great opportunities for us you can see a build in both our global content for vehicle for both battery electric vehicles and hybrids.

As a result of recent wins. The lines of internal combustion battery electric vehicle and hybrid global content for vehicle are converging, which of course is our goal.

In fact, hybrid vehicle content per vehicle this year is already where we were in internal combustion engine vehicles only five years ago, which is great to see. Our addressable market across a range of vehicle propulsion types continue to look excellent, with our total addressable market for us today around $100 billion, growing to $300 billion in the future and increase of nearly three times.

Our launch book is solid and expected to peak at more than $4.1 billion in sales. We did shift more than $85 million of programs from launch production last quarter.

Programs will continue to launch and replace existing although some delays and ramp ups have been announced. This is still an area that is shifting and we will have a better update for you on the level of business launching and leaving this year in the coming weeks.

In addition, as noted, we're looking at significant declines at Skyjack this year with performance setting up next year. MacDon will see double-digit declines to sales this year, but we do expect to see sales picking up next year.

Obviously, it's difficult at this time to be very specific about what this year and next year will look like. What we can say is we expect significant double-digit declines in both sales and earnings this year, so do expect to be profitable overall and in both segments.

2021 should be as growing on rallying market was of course better margin. We expect to maintain leverage levels well under 2.5 times for the year and improve significantly from such in 2021.

And we expect to generate positive free cash flow both years. Looking specifically at Q2, the single -- biggest impact will be plans and customer shutdown, and the accompanying revenue declines associated with the COVID-19 pandemic.

Impacts from the COVID-19 outbreak are currently not fully understood or determinable in terms of their impact on segments at this point, but what is clear is after four to six weeks of complete plant shut down globally outside of China in the quarter and a slow ramp back up to 3 shifts, Q2 will be a very challenging quarter financially expect a significant loss likely higher than the profit of Q1 for a negative first half. I'll finish up on a more positive note highlighting a couple of our more interesting wins this quarter, which were notable for electrified vehicles.

First, we picked up a package of [indiscernible] components for a battery electric vehicle in the quarter worse in aggregate, nearly $25 million in annual sales. This job is for a new entrant into the battery electric vehicle space headquartered in the U.S.

with a great and integrated vehicle designing concept. We are excited to expand our portfolio of battery electric vehicle customers.

Secondly, we were awarded and assembled battery tray again for a battery electric vehicle this time for a European based OEM. This is a new product to Linamar focused exclusively on battery electric vehicles.

The intricate passageways for cooling in these housings make the design perfectly suited for Linamar’s light metal casting expertise in thin walled highly complex coring. We were excited by this one which we have been working on for some time.

With that, let me turn it over to our CFO Dale Schneider who lead us through a more in depth financial review. Dale?

Thank you, Linda and good afternoon everyone. As Linda noted Q1 was significantly impacted by COVID-19 in terms of sales and earnings.

Despite these impacts, it was a great quarter for cash generation as we did generate $147.1 million of free cash flow in the quarter, which represents an increase of over 570% from last year. Additionally, we're able to increase the amount of liquidity that is available to Linamar to $1.2 billion compared to December 2019.

For the quarter sales were $1.55 billion down $424.7 million from $1.97 billion in Q1, 2019. Earnings were normalized for FX losses related to the revaluation of the balance sheet and any unusual items such as those in Q1, 2019.

Normalized operating earnings for the quarter were $103.5 million this compares to $197.7 million in Q1, 2019, a decrease of $94.2 million or 47.6%. Normalized net earnings decreased $71.5 million or 51.3% in the quarter to $67.9 million.

Fully diluted normalized EPS decreased by $1.07 or 50.7% to $1.04. Included in earnings for the quarter was a foreign exchange gain of $14.1 million, which was a result of a $14.4 million gain related to the revaluation or operating balances and a $300,000 loss due to the revaluation of our financing expenses.

The FX net, FX gain in the quarter represented $0.16 to EPS. From our business segment perspective, Q1 -- the Q1 FX gain due to the revaluation of operating balances of $14.4 million was a result of a $11.5 million gain in industrial and the $2.9 million gain in transportation.

Further looking at the segment's, industrial sales decreased by 35.7% or $166.1 million to $299 million in the quarter. The sales decreased for the quarter was mainly due to the sales declines associated with COVID-19 pandemic, reduced access equipment volumes for certain key customers that were impacted greater than the general market declines.

And finally, the expected agricultural sales declines due to the ongoing issues in the market such as the poor crop conditions, statement, commodity prices and ongoing trade dispute. Normalized industrial operating earnings in the quarter decreased $46.5 million or 59.7% over last year.

The primary drivers of the industrial operating results were impacted by the lower volumes as I just discussed, which were lessened by the cost savings initiatives that were a key focus in the quarter. Turning to transportation sales decreased by $258.6 million over Q1 last year to $1.25 billion.

The sales decreased in the first quarter was driven by the impact of the COVID-19 and the result in customer shutdowns encouraging the quarter. Additionally, we had an unfavorable FX impact as the changes since last year.

Q1 normalized operating earnings for transportation were lower by $47.7 million or 39.8% over last year. In the quarter transportation earnings were primarily impacted by COVID-19 and partially offset by the targeted cost savings that were achieved.

Returning to the overall Linamar results, the company's gross margin was $200.5 million, a decrease of $103.4 million, primarily due to the volume decreases in both segments as a result of the COVID-19 pandemic offset by -- partially offset by the targeted cost savings. Cost goods sold amortization expense for the first quarter was $108.7 million COGS amortized percent of sales did increase the 7%.

Due to amortization from launching programs and the significant decline in sales revenue. Selling, General and Administration costs decreased in the quarter to $97.5 million from $110.2 million last year.

The decrease is mainly due to the cost reductions to help offset the COVID-19 impact core sales and earnings. Financing expenses decreased by $4.8 million since last year as a result of the impact of the lower debt levels from last year and this year in Q1 and also the underlying market interest rates are lower.

The consolidated effective interest rate for Q1 declined to 2.5% from 2.9% last year. Effective tax rate for first quarter increased to 24.6% compared to last year, which was mainly driven by the impact of benefiting tax losses in the U.S.

at a lower U.S. tax rate.

We are expecting the 2020 full year effective tax rate to be in the midpoint of a range of 23% to 25%. Now our cash position was $413.2 million on March 31, a decrease of $72.3 million compared to March of last year.

The first quarter generated $232.6 million in cash from operating activities, which is used primarily to fund CapEx and debt repayments. This also result in a free cash flow generation of $147.1 million in the quarter.

Net debt to EBITDA increased to 1.57 times in the quarter as a result of the strong cash generation in addition to the impact of FX rates, as a result of COVID-19 had a significant impact on our on the leverage for the quarter. Net debt to EBITDA on a constant currency basis to rates as of December 31, actually declined to 1.48% times.

Our goal to have net debt to EBITDA to be under 2.5 times by the end of 2020 based on our current estimates, we are expecting to be well under 2.5 times by the end of the year subject to any COVID-19 impacts currently may not be known or fully understood. The amount of available credit on a credit facilities was $739.3 million at the end of the quarter, our available liquidity at the end of Q1 was approximately $1.2 billion.

And as a result, we believe we have sufficient liquidity to satisfy our financial obligations through 2020. To recap, sales and earnings for the quarter was the story of COVID-19 with a dramatic impact of the pandemic is having the critical story for the quarter is one-off cash and liquidity.

No matter remarkable past generation quarter and has generated $147.1 million in free cash flow in the quarter and it increased our liquidity to $1.2 billion. That concludes my commentary, and I’d now like to open it up for questions.

Hi, good afternoon. Maybe I just want to start -- with the sort of the restart of your production.

If you just give us sort of an update or -- Linda you did mention it earlier in the call, but I'm just curious that I guess by the end of next week, is it sort of the expectation is that sort of all facilities globally are up and running give or take?

Well, I mean, as I noted, we had – our [indiscernible] operations have been running back for 13 weeks. So they're all going at 100%.

Europe started coming back last week. So you know, it's not a zero to 100 kind of return, as you might expect.

So they're coming back on one shift and slowly building their way back up to three shifts. In North America next week, some plants are coming -- some customers are coming back on one shift, some on two shifts.

So it kind of depends customer-to-customer, but again, plants starting back next week, but not at 100%, right. So it'll take several weeks to pickup there.

Yes, maybe some other information. It's sort of customer-by-customer based and inventory based as well.

So as Linda said, like the shift patterns are going to be a little bit different at each plant, just depending on what the poll is coming in to the EDI systems, but certainly, I think actively all plants will be sort of up and going next week in Canada, certainly all plants in Europe are up and going just at different rates. And what we're doing is every Tuesday we're monitoring every single plant, every single program, of when they're coming back per shift and things like that.

And the other thing that's been out there, which was our customers going to change up their tat times and for some of these things. And the feedback, we've got is, no, they're not going to slowdown, they've got to come back, run a shift at sort of the rate that they had, because they can't really change that up because you'd have to coordinate the [indiscernible] plant, the stamping plant, and you'd have to do all that.

So really, when they go back to a shift, they're going to go back to a full shift two shift to full shift. So we'll be following that protocol.

Right. Okay, and that's -- that's very helpful.

Yes, okay. Maybe Linda you mentioned earlier as well just look decremental maybe just by business segment transportation versus the industrial, sort of what kind of decremental you just to sort of help some modeling purposes, sort of what you're sort of built in or sort of what you could expect.

You know, what we could expect for decrementals?

Yes, I mean, we have generally suggested – just – a blended numbers. So we've never really give any decremental margins different for industrial versus the transportation, I mean, obviously, the industrial side is more profitable at the OE level.

So they're going to be a little higher in the range. So, I mean, historically, we've talked about kind of 20% to 25% at the net level.

So if you, take that up to the OE level, and you assume, let's say 25% for tax and a bit of interest and that takes you to kind of 27% to 33%. So that's a good range to use for both segments.

Okay, so 27% to 33% on EBIT, combines?

Yes.

Yes. Maybe just one questions the [indiscernible] dividend is -- again, I can appreciate sort of the thoughts around conserving cash, especially when you're just cost reduction mode or -- but I mean, again, it's, I guess the cut would save you roughly $15 million per year.

So I guess I'm just curious. This is sort of maybe why so that you made that decision.

Again, I can appreciate it. I guess it's -- I guess the answer is probably fairly simple, but it just have your thoughts on that.

Thanks.

Yes, absolutely. Mark, we did grapple with the decision about the dividends.

Because as you correctly point out, it's not a significant number, so it's not moving the dial very much. You know, we do feel we're in a strong position within even longer [indiscernible].

And we're currently expecting without impacting our covenants. But we also recognize there’s a lot of uncertainty around us.

You know, sure, we could [indiscernible] the dividend where it was, but I had to say frankly, it just didn't feel right. When we have thousands of people laid-off and not working.

We're all kind of sacrificing something and so we decided it was the appropriate thing to make a cut. We were careful not to cut it completely.

But, I believe that taking it to half is prudent action and appropriate in this environment.

Perfect. Thank you.

Dale, when you talked about the $14.1 million foreign exchange gain, where is that below the operating income line? Where do you take that?

It split, so there's a portion that goes to operating as I talked about, and the other the small -- there's only a $300,000 loss that hit the financing --

Okay, so when you give kind of these operating income, segmented operating income numbers, which are adjusted for foreign exchange movements, the 72.14 power train drive line and the $31.4 million for industrial those are kind of the adjusted operating incomes, like that's different adjustments than this $14 million, this $14 million is something different, is it not?

No, that's what it's adjusting for. In this case, we only adjust for that gain or loss and we -- or if we had any unusual items, which we did in Q1 this year.

So the whole normalizing impact is that number.

So the $103.5 million of operating income that's taking out this $14.1 million foreign exchange gain is that right?

Okay, got it. On the CapEx, I believe you said you're taking down your CapEx, like a third.

I think it's a third year-over-year. Can you talk about how you do that?

Because -- that because programs are deferred, because if the programs are moving forward, you need to have the capital in place. So how do you take your capital down by that magnitude?

Yes, I mean, Peter, part of it is reallocating capital where we can, so as you know, we utilize flexible equipment that if volumes are down, we can reallocate for a temporary time period and that gives us a little bit of breathing room to push out receipts of new capital equipment for a few months or six months in order to be able to push out the capital costs.

Okay. And you gave some interesting numbers, you said that pandemic had a negative impact of $275 million on sales and $80 million on operating income for -- I guess a decremental margin of 29%.

Is that is that correct? Did I hear that correctly?

Yes.

Yes. So when you calculate that, is that, like after you've sent like that $80 million change in operating income?

Is that after you've sent all the labor home and you're not incurring the labor costs?

Sorry, can you say that last piece again?

Well, I'm just trying to figure out is that when you calculate that loss of $80 million of operating income that you would have otherwise gained? Like, is that with the employees in the plant or do you still, like lose $80 million, even after you send the employees home, and you're no longer paying them.

Yes, I mean, that's the resultant impact to earning. So, obviously we're not including in that figure wages that we're not paying.

I mean, if we've got people laid-off, we're not paying them.

Right.

That's the contribution impacts. I was looking at the revenue less variable costs.

Yes.

And so if you're talking about people on the….

On the floor.

Product lines, they would be considered variable because requirements that goes with volume.

Right. And but like in Canada, the people that are on layoff, do they fall into any government programs or do they go on unemployment insurance?

As we go on to a way subsidy program or CERT with their -- at their choice. So we basically when this came to the subsidy program, we basically laid-out to all of our employees.

What would did impact be if you went on CERT? What's the impact if you go on to the wage subsidy?

And what's the impact If you're on EI, so every employee would get that data Peter and understand the impact to them, and then they would make their decision which program they would choose.

Yes. So I mean, it basically depends on what somebody is earning per hour at -- there's a break point at which the Serb program is more beneficial to them.

So they may decide to be on Serb. And if -- but a over certain wage level, it makes more concern to be on the subsidy program.

Yes. Okay.

And then finally, just on working capital, you made good progress in terms of generating cash by reducing your accounts receivable and inventory balance. The accounts like the -- is this reflect lower volumes or does it also reflect the program you've been involved in where you realize on your receivables from a third-party.

This is -- there is a bit of financing in there. But to be honest, the amount of financing is going down as the revenue goes down because you have [indiscernible] finance.

So really the decrease is volume related. But also the team's being really driven on making sure that we're collecting every penny we can and minimizing anything that's overdue and watching very carefully that they're not buying anything that's going to go any inventory that we don't absolutely need.

Yes, I think from the inventory standpoint, we have to sort of hedge what we're doing Peter, right. Like we have to plan out what the customers are doing.

So right now we're saying hey, if you don't have clear cut understanding of the production level, you got to hold-off on bringing inventory in. So we've got basically weekly we're watching cash every week and really every day.

Right. Okay.

That's all I have. Thank you so much.

Thank you.

Hi, good evening, and thanks for taking my question here, but maybe just on the net working capital, should I assume that that turns -- it becomes a bit of a headwind to free cash flow as you ramp up production. So that Q1, the positive net working capital kind of a high watermark for the quarter or do some of the initiatives that Peter was mentioning that you're taking to improve working capital efficiency provide at least some buffer as you start wrapping up your plants again?

Well, generally speaking normal, you would find that we would build non-cash working capital in Q1 and further into Q2. As those are our peak selling quarters, typically.

And then in Q3 and Q4 as you have summer shutdowns Thanks Giving weekends in the U.S. and Christmas break, those two quarters tend to be the lighter ones.

Obviously, in this year, Q2, given the shutdowns is going to be the lightest quarter as a result, because you're not going to have as much AR. So for sure as we start to ramp up volumes you're going to see AR come back and then that'll be a bit of a drag.

But we will be focused on our inventory levels just to make sure that we minimize any investment we have to do to restart the company.

Would your expectation be for the year that it still ends up being an absolute tailwind or was that too difficult to tell at this point in time?

I'd say it's a little early to predict that at this time.

Okay. And just on your market outlook.

At least for 2021, I noticed that there wasn't one for agriculture. And, I get the long-term thesis around the replacement cycle and the need to replenish and we've been hit with a number of -- a lot of unexpected events that is trade friction and obviously COVID-19 here.

I'm just wondering, like, how much more buffer do you have when you look at the goodwill that sits on your books from MacDon like if you have -- if you have continued challenges in 2020 and 2021. Like, there's a way to frame a potential write down here or -- are you pretty confident that the earnings are going to bounce back fast enough to take that hit?

Yes, we actually in the quarter reassessed our goodwill test that we did in Q4, so exactly that issue, and you'll see disclosures in the MD&A around that. And you have to keep in mind that a goodwill test is a long-term test.

It's not a one year or two year or three year test. So if you look at it from a long-term evaluation on the way the impairment tests are done, there's no permanent impairment to any of our markets.

It is a temporary issue. You are -- all markets as Linda already talked about are showing significant growth for next year and we expect them to normalize over the long-term.

So we are not currently anticipating any impairments.

That's helpful. And then just last one for me.

I applaud Linamar for a lot of the initiatives that --it's taken here to help the -- with the [indiscernible] manufacturer of essential medical equipment, strategically I -- you're looking to also get into in the medical field, and you made some investments there, just wondering what's happened over the past, I guess two to three months here has that opened up new opportunities that might not have been obvious pre COVID-19 the strategy to get into this segment accelerate now because of COVID-19. And some of the experiences and some of the products you are producing today opens those windows, just wondering how you think about that, opportunity longer term?

Yes. Good question, Kevin.

I think that we have learned an enormous amount about the medical device market over the last couple of months, which has been fantastic. I mean, as you know, and have said it is an area we are already looking to expand into.

And although ventilators weren't on the list and probably aren't going to be on the list, what is done is just bring up more insight into how as the markets work into some of the players that are there, we've made connections with players in the space that I think can be very helpful. And it's just given us a much better understanding of the overall market which is absolutely happy to inform our strategies into a market that we were already looking to expand into and given us some ideas around strategies that we can employ.

I think one other thing that we've also learned is that we can really bring our manufacturing efficiency to this market. It's very interesting to customers that we have O2 [indiscernible] excellent companies to work with and we -- I think we can really enhance their efficiencies and that type of thing in this marketplace.

And that's something that we've seen pretty clearly that our expertise and who would have known about this what Linda showed this clean slate product an ultraviolet system that put your cell phone in and 20 seconds later, you've got 93% of the bacteria that comes off, right? Who imagined this?

And to me, that market could be massive. And you think about every plant every office, every airport, every store might have to have these right.

I mean, we don't know. But so there's been a lot of things that have opened up and I think there'll be more that are coming.

Yes. I agree, I think that [indiscernible] this whole area is one that people are going to be taking a very close look at what do we need in terms of this these types of products?

I and it's exciting that we're, at the forefront of it.

That's super helpful and I have a three-year-old is always touching my phone, so I think I'll be meeting one of those, thank you very much. Have a great evening.

Hi, good evening. I just have one follow up housekeeping question, if I can.

Just, if you could just explain to me the decremental margin that you’ve pulled out the 29% the $80 million on the $275 million. Can you just tie together for me explain to me the difference between the decremental margin reported and that decremental margin that you pulled out in the slide?

I believe that we called out both. So I -- the $275 million and the $80 million are the impact of COVID in the quarter.

So what I did then was strip out the COVID impact from the first quarter of last year and say, okay, if we didn't have COVID, what would our results would be so basically, I added that back and when I did so you'll see that sales and earnings were still down, but dramatically less obviously. So they’ve would have been down $150 million and around $11 million for a decremental margin in that case of less than 8%.

And I wanted to point that out, because to me, it is illustrated as a fact that our underlying performance is much stronger this year than it was last year. So, the -- there was a positive improvement to margins that offset where decremental margin would normally advance.

And normally, you would have $150 million decline and that would hit you at around that let's say 30% or $50 million, so we only came down to $11 million. So the difference is the improvement on the cost side that has come from ramping projects on the [indiscernible] side as well as cost reductions that we've implemented.

I appreciate the clarification.

No problem.

Okay, sounds good. Before I conclude with my final message, I'd like to announce some changes as it relates to our annual general meeting.

Our AGM is scheduled for Wednesday, May 27, at 10 a.m. And clearly we're unable to hold a public gathering due to COVID-19.

So an in-person meeting is not possible this year. We will instead host our AGM virtually online.

We noted this as a possible contingency in our infrastructure when we sent it out, and are now acting on it. So I just wanted to draw that to your attention.

For more information, you can refer to the COVID-19 update section of our website for some more details on the virtual AGM format, which is at linamar.com/Coronavirus/shareholders. So be sure to do that.

So to conclude this evening, I'd like to leave you with three key messages. First, we are thrilled to have again driven a strong performance in a quarter on free cash flow of $147 million to drive liquidity up to $1.2 billion, which is obviously key to thriving in this challenging time.

Number 2, we are really proud of the work of our global team to rapidly mobilize to build ventilators and parts thereof, as well as launching a [marry] of other initiatives to support our communities. And finally, Linamar is a strong, responsive agile team with a culture perfectly suited to handle crisis.

We are laser focused on cost reduction, cash generation, finding new business opportunities and supporting our global team and communities. Tough times don't last tough team too, and we're one tough team.

Thanks, everybody and have a great evening.