Thank you. Good afternoon, everyone.

And welcome to our third quarter conference call. Joining me this afternoon on the call are members of our executive team, Jim Jarrell, Dale Schneider, Roger Fulton; Mark Stoddart, Kevin Hallahan; and members of our corporate IR, marketing, finance and legal team .

Before I begin, I will draw your attention to the disclaimer that is currently being broadcast. Okay, why don't we start off with an update on the COVID-19 crisis and Linamar's reaction to such?

Now as you know there’s a 4-step approach to dealing with COVID-19. We assembled the team.

We gathered data. We made a plan.

And we executed on that plan and we communicated broadly. And we continue to make excellent progress on each one of these steps.

I focus now is very much on the next phase of this crisis, restarting, rejuvenating and recovering. First and foremost, we are determined to create a work environment where people feel and are as safe or safer coming to work and not coming to work.

We launched the testing pilot in August to regularly test employees at two sites and go out to prove we're not seeing transmission in the plants of any asymptomatic positive people or any positive cases whatsoever. We plan to continue with the study for a few more months.

More than 94% of our employees are now actively back at work, which is great to see. Of those 97% are physically back at the office or plant and have been since May.

Safety protocols in both office and the plants are protecting our people. And we are not seeing transmission outside of the virus.

We're working with the balance of our people on appropriate return to work plans that makes sense to them and when the time is right. We are actively building market share in our businesses, particularly where there may be some weakness in the competitor base.

And of course, we continue to be very cautious around cost reduction and cash management. Although many of our cost reductions are only temporary measures, we do believe some can be permanent changes in how we manage these costs.

Our safe work protocol is based on five key principles; screening; PPE that includes masks and/or face shields; distancing; increased cleaning and hygiene; and contact tracing. We are regularly surveying our employees as to how safe they feel at work and the adequacy of the safe work protocols and are continuing to see consistently strong scores for both metrics since we started doing so.

If there's a concern in any one plant or region in terms of how people are feeling, we can quickly focus in on that through this data that we're gathering which allows us to drill down by region and by plant. We are making excellent progress on the financial aspects of our Linamar Health First action plan as is evidenced by our great results this quarter.

On the P&L side, you can see we have implemented strong levels of cost reduction. And as noted, continued to be very cautious around spending.

We have an excellent system we’ve put in place to accurately forecast our next five quarters on a biweekly basis, which is now part of rhythm of we how we manage. From a balance sheet perspective, we continue to operate with the highest levels of cash payment control.

Capital spending was cut by more than 50% in the quarter compared to last year. And we continue to stress test our forecast to evaluate impact on our cash and covenants.

Our stress test continues to show we are well in control in terms of still generating profit, free cash flow and staying well away from debt covenant levels this year and next. In an attempt to further risk mitigate our balance sheet given uncertainties in the current environment, we early negotiated terms for refinancing a piece of debt that was due in January.

The US$435 million principal amount owing under the facility B of our bank credit agreement matures in mid-January of 2021. We have identified a preferred option for replacing that financing, circled preliminary terms with our lenders were set, and are confident in completing the paper close in the next few weeks.

Another key area of focus, of course, has been community support. I think that what we've done in terms of rapidly retooling lines for ventilator components and full assembly production of ventilators is a great example of Linamar’s innovation, responsiveness and flexibility.

We were in part production on several orders within two weeks of the first phone call. We were assembly-ready to build the UV based disinfection units CleanSlate slate in four weeks.

And we were assembly-ready to build the ICU in a box integrated ventilator and life support system for Thornhill comprised by the way of 1,700 different components in only six weeks. How did we do that?

We were able to do it because we are a remarkably agile, flexible company, both in our management style, our engineering, and supply chain management capabilities and in our actual equipment, which can be easily and rapidly retooled to new programs. We are technically incredibly deep.

Our team honestly is fantastic and adaptable, and I'm so proud of them and the excellent job that they did. Now, I’m going to report a little -- as we are often challenged about how Linamar will handle a changing landscape of design, technology and skills that we focus, electrified vehicles as one example, Linamar is an advanced manufacturing company through and through.

We can design and manufacture products for all kinds of industries as we did and we will continue to do so long into the future regardless of where technologies take us. We see technology changes only one thing, opportunities.

And we will as we always have take these opportunities down and continue to prosper. We’re at various stages of completion for these products.

For the component work for GM, ZOLL and O-Two we compete. For Thornhill we have built nearly 300 units, and we'll have a full order of more than 1,100 complete within a few months.

There is some potential for additional volumes on this product as well. Similarly, we have built nearly 200 units for CleanSlate on the UV disinfectant product and will continue to ramp up production as we get into the fall.

There's also some potential for additional volume on this product as well. Okay.

With that, let's jump into some of the specifics about the quarter. And we'll start off as usual with sales, earnings and content.

Sales for the quarter were $1.64 billion down 5.9% from last year. Our results have bounced back nicely from Q2 lows, although a spot that’s still feeling a drag from the pandemic.

Launches have resumed ramping up and MacDon had strong quarter as well. Skyjack is definitely still feeling the pinch of the pandemic but we did see a little better market performance in the quarter compared to Q2.

In terms of earnings, normalized net earnings are up 46% to $140.5 million driven by the strong sales performance, improved margins on launches, cost reductions implemented and government support programs. Earnings are better than expected last quarter, thanks to a stronger than expected performance in Asia and also at MacDon and higher government support than had been forecast.

In North America content per vehicle for the quarter was $182.76, up 9.6% over last year with customers we ahead in waiting list also seeing the biggest market share gains. Vehicle production levels were down 1% compared to last year, meaning automotive sales in North America grew 8.4%.

In Europe, content per vehicle dropped to $77.72 and the market is down significantly, thanks to continued impact of the pandemic. We're seeing volumes pick up as of Q4 but we do know an element of risk given the strength of the second wave of the pandemic in Europe.

In Asia content per vehicle was also up significantly at $12.74, up 25.5% over last year. Again, due to our key customers seeing strong market share gains in certain products in a market that was actually down 1.8%.

This gave a 23% boost to our sales in the region. Global content per vehicle was also up driven mainly by the strong growth in North America.

Commercial and industrial sales were down 20% in the quarter due to lower Skyjack sales on North American and European markets down 30% to 40%, somewhat improved from last quarter but still a very big decline. On the cost side, MacDon saw sales growth over last year with the draper header market up double-digits in Canada and the U.S.

in the quarter, recovering much of the ground lost after a tough first half. MacDon also saw market share gains again in Europe and CIS, which also helped to boost results.

Carefully managing CapEx continues to be a key theme for us in these uncertain times. We were down 53% from last year, although up of course from the lows of Q2 as we hit more solid ground.

The year will end up with CapEx down at least 40% from last year. But in 2021, we will be back to a more normal range of spending as a percent of sales.

Linamar’s utilization of flexible programmable equipment is the key factor in allowing us flexibility in times of market softness to continue to tool up new business without requiring significant CapEx. This is a massive advantage Linamar has in comparison with competitors, who may invest in more dedicated equipment which although cheaper and often requiring less labor is not easy to reallocate new programs or scale the line to match actual capacity needs.

I have to say we had an absolutely outstanding quarter in terms of free cash flow with $445 million generated to further reduce net debt level. Net debt now sits at $877 million, which is down over $1 billion from a year ago despite the pressures of the pandemic.

Leverage likewise improved dramatically to 1.1 times last 12 months EBITDA. As noticed we have circled terms to refinance debt due in January and have no other debt due until 2023.

So our balance sheet is in excellent shape. Free cash flow is something Linamar is quite good at managing and juggling.

We have seen strong free cash flow over the last five years. And clearly expect to see strong positive free cash flow this year as well, given the performance through the first three quarters, which has been more than double last year at this time.

Free cash flow yield sits at 44% which I think is pretty impressive. We have $1.3 billion of liquidity available to us which is also outstanding.

Out strong balance sheet and liquidity mean we have the ability to take on takeover work or acquisitions as they arrive in an opportunistic market and drive even more growth. In addition, our strong cash position has allowed us to double the dividend to $0.12 per share for Q3.

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

Industry experts are predicting steeply declining light vehicle volumes globally this year to 30 million, 16.4 million and 39.7 million vehicles in North America, Europe and Asia respectively. It's expected that each market will see a strong recovery in 2021 at 22.3%, 15.9% and 9.2% respectively.

On-highway medium heavy truck volumes are predicted to be down significantly in North America and Europe this year but solid growth next year. Asia will see small declines this year here and bigger declines next year.

Ag and access markets are similarly down this year in most regions but expected to grow next year. Looking at a little more detail on the auto side, you can see an increase for 2021 in every region globally after a very tough 2020.

Not surprising -- not surprisingly 2020 is expected to be the trough for global production levels now at now 73 million, up a little by the way from expectations last quarter. Production recovery of course derived from consumer demand.

You can see here how the consumers have bounced back in the different regions, three different curves in each, in fact, China is sharp and deep and now back up well over last year consistently every month. Europe curve is deep but broad with low levels of demand lingering for much longer, although finally back up over prior year too over the last three months.

And the U.S. is shallow but broad and notably back up over prior year for the last two months.

So not nearly as big a drop in North America, which is great to see and a big reason why production is pulling so strongly here. Inventory levels dropped quite low after two months of shutdown and shallower drop in demand, particularly for popular pickup trucks.

October had a highest monthly sales volume of 1.35 million units seen since the start of the pandemic. It's great to see all three regions globally profitable again in comparison to prior year which bodes well for continued strength in production.

You can see here the changes to both Q3 and Q4 from what was predicted last quarter in global light vehicle production. I think it is highly notable that for the first time in literally two years, we are seeing the forecast improving versus prior quarter forecast.

Growth in both Q3 and Q4 drove mainly out of Asia but Europe is notably running hotter for Q4 as well. Similarly, we are also seeing a positive change in comparison to prior quarter estimates for full year production levels, now expected to be 3.5 million units higher this year, and 4 million units higher next year with gains in every region.

In terms of patterns of correction in North America, this correction fits a standard level of reduction seen historically which is good news. Although COVID-19 did accelerate, this changed meaningfully for us.

It does mean we can now look forward to volume starting to build again, which is absolutely what we are seeing in the forecast. Looking at the access market in more detail, industry experts expect significant declines well in the double-digits for the access market globally this year, driven by the COVID-19 pandemic impact, adding significant pressure to an already soft year in terms of demand.

We are finally seeing some positive market indicators which suggest next year should see demand improve in double-digits in North America and Europe in particular. Equipment utilization levels are increasing with levels of 95% and 98% of last year, seen consistently over the last couple of months.

Q3 was down less than half in North America and Europe, and another positive sign. In the agricultural business the industry expectation is for a moderately lower draper header market this year in Canada, thanks to a tough harvest last year as well as tariffs and political backlash hitting farmers and therefore dampening demand, particularly in soybean and canola.

The combined draper header market in the U.S. will be up moderately for the year offsetting the drop in Canada to result in North America being recently flat.

The European market is still expected to decline this year. Australia is also expected to continue to decline but South America and CIS show more positive signs to more than offset the decline in Australia for an overall positive outlook for rest of world.

After a rough first half across North American market, most notably in Canada where MacDon market share is strong, we're seeing a positive trend in the back half which is helping to offset earlier declines. Combine retails in both Canada and U.S.

were both up in double-digits in Q3 over prior year. MacDon continues to grow market share in international markets, most notably in Europe to offset market declines, but nevertheless we will see sales down in 2020 as a whole with market improvements in the back half not enough to offset first half in Canada.

We are seeing positive signs indicating market growth for 2021 here as well, with the fall order intake running well above last year at that time. Turning to an update on growth and outlook, you'll be pleased to know that we had another solid quarter in new business wins.

I'll highlight a few of our more strategic wins in a moment. Electrified vehicles continue to provide great opportunities for us.

You can see a steady build in our global content per vehicle for battery electric vehicles as a result of recent wins. The lines of internal combustion engine and battery electric vehicle global content per vehicle are converging, which of course is the goal.

Our content per vehicle in electric vehicle is now projected to surpass that of hybrids within a couple of years as we see more and more of that win. And also importantly, our global content per vehicle for BEV is only three years out, is equivalent to our global content per vehicle for internal combustion engine vehicles three years ago which is fantastic news.

Our addressable market across a range of vehicle propulsion types continues to look excellent, with our total addressable market for us today around $80 billion, growing more than $300 billion in the future, an increase of more than 3 times. As we can see, the market potential for each type of vehicle, internal combustion, hybrid, battery electric, fuel cell electric are all starting even up.

This is largely driving some of the higher potential content per vehicle we now have in the battery electric, fuel cell electric, and hybrid vehicles. Thanks to continued product development efforts such as assembled battery trays, or hydrogen fuel tanks and other products.

Our potential content for all vehicles is now equivalent. In fact, just exceeding the current potential on the internal combustion engine vehicles at roughly $3,200 per vehicle, which is great to see.

It's also critically important to point out that the type of equipment utilized in the machine parts for electrified vehicles is literally identical to the equipment used in machine parts for internal combustion engine vehicles. Electric vehicles use gears, shafts, structural parts and a variety of housing, just like internal combustion engine vehicle.

A gear grinder or shaper used to make a gear for an internal combustion engine vehicle is the very same equipment we’d used to make a gear for an electric vehicle. I’d highlight this point, it means we will not have significant levels of stranded assets to deal with as the world transitions into electric vehicles.

Our launch book is solid and expected to peak at more than $4.1 billion in sales at this time. We saw a shift of about $140 million in programs moving from launch into production last quarter.

We should be hitting somewhere around a third of mature levels on launches this year and expanding that towards half of mature levels next year. As usual, we are summarizing all of these expectations of market changes on our outlook slide and you can see that I am now showing.

We continue to expect significant double-digit declines in both sales and earnings this year, but still expect to be profitable overall in both segments. Neither segment will be in a normal range on normalized operating margins but they will be within a few percentage points of that.

Net margin should be between 4% and 5% for the year. 2021 should see strong growth on rallying markets in the double-digits for both top and bottom line.

Really that means expansion towards or into normal operating margin ranges for each segment. And a net margin that is moving closer to our normal range of 7% to 9%.

We expect to maintain leverage levels under 1.25 for the year and improve significantly from such in 2021. Free cash flow both years will be strongly positive as already demonstrated.

Looking specifically at Q4 you should expect to see auto dial back from Q3 given our customers in North America basically did not shut down in Q3, but are expected to have their normal seasonal shutdown in Q4. In addition there are some key customer platform changeovers planned for Q4, which will also impact volumes in the auto business.

MacDon will see a similar performance to Q3 noting the typical seasonal slowdown, as we often see. And Skyjack will definitely dial back on Q3 as it normally does seasonally.

In addition, Q4 is not currently expected to have significant levels of government subsidies compared to the Q3 and Q2 as the calculation has changed significantly from the original rollout of the wage subsidy program, as we return to more normal levels of business. We're still assessing what the impact will be in Q4, given still pending government guidelines about this.

What all that means is you should expect to see a material earnings and dial back in Q4 in comparison to Q3. That's still looking positive in comparison to prior year.

I will add as the lawyers insist that I do, that impacts from the COVID-19 outbreak are currently not fully understandable or determinable in terms of the impact to all segment access lines of work, risk remains. In particular, we are conscious of the fact that potential customer shutdowns are always a risk and should be considered.

I will finish off highlighting a few of our more interesting wins this quarter. First we picked up multiple wins again in the quarter for battery electric vehicles, many of which were in China where of course battery electric vehicles are predicted to more quickly penetrate the market.

In aggregate, they're more than $11 million a year in sales. And we will start production in a couple of years.

Notably, electric vehicle programs have represented nearly one-third of total wins this year. Great to see many of these vehicles of the future.

Secondly, we're seeing a pickup in quoting activity in the commercial vehicle space. We had quite a successful quarter in that regard securing several wins representing more than $90 million a year in sales.

We saw multiple driveline business wins for our Canadian plants, helping us to continue to drive our growing chassis business. In aggregate, these programs represent nearly $30 million in sales.

And finally we saw another meaningful driveline system win for a full RDU system. The volume for this system fully designed and assembled by Linamar by the way is more than $40,000 per year.

This job will also be housed in one of our Canadian plants. With that, I am going to turn it over to our CFO, Dale Schneider to read us through a more in-depth financial review or detail.

Thank you, Linda, and good afternoon, everyone. Linda noted Q3 was a strong recovery from the COVID shutdowns that occurred earlier during the year.

It was a great quarter for cash generation as we generated $445.1 million of free cash flow, which brings the year-to-date total to $762.7 million. Additionally, we're able to maintain our strong level of liquidity and increase it to $1.3 billion.

For the quarter, sales were $1.6 billion, down $102.6 million from $1.7 billion last year. Earnings are normalized for FX losses related to revaluation of the balance sheet, and any unusual items that occurred in the quarter.

In Q3 earnings were normalized for the cost impact of announcing the closure of our Eagle manufacturing facility in Kentucky during the quarter. Under IFRS, we are required to approve the closure costs of the plants on announcement even though the plant is not scheduled to close until May 2021.

The closure costs impacted the quarter by $13.8 million, of which the majority of the cost related to the impairment of fixed assets in the amount of $11.7 million. The impact on EPS from the plant closure announcement was $0.15 per share.

Earnings were further normalized for FX losses related to the evaluation of the balance sheet which impacted EPS by $0.08 per share. Normalized operating earnings for the quarter were $197.4 million as compared to earnings of $139.2 million in Q3 2019, an increase of $58 million or 41.8%.

Normalized net earnings increased $44.3 million or 46% in the quarter to reach $140.5 million. Fully diluted normalized EPS increased by $0.68 or 46.3% to $2.15.

Diluted earnings for the quarter when the foreign exchange loss of $6.6 million, which resulted from a $7.5 million loss from the revaluation of operating balances and a $900,000 gains or evaluation financial analysis. As I mentioned, the net FX loss impacted the quarter's EPS by $0.08.

From our business segment perspective, the Q3 effect due to the revaluation of operating balances of $7.5 million was fully associated with the industrial site. Further looking at the segments, industrial sales decreased 21.6% or $82.2 million to $298.4 million in Q3.

Sales decreased for the quarter was due to the access equipment sales decline associated with the COVID-19 pandemic, which were partially offset by growing our cultural sales at MacDon. Normalized industrial operating earnings in Q3 increased $9.5 million or 24.2% over last year to $48.7 million.

The primary drivers impacting industrial for the government support programs, the increased agricultural sales, which was tempered partially by the software access equipment market. Turning to transportation.

Sales decreased by $20.4 million over Q3 last year to $1.3 billion. Sales decreased in the third quarter is driven by the impact of COVID-19 and transportation markets have not fully recovered, which was lessened by favorable effects impacting the changes rates and last year.

Q3 normalized earnings for transportations were higher by $48.7 million or 48.7% over last year. In the quarter, transportation earnings were permanently impacted by the government support programs to continue to ramp up with launching programs that are adding to earnings, the targeted cost reductions achieved in the quarter, and favorable FX impact to change in rates as last year, all of which was partially offset for the lower volumes in the transportation markets.

Turning to the overall Linamar results. The Company's gross margin was $273.5 million, an increase the $43.4 million compared to last year, primarily due to the utilization of support programs, the added margins for monitoring programs, favorable FX impacts, the targeted cost reductions achieved, all of which was partially offset by the lower earnings from the impact of COVID-19 on volumes in both segments.

Amortization expense of the third quarter was $109 million. COGS amortization in percentage sales increased to 6.7%, primarily due to the impact of launching programs in the quarter.

Selling general and administration costs decreased in the quarter $89.8 million from $94.3 million last year. The decrease is mainly due to the target cost reductions and due to the impact of government support programs.

Finance expense decreased $9.6 million since last year due to reducing our average daily debt level by$655 million since Q3 2019 and reducing our effective interest rate by 100 basis points. The consolidated effective interest rate for Q3 declines of 1.8% from 2.8% last year.

Effective tax rates for the third quarter increased to 26.3% compared to last year, mainly due to unfavorable mix and foreign tax rates. As a result, we're now expecting the full year 2020 effective tax rate to be in the range of 24% to 26%, which is up slightly from our Q2 expectations.

Linamar's cash position was $570.1 million on September 30th, an increase of $175.3 million compare to September 2019. The third quarter January is $518.4 million in cash from operating activities used mainly to fund CapEx and debt repayments.

This also resulted in free cash flow generation $445.1 million in the quarter. As a result, net debt-to-EBITDA decreased significantly to 1.1 times in the quarter.

Based on the current estimates, we are now expecting to remain under 1.35 times by the end of the year due to the seasonality impact of Q4 which has in the past causes usage of cash. This is subject to changes as the impact for COVID-19 is still very fluid enough currently fully understood.

The amount of available credit on our credit facilities was $757 million at the end of the quarter. Our available liquidity at Q3 increased to $1.3 billion as a result.

We currently believe we have sufficient liquidity to satisfy our financial obligations during 2023. To recap, sales and earnings for the quarter was a story of recovery and rejuvenation.

With the dramatic impact of the pandemic has had and Linamar this year, the critical story still remains one of cash liquidity. Linamar has had remarkable cash generation quarter as of January $445.1 million in the quarter and $762 million year-to-date free cash flow while maintaining strong liquidity above December 2019 levels to reach 1.3 billion.

That concludes my commentary and I’d now like open up for questions.

First, impressive results, a great job. I just wanted to clarify the comment on Q4.

Sorry, the guide was earnings would be down sequentially, but still off year-over-year. Is that right?

That's correct. Yes, we will be down from Q3 just based on basically strip the subsidy out, dial back on auto and skyjack.

And we're going to be a lot lower than Q3, but we do expect to be above Q4, 2019.

Okay. And the Q3, I didn't catch, but did you quantify the amount of the support programs?

Yes, that's in the financial statements.

Okay, all right. I'll look for that.

On the cost improvements, is there sort of any way at this point for you could quantify sort of how much is temporary, how much is structural? Just trying to think as we go forward the -- I guess what comes back and sort of what margins look like as we sort of -- as volumes continue to ramp?

Yes, I mean, it's a bit tough to quantify. I can't really give you a specific dollar figure percentage, but I will say that we've always learned from being forced to do things differently.

And of course, we're going to try and retain anything that we can in terms of where cost would trend. I think an obvious area is travel, for instance, I mean quite a time to pandemic, we found we can avoid some of the travel that we were doing to some extent by utilizing technology that we've all become very accustomed to now, to do remote face-to-face to some extent meeting.

So, that's obviously going to help us to save our time and costs and there's other things as well add that we think we can retain.

Yes, I think, we've ratcheted back maybe on some software things and subscriptions and things like that that would probably stay in plays Linamar is just again, the things that Linda was saying, like travel, who knows, right? I mean we're going to start traveling again.

But as we know, we're going to work more potentially remotely. So we always have to go somewhere for that meeting and stuff like that?

So, I mean, we're watching everything we have a lot of all this every week of the cost savings that we've implemented, and we talked to this group operationally to see maintain them or losing nothing.

In terms of margin expectations, I would encourage you still to reference the normal margin ranges that you can see right here on the outlook slide that we would normally have both from a net perspective as well as in terms of the individual segments. I think those are still good margin levels.

I'm not expecting a massive change from those levels.

Sorry, if I can just ask one last question. Just on a free cash flow.

Obviously, great quarter, I guess, I would have thought, just given the restart of operation, there would be maybe bigger or some investment in working cap. So I'm just just trying to understand sort of what happens in Q4 or sort of how you sort of manage to do that?

Just any comments around that, very, very impressive.

Yes, I mean, it was a variety of things, I mean, some of the receivable sale programs we have out there that were able to tap into great management of non-cash from both Skyjack and MacDon, I think, made big differences as well. And we also continued to be really cautious in terms of our overall cash spending just in light of continued uncertainties.

So, if you can see the results, I will say, Q4 as we've noted on the slide here, is likely to see neural to small decline or non-cash. We normally do see -- I'm sorry, neural to small decline in terms of cash generation.

So in other words, a small use of cash in Q4 is estimation of just sort of a normal seasonal change from Q3 to Q4 to see non-cash increase a little bit.

Got it, I'll turn it over.

I was just going to say like, you know, for the industrial side, we do build up a little bit in Q4 rate for expectations coming along. So that's just another thing to keep in mind.

And then on the financing programs, as Linda referred, to keep in mind that, we weren't even close to the full sales of end of Q2, so those programs weren't fully utilized. And obviously, with the markets retiring in auto, and MacDon we've been able to utilize more effectively than Q2.

And sorry, on the use of cash in there, there'll be -- Q4, that was strictly on noncash working capital, not operating cash flow.

Not, sorry.

It was for the working capital. It's not -- you weren't speaking to operating cash flow being negative in Q4?

Yes, I mean, we expect to see non-cash use in the fourth quarter. I mean, as noted, we will still be profitable.

But I mean, you should expect CapEx to start to pick up a big again.

Hi. Thanks for taking my question and good afternoon everybody.

You asked the two questions differently. In your disclosures, if I read, somebody correct me $47 million and I guess $47 million contribution of earnings.

And how to think of the contribution of your operating income line as isn't as simple as taking an effective cash second quarter, which is 26% and adjusting that $47 million or is anything else I should be thinking about?

No, that's basically all flow through operating.

Perfect. And do you have split between your two divisions in terms of how that Qs was, I guess, netted against across two segments?

I don't think we need to close that specifically. But I mean, obviously, the lion's share of the people in the transportation segment.

So, you can safely assume that 70% to 75% there at least.

Okay, now that makes sense. Maybe just looking at your shareholder return program, you raised the dividend with this quarter.

But to kind go back all your presentation, you just went through a leverage of 1.1 times, I think you have a pretty optimistic outlook for your business notwithstanding, obviously, the fluidity of situation with COVID-19 that your effective interest was 1.8%. Just wondering, how you decided that the dividend was not a huge cash outflow book, why the dividend versus making a share buyback program when you'd be looking at a share buyback program just given where your balance sheet is today and the cash generation receipt for the business?

Yes, I mean, I think that our dividends and share buybacks are effective means by which to return cash to shareholders. We accept the dividends so we thought it was prudent first step to restore that to our shareholders.

And of course, we will continue to assess dividend levels and buybacks potential in the context of ongoing cash needs and leverage levels. So, I think it's prudent to be conservative right now just given there are some uncertainties in the road ahead and current wave as a pandemic et cetera.

So, we're going to be cautious, but it's for sure a topic that we discussed that every single board again.

And I don't -- I didn't catch it in your presentation, we haven't happened to happen, but in terms of equipment market, you walk through -- the market is performing in terms of Skyjack specifically, is that outperforming the market or sell performance similar to what the overall market this season right now?

Yes, I mean, we're still seeing market share growth for Skyjackin targeted areas made example is in Europe, where we've seen good continued market share growth and the trend is positive, but when the overall markets down 30% to 40% I mean, obviously, you're going to be down in that territory as well.

I think the other thing is we've got that Skyjack a lot of excellent product launches coming up with virtual labs. I mean, there's also like little scissors and repression parties that are coming out with rough terrains.

So, there's a lot of good product launches that are coming.

Okay. That’s helpful color.

And just last one for me, I think you're planning or looking to eventually put in some sort of third party financing, if they're not gone to do a Skyjack. So definitely sort out the kind of the -- find out your own balance sheet.

Is that something looking to push forward here?

Actually, we implemented that in Q4 2019.

Performance part.

Yes. So we have the financing programs in the auto side in MacDon and Skyjack has been a number of years ago.

You said it would be working capital -- I'll make it and take it off-line. Maybe start up with some of the moving part with working capital in terms of how that financing closer to your balance sheet, but I can take that offline.

Thank you very much. Good quarter everybody.

Thanks, Kevin.

Back on the wage subsidy program. The amount you articulated in the note, the $47 million, that's for the Canadian wage subsidy program, the CEWS program.

But are there -- like the subsidy programs you would have benefited from in other jurisdictions, were those amounts substantial? Or were they minor compared to the Canadian program?

To be honest, the Canadian program is a world-class example of government support. No other country in the world has a program given similar to the Canadian one.

Generally, in other countries, is a reimbursement of wages as we're paying for employees that are laid off. So, it's almost like we are the country's EI and the country is reimbursing it.

So, there's no impact to our results from those programs. The Canadian program does provide subsidy to working and nonworking employees.

And in terms of the fourth quarter outlook, I know. Linda, in your comments, you said you're still working on the numbers, but just maybe qualitatively.

Do you assume that there will be some recovery from the wage program, but it's going to be substantially less than Q3? Is that what you're thinking?

Yes, absolutely, I mean, substantially less, right. The way that the program is designed, it drives off comparisons to private years.

So, now that the sales are becoming more normalized, the levels of subsidy will come back. The problem is that the rules are all out yet for how to calculate what the subsidy is going to be.

We're still waiting to see what they exactly will be. So, it makes a little more difficult to predict specifically, which is exactly what happened last quarter frankly.

Right. And what are you hearing in terms of a replacement program?

Because I understand this program winds down in the third week of December. And so are you anticipating a replacement program in 2021?

Or it will likely not be relevant because you -- you'll be back to more normal levels, and you won't have that much eligibility?

So in the throne speech, the government did talk about extending it into 2021. So there will be a benefit.

Currently, they have only described up to the first claim period, which is a two-week period up till first claim in October. So, we don't really have any insight of what that extension is going to be or how it's going to impact us.

But obviously, as the markets continue to recover in '21, as we've seen so far in Q3 and expect in Q4, even if that program extends, Linamar's ability to utilize it will diminish.

Right. Okay.

Shifting gears here on the industrial segment, can you talk a little bit about MacDon and Skyjack? And what is the normal seasonal pattern like in a typical year, from Q3 to Q4?

And how does that change this year because of all the volatility we've had because of COVID?

Yes, I mean, Skyjack would normally dial back pretty significantly, seasonally in Q4. I mean, we've seen that anything from 20%, 30% to 35% are dialing back from Q3 levels in Q4, so that kind of a normal level seasonally.

MacDon can be a little more changeable. That's why we're suggesting flattish to Q3, but potentially that a seasonal dial back.

Because sometimes they can be flat, sometimes they can be down a little, but they don't -- you don't see the same kind of big change like you do with Skyjack.

Okay, and how if Skyjack -- how is the order book? Like, is the order book picking up?

Or is it stable or is it declining?

I would say the backlog you look year-over-year is down compared to year-over-year and the take rate now is showing that we'll be planning for next year and increase for next year, right. So, we're getting a little bit more sense of increasing into next year.

Right. Okay.

And then Linda, lastly, you showed a chart that was very interesting, your presentation of Slide 31. With and that's where you showed the content preview -- the content potential for electric hybrid internal combustion engine, I don't know if you have quick access to the chart, but I am just --

Yes, yes, we're just pulling it right back at. Yes, that's not -- yes.

Sorry, Peter, go ahead. Ask you question.

Yes. Could you just spend a little more time?

That's an interesting chart, just explaining it. Like I assume it's based on your order book and assumed volumes and ISH is growing very quickly, notwithstanding that BEV is growing quickly.

Could you just reflect a little more on the chart?

Sure. So first of all, this is not charting potential, it is charting actual books content.

So, this is based on books business. We are not putting anything in here that is speculative that we haven't won yet.

So we're taking national books sale for programs that we've been awarded by internal combustion, battery electric and hybrid. And then, we're just dividing them by the current forecast for number of vehicles to be produced in those years for each of those propulsion types, so pulling it right out of IHS.

So when you show up content per vehicle in 2024 for -- like I'm looking at electric, the black line of $50, the numerator would be your anticipated revenue. And the denominator, that's the total number of battery electric vehicles produced or total global vehicle production of all propulsion types?

It's dividing by the total number of battery electric vehicles forecast to be produced globally.

Okay. And then just lastly on that, this growth that you're having in battery in the electric, is that mostly the e-axle systems that you've been marketing?

Or are there other significant areas?

There's other area as well, I mean, battery trains are very high content, potential and assembled product as well as their chassis components, structural components.

Yes. I mean, chassis structural components, gear, gear assembly differentials.

Motor housing.

Coolers, yes. So a wide variety of components of the system.

Right. Okay, thank you for your.

In my comments, our total content potential in electric vehicles, if we add up all the different components and sub-assemblies and systems that we can produce is approximately $3200, that's our potential in the electric vehicle.

And the other the other thing part two is that it's not just what traditional customers, it was new customers do well, that are well established that are coming online, too. So it's pretty diversified that way.

Okay.

I also just wanted to make one last point with regard to your earlier questions on the wage subsidy. I know that that's caught all of your attention, but I do want to point out that even if you strip those subsidies out, our results this quarter were significant and higher than last year in the overall and certainly in the transportation segments.

So there's a lot more going on here than just wage subsidy in terms of what we delivered in the quarter.

Yes. I know I see that in the numbers.

Thank you.

Thank you. So just clarifying that last comment.

Linda, so the allocation that you mentioned earlier, it's fair to say that transportation would have been a low 8% operating margin industrial would have been sort of mid-13s. Is that fair?

Even if you strip the -- if you strip the subsidy out where would we have -- where would we have landed in terms of margin.

Correct?

Yes, I mean, the taxation segment has a strong showing you need to strip the margins out in the neighborhood what you talked about.

Excellent. So the discretionary cost savings obviously you've a very good job there.

But specifically on the transportation side, when you look at 2021 global production volumes as compared to that of 2019, they are going to be down based on the forecast. So you've got an operating margin target this essentially flat.

So is this sustainable cost savings that are fully through? Or is this product mix?

Is this better launches or a combination?

It's a combination that I would say primarily the launches. So as our launches are reached more mature levels of volume, their margins get out to more normalized levels.

So, a year ago, we were at our worst point in 2019, where the losses were at a sublevel at a volume that was suboptimal in terms of margin delivery, so not, nearly certainly capacity. And at the same time our mature programs were coming down in volume.

And we're also running at sub optimal levels of volume and capacity utilization. So, what's sort of the worst possible point in 2019 where we have kind of the worst of both worlds.

Now, we're seeing, launching programs continuing to pick up and that's been a big driver of what is driving those patterns our system will continue to do next year.

Helpful. Thank you.

And then one last question, maybe for Jim or for Mark, actually. So on the industrial side, I think if you take a look at it right now, it really looks underappreciated within your share price.

So when I take a look at Skyjack, we've got some positive or stable trends now, utilization rates improving pleaser aging. Just wondering, how quickly you can adjust the various upward trajectory levels.

And then on MacDon, also looks like industry trends are improving with commodity prices, etc. So maybe just comment on the state of inventory at your North American dealers, if you could.

MacDon, I mean, they're in the order intake that time right now and we see that to ramping up. So from a production perspective, very well prepared for that sort of increase.

Dealers are good. I mean, the farmers actually have had a great season, I would say in both Canada and the USA.

So, on that point side, I think we're ready to roll with that increase, Skyjack the same, we're planning on it. So again, with our suppliers' production side, and for us, it's really going through with distribution to the rental companies, and those are going to flow through well.

Inventory is on annual side, dealers are chipping away at inventories, and they are dropping. So that is also another good sign.

I think on Skyjack side, as Jim mentioned, with a lot of new products, we've got a lot of prototypes that are just finishing up the prototype testing and everything. So we're actually as 2021 increases production and sales requirements.

We've got a lot of new models out there also. So I think we're in a good position for Skyjack.

And one other thing on the Skyjack, the rental companies, a lot of them are selling off us right now, which is another indicator for us that there should be some pull on him.

Thank you, all.

Thank you very much. Well, to conclude this evening.

I'd like to leave you with three key messages. First, we are thrilled to have generated an outstanding $445 million in free cash flows this quarter.

Liquidity has reached $1.3 billion. We have reduced debt more than $1 billion from a year ago and refinance next year's debt to mitigate risk further.

Our balance sheet looks fantastic. Second, it's great to see despite challenges around restarting and lingering impacts of COVID-19 on demand, that launching business increased margins in the transportation sector.

And finally, it's great to see those ratios starting to pop up in terms of market growth at both MacDon where market growth has already begun, and at Skyjack where market growth is now expected in 2021. Thanks very much and have a great evening.