Rob Wildeboer – Executive Chairman Pat DEramo – President and Chief Executive Officer Fred Di Tosto – Chief Financial Officer

Mark Neville – Scotiabank Justin Wu – GMP Securities Todd Coupland – CIBC David Tyerman – Canaccord Genuity Peter Sklar – BMO Capital Markets

Good morning everyone. Thank you for joining us today.

We always look forward to talking with our shareholders, we hope to inform you well and answer questions. With me this morning are Pat DEramo, Martinrea’s CEO and President; and our CFO Fred Di Tosto.

Today, we will be discussing Martinrea’s results for the quarter ended March 31, 2015. I will make some brief remarks.

I will make some operational comments. Fred will briefly review the financial results, and I will finish up with some broader comments about our company.

Our press release with key financial information discussed on a fairly detailed basis have been released. Our MD&A and full financials have been filed on SEDAR and should be available to you.

Our AIF and annual report were filed recently. These reports together provide a detailed overview of our Company, our operations and strategy, and our industry and the risks we face.

Given the detail in our press release and filed documents and the fact that we had detailed call on our annual results with you just six weeks ago, our formal remarks on the call today will be generally overview in nature and very brief. We’re very open to discussing in our remarks and we hope in the Q&A some highlights of the quarter, the state of the industry today, how we are addressing the challenges and progress in our operations.

As always, we want you to see how we see the world. As for our usual disclaimer, I should note that some of the information that we are sharing with you today may include forward-looking statements, even if qualitative.

We remind you that these statements are based on assumptions that are subject to significant risks and uncertainties. This is particularly the case given the present automotive and economic environment.

Although Martinrea believes that the expectations reflected in these forward-looking statements are reasonable, we can obviously give no assurance of the expectations of any forward-looking statements will prove to be correct. Our public record which includes an AIF and MD&A of operating results that I just mentioned is available on SEDAR and you may look at a full disclosure record of the company there.

I also refer you to the disclaimers in our press release, or MD&A and our AIF. So without further ado, here is Pat.

Good morning. It’s a pleasure to be on the call with you.

Few weeks ago I shared some of my thoughts on our company, our strategy and our opportunities for the future. Since our last call, my message is and we continue to make good progress in many areas.

From a performance point of view, we have had a good month quarter, which came in better than planned as you know from our press release. We think our second quarter will be even stronger.

We continue to strengthen our relationships with our customers as you can also see from our press release, we have announced about $400 million in new incremental business over the past months. We don’t win significant awards without having confidence from your customer.

Additionally, in the past few weeks, we’ve assisted a key customer in order to allow them to meet their aggressive production goals. Stepping in and helping customers when they are in need, always promotes good relationships.

We continue to focus heavily on launch preparation and readiness. Our current launches are going well.

As you know the launches are difficult and our philosophy is to get ready early and stay ahead of the customer. We continue to work on adding talent and as I made some good hires relative to [indiscernible] manufacturing to enhance our operations.

A measurable positive impact has already been made. We’re making progress in many of our plants, year-to-date we have made notable improvement in our U.S.

metallic plants. Of course, embedding a new thinking way is not immediate it takes time, but in any case we have many opportunities throughout the organization which from my perspective is great news.

As I previously discussed our strategy is based on four pillars. High performance culture, operational excellence, strong financial management, and that the customers is king.

There are four concepts that are fairly easy to identify with and we are emphasizing them in all we do. A name of the game of course is to execute and drive a culture of discipline and commitment to lean thinking.

From a personnel perspective I continue to visit plants throughout North America and Europe along with the number of customer meetings. And frankly, I’m still having a ball doing it.

We have a willing enthusiastic people who believe in this company, a great asset as we continue to pursue manufacturing excellence. With that, I’m going to turn it over to Fred Di Tosto.

Thanks Pat and good morning everyone. The first quarter was a strong quarter for us, sales grew year-over-year and operations continue to improve.

Sales for the first quarter excluding $30 million in tooling sales were $887 million, within the range of previously announced sales guidance. Overall production sales increased by 2.9% quarter-over-quarter and 5.9% year-over-year, predominantly due to foreign exchange translation from the recent weakening of the Canadian dollar.

In addition to foreign exchange translation year-over-year production sales benefited from overall strong OEM light vehicle production in North America, and the launch of new programs including the new Chrysler 200, Ford Edge and a new aluminum work for Jaguar and Land Rover. These positive factors were offset by lower production volumes in a few platforms, including the Chrysler Minivan which is scheduled to be down 13 weeks in 2015 for re-tooling the Ford Fusion and higher than normal roll off in Martinrea Honsel German operations.

Some of which are strategic in nature and some are simply a byproduct of financial state of Honsel prior to us acquiring it. During this insolvency pre-acquisition and this down with some replacement business opportunities given its financial state and that gap will start to be felt in 2015.

The impact will be noticeable until we capitalize on future opportunities which we are confident will be the case, given, it’s more competitive state today compared to when we acquired it. As a matter of fact, some of the new work we recently won with Ford as highlighted in our press release we’ve placed in Germany.

The Rest of World segment, Brazil continues to be a soft spot for us at the current time with overall OEM light and medium, heavy production volumes down year-over-year, those slightly up quarter-over-quarter, which is a positive sign although it’s difficult to tell at this point whether it’s sustainable given the macro economic factors that play in Brazil. Our first plant in China in the Shanghai area dedicated to our Fluids business continues to ramp up but has still not hit peak volumes and will not until 2016.

Our second plant in China which will be dedicated to aluminum business, is in early stage, and has no revenue at the current time but incurring costs. Our second plant in China will not launch its first product for GM's Omega program until 2016.

Some of the new work we recently won from Jaguar and Land Rover, as noted in our press release, is actually ear marked for the plant, so its pipeline is still up quite nicely. We believe China will be growing on profitable market for us overtime and look forward to contributing to the overall profitability of the organization.

From a bottom line perspective the first quarter was a record quarter for us. And the first quarter of 2015, our total net earnings per share on a basic and diluted basis was $0.36, up quarter-over-quarter from $0.27 in Q4 and year-over-year from $0.21 in Q1 2014.

We’re happy to report that we do not have any adjustments to net earnings in the quarter. Including the Q1 earnings was a $2.6 million foreign exchange gain mainly coming from the Company’s Canadian operations, which has some U.S.-based sales contracts from which we’re benefitting, given the weaker Canadian dollar.

Overall, for the most part, we are naturally hedged in most of our operations and most of our plants predominately buying some in the same currencies. So from that perspective the exposure is not that significant.

We generally hedge any such exposures although benefited in Q1. On the FX translation side, our MD&A clearly highlights the impact it has in our top line.

A large portion of our revenues come from the U.S. and as you all know we report in Canadian dollar.

So as the Canadian dollars weakened against U.S. dollar, sales have been positive of the impact.

Intuitively you would expect bottom-line to benefit as well, however, I want to be careful with that, because the reality is the impact in our bottom line is somewhat muted, given a portion of our revenues coming out of the U.S. are currently at lower margins.

In part due to performance of the same plants, but also because of a relatively large proportion of assembly work which typically generates through our margins. As the margins in U.S.

improve the foreign exchange translation benefit will increase with it, of course subject to any future change in the rates. Operating income and EBITDA margins for the quarter, as highlighted in our MD&A were up year-over-year and quarter-to-quarter, as the companies U.S.

Metallic plants plans continue to improve and this despite through operating costs the new plants currently preparing for upcoming launches. We are particularly pleased to see the strengthening of our operating income margin in North America, as the team focuses on making improvements, which is translating into overall margin improvement.

The European results are weaker year-over-year and quarter-to-quarter as anticipated, given pre-operating and launch costs in Spain and Slovakia, as these plants ramp up and the year-over-year reduction of volumes in Germany due to higher than normal roll-off as I’ve already discussed. As previously noted, we are opening four new facilities in Spain, Mexico, Riverside, Missouri and China, and costs have been incurred.

These pre-operating costs will continue to be incurred in 2015 as these new plants prepare for new program launches later in the year and into 2016. Despite these costs we’re expecting operating margins to improve year-over-year in the back of an improving U.S.

Metallic operations, as our Q1 North American segment results show. Overall as our press release highlights and as previously noted, operating margins are expected to improve, significantly over the next three years to over 6% by 2017, as improvements in the U.S.

operations continue, pre-operating costs of these new facilities subside and execute in our backlog of business, including both new and replacement business. Also just wanted to quickly touch upon the balance sheet, as you can see in our interim financial statement net debt increase by $72.8 million, $32.4 million of this increase is the direct result of foreign exchange translation of our U.S.

denominated debt [ph] from the weakening of the Canadian dollar. The remainder of the increase is essentially due to financing with seasonal increase and working capital, which was funded through [Indiscernible] and our company’s banking facility.

Working capital increased by $46.7 million in Q1. Working capital level has usually increased from the first quarter of any given year as production ramps up, coming out of December holiday shutdowns.

This year was no exception. In addition during the quarter, we continue to make significant investments in the business as a result of new work we are currently launching as significant launch backlog of new and replacement programs coming on line over the next two years to three years, including four new greenfields, as previously noted.

Capital expenditures for the quarter came in at $47 million. CapEx guidance of $15 million continues to be approximately $210 million subject to new program wins and the timing of expenditures.

We continue to see the mix in investment to be heavy on the aluminum side of the business. Given where we are in the launch cycle in our North American and the fact that our North American footprint is substantially established in Martinrea classic and particular, as it relates to metallic business, capital expenditures for Martinrea classic are expected to normalize and as a matter of fact have normalized.

With that trend we expect to Martinrea classic business to generate a significant level of free cash flow in 2015 and 2016. The reality for Martinrea Honsel is somewhat different.

Capital expenditures of Martinrea Honsel was expected to continue to be higher in the next couple of years given the growth prospects in that commodity. Three of the four new greenfield plants going up are aluminum plants and approximately 60% of the capital spend in 2014 and Q1 2015 was associated with new aluminum work and capacity.

Despite these expected higher CapEx levels, we expect the overall Company to still be able to generate positive free cash flow in each of the next three years as margins improve and the ability of the Company to generate cash enhanced. Free cash flow will be used to pay down debt.

And that regard we have set a target net debt EBITDA ratio of 1.5 times by 2017 down from the current level 2.5 times. Thank you and I’ll now turn it over to Rob.

Thanks, Fred. I would like to make some general remarks as we look forward.

Martinrea’s had a very good year in 2014 and since, under the guidance of your board and executive team. We are enjoying record revenues both before and after adjusting for current sea changes.

Growing revenues is a strong signal of the fact we have good customers who’ll provide us with the business to grow and achieve our goals. While we anticipate that our revenue growth over the next several years will not be as fast as the growth rate of 26% annually since 2009, we believe that is a good thing, as we focus on operational improvements, margin improvements and allocating capital funds to their most profitable uses.

At the same time, in last six months we have announced major product wins in our various product areas totaling approximately $400 million annually when fully launched from customers such as GM, Ford and Jaguar Land Rover, great customers for us. Previously, we have announced new business from Daimler, Nissan and others.

After one-time adjustments, 2014 was the best year for earnings in our history. As promised, 2015 will be better, and if off to a very good start given our first quarter results and guidance for our second quarter.

Our first quarter results with record profits for the best in our history of the company and our second quarter results are anticipated to surpass that. Frankly, we believe 2016 will be better than 2015 and 2017 will be better than 2016.

We’ve indicated publicly that our operating margins will increase 50% from the 4% range in 2014 to 6% plus by 2017 and our 2015 results to-date demonstrate that we are moving in the right direction. Our capital structure remains strong; our relationships with our lenders, we view as stakeholders and partners are terrific.

Our lending group financed us through the great recession of 2008 and 2009 and since and financed the purchase of both our initial interest in Martinrea Honsel in 2011 and the purchase of the balance of the ownership in August 2014. And utilizing debt to but Martinrea Honsel, our company avoided issuing equity to finance the purchase and thus avoided shareholder dilution.

Although our debt levels increased with the purchase, our financial ratio has remained strong as a cash flow of Martinrea Honsel supported the new debt. Currently our net debt EBITDA ratio is approximately 2.5 times, which is very manageable, this ratio is supported by increase in cash flow.

Our EBITDA in the first quarter of 2015 was $74.9 million a record for us. Further, as Fred noted, we’ve indicated a target of net debt to EBITDA ratio of 1.5 times by the end of 2017, achievable by increasing cash flow and pay down of debt from that cash flow.

We believe that improving operational and financial performance will translate overtime and to improve share price. In 2014, in part because of the progress we’ve made in our operations and financial performance, our stock price did appreciate closing the year at $10.37, up about 33% for the year but half a size for the year.

Since year end stock price improved closing over $12 as of yesterday’s date up 16% for 2015 to-date one of the better performing stocks in the market overall and in the general automotive space. We believe that continued improvements should result in improved value overtime.

As you know, last year we were involved in succession planning for a new CEO, we thank Nick Orlando for his time and dedication as CEO and the work he did to grow this business and wish him best. In April 2014, the board formed a search committee to coordinating an extensive and compressive search process for a new President and CEO.

Search committee worked diligently together with full board input till we hired Pat in October. Pat started with us in November and now has completed his first six months.

Pat settled long and successful career in the automotive business for the extensive metal forming and parts manufacturing experience, our board believes we ran a successful search process and Pat is an excellence choice for President and CEO. One of the most critical duties of the board is to hire the right CEO and believe your board fulfills that’s key mandate in 2014.

We as a company are highly focused on our vision and mission, particularly through achievement, improvement and operations. There are significant opportunities [ph] to improve our operating performance, translate it into improving operating margins and financial results.

We’re seeing some of that already in our results over the past several months. Our U.S.

Metallic group in particularly is showing financial improvement, we anticipate continued improvement as Pat drives operational excellence and discipline throughout the company together with our team. As a company, we’ve been delivering on our commitment to increase the depth and breadth of our board since 2013.

The board you elected in 2014 is a hardworking and talented group bringing significant manufacturing, financial and operational experience to our company. The full backgrounds will be in our proxy circular, we are going to have our annual next month and we look forward to seeing you all there.

In summary, I want to thank the independent directors for their work. Scott Balfour, who brings financial operational M&A in public company, CFO, Senior Executive and Director experience; Roman Doroniuk, who brings financial and audit expertise and a strong understanding of strategy and risk gone through [ph] a variety of senior internal and external roles with many large companies; Terry Lyons, who brings a broad range of operational, financial and governance experience; Frank Macher, who brings a deep knowledge of the automotive and automotive supplier industry having an advanced international experience, he’s a Senior Executive and Director at several major automotive supplier companies, which are having a carrier spanning over 45 years.

Fred Olson, who brings a deep knowledge of the automotive and automotive supplier industry, having been a Senior Executive and Director of major automotive part supplier, as well as having roles at various suppliers and OEMs during his automotive carrier. Sandra Pupatello, who brings tremendous international experience, I think with investment and trade missions to industrial capitals on five continents is the former Minister of Economical Development for Ontario, with over side of the automotive portfolio, who has strong connections with many automotive OEMs.

Our board has been very busy in last two years, not just last year with a variety of issues. Our members are dedicated, knowledgeable and all focused on best interest of this company.

I note that no director missed a single board or committee meeting in 2014 or since, thank you all for your efforts. At our AGM in June, we’re going to propose to Pat, we added as a director.

I believe it’s appropriate for the CEO of the company to be a board member passed and fully involved in working with the board since his hire. As well I’ll be a nominee, I’ve been with Martinrea since it is formed, I’m proud to serve them as board before this company, and more than 14,000 people work hard for us all every day.

To close, Martinrea has a great feature. A highly experienced and dedicated management team, strong independent Board of Directors, dedicated to creating shareholder value for the years to come.

On behalf of the board, we would like to thank our shareholders and other stakeholders for your ongoing support as we move forward together in building a stronger Martinrea. So there it goes, I think, we’ve summarized and thanks for you, we’re very bullish for future.

Now it’s time for questions. You see from the list we have shareholders, analysts, even a few competitors along the line.

So we may have to be little careful with our answers, but we will answer what we can. Thank you all for calling.

Hi, good morning guys.

Good morning.

Good morning.

I just want to dig into the margins, sequentially we saw some pretty big moves, I guess first on North America, again quite a impressive improvement sequentially and year-over-year. So can you just maybe dig in or help us dig into what’s really driving that?

I mean maybe how much the dollar helps? Is there any seasonality in these pre-operating costs should help us sort of think about the improvement?

Couple of things, no seasonality operating margins not really FX related at all.

Okay.

We are seeing improvements as we said in a number of areas, but our U.S. Metallic plants are operating significantly better than they were, say at this time last year.

But we’re seeing improvement in our number of our plants. So we commend the performance of our people in our various other divisions as well, in North American we have some very good fluid plants, some assembly plants, we have an aluminum plant in Mexico, as well as Metallic groups of course in Mexico and in Canada.

But as we noted in the release and I think in our various comments, the U.S. Metallic plants, as a whole and we tend not talk about plant by plant, but you can include Hopkinsville in that are performing better.

Okay.

We discussed in previous calls and with some of our individual meetings, the lean activity has been very high in the metallic plants, particularly in the U.S. And in addition to that with the low launch schedule in a lot of our metallic group is giving resources time to improve the efficiencies of a number of the operations.

So I would tell you what the front end to this, we still have a lot of runway here and expect it to continue to improve.

Okay, I mean, so you sort of think about this I guess as stepping off point from here for North America. I mean is this a good sort of expectations for the year, moving forward?

Let me give a qualitative answer a little bit, typically what we see is the first two quarters of the year, a pretty strong from a production point of view.

Okay.

In the third quarter we have the reality of shutdowns from customers in July, often they are two weeks, sometimes they are one week, sometimes three weeks, depending on the program and where the customer sits with this inventory levels and its production plants at that time. And in Europe, where we obviously have significant operations, August is holiday season.

And the holiday season might be longer than two weeks. With respect to fourth quarter, we typically see less shutdowns in third quarter, but there is a Christmas season and in U.S.

there is the Thanksgiving holiday, which is half a week. So that kind of deals with that.

With respect to the overall margins when we said 4% last year to 15% improvement and 6% in a few years we did say in one of our calls, because we’re asked the question, it’s not all back-end loaded as I think you can see, but it not all is really front-end loaded either. So we’re going to continue to work on margin in all areas overtime.

But let me let other guys add comments.

Yes and I think the way you need to look at it is a three-year guidance and that’s kind of the background. Q1 was a very good quarter for us, we’re seeing improvements in our U.S.

Metallic plants, we’re expecting that to continue as Rob noted that that back half of the year is generally softer from the volume perspective. So this is not necessarily going to be the same type of margin we’re going to see every quarter for the remainder of this year, but year-over-year we’re expecting nice improvement with the steady improvements leading into our 6% expectation for 2017 or greater than 6%.

Okay well that’s help. So I guess again, aside from seasonal factor there’s really nothing in North America as suggested comes in a whole lot.

We’re seeing improvement in operations and that we anticipate, well let me ask Pat.

Yes, I’m pleased with progress, of course we can control if there’s a shift and volume or something like that, but we don’t anticipate anything that’s not in the plan currently. So I would expect we will continue to see a pretty steady improvement, especially from the metallics group, where most of our emphasize is right now.

Anticipating further question, our perception of what’s happening in North America overall, we think that volumes are going to be solid for the next timeframe to three years at least. I personally think longer.

We’re not going to see major year-over-year increases. The growth rate will slow from what it has been obviously on a last five years, when it’s been unbelievable growth rate, but the U.S.

demand seems fairly strong, Mexico we’re seeing increases also from the wealth effect, Canada several of our customers figure that we’ll get to a sales rate of two million units in a relatively near future. So we think North America is pretty solid, but we also foresee margin improvement in a relatively flat volume environment in North America.

We do not see big volume declines year-over-year in North America and frankly our customers are of the same view. With respect to Europe, volume seem to be up overall.

I’m not sure how sustainable that is, I think that, – but I don’t think volumes are going to go down much. Recognized it in Europe, our exposure is limited in the sense that we don’t have metal plants there.

We do have aluminum plants that we specifically talked about the rationalization of Germany and the growth in our Spanish plants as we’re building a second plant and with respect to fluids where we have relatively small operation where the orders in place show volume increases over time. So that’s kind of a European sense, Brazil, Fred talked about.

With respect to China we are basically getting our feet wet. We have one operating division in China today which is the fluids which is ramping up with orders already in place.

And aluminum, well obviously revenues will increase as we start producing those products that we want.

Okay. And on Europe, last call, Fred, I think, you expect Martinrea [ph] to sort of straight are you far from whether or at.

I guess for the year, is this still the expectation?

Yes. So the expectation, it would come down and a couple of factors that play into that.

So obviously the launch of the Jaguar, Land Rover work in Spain, we started up production in Q1. The ramp up as I’ve noted in the past is extremely slow.

So we have cost structure there that and we don’t have enough revenue to support. So overtime, we’ll see improvements in the Spanish facility.

I talked about the German roll off which is over next couple of years is going to be higher than normal. So in that type of environment, the cost structure is fairly fixed, so our ability to flux cost is reduced.

But the expectation is that we’ll be able to build up that book overtime. And as our press release noted, we did win a piece of work that’s going to be placed in Germany.

The other thing that I wanted to touch upon quickly and which we need to look it from what I had expected may be a year ago in terms of Europe. We opened up our Slovakia plant a few years ago, and the ramp up has been extremely slow.

Its anchor program, which is the Ford Mondeo, has been delay on number of occasions, and that will suppose to kick into high yield this year, although they pull in volume, the volume is significant lower than what we had anticipated. So Slovakia is not where we thought it would be at this point in time.

The volume will eventually come that’s going to take a little bit more time. So that’s the factors that played into the Q1 year margin.

I think one of the other things in Europe that as we look forward in the future, we know that we’re going to have a dip in production based on programs that roll off as Fred indicated. But when we come back out, we want to have a leaner workforce and the products we’re in higher volume from Ford as we announced.

And then also on a number of high-end vehicles which are exported and frankly in this movement they can’t build enough of them. So I think we are going to be in a very good position, as you look forward in the future in Europe.

We are hoping via expansive answers we answer some questions before they are asked.

And maybe just one last one on revenues, I think, you’ve guided for flattish of the year, but to the first half secure up with 6% or 7% again the U.S. dollar helps, but, I mean Europe is up, I guess despite the weaker Euro.

So I guess are you thinking that you’re probably coming above that guidance now?

Yes, so our original guidance for the year was $3.4 million, $3.6 million, the reality is we are trending higher than that right now, all really depend on how the FX rate go over the rest of the year.

Okay.

There was a couple of factors that played into to that original guidance, the Chrysler Minivan line, which is redoing for 13 weeks. So that’s been a relatively a big hit for us.

And the Germany roll-off which I noted. So I think the reality is we would like end up exceeding $3.6 million, hard to tell by how much, based on FX rates.

The longer term we provided some guidance heading up to 2018, we still believe that the $4 billion and $4.5 billion for 2018 is a reasonable expectation in range. So I think it’s a much more normalized growth rate.

We talked about the factors plan into that. We expect the [indiscernible] to be a large portion of that growth, fluids will grow although on a much smaller base.

And the metallic test and growth prospects, but the focus in that group right now is on margin improvement and you’ve seen some of that in Q1 results.

Great. And so you did say that Chrysler is working into the guidance, right?

Minivan?

Yes.

All right, thanks a lot guys. Good job.

Thanks.

Thank you.

Good morning.

Good morning

Good morning Justin.

Actually my first question is a follow-up on the margin side, I was wondering if you can give us a sense, if the mix was either a positive tailwind or negative headwind in the quarter. So I guess you had a number is issues with Minivan, just wondering if that makes an impact on margin performance?

Yes, mix the nearly factor into the Q1 performance, at the end of day the improvement is essentially and we have been working on this for a while and it’s focused on cost reductions and optimizing efficiencies and productivity. And that really was driving the improvement of the North American margin and really has nothing to do with mix.

I in my opening remarks did talk a little bit about the Forex translation. So you’ve seen a large impact on our top line, but I wanted to convey the message that we’re not seeing the huge impact on our bottom line, given the fact that our margin is a little bit lower in the U.S.

at the current time, but improving. So that was an [indiscernible], so it’s really bows down to just better operations in a number of our U.S.

plants.

Got it.

We have high debt exposure whatever you would want to call it on some platforms, but looking it that way, I mean, you can look at what happens in a particular quarter up or down, but frankly it kind of balances out. And we tend to make good margins in certain plants it’s not always platform specific.

We can spend a lot of time talking about different platforms, but it’s kind of waste of time.

Okay, that’s helpful. And I know you guys are trying to get away from time with specific plants but was Hopkinsville cash flow positive in a quarter?

You’re right, we’re trying to get away from time, about specific plants. Hopkinsville is way better than it was a year-ago.

We think that there is still opportunity there…

I would just say – I’ll keep it short. We have a plan for Hopkinsville on improvement curve and I will tell you that’s ahead of its curve.

But it’s a long road, we have some product mix not might be we’re talking about, but just some low price product and there that rolls off in the near future and then we have some other items happening right now relative to new product. But really the operation itself is what’s making the difference just could blocking and tackling and so far we’re seeing a better result earlier than expected.

We’ve got a lot of good people working lot of our plants and with less overall launch activity less turnaround activity in Mexico [ph] which took a lot our people and lot of focus. And quite frankly, you can’t have all your people in three places at the same time.

We’re seeing the ability to put the right people in the places they ought to be. And people at Hopkinsville, they are good people, they’re willing to learn, they had an incredible launch cycle doing engine cradles of five different customers, they do about 2.5 million engine cradles per year, including a number of launches.

Customers are happy we are working with them and, I think, as you can see from our key customers that are in there we’re winning work from all of them in different places and that’s what you do with your customer. And we got 44 plants if you include the four that we’re building it’s pretty hard to look at it plant by plant situation.

The reality is that with some of our key customers, particularly our larger customers, we may have 20 plants to 30 plants servicing them. And at any particular time, it’s going to be the rare case that you’ve got 25 plants that are all typically moved [ph] in terms of dealing with the customer.

But Hopkinsville had its challenges are very commending of the people there and a lot people have helped out, and we sunny sky ahead.

Okay, great. And then just in terms of the new programs that were awarded, can you give us the sense when the SOP on those programs are?

Start production on the two wins we announced in our press release are until 2018. And some of two – some of the other aluminum packages they ramp up relatively slow so they don’t have peak volumes and we noted in the press release until 2019 and 2020.

Good news on those programs, it’s not a bunch of brick and mortar, some capacity we have there but we’re not throwing a bunch of new footprint down. We’re able to get good utilization out of the current footprint that were already either under construction or inexistence.

The other thing is those are great programs. They last a long time and their cross platform, they’re with great customers that have seen their product grow, they’re very successful customers.

And if you take $100 million of annualized business from fully launched, we were awarded those programs today in 2015, we may be producing parts for those programs 12 years, 13 years from now. It’s a very, very good core piece of business, basically we want to support the plants and the work that we were doing there for a long, long time.

A lot of programs that win there is platform specific and some are our steel or in our fluids groups have much shorter program wise. Now having said that, we generally win the replacement business, but it’s very nice when you win a program like this.

You are going to go cross platform and you’re going to be working with the customer of those products for a very, very long time.

Okay, great. That’s it from me.

Thank you.

Thanks.

Yes, good morning, everyone.

Good morning.

Good morning.

Rob, I wanted to continue on the aluminum new program wins. And help me understand what you won here.

So is it appropriate to think about these businesses, you just said 10 years or 12 years are going to be fully ramp for five years. So could we simply take the $200 million and put a 7x multiple on that, and that over the life those are 1.4 billion in programs you announced this year.

Yes.

Yes. Both are [indiscernible].

Yes, could be more.

And where these the programs that you would reference at the Investor Day which was I think you talked about your bidding for some of the largest aluminum in our history. So is this coming through or is that sort of…

Yes.

Yes, yes.

Yes, go ahead.

I’ll tell you the first one when we announced the JLR was not that was an addition to, but the Ford program was the one that we were implying, but obviously couldn’t talk about at that point. So and the answer is yes plus.

Yes, I think what we’ve said and we’ve said this in general terms for a year, particularly since the acquisition of the minority of Honsel is we said there are a number of opportunities that we would like to take advantage of going forward with customers, because customers are saying to us quite frankly Lee Mack [ph] is the biggest outside supplier, we’re looking for a strong second source, we like what Martinrea Honsel has done. Honsel five years ago was bankrupt and not in consideration for coding programs as much is even coding programs.

What they’ve seen since that time of course is a streamlined efficient successful company. And the reality of car company this is I like to getting quotes more than one outside supplier.

And no one is ever going to win at all. That’s just the way it is, that’s how we grew our fluid businesses its competitors to TI and Cooper Standard, that’s how we grew our metal forming businesses, competitors to Magna and others.

And so the reality of owning 55% of an operation when your partner of a very good partner has 45% our partner isn’t necessarily looking at the same capital commitments of programs that are going to be fully launched in 2019 and 2020. And so since that time, we basically talk to customers and say we are here and we would like to look at something that fits with us and fits with you.

And of course, programs take a long time to negotiate to be in front of the customer, the customer makes many, many decisions and at any particular time I would say that we’ve got four or five leads, quotes that type of thing working with customers and we’ve indicated that there are lots of potential opportunities. You don’t want to win them all, you can’t win them all, because we’ve got competitors as well.

But I think that this is a very good result. We congratulate the team who has been working with the customer for many months in terms of looking at these programs and there are other opportunities in the future.

The timing of the award and the timing of – and determination as well, whether we win the program, which is based on all kinds of factors, including pricing and location and that type of thing, our thing is that we will see. But these are very good signs that our aluminum business and our reputation with our customers is very good and we really love the engine block program from Ford, which is going to Spain and Germany.

And we really love the Jaguar Land Rover program, which we talked about as well.

And just one follow-up on that if I could, what does this do to the profit margin mix in Honsel. You had had pretty high margins before these new launches, does this allow you to get back to those once the new plants are put in place?

We are very comfortable with the price.

Okay. And then if I could just ask one sort of follow-up on North America, so it sounds like you see like you’re on a steady path of improvement now, if you were to highlight a risk that would truly you’ll ask that at this point in time, I guess beyond industry volumes, what would that be or is that really you’ve got your arms around it and we should just expect steady improvement?

I feel pretty comfortable that we have our arms around it, I would tell you things like product, customer decides that they are not selling a product and have to reduce one of our key products, obviously that’s something that would be difficult. Again we don’t anticipate that, but that’s something that will certainly slow as down a little bit.

And of course, we have heavy equipment and we have unexpected issues we always have to rustle through that and we typically do during the launch cycle, it’s a lot more difficult to deal with days or times like this. So in the moment I feel pretty comfortable.

It’s interesting and we alluded to a qualitatively and we won’t get too specific, but we have customers that are involved in big launches and given our capacity on our locations and I emphasize the fact we spend a lot of time building a footprint in North America so we can help the customer out in many different locations. We have helped the customer either directly or indirectly by helping a supplier the customer was some takeover work, not long-term but takeover work that allows them to meet their robust production schedules and there is a – I mean, we spend a lot of time building a reputation of that – go helping our customer doing that type of thing.

We’re seeing some of that now as well. And that is very good for relationship building, it gets noticed when you go and help people and we quite frankly have a reputation of doing that, even with the escape launch in Shelbyville, which was a very difficult launch, we ensure that Ford basically ran at a run rate of over 400,000 vehicles a year for the second half of 2012, it was a very difficult launch, it cost us money, but we do get a nice award.

And at least you can have a nice conversation with the customer, when there are other opportunities and that’s how you build your reputation in this business overtime.

Thanks gentlemen.

Thank you.

Good morning gentlemen.

Good morning.

Good morning.

First question, could you tell us what pre-launch costs were in the quarter.

Yes, so we provided some guidance in that, I think, on the last call. So we’re estimating for the year about $20 million or $25 million for the quarter it was between $3 million and $4 million.

So the quarterly run rate will increase slightly over the remainder of the year. But $20 million or $25 million is still reasonable range.

So average four to five, five is per quarter.

Okay. Okay that’s fine.

That’s very helpful. And then could you just run through you’ve got the four new plants starting, when do they start if you could just run through them.

Yes, so our Spanish low pressure die casting facility is launching Jaguar Land Rover work. We launched that product in Q1 as in order to ramp up is very slow.

So that plant is actually in production at the current time with not a lot of revenue. So that will build up overtime.

We’re opening up on Mexican low pressure die casting facility, as well. That’s going to be launching, the GM Omega subframe, which is for the Cadillac, late this year on November, December.

And then there is the China like to that which is going into our new China facility, which is launching in early 2016. So that program will be after the Mexican launch.

And then we have Riverside Missouri which will be dedicated to GM E2XX, which is the Malibu just outside the Fairfax and that’s launching later in this year in November.

Okay, and when you launch the facility the Spanish obviously up and running it sounds like it’s a drag right now on profitability, because of the low revenues. Would you expect the same kind of process to occur on the other facilities also?

In the case of the aluminum facilities would be similar in the case of the fair facts of ramp curve will be steeper that towards at the end of the year. So you won’t see a lot this year, but the ramps are tend when you’re next to an assembly plant tend to much faster than aluminum launch.

Okay.

And just elaborate Dave on that, the subframe for GM Omega, although potentially slower than the, for example, riverside E2XX program, it’s not going to be as slow as the Spanish ramp up.

Yes, it’s good point.

So it’s an over in year to your timeframe we’re probably talking about months as supposed the years.

Right, and the challenge for you guys have been last few years has been launches, there is obviously a lot launching right now comfort. Can you give us that we’re not going to have another problem along the way on these?

The good news is and I’ve said this in the few of the other discussions that I’ve had is the aluminum, the Honsel group has a lot of debt. When the company was purchased, we purchased a lot of resource capability.

So they will not be stretched to the extent to the metallics group was, and keep in mind, when the metallics group is being stretched, what resources that they’re aware, we’re actually over getting the Honsel situation put to bed. So the company is always lot more stretch.

So I could just take Honsel on its own, resource basis is really solid capability, technically it’s very solid. And the processes are all the same.

So in our low pressure die casting, whether you’re going to Spain, whether you go to Germany, whether you go to Mexico, whether you go to China, the equipments the same, the process is the same which is a huge benefit that we didn’t have in the metallics group, same with the high pressure die casting. So that makes us significant impact on your ability to launch.

And then in the case of the other launch, the metallics module launch in Fairfax, the philosophy as I said in my statement earlier is stand from the customer and be ready. So hiring earlier than normal, giving the equipment in earlier than normal and getting it all running and approved.

So that’s the gain we should make there, and that’s the only significant launch we have in metallics beyond the one we are currently doing in hydroform, which we’re doing well at.

Yes. I mean…

It’s not nearly as many launches simultaneously.

31] *19:

Okay. That’s all, very helpful, thank you.

You’re welcome.

Just the last question I had, have you guys given any further thought to return on invested capital targets, and if so any target numbers we could be thinking of?

Yes. So we’ve talked about, it was topic of discussion in Investor Day we validate the fact that we have a set in more strict hurdle rates going forward.

The story is not going to be just about growth, it’s going to our investments can be much more selective and what we’re aiming to do is to bridge the gap between us and the peer group. So I don’t want to get into specifics where the hurdle rates are because they do change depending on the circumstance, but you will see a noticeable improvement over the next two to three years in that.

And the fact that is you got to remember lot of the investments we’ve made over the past 12 months to 18 months still on our balance sheet and we’re not anywhere near seeing that benefit to the bottom line as of yet. It’s little bit of timing gap as well, so that will help, in addition to that anything new coming online will be at higher returns.

As we’ve said consistently and I agree with your point I think it’s one of the measures that you look at obviously, just one that investors look that, but when you’re in growth more, when you’re building a footprint. So that you become critical to your customer then there are other measures that you look that as well, right.

So the fact that we can help our customers in some of our plants today is because we have those plants there. And we’ve made investments in order to get them there.

I think that when you’re in started up more, which we have kind of been since 2001 and some of our businesses are only in turnaround mode in order to get the base of business there. And I said there are a number of other measures that one looks that.

So when we talk about comparison to the peer group, go look at the growth rate of the peer group. And there is a lot of companies that have higher ROICs that unfortunately are growing or have issues with growth.

And then they have different criteria that they try and put in there mix for their various stake holders, but we’ve try to do is get very close to our customer, key supplier throughout this in every area that we’re there so that we’re one, two, or three and then end up with the dialogue where a customer gives us a sustainable business and this business you don’t grow ultimately atrophy. And I think that certain amount of growth was important for your people.

It’s important in order to attract key people we have a lot of people at our business not just at the executive level, but General Manager level, the operator level will come over with this issues, this is a place that’s going to be bigger somewhere down the road and it is today and they are not seeing that in the place that they come from. And that’s an important factor in terms of getting right talent in the right places in this business.

That’s one of the criteria and we use when we’re recruiting Pat, this was an opportunity for you.

Okay, and just set of the last open up one last question. Then so what are the measures do you use besides ROIC, when you are in.

Return is obviously a key measure in where we look at in all of our investments, right. So that’s not sway rate from that.

And then I think they go back to your original question, David at the end of the day what we’re going to be doing and we have given it a lot of thought. We [indiscernible] we will be providing more color on those return whole rates and that kind of stuff.

We’re still working through the process, we are still looking at particular investments and as we get more comparable to talk about that we will. And obviously cash flows is an important metric we look at, there’s a huge focus across the organization now on optimize the working capital levels.

There is an opportunity there, so we are looking at cash flow , margin is very important, as well we’re in capital intensive business so we got to be aware of that. So there are various things to look at, but to your point return is very important, to all of us.

And overtime we will be providing little bit more color on that as our process evolves.

Okay very good thank you.

Thank you.

Fred in your comments, you touched upon briefly that $2.6 million foreign exchange gain, could you explain what that is. I take it that something other than foreign exchange translation of U.S.

results.

Correct so in our Canadian operations which is the only part of our business, where we have some level of FX exposure, we have some U.S. based sales contracts, right?

So we benefited from that and essentially what’s flowing through that line in income statement is the revaluation of a long position and the Canadian balance sheet, given the swing in the rates. So that simply is that is what it’s.

Is straight talking about the working capital like the receivable?

Receivable, yes.

Okay.

Yes, just…

Cash.

Is also cash, U.S. dollar cash.

We put out our release in March, when we talked to – when we talked to you guys and we gave the range of $0.31 to $0.35 that FX was in there. And as you know

Most of that range was probably higher. And most of it came through in January if you look at the trend of the rates, I mean there was a huge swing in the CAD to USD rate in January.

So most of that was built into our forecast.

Yes, the reality when we had the $0.31 to $0.35 we talked about that in early March, we had a good March, a lot of operations performed quite well volume was quite high. And we were receiving a number of improvements.

Okay, so Fred for the guidance you provided for Q2, does that anticipate a similar foreign exchange gain?

No, no. our guidance for Q2 has no foreign exchange gains or losses in there.

As I noted in my opening comments, we generally hedge the exposure, it so happened- it’s for Q1 we benefited from the hedging strategy. But going forward, and you don’t see whole lot of volatility in our income statement from FX, Q1 was a bit of an expectation.

Going forward, I'm not expecting huge swings because for the most part we are hedged.

Okay, and Pat, on the takeover work where you’re shifting a customer. Is this where you have taken work from another independent supplier?

Or you are supplementing an OEMs internal parts production? What’s the nature of takeover work?

Both, we’ve had some takeover work from the customer based on their needs and their volumes, and other suppliers, one in particular that it had some struggles and the customer asked for our help and we stepped in and helped. And frankly in both those cases some of our improvements in North America allowed us to open some capacity to do that.

So we did reap obviously a little bit of benefit from that.

So I take it that this takeover work is metal stamping work?

In this case, the majority of it is, yes.

Okay. And then lastly I noticed that that if you away the foreign – if you look at your North American revenue growth, and if you take away the foreign exchange translation FX revenues, we are growing.

And I’m just wondering like, what you think about that. That’s not just reflect that there was a period where the U.S.

Metallic operations were struggling and so they didn’t win as much business, as maybe they should have during that periods over kind of facing that GAAP right now.

So we provided the guidance for the year on the top line and we have talk openly about metallic business. At the end of the day, there are some growth opportunities in the Metallic.

However, the folk there is a margin improvement. Now in Q1, North America was slightly down but there are couple of factors that played into that.

We talked about the minivan line. So if you back that out, we probably would have been in minimum flat.

And then you also had the Ford Fusion in Mexico, which is an important platform for us that came out of the December holiday shutdowns slowly. It had some issues with another supplier both in December and in January.

And we lot some volume there as well, so had an impact on Q1. Looking forward if you through our Q2 production revenue guidance you will notice that even if we exclude the FX translation retch is going to be up year-over-year.

So Q1 was a bit of blip. But with that said provided some primers for the year and metallic flat lines over the next couple of years that’s okay for us because it’s more in margin slower rate suppose to a top line growth store.

I noticed also that Equinox volumes were weak during the fourth quarter.

Yes, it was slightly weak as well. Correct.

So that would have been a contributor also.

Yes.

Okay, thanks very much. Okay, thanks very much.

Yes, thanks very much for you.

Okay, thank you everyone for joining our call. If any of you any further questions, all of us are quite happy to talk to you, you can contact any of us at 416-749-0314.

Thank you and have a great day.