Good afternoon or evening, everyone. Thank you for joining us today.

We always look forward to talking with our shareholders and we hope to inform you well and answer questions. We also note that we have many other stakeholders, including many employees on the call and our remarks are addressed to them, as well as we disseminate our third quarter results and commentary through our network.

With me are Pat D’Eramo, Martinrea’s CEO and President and our Chief Financial Officer, Fred Di Tosto. Today, we will be discussing Martinrea’s results for the quarter ended September 30, 2020.

I am going to start with some brief remarks and some macro commentary on the market. After my opening remarks, Pat will take you through some highlights and give you his perspective.

Fred will review the financial results. I will make some further comments and then we will open the call for questions and we will endeavor to answer them.

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

These reports provide a detailed overview of our company, our operations and strategy and our industry and the risks we face. We are 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, anything about COVID-19 related issues, U.S.

election results and progress in our operations. As always, we want you to see how we see the world.

As for our usual disclaimer, I refer you to the disclaimers in our press release and filed documents. Our public record, which includes an annual information form and MD&A of operating results, is available on SEDAR and you may look at the full disclosure record of the company there.

So, a few general thoughts. First, this is a newly adopted format for us a conference call webcast.

One thing we intend to do on each call is focus on a special topic of interest to us and our stakeholders. It may be a technology or a strategy or a special aspect of our business.

On this call, Pat and I are going to comment on our Graphene initiative, how we are using this remarkable material and our investment in it, we hope you enjoy it. Second, the general industry comment, we are all observers of COVID-19, the health issues, the economic hardships, the restart or rebound of our economy, the U.S.

election results and so forth. We have experienced some challenging times, just as we saw and experienced with 9/11 and with the 2008/09 recession.

As I said on our previous calls from an auto industry perspective, there is really three phases to dealing with a pandemic: first, a shutdown phase, which we now seem to be passed for the most part. Second is the restart phase, which we have seen and it’s gone pretty well for us, as Pat and Fred will talk to.

This has been challenging for the industry, but we have worked hard to launch as smoothly as possible by working on and implementing protocols to keep our people safe and actually ramping up successfully. The third phase has been to rebuild and then meet demand.

And here the news has been quite good for us so far in the context of U.S. sales rates or typically stated U.S.

SAAR. There are other metrics we can use for North America, such as overall production or North American sales, but U.S.

SAAR is probably the most used proxy and generally the most easily accessible number. As you can see, after a huge downward spike in March and April of this year, there has been a pretty steep resurgence in sales and demand.

In September, we had U.S. SAAR above 16 million vehicles and October was also above that level.

We are at a rate fairly close to last year. To put this sense of normalcy into a longer term perspective, going back 15 years, sales levels have been 16 million even back then.

We can go back to the beginning of the century. A second observation is that inventory levels, especially the vehicles that are hot sellers, remain relatively low.

And we are not catching up that quickly. A rough estimate for us all to consider that with a 17 million or so of production rate in North America we lost about 3 million vehicles of production in our industry shutdown period.

It’s not that easy for us to build up inventory when the U.S. SAAR is running at current levels.

The story in China is also good in terms of rebound. The story in Europe is more mixed with rising cases, reintroduction of some lockdown measures, although factories and schools remain open for the most part.

Pat and Fred will give the Martinrea perspective in a moment. I have a couple of quotes from Jimmy Pattison.

One says we have never seen business better in the car business than right now. The other says people want to be sure they feel safe and a lot of people feel safer in their own car than they do on a bus or the train.

I want to provide some context. Jimmy is a legendary Canadian businessman.

As many of you know, he started business with a car dealership and he was very successful there, as in many businesses. I like Jimmy a lot.

I have had the pleasure of serving with Jimmy on the Economic Advisory Council, advising former Finance Minister Jim Flaherty for years. And he had some of the most insightful perspectives that I have run across.

When he says that it’s time to buy car dealerships because people are buying cars I take note. The trend he is referring to here is that many are looking to the vehicle differently these days as a safe mode of transport for one thing, but also as a place to be free I would submit, to be free from wearing a mask and transport, to be free from the restrictions we face in public on a bus or a train or even a plane.

People don’t like wearing masks. We are not made that way.

The trend is that vehicle sales are robust and are very likely to be robust for a long time. We have customers telling us they don’t have enough product, on dealership lots and they are bullish about long-term demand.

The fact is we are in a growth industry here in 2020. There maybe hiccups, but I am optimistic.

There are many prognosticators out there in terms of sales and production volumes, including IHS, Wards and many others. A lot have been off in their predictions.

I am going to go with Jimmy. And with that little glimpse at the macro picture, here is Pat.

Thanks, Rob. Good afternoon, everyone.

As noted in our press release, our positive back to work story continues with Q3 net earnings per share coming in at $0.57 cents and at the range we discussed in our Q2 call of $0.40 to $0.50. Q3 2020 adjusted EPS performance represents a third quarter record for the company.

Our operating income margin came in at 7.8% for the third quarter. That includes the acquired Martinrea Metalsa Group, up from 7.1% in Q3 of last year.

Production sales came in at $933 million, also inclusive of our Martinrea Metalsa Group at the high-end of our guidance range of $850 million to $950 million. Excluding the acquired assets from Metalsa, operating income margins for the quarter would have exceeded 9% driven by our North American segment.

We were able to produce these strong results on some high volume and mix despite COVID. As you are aware, COVID completely shutdown our industry for essentially 2 months in Q2 without any sales, except for our industrial business which includes our off-lightweight products and ventilator stand revenue.

As you can tell, automotive production has recovered from the COVID shutdowns more quickly than previously expected and we see this momentum continuing into the fourth quarter. Our current forecast for Q4 calls for production sales in the range of $900 million to $1 billion, with the midpoint similar to what we saw in Q3 and adjusted EPS in the range of $0.46 to $0.54.

In North America, it’s clear the OEMs are pushing to make up loss volume the remainder of the year. Vehicle inventories remain low, especially related to trucks, SUVs and CUVs, but we are heavily weighted in North America.

It is also clear that Europe overall is recovering at a slower pace. Our volumes in China continue to be quite robust.

As discussed previously, a number of programs were delayed by our customers due to the Q2 COVID shutdowns. This is across multiple customers and some large programs.

These delays will affect some sales and margin enhancements in 2021. The 3 to 6-month delays have some effect on our launch cost at the beginning of the upcoming year, but will normalize in the back half as the program’s progress toward our original planning.

Notwithstanding, our overall operational improvements and program launches continue to go well. Of course, like many in our industry, the higher volumes are stretching plant resources given the continued COVID fears.

Despite this, we have been able to maintain and satisfy a high customer demand. In addition, we continued to improve our safety performance in our facilities, including protecting the masses with our additional safety protocols for COVID-19, impressive overall work for the Martinrea team.

You will recall our margin targets have two key components: sales of new higher margin products and continued operational improvements. For 2021, this includes operational improvements and lean activity we are instituting for our newly acquired Martinrea Metalsa Group.

Our integration activity in this group is going well. We were slowed in one of the six plants, specifically Germany by COVID, but have since been able to get some additional resources there and start to get the work back on track.

Client activities at other Metalsa locations are progressing as expected. We are particularly pleased with our preparation work, including new equipment installation being done at the Tuscaloosa facility.

Recall, this facility had open space when we purchased it. We had won a significant amount of work for the Daimler EVA II electric vehicle platform just prior to the acquisition.

The acquisition allowed us to avoid building a new facility and saved us significant expenses in having to build and staff an all new plant. The previously established facility and leadership team has saved both time and money.

Aside from providing capacity in needed areas, there were several other strategic reasons we acquired the Metalsa assets. The acquisition helped us to diversify our customer base adding significant revenues with Daimler and BMW and transformed our steel metal forming group from a North American player into a global player.

It also enhanced our engineering capabilities in the heart of Germany, allowing us to better support our customers not only in Europe, but also in North America. Perhaps most importantly, the acquisition enhances our lightweight multi-material joining capabilities, which forms the core of our lightweight structures’ commercial strategy.

To summarize, our view of Metalsa has not changed and we remain excited about the prospects for this business as we look forward. Quoting activity also continues to increase as volumes normalize.

I am happy to announce new business wins totaling $70 million in annualized sales since our last call, including $45 million in propulsion systems for FCA and General Motors, $10 million in lightweight structures for General Motors, and $15 million in our industrial group to produce a battery box for Volvo’s top selling heavy duty truck platform. Our industrial business is seeing the highest level of quoting activity since my time at Martinrea and we see many opportunities to grow this business.

We also expect to see our first fluid product with Graphene in production in 2021, a Graphene enhanced brake line for one of our current OEM customers. Our customer has tested and approved the product and is working with us to convert current production from standard brake lines to the more durable Graphene enhanced lines.

This improved safety as well, because the entire line is protected with Graphene as opposed to padding targeted areas with protective material where brake lines can rub against or be exposed to road elements such as gravel. Aside from greater abrasion protection, our Graphene-enhanced brake line offers the benefits of improved chemical resistance, improved performance under high temperatures, and not to mention a 25% weight reduction versus standard brake lines.

The technology is patent protected and we are able to produce these brake lines using current manufacturing equipment and processes, which minimizes investment. As a reminder, at Martinrea, we are big proponents of Graphene and its development.

Graphene is proportionally stronger than steel, is very lightweight, it’s flexible and has better conductivity than copper, transmitted to heat well and its impermeable qualities and it’s very durable given the corrosion, abrasion and UV resistance properties. There are many existing and potential applications for Graphene across a wide variety of end markets, including automotive, transportation, industrial, agricultural and paints, as well as green technologies for electric vehicles, renewable energy and recycled plastics, surely a material that will help better the planet.

We are excited about the technology and the potential opportunities that Graphene provides. And we intend to capitalize on these opportunities through our investment in NanoXplore.

It’s been quite a year so far with the Q2 COVID shutdowns surging volumes in North America that met some of the highest volumes we have ever seen. Demand is expected to remain strong for the remainder of the year.

The restart has gone as smoothly as we could have expected. Our safety protocols have been effective and our team members have done a tremendous job ramping up production and meeting the aggressive volume requirements.

A lot of hard work for the Martinrea people as the team continues to impress, many thanks and appreciation for your commitment to our great organization. And with that, I will pass it to Fred.

Thanks, Pat and good afternoon. I hope everyone is doing well and staying healthy.

As Pat already noted, Q3 was a very good quarter for us in the context of the current environment. In the last call, we indicated that we have likely seen the bottom from a production volume standpoint and the Q3 results certainly support this.

To be able to post year-over-year growth in operating income, earnings per share and free cash flow in the middle of a pandemic is an achievement we are all very proud of. Our operations are now at or near pre-COVID activity levels in North America and China and ramping up in Europe albeit more gradually.

As Pat noted, our team has done a remarkable job in managing the operations and meeting customer requirements during the restart. We thank them for their tireless efforts and dedication during these challenging times.

Taking a closer look at the results, total sales in Q3 were essentially flat year-over-year and down 11% excluding $105 million of sales from our recently acquired assets from Metalsa due largely to overall lower year-over-year tooling sales. Production sales are up 10%, while tooling sales were down 70%, because it generated a higher than normal tooling sales in Q3 of last year, which did not repeat this year due in part to some new program delays.

Recall that Q3 2019 results were impacted by the UAW GM strike, which resulted in approximately $20 million in lost production sales during that quarter. Q3 volumes posted a sharp recovery from the rock bottom levels hit in Q2.

Clearly, the automotive industry is bouncing back more quickly than many expected only a few short months ago. As Rob and Pat touched upon, vehicle sales had been robust and inventory levels remained low in North America, particularly on truck, SUV and CUV platforms, where we are more heavily weighted.

This bodes well for future sales. Our adjusted operating income was $75.5 million, representing a 7.8% margin, a significant improvement from the loss experienced in Q2 and better than the year ago performance.

As Pat already indicated, excluding the operations of our new Martinrea Metalsa Group, which had an operating loss of $3.3 million during the quarter and $105 million of sales, operating income margin would have exceeded 9%, a very strong result. Margins are driven by strength in North America, reflective of volume and a positive sales mix, reduced operating costs, lower tooling sales on which we generally earn little to no margin and a $6.6 million benefit from the Canadian employment wage subsidy program, which we expect to be lower in Q4.

In terms of Europe, as noted earlier, their overall volume recovery there has been slower, which is weighing on margins in that segment of our business. In addition, our operating margin in Europe continues to be negatively impacted by the inclusion of the new German operations acquired from Metalsa.

Pat has already addressed our plans and outlook for the acquired Metalsa business. Some logistical challenges put us behind schedule with the integration of the German plant, but these are now largely behind us and we continue to feel very good about the acquisition and its prospects for the future.

As a matter of fact, we just completed our annual business planning and budget process. And based on the current and anticipated growing environment, we expect the newly acquired Martinrea Metalsa Group to deliver breakeven operating result next year, approach our original $30 million of EBITDA targeted level in 2022 and exceed that original target by 2023.

Inclusive of the new work we won with Daimler on its EVA II platform, which as Pat noted, we will be launching on our new Tuscaloosa facility starting in 2022. Moving on to earnings quickly, Q3 earnings per share was a solid $0.57 as Pat noted, a record for Q3 driven by our strong margin performance.

We did not incur any further restructuring costs in Q3 and we did not currently expect any further such costs during the remainder of 2020. So, we will react to the market as required.

We expect the strong earnings performance to continue into Q4 for guidance and as Pat outlined earlier. Free cash flow as defined in our MD&A for Q3 2020, was $102.5 million, inclusive of $72.3 million in cash CapEx and a $63.7 million cash inflow from working capital.

A portion of the working capital benefit is timing related and will likely normalize during the next couple of quarters. Notwithstanding, our free cash flow performance for the quarter is very strong as production volumes recovered.

The team has done an excellent job, managing cash for the last number of months. Giving strong Q3 performance and our positive outlook for Q4, we believe we are on track to deliver on our expectation and breakeven free cash flow in 2020 if not exceeded.

Due largely for the free cash flow generation during the quarter, we managed to reduce net debt, excluding the impact of IFRS 16 by over $100 million compared to Q2 levels, which resulted in a net debt to adjusted EBITDA ratio at the end of the third quarter of 2.21x and approximately 1.7x for bank covenant purposes, reflecting our amended credit agreement, allowing us to exclude Q2 2020 EBITDA from the calculation. Our leverage ratio remains within our comfort range and well below our bank covenant maximum of 3x.

At the end of the third quarter, we were essentially back to pre-COVID 2019 net debt levels and we funded an acquisition during that time, very good results from all accounts and reflective of the strength of the business. Turning to capital allocation, we believe that our strong balance sheet entering the COVID-related downturn and our swift action to cut costs, preserved cash and protected the balance sheet, enabled us to successfully navigate our way through the crisis, positioning us well to take advantage of opportunities as the recovery takes shape, be the opportunity to take over business or potential acquisitions.

Of course, we will be prudent in allocating capital and our commitment to maintaining strong balance sheet remains a top priority. While maintaining a strong balance sheet, we will seek opportunities to invest in our business, be it organically or through acquisitions, where they make strategic and financial sense.

We will also continue to seek to return capital to shareholders through dividend growth over time as well as opportunistic share repurchases. Overall, we are very pleased with our performance in the third quarter.

We believe the worst of the COVID driven downturn is largely in the rearview mirror at this point barring an industry shutdown from a second or subsequent wave of COVID, which we believe is highly unlikely. We look forward to the future, starting with a strong fourth quarter as our Q4 sales and earnings guidance indicates.

Thank you for your attention this afternoon. With that, I will now turn it back over to Rob.

Thanks, Fred. Pat talked to you about Graphene and our product focus there.

I am going to say a few words about NanoXplore and our approach to technology investing R&D, product development, and M&A. NanoXplore is not just a passive investment for us.

It’s been a very good investment so far, but there are many more aspects to this. We look at Graphene as it fits with our technology focus and light weighting strategy.

We are world leaders in lightweight with aluminum and various steels as you know and we intend to be the best lightweighting company on the planet, using these materials and perhaps others. Graphene is strong, it’s light and it has all the features Pat talked about and it has a great future we believe.

Our initial investment in Nano was made in essence to secure Graphene’s source and to get our feet wet so to speak. We entered into a supply agreement where we could work with the material for our product lines, I made a small investment.

Then while we are working in the early stages with Graphene, it became clear that Nano could produce Graphene in commercial quantities at a reasonable cost. I won’t get into all the details.

Nano is a public company on the TSX Venture Exchange, symbol GRA, and you can read all about the company on its website or in its public documents. It’s AGM is November 25 in 2 weeks.

We came to the view with NanoXplore CEO, Soroush Nazarpour and the company that in order to take advantage of the Graphene opportunity, the company had to be able to produce larger quantities of Graphene, minimally commercial amounts. As a result, Nano plan to build a commercial production plant with capacity to produce 4,000 tons annually and an ability to scale up from there.

The reality is this, large customers are going to buy large quantities. They don’t buy materials by the barrel.

Nano raised the money for this plant in a share offering and we are the lead investor. Now, Nano had the ability to proceed to build this plant.

One thing we know how to do extremely well in Martinrea is to build and scale of plants. We are masters at it.

And so we contributed our expertise. Rocco Marinaccio, the Head of our Flexible Manufacturing unit, which includes our industrial division, went to NanoXplore as a COO.

I joined the Nano board as Chair, our lean team, HR people, and some others all work with Soroush and the NanoXplore people to develop the company, including its non-Graphene manufacturing operations. Pat, Fred and our product development and sales team remain available and are involved in our investment.

And along with this investment, we took care of exclusivity agreements for Graphene on products in our line of business. Although I personally believe the real opportunity for NanoXplore and Graphene generally are in areas that are not necessarily automotive.

By the way, the Graphene plant has been recently completed and is now operational basically on time and below budget. The great achievement in the Nano team is to be congratulated.

When Nano’s largest investor sold its block, we bought a piece and became NanoXplore’s largest investor with an approximate 24% ownership level. Other large investors in NanoXplore include Fidelity Investments, IQ or Investment Québec, [indiscernible] and BDC, as well as Soroush, a pretty solid group of financial backing.

Together, we own most of the shares. Earlier this year in April, Nano completed our share offering to ensure add cash for the next couple of years and we invest in our pro rata portion.

So I hope that’s how we came to have this ownership interest. But let me frame it for you as to how we see the world, something I always say in the introduction to our calls.

This is very much a strategic investment for us related to our light-weighting focus. This is very much a kind of R&D investment or a technology investment.

There are many I believe parts of automotive are not technologically driven unless you are an electric or autonomous products, nothing could be further from the truth. Light weighting is one of the leading technology growth areas of this industry or any industry where things move.

And Graphene is a good aspect of that. And of course, Graphene’s capabilities go beyond light weighting like, for example, connectivity.

Our company does a ton of innovation. Our focus on process improvement, which is constant, is process innovation.

This type of activity is innovation at its best. Further, this investment is a form of M&A, not necessarily in the traditional sense of buying companies which we have done, but to get a key position in a company that we can help to drive growth.

And in my view, at least by not owning the company 100%, we leave it free to really take advantage of all opportunities and not be bound by our current focus, which is primarily automotive. As an aside, Pat talked to you about Metalsa, which is a form of M&A transaction, but really for us, that was in essence the broadening of our presence by getting 6 plants in new locations and by getting access to among other things, some cool technology.

It was cheaper to buy than build. We invest in and develop leading edge technology.

We make things, we make new things and we make things better. That’s the core of innovation.

Interestingly, on that score, our people are showing that when tasked, we can build anything really well and really efficiently, as demonstrated by our success in making ventilator stands and masks. Fred talked about capital allocation.

We always say we invest in our business first while maintaining a strong balance sheet. And we will consider M&A of course, but really with Metalsa and Nano, we are really investing in our business.

When we summarized the cost of our NanoXplore investment and where the valuation sits as of last week total invested $37.5 million, the value today $90 million or so. That’s pretty good.

We recognized stock price and valuation change day to day, but we think we have invested well. By the way, I would argue the value of this investment is not being reflected in our stock price.

And frankly, I doubt the prospects are either. I would think that will change over time.

So, let me make a few remarks on our people and culture for the benefit of our stakeholders. From a macro perspective, our industry has endured the longest shutdown in its history and everyone has been affected.

Our team has responded well, not only in improving our company for the long-term, but in our dedication to developing and implementing leading safety protocols and in contributing to the fight against COVID-19 by building ventilator stands and PPE such as masks for our people and people in our communities. Just as with the great financial crisis of 2008 and ‘09, we are already a stronger and more competitive company going forward coming out of the crisis.

It’s in times like these that are focused on culture and our vision of making people’s lives better by being the best we could be in the products we make and the services we provide comes through for us. This is why in our company, we consistently talk about vision, mission, guiding principles and culture, our people do and hold us accountable to them.

To our lenders, this is who you are lending to. To our customers, this is who produces for you.

To our communities, this is how we will care for you. To our investors, we believe this culture will drive a great and sustainable business for you to invest in.

To all of our stakeholders, we treat you the way we want to be treated and with dignity and respect. We want to thank our dedicated employees for their great service as well as our shareholders, lenders, suppliers, customers and governments for their hard work and support.

Finally, I want to do a shout-out for our industry and some great things happening in Canada and Ontario that are to the benefits of all of us. The Canadian auto industry has had a great several weeks.

We have had close to $5 billion in OEM announcements, including from Ford, re-electric vehicles in Oakville, FCA re-expansion in Windsor and elsewhere, and GM in reopening Oshawa to produce its best-selling truck and investing in its other plants in Ontario. Probably, the highest level of investments announced in our industry in Canada in over a decade.

Further, the Province of Ontario announced some very positive measures for our industry and manufacturing in general in its budget, cutting energy costs and other business related taxes, all to make us more competitive and to encourage investment. Both the federal government and the province have also provided financial support to our industry and it will be well rewarded with the benefits of new jobs and all the tax revenues that will be generated directly and indirectly.

Our studies show OEM investment payback is under 3 years. Both as Martinrea Executive Chair and as Co-Chair of CAPC, or the Canadian Automotive Partnership Council, thanks and congratulations to our customers, our governments, Flavio Volpe of APMA and Jerry Dias of Unifor for some really good work.

And as my colleague, Flavio Volpe has stated publicly and as I have stated publicly, this is possible in large part because of the great work done on the Canada, U.S., Mexico Free Trade Agreement by Minister Freeland and the team working together with us and with our industry. This is good news for all Canadian auto suppliers, including us.

There is work to win here, which will happen and our Canadian base is solidified, really good news. We can keep our plants full and maybe add some work and new jobs.

Now, it’s time for questions. We see we have shareholders, analysts and competitors on the phone.

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

Hi, good evening guys.

Good evening.

Great quarter and good job on the restart.

Thank you.

Maybe just the first question on Metalsa $3.5 million operating loss, I was curious is that sort of roughly what you had planned for the quarter. And yes there is a second question, breakeven next year of $30 million EBITDA in 2022, I think is what you said, always gets the big ramping, maybe just an idea sort of when it becomes profitable.

And I just – I don’t imagine just you flip the switch in 2022 and it’s getting around $30 million so just a better idea of the cadence just for modeling purposes? Thanks.

Yes. So, the third quarter came in as expected for the Martinrea Metalsa Group, so no surprise there and we are expecting a similar quarter in the fourth quarter as well.

And heading into next year, so you are correct, so we are targeting breakeven next year for ‘22, we will approach a $30 million EBITDA so we will get pretty close and then in ‘22 will exceed that’s what our current plans are showing. We have a roadmap in place.

The bulk of the work required is going to be in our German plants. So, we are really focused on that.

And coming over to COVID shut downs, we have been able to turn our attention to that and get people back on the ground there, so making progress there and I envision it to work out kind of like a gradual pace over the course of ‘21. So, I can’t get anymore concrete than that, but roadmap is there and we will continue to work on it quarter-over-quarter expectations are just continuing to get better.

Sure. That’s helpful.

I can sort of draw a line from there. Maybe on the subsidies, just want to clarify, sorry, the $6.5 million in the quarter, is that a total amount or is that just Canada, I don’t know I talked about it and something else too?

Yes. So, the total for the quarter is just over $9 million.

A $3 million of that relates to inactive employees. So, as employees are still on, it’s predominantly in Germany.

So, the subsidy received essentially is a pass that covered the cost of those individuals that are inactive and on layoff. The $6.6 million essentially is the Canadian subsidy and given where volumes were and the fact that we didn’t have any layoff during the quarter, that was essentially a direct benefit.

So that was the net benefit for us for Q3.

I got it. Thanks.

Maybe just one last one before I get back in the queue, again, obviously, a good job here in the cost front. Again, obviously, it’s been a focus for a while.

But I am just curious, as you think about volumes ramping or continuing to ramp and sort of the structural or the permanent costs versus what comes back? So, is there anyway to frame that for us?

Again, I don’t know if there is big structural savings, but any sort of color would be helpful? Thanks.

Yes, we talked a bit about that on the last call. Obviously, we have right-sized our workforce and we took the COVID shutdowns as an opportunity to do so and we have come up very strong.

So, there are some permanent reductions there. We were saying it was about 7% reduction on workforce, some of that is going to be volume related.

Some of it is going to have to come back. So, structurally anywhere from $20 million to $30 million of savings annually as well I am pegging.

We are still working on a few things, but heading into next year that’s kind of how we envision the permanent reduction in cost.

Thanks for such a good color. Again, good job and I will get back in queue.

Thanks.

Thank you.

Hi, thanks for taking my question and just echoing Mark’s comments, good quarter there. Maybe just looking at your cash flow generation over the first 9 months of the quarter, your cash flow from ops are basically 100% or just over 100% of your EBITDA, so good conversion rate.

I know you spoke to us on some working capital moves as we get to the remainder of the year. But when you look at what you have done year-to-date just wondering how you think about the ability to convert a higher level of EBITDA into cash flow into 2021 and 2022 as you ramp up here just given the performance you have seen year-to-date?

Yes. So, obviously a nice tailwind on working capital this quarter, I know it my opening remarks that some of that will normalize over the next couple of quarters.

So we have managed that quite well. We also manage CapEx well as well.

So Q2 obviously, we are at a pretty low level, some of that’s come back just based on the fact that we are – we are focused on some of our launches. So, some across is coming through and we will see some like going forward.

I feel pretty good about our ability to capitalize on that and convert. So we are going to probably land the year end CapEx about $260 million to $270 million and that’s about 20% lower than where we thought we would be pre-COVID in 2020.

And then any of the ‘21 some of that delays in deferrals, so we are going to see some of that come through, but where we sit right now actually and in order, we just completed our annual budget business planning process. I feel pretty good about our ability to actually keep that flat next year from a CapEx perspective year-over-year.

So if we are able to do that and expect sales to be much better next year, we should be able to have a decent year of free cash flow in ‘21.

That’s great color. And just on the Metalsa, I don’t know if there is a readout to think about that a way to quantify this, but you spent $19.5 million of members, certainly correct on the acquisition.

But as you know that it came at a bunch of capacity that you would have had to invest in yourself if you hadn’t made the acquisition. Just trying to get a sense of it’s in the tough acquisition, it wasn’t made what the CapEx would have been for you to build a plant in Alabama for example and staff that plant?

I am not sure about the….

Yes, I mean, obviously greenfields are difficult and it’s not even the cost of the capacity and equipment, it’s building up the workforce that fills startup costs, I think we saved all that in our historical experience and that could be quite substantial.

And southern U.S., especially with all the growth in manufacturing, it’s extremely difficult to get a talented and technical workforce in place. So, the building itself, I’d be guessing to tell you how much the building and the property would be the equipment of course, is equipment that’s all new as part of the program, but the management team and the workforce are absolutely the gem in the whole thing.

That’s helpful. And maybe just lastly from me, I found all the Graphene commentary very helpful and you spoke in one of your slides about different Graphene and nylon coated brake lines and it looks like you have won a little bit disappointed that’s one of your largest customers.

Do you think this recent win pushes through a glass ceiling in terms of the adoption of Graphene within the automotive industry? One of your competitors just in general that maybe adopting new technology sometimes the hardest thing is getting that customer adoption and if you have that it’s kind of accelerates from there, is that a feeling you have given the new contract with the 2021?

Yes, the Graphene and the brake lines is just scratching the surface of its potential. One of the easiest places to add Graphene is in polymers and paints, which is substantial amount of a vehicle – in the tires as well.

But the substantial amount of vehicle is plastic, paint and of course, rubber. So, the amount of future volume I should say of this product is almost immeasurable right now in my view.

One of the inhibitors of getting started is, especially in the automotive arena is testing is key and it took us some time to test and qualify the brake lines, because automotive is very careful when they add new material. So, that takes a little time of course and then making sure that there is a supply line that they can rely on, which in the past Graphene there hasn’t been high volume, about high volume producer, now of Nano there is a high volume producer.

So, once it gets rolling, I think some years from now we are talking about this we will be at an awful lot of Graphene in vehicles from many suppliers.

That’s great color. That’s it for me.

Thank you very much.

Thank you.

Hey, good evening.

Good evening.

Can you maybe – thanks for the information on Metalsa and can you maybe talk about next year Europe as a whole, which what we should think about from that business from an operating margin perspective?

Yes, so, I mean we are dealing with a couple of headwinds from our Europe segment perspective, we talked about it earlier, the volumes are recovering at a slower pace there. Actually pre-COVID, we are doing some headwinds in Europe and those are somewhat continuing.

So, we expect the recovery to continue to be gradual over the course of the rest of this year as well as next year. So, as the volume starts coming back, obviously, our margin will improve with it.

And then the other big piece to it is the German plant that came on Metalsa, obviously, that’s negative in the moment, it resulted in a negative margin for the third quarter. And we expect that to improve over the course of the next number of quarters as we execute our integration plans for which we have a roadmap at the current time.

So, expect that to continue to progress and turn positive. And over the next 2 to 3 years, there is no reason why our segment – European segment can’t get back to pre-COVID type marketing levels.

So, it will depend on volumes and obviously the integration is also a key aspect to it.

So, the number you gave with that Metalsa had a negative $3.3 million I don’t know if that was…

For the group, for the entire…

For the entire group okay. And the European loss was that – was – how did Europe do ex-Metalsa?

What I will say there is ex-Matalsa, the margin would have been positive.

Okay, okay. And then just on the working – on the free cash flow, so should we be – I think you are talking about neutral free cash for the year, but you look to be positive if I am doing the calculation, right, you are positive free cash for year-to-date.

So, is there something do you think that free cash flow would revert back to negative in Q4?

Well, the working capital as I noted is expected to normalize in the next couple of quarters. So, forget about our ability to meet our target, which is breakeven and where I sit right now I feel like we can exceed that, but the working capital will likely be a bit of a headwind heading into the year end and potentially Q1 as well.

Okay. And then when you look at the balance sheet in terms of getting the buyback in place again, when do you think timing for that makes sense?

We just had our board meetings today we will probably address our thinking in the next quarter. I think it’s prudent for us cannot make that announcement here.

We just went through a budget process, things look really good going forward, which is why I talked about the Jimmy Pattison view of the world. It’s certainly something that’s one aspect of our capital allocation strategy, but it will be on the board list for consideration in March, I guess.

Okay. Okay, thanks for taking the questions.

You are welcome.

Thanks very much. Two questions, guys, if I can, one, maybe housekeeping another maybe philosophical, but in terms of your tooling, revenue outlook for 2021.

So I think we are looking at maybe half of what it was in 2019. Is that a good assumption?

I realize it’s volatile from year to year?

Yes, it’s probably going to be a little bit higher than that, just given the fact that some of these delays and that’s going to get pushed out from ‘20 to ‘21. So it’s probably going to be a little higher than that probably not as high as ‘19, that ‘19 was an unusually high year, but your estimation is probably a bit on the loss side.

Okay, somewhere in the middle. It makes sense then.

Yes.

Okay. And then I guess this is probably a question for Rob.

So, I see you accept your excitement with growth with respect to NanoXplore and I don’t necessarily disagree with it. But I just want to play devil’s advocate for a second here you are currently trading at 4x EBITDA, if you exclude NanoXplore you are probably 3.5x to 3.75x kind of forward EBITDA, so just in terms extracting shareholder value, I am just curious on your thoughts, whether it might be more advantageous here to sign a strategic long-term supply agreement, and monetize your position.

Or maybe tell us how you think this could get reflected in the share price? It seems to hit new highs every day.

Sometimes new highs doesn’t necessarily continue forever. As I think that first of all and the first part, we really undervalued.

I think our industry is undervalued, I think the multiples will probably expand as people realize that we are kind of in a growth phase and you are seeing moving into cyclical’s certainly last several weeks, we have seen that. In terms of Nano, we do have a long-term supply agreement.

So that was part of the strategic investment. As long as we maintain a level of investment now we have got exclusivity for that in our lines of business.

And in terms of monetizing, I would monetize yet, because I think that starts to go off to run as desired. So among other things, we look at investments as well, we buy companies or positions in companies we take a look at it.

Also, from an investor perspective, I think we are extremely good at investing in this industry, our acquisition record has been better than just about anyone. And I think that we have got a long way to go.

And so back to the capital allocation question was previous spoke about share repurchases, and so forth. Our focus is on returning shareholder value to our shareholders, I am highly confident that we will do that over the next number of years.

And if the stocks too cheap, we are just going to buy them back. And eventually, make sure we reward our shareholders if you take a look at our the 1-year, 3-year or the 5-year returns when it comes to share price, we are in the top, top part of whatever group you want to look at, I think we have got a runway.

And I think as we look at the meetings that we have here, and the quality of the people that we have, and some of the opportunities and the things that we are seeing, we think we are extremely well positioned. And I think we are just getting started.

Right, okay. I mean, I have seen a lot of companies over the years that have had hidden value in these investments.

And there is no question that you are under appreciated in terms of valuation. But I think until you monetize that, it’s tough to see how that gets reflected in the share price and there is tremendous value there?

Yes, I agree. But I would rather sell at $10 than a $3.

Understood, okay. We can talk about it.

Thanks.

Alright. Thanks.

Hi, good evening. Maybe a quarter ago, I think the concern on the volume increases that you were seeing was maybe filling back up the supply chain.

Is it simply the SAR that you are looking at to feel as confident as you come across about the longevity of this of the volumes you are seeing now? Is that – is it as simple as that or do you see more longer term trends that leave you much more confident than say 3 or 6 months ago?

That’s a great question. I think we should all take a shot at an aspect of it.

I actually think that the underlying economy. First of all, North America is doing better than headlines, would suggests I think in Canada, we are at 87% of capacity according to UBC, I think it’s close to 90% here and people are buying homes and they are buying vehicles.

So big ticket items. And I think that’s very important in the United States, the unemployment rate is 6.9%.

I find that incredible, incredibly good compared to some of the things that we are anticipating I think the United States, at least from an economic perspective, is probably called a number of things, right? By staying open on that and so I think there’s a lot of underlying value there.

We look at a number of different things. I think North America as a region is very strong.

I think the U.S. MCA is doing very well to support that I think the views of international trade and reassuring manufacturing from places like China and other places in Asia is great.

I think it’s absolutely great for Mexico, which is a fantastic place to manufacture. I think we are seeing some of that in Ontario with the announcements that I talked about.

So I think the fundamentals are good there. But I also think the world has changed.

And I go back to what Jimmy said and to a certain extent, what we are seeing is a rethinking of certain philosophies and trends that were put out as gospel over the past, whatever period of time, urbanization and everyone moving in from the suburbs. I think there is a reversal of that trend.

There still will be people downtown and so forth. But I think that a lot of people are basically saying, I can work a good part of the week from home, I can effectively have a yard, I have got a certain amount of freedom, but I am still going to need a vehicle, because if I drive 5,000 kilometers a year, I am going to need a car for that.

And I think that supports automotive sales. I think that number of people are saying, I don’t really want to be in mass transit and whether it’s a safety issue or whether it’s just a restriction issue.

And so in that sense the car gives you a certain amount of safety, you can control your environment for you and your family, anyone that might be vulnerable. I also think that, quite frankly, you get freedom in the vehicle.

And the reality is in our industry, we are building better vehicles, more fun vehicles than ever before. People like to drive.

And I think that trend is a very good one. Miles driven in the United States and North America were going up until we had the pandemic went down for a while and even though miles are down, a lot of people are finding their need to a vehicle.

So I think that that the vehicle sales, my personal view is vehicle sales are going to be very good, production is very good as we showed in North America. And I think we are going to see a lot of growth over the next number of years.

And I think people like IHS are way too conservative. That’s my view.

That’s great. I guess I also had a question related on the NanoXplore side, can you – I mean, it’s a pretty modest part, right that you have announced so far that you are launching.

Can you share with us what your views on like I don’t know, the next 4 or 5 products that you think are ripe or at least areas without sort of showing your hand, but can you kind of guide us to where you really think the low hanging fruit is for you to use more of that material?

Yes. I guess first I would argue a little bit that it’s not an insignificant part.

It’s a very highlighted safety part in a vehicle, which is one of the reasons it took quite a while to go through all the testing cycles that are necessary for brakes. Our next venture will be in the fuel line, which we are down the road on with testing now.

Similar way of producing cars, fuel lines, nylon and its different materials and when you mix, plastics and Graphene, it seems to be one of the best areas where you can adopt the quickest, but again, they have to go through testing cycles and so forth. But in the industry as a whole, I think we are really going to start to see some volumes paint and coatings, rubbers and then of course, the entire interior of a vehicle is plastic under the hood anymore half of its plastic, fuel tanks are plastic in many cases.

The structure of the car tends to be steel and aluminum. And I think that will continue for the most part, which we are very happy about.

But all the interior pieces, the parts of the vehicle you see Graphene definitely has a place in the mix that I think will be very high volumes in the future. A lot of those are different suppliers and in fact between Nano and ourselves, we are certainly trying to help bridge that activity to the other suppliers, so non-competitors, of course.

The other thing that we would say is that Nano as an industrial group, but the growth in Graphene, maybe outside automotive, to a certain extent, a lot of people are looking at it for a lot of different things. That’s why I suggested for those that are interested tune into the AGM and listen to Soroush’s presentation at the AGM just to get some background.

These folks are 100% focused on Graphene. They are leading experts in the world on it.

And they basically said and quite logically so on these wires and I mostly agree with it. In order to capture a market, you have got to be able to produce at volume at reasonable cost and that’s opposed to producing and test tubes and smaller, smaller amounts, if I am a big customer, I want to know that I’ve got source of suppliers as Pat said.

The other thing is that very often when people are looking to purchase stuff, their say who else is buying and who else is using it and industries tend to be copycat when a new product is being adopted. And to a certain extent, but we may not be the biggest buyers or users of Graphene, that’s fine with us.

If we are – if we remotely use, we are 0.1% of the total, somewhere down the road, then Nano is selling one heck of a lot of Graphene.

Right. Thanks, guys.

Thanks and congrats on the quarter.

Thanks.

Thank you.

Thank you very much. Thanks for the question.

Thanks for spending some time in the evening. I just want to end with a couple of thoughts on some individuals.

The first one is very sad. We’re dedicating our call to Roman Ronnie.

Roman, is longtime director and head of our HRCC and a very good friend. He’s been fighting cancer for some time and unfortunately passed away last weekend.

So our hearts and condolences at the company and in our community go to his wife Kathy and son Robert. Roman was respected and one member of Martinrea Family Service and the shareholders with distinction.

He’s been with us since 2014. And he’ll certainly be missed, but will continue to run our board and company as we would have wished with dignity and respect to you all and we will miss you good friend.

A second person we want to talk about is a one of our directors, Molly Shoichet. She just won the Gerhard Hertzberg Gold Medalist, Canada’s top scientist.

We congratulate her. She got a nice gold medal, which we showed us at our director meetings today which was great.

Molly used to be Ontario’s Chief Scientist for a while but she is extremely great person and a great innovator. Part of the call we talked about technology and our approach to technology and how we focus on that in our business and elsewhere.

And the fact that one of our directors to win this prize show us once again our commitment to the technology field. And then a third person that we would also like to congratulate is Megan Hunter, our EVP of Procurement and Supply Chain Ops, was just awarded an award as a Recipient of the Hundred Leading Women by Automotive News, which is quite an achievement.

We congratulate her and we hope that our remarks in these people show the wonderful people that we associate with in our organization. Thank you everyone for the call.

If anyone has any questions, you can call any of us at the numbers in the press release. Have a great evening.