Martinrea International Inc
TSX:MRE
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
9.65
14.45
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Martinrea International Inc
You don't have any saved screeners yet
All
participants,
your
conference
is
ready
to
begin.
Good
evening,
ladies
and
gentlemen,
and
welcome
to
the
Martinrea
International
Fourth
Quarter
Results
Conference
Call.
Instructions
for
submitting
questions
would
be
provided
to
you
later
in
the
call.
I
would
now
like
to
turn
the
call
over
to
Mr.
Rob
Wildeboer.
Please
go
ahead,
sir.
Good 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
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
year
end,
quarter
ended
December
31, 2021.
I'll
refer
you
to
our
usual
disclaimer
in
our
press
release
and
filed
documents.
A
few
general
comments
for
me
at
the
outset
to
set
the
context,
Pat
and
Fred
will
echo
some
similar
thoughts
and
provide
more
context,
and
then
we
will
finish
up
with
some
Q&A.
Welcome
to 2022,
a
year
of
renewed
optimism,
and
we
hope
the
year
we
finally
put
lingering
pandemic
related
headwinds
in
the
rearview
mirror.
Our
company
and
industry
continue
to
navigate
our
way
through
some
significant
challenges
in
2021,
most
of
which
were
related
to
the
ongoing
fallout
from
the
COVID-19
pandemic,
including
supply
chain
issues,
labor
shortages,
cost
inflation
in
materials,
energy,
and
other
inputs,
and
substantial
new
business
launch
activity.
We're
currently
launching
the
largest
volume
of
new
programs
in
the
company's
history;
and
as
such,
launch-related
costs
are
currently
elevated.
Pat
and
Fred
will
provide
more
detail
on
these.
Arguably,
the
challenges
we
faced
in
2021
were
greater
than
the
challenges
we
faced
in
the
early
days
of
the
COVID-19
pandemic.
When
the
automotive
industry
shut
down
for
over
two
months
beginning
in
March
2020,
our
revenues
dropped
precipitously
close
to
zero,
and
many
in
our
industry
questioned
their
ability
to
survive.
However,
we
knew
what
we
had
to
do
to
secure
our
own
survival,
and
we
acted
quickly
to
reduce
costs
and
protect
our
balance
sheet,
thereby
ensuring
the
sustainability
of
our
business
well
into
the
future.
We
quickly
bounced
back
from
those
dark
days,
posting
record
results
in
the
third
and
fourth
quarters
of
2020.
The
overall
environment
has
been
more
erratic
and
unpredictable.
Production
volumes
declined
year-over-year
and
remained
suppressed,
but
the
impact
has
been
uneven
across
programs
and
platforms,
and
our
sales
mix
has
been
negative.
Cost
inflation
has
been
more
pervasive
than
most
in
our
industry
expected.
Labor
shortages
have
impacted
the
company.
Visibility
has
been
extremely
limited.
These
factors
have
made
it
difficult
to
pivot
in
real
time
in
response
to
these
changing
industry
dynamics.
As
we head
into 2022,
we
know
there
will
be
challenges,
some
continuing
and
some
new.
Already
this
year,
we
dealt
with
border
closures
resulting
from
protests
against
COVID-19
pandemic
restrictions,
which
affected
our
industry.
These
seem
to have
been
resolved.
There's
conflict
in
Ukraine,
casting
a
cloud
over
Europe,
global
financial
markets,
and
the
automotive
market,
especially
in
Europe.
While
the
events
are
terrible,
I
believe
the
impact
on
the
automotive
industry
are
likely
transitory.
Undoubtedly,
there
will
be
more
challenges.
We
live
in
a
troubled
world.
However,
as
we
look
forward,
we
believe
there are
reasons
to
be
positive.
Our
fourth
quarter
results
were
better
than
our
third
quarter
results, and
we're
off
to
a
good
start
in
the
early
part
of 2022.
We
believe
our
results
will
continue
to
improve
throughout
the
year
as
supply
chain
conditions
normalize
and
industry
volumes
stabilize
and
recover.
Our
launch
activity
is
also
expected
to
normalize
later
this
year,
resulting
in
higher
sales
and
better
margins
as
volumes
on
these
programs
ramp
up.
We
are
also
addressing
cost
inflation
through
commercial
negotiations
with
our
customers
and
other
offsets.
We
believe
that
we
are
at
the
beginning
of
what
is
likely
to
be
a
multi-year
cycle
of
strong
sales
and
production
growth,
especially
in
North
America
where
most
of
our
operations
are
located.
Demand
for
vehicles
is
robust,
and
likely
to
remain
strong
given
pent-up
demand.
Interest
rates
that,
although
appear
likely to
move
higher,
are
still
low
in
a
historical
context.
High
savings
rates
and
strong
household
balance
sheets.
Additionally,
vehicle
inventories
remain
near
an
all-time
low,
and
will
likely
take
several
years
to
build
back
up
to
normal
levels.
Pat
and
Fred
will
talk
to
our
2022
and
2023
outlook.
As
always,
we
continue
to
live
our
vision
of
making
lives
better
by
being
the
best
we
can
be
in
the
products
we
make
and
the
services
we
provide,
as
well
as
our
unique
culture
based
on
our
central
golden
rule
philosophy.
At
the
same
time,
we
remain
true
to
our
lean
thinking
philosophy
and
to
our
entrepreneurial
character.
We
are
a
technology
company
focused
on
innovation, and
we
had
some
notable
developments
on
that
front
during
the
year.
Here
are some of
the
key
highlights
of
2021.
The
full
range
are
found
in
our
annual
information
form
in
year-end
releases.
We
celebrated
our
20th
anniversary
as
an
auto
parts
manufacturer,
a
significant
milestone
for
our
company.
In
that
time,
a
relatively
short
time
in
the
industry,
we
have
been
one
of
the
fastest
growing
companies
in
the
world.
We
continue
to
deliver
industry-leading
safety
metrics
with
a
total
recordable
injury
frequency
or
TRIF
of
1.37,
representing
a
46%
improvement
over
last
year
and
a
91%
improvement
since
2014.
This
is
a
wow
statement,
wow!
This
is
significantly
better
than
the
industry
average
of
3.0
and
is
an
accomplishment
to
be
proud
of.
Our
goal
is
to
be
the
industry
leader.
In
light
of
the
ongoing
semiconductor
shortage
and
other
headwinds
we
are
currently
facing
and
as
a
proactive
measure,
we
reached
an
agreement
with
our
banking
syndicate
to
provide
enhanced
covenant
flexibility.
Fred
will
talk
to
that.
We
have
excellent
relationships
with
our
lenders,
and
we
thank
them
for
their
ongoing
support.
We
increased
our
investment
in
NanoXplore
Inc.
by
purchasing
1
million
shares
in
February
2021
to
hold
an
approximate
22%
interest
in
NanoXplore
at
year-end.
NanoXplore
is
a
world
leader
in
graphene
production,
and
we
are
very
excited
about
its
future.
Also
in
2021,
we have
been
producing
the
world's
first
grapheme-enhanced
brake
lines
for
customers,
a
technological
first.
We
entered
a
50/50 joint
venture
with
NanoXplore
called
VoltaXplore,
aimed
at
commercializing
the
development
of grapheme-enhanced
lithium
ion
batteries
for
electric
vehicles.
We
are
excited
about
this
potential
game-changing
technology.
We
formally
established
our
Martinrea
Innovation
Development
or
MiND
initiative
with
the
purpose
of
incubating,
developing
and
funding
innovative
technologies
that
can
be
directly
applied
to
Martinrea's
operations
or
grow
independently.
Martinrea
currently
holds
three
equity
investments,
including
its
22%
stake
in
NanoXplore,
its VoltaXplore
50/50
joint
venture
with
NanoXplore,
and
a
minority
equity
position
in
AlumaPower,
a
private
company
developing
aluminum
air
battery
technology
for
a
variety
of
end
markets,
including
automotive.
Martinrea
is
also
evaluating
a
number
of
other
initiatives
within
MiND,
including
additive
manufacturing,
robotics,
and
software.
As
the
industry
increasingly
moves
towards
electric
vehicles,
our
program
mix
and
product
portfolio
is
evolving
in
lockstep
with
this
trend.
We
estimate
that
by
2026,
approximately
40%
of
our
book
of
business
will
be
on
electrified
vehicle
platforms,
which
is
in
line
with
industry
projections
from
IHS
market
in
the
regions
we
operate
in.
Our
business
is
largely
agnostic
to
propulsion
type.
And
for
the
small
portion
of
our
business
that
is
exposed,
we
have a
broad
range
of
products
that
are
either
in
production
or
under
development
to
address
the
transition.
In
fact,
we
believe
that
we
have an
opportunity
to
augment
our
content
per
vehicle
as
the
world
goes
electric.
We
believe
that
our
culture
is
and
will
be
a
sustainable
competitive
advantage
for
the
company
over
the
long
term.
And
we
believe
it
has
driven
the
improving
financial
safety
and
quality
performance
in
the
past.
In
order
to be
sustainable
for the
long
term,
the
company
has
to
be
profitable,
safe,
build
great
products,
take
care
of
its
customers
and
people, and
have
a
culture
that
is
embraced
by
the
people.
Sustainable
companies
with
great
cultures
will
be
around
for
a
long
time.
We
believe
we
have
a
company
poised
to
excel
in
2022, 2023
and
beyond,
and
we
are
committed
to
deliver
for
our
shareholders
and
all
our
stakeholders.
We
thank
you
for
your
ongoing
support.
We
have a
great
future
together.
With that, I will turn it over to Pat.
Thanks,
Rob.
Hello,
everyone.
As
noted
in
our
press
release,
we
generated
an
adjusted
net
loss
per
share
of
CAD 0.12
and
an
adjusted
operating
loss
of
CAD
2.9
million
in
the
fourth
quarter.
This
was
on
production
sales
of CAD
850
million,
which
is
down
13%
year-over-year
as
a
result
of
lower
volumes
due
to
chip
and
other
supply
shortages.
Operating
income
was
further
impacted
by
mix,
cost
inflation,
inefficiencies
due
to
customer
fluctuation,
and
launch
activity.
EBITDA
was
positive
at
CAD 63
million,
better
than
Q3
at
CAD 44.9
million,
though
still
down
from
Q4
of
last
year
at
CAD
132
million.
We
note
that
Q4 2020
was
a
record
for
the
company.
Results
did
improve
sequentially
over
Q3
as
we
saw
a
slightly
lower
level
of
chip-related
OEM
production
shutdowns
and
customer
call-offs
during
the
quarter.
It
was
encouraging
to
see,
but
we're
not
out
of
the
woods
yet.
We
continue
to
face
volume,
cost,
supply
challenges
that
have
hampered
our
progress
over
the
last
year.
We
are
seeing
signs
of
these
challenges
easing
in
the
early
part
of
2022.
We
expect
Q1
to
be
notably
better
than
Q4,
with
the
results
expected
to
continue
to
improve
over
the
course
of
the
year
as
the
supply
chain
issues
gradually
sort
out
and
our
launch
activity
normalizes.
From
an
industry
and
macroeconomic
standpoint,
demand
for
vehicles
is
very
high.
We
continue
to
expect
our
plants
to
be
operating
at
full
capacity
once
production
smoothes
and
the
recent
program
launches
reach
mature
volumes
over
the
coming
quarters.
We
therefore
remain
confident
in
our
2023
outlook,
which
includes
over
CAD
200 million
in
expected
free
cash
flow
generation
for
the
year.
In
the
meantime, and
as always,
we
continue
to
manage
costs,
protect
the
balance
sheet,
and
ensure
sustainability
of
our
business
over
the
long
haul.
During
the
quarter,
we
reached
an
agreement
with
our
banking
syndicate,
providing
us
with
covenant
flexibility
as
we
navigate
our
way
through
the
remaining
pandemic-induced
challenges.
Our
relationship
with
our
lenders
is
strong,
and
we'll
have
more
to
say
on
the
outlook
in
a
few
moments,
and
Fred
will
address
our
balance
sheet
later
on
the
call.
Looking
at
our
North
American
operations,
volumes
continue
to
be
held
back
by
chip
and
other
supply
shortages,
as
I
mentioned,
but
we're
a
bit
better
in
Q4
and
we
have
a
good
start
to
2022.
The
cost
inflation
and
labor
shortages
continue
to
impact
our
operation
at
a
time
when
we're
working
through
a
period
of
heavy
new
business
launch
activity.
Much
of
the
current
launch
cost
is
driven
by
the
fluctuation
in
customer
pool
due
to
the
supply
of
chips
and
other
components.
Hence,
one
day
we
have
a
plant
that
is
running
full
and
the
next
day
we
have
people
standing
waiting
on
the
customer.
The
good
news is,
these
headwinds
are
not
getting
any
worse
at
this
point.
So,
there
has
been
some
stabilization
in
that
sense.
While
labor
shortages
persist,
they
have
improved
in
some
locations,
and
we
do
not
anticipate
having
to
implement
any
further
wage
increases
at
this
time.
Commercial
negotiations
aimed
at
recovering
a
portion
of
the
inflationary
costs
that
have
weighed
on
our
margins
in
recent
quarters
continue
with
the
customers.
We
have had
a
number
of
positive
outcomes
on
this
front,
and
expect
that
we
will
have
more
success
as
we
move
forward.
As
I
discussed
on
the
last
call,
this
process
will
take
time.
As
I
alluded
to
earlier,
we
continue
to
progress
through
the
largest
period
of
new
business
launch
activity
in
the
company's
history.
Our
launch
activity
has
been
especially
high
during
the
pandemic
due
to
the
compression
of
2020
and
2021
launches,
but
also
because
we
won
a
lot
of
new
business
in
recent
years.
Programs
we
are
currently
launching
represent
approximately
CAD 800
million
in
annual
sales,
touching
both
traditional
customers
like
GM,
Ford,
and
Stellantis
with
both
core
products
in our
all-
electric
vehicles,
as
well
as
EV
programs
from
newer
customers
such
as
Daimler
and
Lucid.
In
the
moment,
these
programs
are
resulting
in
higher
than
normal
launch
costs
with
the
issue
further
compounded
by
the
volatile
production
environment.
This
is
in
part
driven
by
the
abnormal
customer
pull
due
to
the
supply
of
chips
and
other
components.
This
makes
it
difficult
to
flex
our
cost
structure
and
match
the
level
of
volume.
The
good
news
is
these
programs
will
ultimately
drive
above
market
sales
growth
and
improve
margins
in
the
years
ahead.
Notably,
as
we
progress
in
the
back
half
of
this
year
and
into
2023,
our
plant
launch
activity
is
expected
to
drop
by
half.
So
launch
costs
over
the
timeframe
will
drop
to
a
lower
level
as
well.
This
combined
with
the
expected
normalization
in
production
volumes
as
supply
conditions
in
our
industry
improve
should
set
the
stage
for
a
meaningful
recovery
in
our
operating
results.
In
Europe,
we
are
facing
the
same
cost
pressures
as
in
North
America,
with
energy
costs
being
the
significant
and
unique
headwind.
We
continue
to
make
good
progress
with
our
operational
improvements
in
the
region.
However,
this
progress
is
currently
being
masked
by
energy
supply
headwinds
and
cost
inflation.
The
bottom
line
impact
of
these
efforts
will
be
more
visible
once
production
returns
to
normal.
Our
Rest
of
World
segment
continues
to
be
impacted
by
the
same
volume
and
cost
issues
as
other
regions,
although
to
a
lesser
extent
as
margins
in
this
segment
were
quite
healthy.
Overall,
our
operations
appear
to
have
hit
an
inflection
point
back
in
the
third
quarter,
with
a
modest
improvement
in
the
fourth
quarter
and
a
much
more
meaningful
improvement
in
Q1
to
be
expected.
The
positive
momentum
will
continue
as
the
year
unfolds
as
we
have
noted
in
the
last
few
quarters.
I'm
pleased
to
announce
that
we've
been
awarded
CAD
100
million
in
new
business
since
our
last
call.
This
includes
approximately
CAD
50 million
in
our
Lightweight
Structures
Group
on
the
General
Motors'
new
BEV3
electric
vehicle
platform; CAD
35
million
on
various
Propulsion
Systems
work
for
GM,
Ford,
Daimler,
and
Tesla;
and
CAD 15
million
in
our
FMG
group
with
Lucid,
GM,
John
Deere,
and
Thermo
King.
New
business
awards
since
the
beginning
of
2021
have
now
totaled
approximately
CAD 300
million.
I
wanted
to take
some
time
and
explain
the
drivers
of
the
expected
margin
improvement
that
is
underpinning
our
2023
outlook.
What
this
slide
shows
is
a
visual
description
of
the
drivers
that
will
take
us
from
what
is
essentially
a
breakeven
adjusted
operating
income
margin
in
Q4
to
an
adjusted
operating
income
margin
of
8%
as
implied
in
our
outlook.
The
items
are
in
order
of
significance.
The
first
bucket
comes
from
the
expected
recovery
in
our
industry
volumes
as
projected
by
IHS
and
the
normalization
in
our
sales
mix.
Recall
that
mix
has
been
a
challenge
for
us
in
recent
quarters
with
programs
such
as
the
GM
Equinox,
Sierra,
and
Silverado
and
the
Ford
Escape,
which
have
been
discussed
at
length
in
previous
calls.
Next,
a
recovery
in
materials,
labor
and
energy
costs
achieved
through
successful
outcomes
on
commercial
negotiations
with
our
customers
will
be
a
source
of
margin
improvement.
We
have
had
some
success
here
and we
anticipate
that
we
will
have
more
in
the
coming
quarters.
The
reality
is
our
industry
has
witnessed
inflationary
costs
that
would
have
been
hard
to
fathom
at
the
time
the
existing
contracts
were
put
in
place.
At
the
same
time,
our
OEM
customers
have
protected
and
even
enhanced
their
margins
through
higher
prices
of
vehicle-buying
customers.
So
it
should
be
expected
that
they
share
the
inflationary
burden
with
their
suppliers.
Most
of
the
customers
are
generally
accepting
of
this
reality
given
the
cost
breakdowns
customers
use
to
build
the
final
pricing
with
suppliers.
And
so
it
becomes
a
matter
of
negotiating
a
fair
settlement.
As
I
said,
this
takes
time,
but
we
continue
to
drive
this
forward
and
we're
making
good
progress.
Of
course,
there's
also
the
possibility
that
material
costs
normalizes
as
supply
conditions
improve,
which
would
relieve
some
of
the
pressure.
On
the
other
hand,
labor
costs
are
likely
to
be
higher
permanently.
Moving
on,
the
next
bucket
consists
of
operational
improvements
across
our
network
as
we
continue
to
execute
our
lean
initiatives.
As
discussed
at
length
today
and
on
previous
calls,
our
operations
have
been
impacted
by
the
volatile
OEM
customer
production
schedules
and
short
notice
of
call
offs
that
have created
a
lot
of
the
inefficiency.
This
category
also
assumes
that
operations
improve
as
a
result
of
normalization
and
production
schedules
in
volumes.
So
at
minimum,
we
achieved
our
pre-COVID
performance
levels,
though
we
expect
more
from
ourselves, of
course.
Next,
the
reduction
in
launch
activity
I
mentioned
earlier,
dropping
by
almost
half
later
this
year
and
into
2023
will
result
in
better
margins.
Finally,
there's
a
small
other
category
that
contains
various
puts
and
takes.
While
we
don't
have
perfect
visibility,
we
have
a
clear
view
of
what
we
need
to
do
to
improve
operations
to
drive
margins
higher.
Next,
I wanted
to briefly
mention
VoltaXplore,
our
EV
battery
joint
venture
with
NanoXplore
as
we
get
many
inquiries.
VoltaXplore
is
making
great
progress
and
is
on
track
towards
meeting
its
expected
milestones.
We
remain
excited
about
this
potential
game-changing
technology.
Our
demonstration
facility
in
Montréal
is being
commissioned.
The
equipment
is
in
and
we're
ramping
up.
On
schedule,
the
feasibility
study
will
be
completed
by
mid-2022
with
a
go,
no
go
decision
on
a
larger
gigawatt
factory
expected
shortly
thereafter.
VoltaXplore
envisions
building
a
10-gigawatt
hour
facility
likely
in
two
phases.
First,
the
initial
2-gigawatt
hour
factory
to
start
production
in
mid-2024
followed
by
an
expansion
to
a
10-gigawatt
factory
in
2026.
As
a
reminder,
the
key
advantages
we
expect
from
graphene-enhanced
lithium-ion
batteries
compared
to
competing
technologies
currently
in
the
market
include
increased
battery
capacity,
therefore
longer
battery
life;
faster
charging
speeds;
improved
safety
as
graphene's
high
thermal
conductivity
allows
for
greater
temperature
control
at
lower
costs.
In
the
near
future,
we
will
hold a
battery
day
at
the
company's
demonstration
facility
in
Montréal.
The
event
will
consist
of
a
plant
tour
as
well
as
technical
discussions
and
presentations
with
senior
management
of
VoltaXplore.
I
would
encourage
all
interested
investors
and
analysts
to
attend.
With
that,
I'd
like
to
thank
the
entire
Martinrea
team
for
their
continued
dedication
and
commitment
in
these
challenging
times.
Our
future
is
bright,
and
with
that,
I'll
pass
it
to
Fred.
Thanks,
Pat,
and
good
evening,
everyone.
As
Pat
noted,
our
business
continues
to
face
challenges
from
lower
volumes
due
to
semiconductor
and
other
supply
shortages,
as
well
as
mix,
cost
inflation,
operational
inefficiencies
and
heavy
launch
activity.
As
such,
our
Q4
results
remain
well
below
year
ago
levels
and
below
where
they
need
to
be,
quite
frankly.
The
good
news
is
it
looks
like
we
hit
the
bottom
in
Q3
and
are
now
in
the
early
days
of
what
we
believe
will
be
a
strong
multi-year
recovery
in
volumes,
sales,
margins
and
free
cash
flow.
Taking
a
look
at
our
sequential
performance,
our
fourth
quarter
results
did
improve
over
Q3
as
chip-related
OEM
production
shutdowns
and
customer
call
offs
declined
slightly.
We
had an
adjusted
operating
loss
of
approximately CAD
3
million
close
to
breakeven
and
production
sales
of
CAD
850
million,
which
is
up
by
about
7%
for
an
incremental
margin
on
production
sales
of
approximately
25%.
We
had
a
higher
than
normal
level of
tooling
sales
in
the
quarter
and
as
such,
our
total
sales
were
up
24%
compared
to
Q3.
Adjusted
EBITDA
was
up
by
41%
quarter-over-quarter.
We
generated CAD
21
million of
positive
free
cash
flow
in
the
quarter,
which
was
largely
driven
by
a
reduction
in
tooling-related
working
capital.
While
we
wouldn't
extrapolate
this
amount
going
forward,
this
tooling-related
working
capital
flows
can
be
lumpy
and
unpredictable,
we
do
expect
to
generate
positive
free
cash
flow
in
a
full
year
basis
in
2022.
As
Pat
noted,
we're
off
to
a
good
start
so
far
in
Q1
as
we're
seeing
higher
volumes
and
greater
production
stability
with
fewer
customer
call
offs
compared
to
Q4.
We
believe
our
results
will
continue
to
improve
throughout
the
year
as
supply
chain
conditions
normalize
and
industry
volumes
recover.
Our
launch
activity
is expected
to
normalize
later
this
year,
resulting
in
higher
sales
with
better
margins
once
these
programs
ramp
up.
We're
also
addressing
cost
inflation
through
commercial
negotiations
with
our
customers.
Overall,
while
it's
still
early
days,
the
outlook
we
provided
in
our
last
call
that
is
for
Q4
to
be
slightly
better
than
Q3
followed
by
a
steady
improvement
in the
first half
of
2022
and
an
accelerated
pace
of recovery
in
the
back
half
of
the
year
is
on
track
at
this
point.
More
importantly,
we
continue
to
have
a
high
degree
of
confidence
in
our
ability
to
achieve
the
targets
set
out
in
our
2023
outlook
which
calls
for
total
sales,
including
tooling
sales
of
CAD 4.6
billion
to
CAD 4.8
billion
and
adjusted
operating
margin
exceeding
8%
and
more
than CAD
200 million
in
free
cash
flow.
Demand
for
vehicles
remains
robust,
and
inventories
continue
to
trend
near
an
all-time
low.
We
believe
this
sets
the
stage
for
a
multi-year
period
of strong
industry
production
volume
growth
once
supply
chain
bottlenecks
are
worked
out.
We
also
expect
our
sales
growth
to
outpace
industry
production
volume
growth
given
the
substantial
amount
of
business
that
we
have won
in
recent
years
that
we'll
continue
to
launch
on.
Pat
walked
us
through
the
bridge
to
our
greater
than
8%
margin
target
earlier.
Drivers
include
volume
and
mix;
recovery
in
material,
labor
and energy
costs;
operational
improvements
and
a
normalization
in
new
business
launch
activity.
We
already
covered
these
in
detail
so
I won't
elaborate
on
them
again
here.
The
other
key
assumption
underpinning
our
2023
free
cash
flow
outlook
is
an
expected
normalization
of
capital
spending
to
a range
approximately
in depreciation
as
a
percentage
of
sales.
The
two
main
drivers
continue
to
be
second
generation
programs
in
our
flexible
[ph]
well lines (25:19) which
require
less
capital
in
the
first
iteration and
getting
past
a
heavy
investment
cycle
in
aluminum.
We've
been
winning
a
lot
of
business
in
recent
years
and
this
has
required
investment.
But
ultimately,
this
is
really
good
news
given
our
strong return
profile. Our
track
record
of
delivering on
our
financial
targets
speaks
for
itself
and
we
are
confident
that
this
will
continue
to
be
the
case
as
we
deliver
on
our
2023
outlook.
Turning
to
our
balance
sheet,
net
debt
was
essentially
flat
quarter-over-quarter
at CAD
857
million
at
the
end
of
Q4.
Our
net
debt
to
adjusted
EBITDA
was
3.11
times
at
the
end
of
the
quarter,
an
increase
from
approximately
2.5
times
last
quarter.
As
we
foreshadowed
on
our
last
call,
in
light
of
the
semiconductor
shortage
and
other
challenges,
we
proactively
amended
our
lending
agreements
with
our
banking
syndicate
during
the
fourth
quarter
to
provide
us
with
increased
financial
covenant
flexibility.
Similar
to
what
we
did
in
2020,
the
company's
calculation
of
its
net
debt-to-EBITDA
ratio
for
covenant
purposes
now
excludes
EBITDA
from
Q3
and
Q4
of
2021
and
is
based
on
the
annualized
total
of
the
remaining
quarters
in
the
relevant
trailing
12-month
period.
In
addition,
the
maximum
net
debt-to-EBITDA
covenant
has
been
increased
to
4
times
for
Q1
this
year,
4.5
times
for
Q2,
and
3.75
times
for
Q3
before
returning
to
3
times
in
Q4
of
2022.
We
have
strong
relations
with
our
lenders
and
we
thank
them
for
their
continued
support.
And
with
that,
and
I
turn
you
back
over
to
Rob.
Thanks,
Fred
and
Pat.
And
with
that,
we
conclude
our
formal
remarks.
Thank
you
for
your
attention
this
evening.
Now,
it's
time
for
questions.
We
see
we
have
shareholders,
analysts,
and
competitors
on
the
phone
so
we
may
have
to
be
a
little
careful
here
but
we
will
answer
what
we
can.
We
will
give
answers
to
the
questions
we
would
like
you
to
ask.
Thank
you
for
calling.
Thank
you.
We
will
now
take
questions
from
the
telephone
line.
[Operator Instructions]
Our
first
question is
from David
Ocampo
from
Cormark
Securities.
Please
go
ahead.
Thank you.
Good
afternoon,
everyone.
Good afternoon.
Hello.
Or
good
evening.
Yeah.
Pat,
I
really
appreciate the
discussion
on
the
bridge
to
8%
margins,
but
maybe
if
I
can
dig
a
little
bit
more
into
the
cost
inflation
piece.
That
recovery
that
you're
showing
there,
does
that
assume
that
all
your
customers
repriced?
I'm
just
trying to
get
a
sense on
what
margins
could
be
if
your
customers
don't
play
ball
here.
Well,
it's
not
assuming
that
we
get
100%
of
everything
that's
out
there.
There's
also
the
request
on
the
other
side.
So
you've
got
the
inflationary
numbers
coming
from
our
supply
base,
the
tier
2s
and
tier
3s
and
raw
material,
energy,
which
is
a
big
one
right
now.
And
then,
of
course,
while
we
would
likely
recover
from
the
customer
but
you're
also
still
negotiating
with
the
side
that's
driving
the
inflation.
So
between
those
two
hills,
we
certainly
expect
to
make
that
type
of
progress
and
we've
had
some
good
progress
so
far.
And
those
are
closer
to
50%,
75%
that
[indiscernible]
(29:11)?
No.
We're
not
going to
get
into
that
detail.
We're
in
negotiations.
We're
just
telling
you
we're
in
negotiation and
we
gave
you
an
estimate.
You can
appreciate
that,
I
think.
No,
no,
definitely
can.
And
then
I
guess
for
your
new
business
awards,
is
there
more
flexibility
on
pricing
there
especially if
the
higher
than
normal
inflationary
pressures
persist
here?
Like
are
you guys going
to
have
to
renegotiate
some
of these
new
contracts
that
you
guys have
just
recently
signed?
I
would
say
that
a
lot
of
these
things
come
into
play
later.
These
are
things
that
are
a
couple
of
years
out
and
certainly
if
there
was
some
inflationary
effect,
we
would
be
negotiating
that.
But
our
expectation
is
on
a
lot
of
the
material
cost
increases,
like
you
look
at
aluminum.
It just
shot
through
the
roof
recently.
A
lot
of
that
stuff's going
to
recover
and
normalize.
Some
things
such
as
labor,
we
knew
was
going to
go
up.
It
went
up.
We
would
bury
that.
That
would
be
a
part
of
your
pricing.
That's
normal.
So
we
would
expect
that
those
things
that
need
to
be
adjusted
because
[ph]
the
bottom
line
(30:18) at
the
time
of
launch
or
as
you
approach,
we
would
certainly
negotiate.
But
we
also
made
some
assumptions
based
on
where
we're
sitting
and
what
we
were
seeing
in
the
environment.
And
anything
new
that's
coming
our
way,
obviously
we're
quoting
in with
updated
costs
reflecting...
That's
right.
...the
current
reality.
Okay.
That
makes
a lot
of
sense.
I'll
hop
back
in
the
queue.
Thanks
a
lot,
everyone.
Thank
you.
Thank
you. Next
question
is
from
Michael
Glen
from
Raymond
James.
Please
go
ahead.
Hey.
Good
evening.
Good
evening.
Just
to
start,
I'm
just
wondering,
can
you
provide
some
insight
into
how
you
are
impacted
by
these European
energy
prices?
I
mean
I
know
that
there's
a
lot
happening
right
there,
but like
what
does
this
represent? And
like
if
we're
thinking
of
input
cost
into
your
plants,
like
what
– how
important
is
energy
to
the
overall
cost
structure?
Yeah.
It's
significant
in
our
aluminum
business
in
particular
just
given
the
nature
of
the
equipment
and
the
processes.
So
it's
a
pretty
major
input
there
and
it's, at
this
point,
obviously
concentrated
on
what's
going
on
in
Europe.
On
the
last
call,
I
articulated, this
had
been
in
November,
cost
inflation.
At
that
point,
it
was
hovering
around
CAD
40
million
annually
and
that
included
material,
labor
and
energy.
And
energy
at
that
point
was,
I'll
say,
a
smaller
component
of
that. Since
then
beginning
in
this
year
and
more
recently
with
the
situation
in
Ukraine,
that
has
skyrocketed
even
more.
So
the
energy
piece
continues
to
grow
and
at
CAD
40
million
now
it's
larger.
I'm
not
going to
get
too
specific.
Again,
we're
negotiating with
customers and
so
forth
so
I don't
want
to throw
any
specific
numbers
out
there.
But
energy
is
a
fairly
significant
piece
to
the
–
cost
headwinds
are
currently
[indiscernible]
(32:17).
It
is
pretty
localized
to
Europe,
though.
We're
not
seeing
it
in
North
America
at
this
point
at
all.
And
are
there
any
concerns
coming
about
outright
shortages
or
having
to
curtail
to
just to –
because
the
supply
is
just
not
there?
Are
there
any
discussions
along
that
line?
No.
I
mean
not
at
this
point.
I
think
the
supply
is
there.
I
think
it's
just
anxiety
that's
driving
a
lot
of
it
so
far
that
what
could
happen
and
so
prices
go
up,
which
is
pretty
typical
but
we
haven't
had
any
signs
of
shortages
yet.
Just
in
a
broad
perspective,
of
course,
as
a
customer is
shutting
their
plant
because
they
can't
get
parts
from
whatever, wherever
it
is,
that
will
affect
our
production
as
well
even
though we've
got
supply
of
what
we
need.
We
think
that
Europe
is
obviously
the
critical
area
in
all
of this.
It's
under
− just
under
20%
of
our
revenue
so
obviously,
it
could
impact
what's
happening
in
Europe
probably
more
than
in
North
America.
North
America
supply
chains
seem
pretty
solid
and
demand
exceeds
supply
and
a
lot
of
people
are
going to
still
trying
to ramp
up
supply
in
North
America.
But
we're
quite
aware
of
what's
happening
in
Europe
and
I
think
you've
seen
some
of
the
uncertainty
from
a Volkswagen
announcement,
a
little
bit
from
BMW and
we're
monitoring
that
as
we
go.
Were
you
being
specific
to
energy
or
being
or
talking
[indiscernible]
(33:56)?
No,
really
specific
to
the
energy
situation.
I
know
that
it's
very
volatile
right
now.
I
mean
the
reality
on
energy
is
Europe
has
got
to come
up with
a
solution
really
quickly
to
get
gas
from
someone
other
than
Russia.
And
I
think
that
certainly
Canada, the
United
States,
and
some
other
places,
including
[ph]
put
in
place
(34:22) in
the Mid
East
have
got
to
be
able
to provide
alternative
supply
as
quickly
as
possible. At
the
same
time,
the
issue's
going to
be
how
long the
Russian-
Ukraine
situation
occurs.
I
know
that
people
are
talking.
There
are
many
different
scenarios
out
there
is
whether
it's going
to
be
a
longer
drawn
out
affair
or
shorter.
We're
watching
that
as
much
as
anyone
else
but
well,
we
do
think
that
on
a
long-term
basis,
the
very
interesting
thing
here
is
Europe's
going to
have
to
pivot
from
relying
on
Russian
energy
and that,
in
the
long-term,
will
be
good
for
energy
costs.
And
just
on
CapEx,
Fred,
are
you
able
to
give
an
indication
for
CapEx
in
2022?
And
also
at
the
same
time maybe
some
thoughts
on
working
capital
in
2022.
Sure.
So
2021
was
a
pretty
heavy
year
for
the
various
reasons
we
indicated
earlier, a
lot
of
new
program
CapEx,
some
compression
from
2020,
a
bunch
of
engineering
changes
customer-driven,
as
well
as
some
higher
than
expected
volumes
that
are
coming
down
the
pipeline.
And
looking
into
2022
levels,
we'll
continue to
be
somewhat
elevated.
I
would
say
somewhat
similar
to
what
they
were
in
2021,
maybe
slightly
lower.
And
as
we
enter
into
2023,
the
expectation
is
that
you'll
see
a
noticeable
drop
in
our
CapEx
program
predicated
on
two
things.
Number
one,
we've
invested
significantly
in
the
number
of
flexible
[ph]
well
lines (35:56)
across
a
number
of
programs.
As
those
programs
come
into
next
generation,
your
investments
will
be
lower
on
our
replacement
work.
And
on
top
of
that,
our
aluminum
group
has
gone
through
a
bit
of
a
growth
spurt,
some
heavy
investment
cycle
and that's
a very
capital-intensive
business.
And
over the
next 12
months, we're
going
to
be the
tail
end
of
that
and
then
as
we
enter
2023, we should
start
seeing
that
normalize.
So
that
kind
of
builds
on
our
2023 outlook
and
by
2023, we
expect
to
generate
some
really
significant
free
cash
flow.
As
it relates to
the
working
capital,
I
mean
in
the
fourth
quarter was
a
nice
tailwind.
Most
of
it
came
from
tooling-related
working
capital,
and
that
tends
to be
quite
volatile.
We
may
end
up
giving
some of
that
back
in
the
early
part
of
the
year,
but
I
don't
see
that
as
a
huge
headwind
for
the
year
necessarily.
And
[ph]
production
in (36:51)
working
capital,
you'll
just
see
typical
seasonal
trends
as
we
kind
of
progress
through
2022,
probably
a
bit
of
an
increase
in
Q1,
some
stabilization,
and
a
drop
later
in
the
year
just
based
on
volumes.
Okay.
I'll
get
back
in
queue.
Thanks.
Thanks.
Thank
you.
Our
next
question
is
from
Ben
Jekic
from
PI
Financial.
Hi.
Good
afternoon.
Hi,
Ben.
Hi, Ben.
Hi. I
have
one
question,
just
sort
of
similar
to
Michael
Glen's.
My
question
was
more
aluminum
and
if
you
could
jog
my
memory,
what
is
your
exposure
to
–
is
there
any
exposure
in
Europe
to
Russian
aluminum?
Because
I
understand
they're
one
of
the
top
two
or
three
exporters
of
aluminum.
We
have
not
seen
any
–
let's
put
it
this
way.
We're
not
anticipating
any
shortage
at
this
point.
Prices
have
gone
up
quite
a
bit.
Of
course,
we're
protected
over
time
because
we're
on
an
index
and
of
course,
there's
a
lag
to
the
index.
But
we
haven't
seen
anything
months
out
that
say
we're
going
to
be
shorted.
Got
you.
At
this
point.
Okay.
That's
all
for
me.
Thank
you.
Thank
you.
Thank
you.
Next
question
is
from
Peter
Sklar
from
BMO
Capital
Markets.
Please
go
ahead.
Okay.
Thank
you,
operator.
Pat,
you
talked
about
this...
Hi,
Peter.
...elevated...
Hello?
You
talked
about
this – do
you
hear
me,
Pat?
Yeah,
I
can
now.
Go
ahead.
Okay.
You
talked
about
the
elevated
level
of
launches.
Can
you
disclose
what
are
the
major
programs
that
you're
in
launch
phase
with
now?
Well,
we're
still
in
the
WL,
which
is
the
Grand
Cherokee.
That's
a
big
one.
The
WS,
which
is
the
Grand
Wagoneer,
that's
another
big
one.
We've
got
a
number
of
aluminum
launches.
We're
still
[indiscernible]
(39:08)
as
volumes
continue
to
climb
because
their
plants
are
starting
to
smooth
out
a
little
bit;
the
D35,
which
is
then
the
Ford
engine
block
for
the
F-150.
We've got
the
Honda
launch.
continuing to
ramp-up
on
the
Nissan
Rogue...
Oh,
yeah,
the
Rogue.
The
Rogue
and
Pathfinder
got
delayed
a
lot
between
the
chip
shortages
and
a
number
of
other
items
and that's
really
just
now
ramping
up. It's
a
big
program...
In
China.
[indiscernible]
(39:34) in
China,
that's
right.
Lucid
is
just
getting
started.
That
affects
a
number
of
our
plants.
So,
like
I
said,
about
CAD 800
million
worth
of
launch.
What's
complicated
is
because
if
you
think
of
a
launch
curve,
and I'll
keep
it
simple,
let's
say
we
were
going
to go
up
from
zero
when
you
launched,
10%
per
month,
you
get
to
100%
in
10 months
or
10
weeks,
let's
say,
10 weeks.
Well,
because
there's
not
smooth
supply,
that
10%
per
week
isn't
happening.
It's
5%,
it's
2%,
it's
4%.
And
so
that
launch
curve's
getting
spread
way
out
and
you're
carrying
all
the costs
of
those
people
without
the
volume
and
that's
kind
of
what
we're
experiencing
in
a
number
of
the
launches.
We
see
more
light
at
the
end
of
the
tunnel
this
quarter
but
certainly
in
fourth
quarter
and
third
quarter,
there
was
a
lot
of
that
which
created
a
lot
of
the
heavy
lifting,
if
you
will,
on
cost.
Okay.
Pat,
question
for
you
on
Europe.
With
the
parts
interruption
as
the
result
of
the
conflict
in
Ukraine,
are
you
seeing
downtime
now
from
your
customers?
Like
are
you
seeing
the
downtime?
Is
it
this
week...
No.
...or
next
week
or
what's
happening?
We
haven't
had
any
indication
yet
of
any
downtime
that
affect
our
plants
so
far
relative
to
the
Ukraine.
We
still
have
residual
downtime
from
chip
shortage
and
other
supply
things
that
were
in
place
prior
to
last
week
when
the
war
started,
but
nothing
that
we're
directly
seeing
as
an
impact,
at
least
not
so
far.
But
do you
not
sell
to
Volkswagen
for
example?
They've
announced
downtime.
Yeah.
But
Volkswagen has,
what,
50 plants
or
something
over
in
Europe,
maybe
more.
I
mean,
they're
talking
about
one
or
two
plants.
Right.
And
Volkswagen's
not
one
of
our
bigger
customers,
believe
it
or
not.
I
mean,
we
do
sell
to
them,
but
they're
not
one
of
our
bigger
customers.
Right.
Okay.
And
Fred,
I
just
wanted
to ask
you,
like,
can
you
just
summarize
how
much
has
Martinrea
invested
in
NanoXplore
and
VoltaXplore?
Just
kind of
review
your
investment
and...
Yeah.
So,
going
back
a
few years
ago
since
we've
been
implementing
our
investment
NanoXplore,
we
got
about
CAD 40
million, give
or
take,
in
the
investment.
And
obviously that's
worth
a
lot
more
today.
And
then
as
it
relates
to
VoltaXplore,
both
us
and
NanoXplore
have
committed
to
CAD
10 million
each
as
needed
as
we
ramp
up
the
demo
facility.
And
at
this
point
in
time,
we've
both
put
in
CAD
6
million.
CAD
5
million.
CAD
5
million,
sorry.
CAD
5 million
each.
Okay.
And
I
don't
really
pay
attention
that
closely
to
NanoXplore,
but I
noticed
the
stock
has
gone
to
CAD 4.
Has
there
been
any
fundamental
change
at
the
company?
No.
I
think
a
lot
of
–
if
you
take
a
look
at
the
shareholdings
of Nano,
there's
probably
four
or
five
people, like,
together, hold
about
65%.
So,
I think
it
probably
took
a
bit
of
a
run
with
the
retail
side.
But
the
long-term
perspective
of
Nano
remains
quite
solid.
So,
it's
built
a
graphene
plant.
Its
focus
in
the
next
year
or
two
is
on
graphene
sales.
We've
announced
there
some,
and
I
think
that that's
a
market
that
has
a
tremendous
future.
Then
the
other
aspect,
I
guess,
is
that
Nano
holds
50%
of Volta,
and
I
think
we'll
see
the
distribution
of
the
stock
fluctuate
from
that
too.
But
it's
not
particularly
unusual.
I don't
want
to
put
words
in
anyone's
mouth,
but
I
think
it might
have
risen
in
value
faster
than we
thought
it
was
going
to.
But
ultimately,
there's
a
really
solid
business
there.
Okay.
Thank
you
for your
comment.
All
right.
Thank
you.
Thank
you.
Next
question is
from
Brian
Morrison,
TD
Securities.
Please
go
ahead.
Thank you.
If
I
can
just
follow
up
on
the
launches.
It
sounds
like
the
headwind
becomes
a
tailwind
in
the
back
half
of
this
year.
Just
baked
into
2023,
can
you just
quantify
what
the
operating
margin
or
basis
points
that
is?
Like
it
sounds
– is that like
100
to
200
basis
points
of
margin
improvement?
We
try
to
avoid
getting
that
specific,
but
you're
probably
in
the
ballpark,
generally
speaking.
Okay.
And
then
just
macro
question
here,
probably
for
Pat,
I
guess.
But
you
have
better
visibility
than
most
of what's
going
on
in
the
industry
and
you
acknowledge
the
geopolitical
conflict
that's
obviously
evolving
pretty
rapidly.
So,
just
in
terms
of
the
supply
chain
discussions
you're
having
with
people
in
the
industry,
is
there
a risk
to
the
[indiscernible]
(44:31)
issue
becoming
much
greater?
I
understand
that
there's
inputs
from
the
region
that
go
into
this.
There's
been
some
articles
on
certain
things
that
come
out
of
the
Ukraine
that
are
critical
to
chip
supply.
But
when
you
talk
throughout
people
in
the
industry,
there
doesn't
seem
to
be
any
alarmists
within
the
industry
about
it at
this
point.
Is
that's what
you were
talking about,
chip specifically?
Yeah.
I
do.
We
will
say
that's
what
they
said
last
time
too.
Well,
you
got
to
say
one
thing,
they
definitely
have
better
visibility...
They
have
better...
...than
they've
ever
had
before.
They
have
better
visibility
on
this,
but
I
do
recall
a
year
ago,
I
think
some
people
were
saying, I
think
it
was
on
this
call.
Some people
were
saying
it
was
a
blip.
Yeah.
And
we
said
it
was
a
blip
on
our
call.
I
think we
were
right.
But
on
this
one,
we've
talked
to
several
OEMs
and
a
couple
of
steel
companies
about
their
ability
to
make
neon.
And
neon
Ukraine
is
actually
produced
by
some
of
the
older
running
steel-making
process.
So,
people
here
know
how
to
make
it.
I'm
not
an
expert
in
neon,
but
we've
asked
the
question
a
couple
of times,
and
I've
heard
the
same
thing
as
Pat.
Okay.
I
appreciate
that.
And
then
last
question
for
Fred
here
is
the
balance
sheet.
I
realize
you have
support
from
your
lenders
and
you've
got
covenant
relief.
Just,
if
the
industry
volumes
don't
uptick
for
various
reasons,
any
update
on
potentially
– or
any
plans
to
potentially
slow
your
mind
strategy
or
the
dividend
or
you're
comfortable
just
progressing
on
that
front?
I
think,
at this
point,
we're
comfortable.
And
as
I
noted
in
my
opening
remarks,
just
based
on
the
way we
do
things
[indiscernible]
(46:15)
year.
We
do
expect
to be
positive
free
cash
flow
for
the
year or
so. And
the
covenant
relief
we
got
from
our
banks,
there's
ample
room
there.
It
was
structured
that
way
to
allow
us
some
flexibility
to
get
through
the
next
number
of
months
as
these
headwinds
start
getting
behind
us.
So,
I
think,
overall,
we're
comfortable,
and
like
always
when
we're
faced
with
challenges,
we'll
pivot
and
adjust
as
required.
Yeah.
We didn't
reduce
our
dividend
in
2020
either,
but
we
know
the
orders
that
we
have
on
our
book.
We
know
their
plants
are
full
when
volumes
return
for
whatever
reason,
and
we
know
that we're
going
to
make good
money
on
it.
So,
we're
pretty
bullish.
And
the
interesting
thing
is
that
there's
challenge
after
challenge.
We
live
in
a
troubled
world
in
that
sense,
but
we've
had
wars
before,
in
1956, 1968, 1980.
This
isn't
the
first
time
Russia's
invaded
something,
and
the
market
deals
with it,
but
the
market doesn't
like
uncertainty
either,
and
that's
what
we
have
right
now,
but
the
reality,
particularly
in
North
America,
demand
is
robust,
supply
is
low,
people
figure
these
things
out,
and
our
plants
are
full.
Thanks,
[ph]
Rob (47:36).
Thanks.
Thank
you. Next
question
is
from
Krista
Friesen
from
CIBC.
Please
go
ahead.
Hi.
Thanks
for
taking
my
question.
Maybe
just
a
follow
on
the
covenant
topic
there.
Are
there
any
stipulations
around
the
covenant
such
as
not
being
able
to
increase
your
dividend
or
not
being
able
to
do
any
sort
of acquisitions
[indiscernible]
(48:03)
on
your
buyback?
Well,
I
think
it
worked
for
one
of
our banks,
but
I
won't
get
too
detailed.
I
don't
think
we
intend
to increase
our –
I
mean, let's
tell
you
what
we
want
to
do.
I
don't
think
we
intend
to increase
our
dividend
in
the context
of
where
we
are
here,
so
we
wouldn't
ask.
I
don't
think
we
have
to
address
it.
We
get
asked
from
time
to
time,
would
you
buy
back
stock?
I
don't
think
–
I
think
we've
said
we're
not
thinking
about
buying
back
stock
right
now
for
a
similar
reason.
In
the
context
of
acquisitions
and
so
forth,
if
we
saw
something
that
made
sense,
we'd
do
it.
But,
quite
frankly,
we're
also
cognizant
of
focusing
on
launching
our
product
successfully
[indiscernible]
(48:49),
so
that's
where
we're
at.
Okay.
Great.
And
then
just
on
the
8-plus
percent
margins
in
2023,
to
confirm
that
it's
for
the
full
year,
that's
not
like
a
run
rate
that
you
expect
to
hit.
That's
full
year,
correct.
Okay.
All
right.
That's
it
for
me.
Thanks.
Thank
you.
Thank
you.
[Operator Instructions]
The
next question
is
from
Mark
Neville
from
Scotiabank.
Please
go
ahead.
Hey.
Good
evening, guys.
Good
evening.
Hey,
guys.
Fred,
I
think
earlier
you
quoted
a
CAD 40
million
number
in
terms
of inflation.
Can
you
just
recap
if
that
[indiscernible]
(49:34)?
On
the
last
call
in
November,
I
had
articulated
that
point
that
the
cost
inflation
headwinds
we're
dealing
with
quantified
to approximately
CAD 40
million
on
an
annualized
basis,
and
that
included
material,
labor
cost
increase,
as
well
as
energy.
Since
then,
I
would
say
that
that
number
has
grown.
In
particular,
this
year,
energy
has
been
another
fairly
large
headwind,
some
material,
as
well.
As
Pat
noted in
his
opening
remarks,
we
haven't
had
to
make
any
further
adjustments
on
the
labor
front,
so
it's
really
energy
and
material.
So,
that
CAD
40 million
is
somewhat
larger
than
where
we're
sitting
here
on
the
last
call.
Okay.
Okay.
And
in
terms
of
energy charges,
is
there
anything –
I
mean,
could
you
implement
like
an
energy
surcharge
or
something
in
Europe,
and just
how you
can
manage
that?
With
our
customers,
that's
part
of
the
ongoing
negotiations
with
them
at
this
point.
So,
we're
working
through
that
and
through
the
mechanisms
on
how
we
can
be
compensated
for
some
of
that
stuff.
Okay.
Okay.
And
just
to
be
clear,
[indiscernible]
(50:47)
any
sales
belong
to
Russia
or
Ukraine?
No.
We're...
Or
how
far
or
less
you
want
to
go?
We
don't
sell
there.
We
don't
produce
there.
We
don't
pay
any
bribes
to
lease
any
equipment
there,
right?
We
stayed
out
of
Russia
[indiscernible]
(51:08).
Got
it.
The
blockages
from
the
[indiscernible]
(51:15)
be
honest,
should
– would
that
be
a
material
impact
in
Q1?
No.
No. No, I
don't
have
any –
really
didn't
have
much
impact
at
all.
There
was
a
lot
more
noise
than it
was
a
reality
when
it
came
to
production.
I
mean,
some
of
our
customers
had
to
slow
down
a
little
bit.
We
didn't
lay
off
a
single
person.
We
might
have sent
a
few
people
home
early
on
a
Friday
and
then
it
was
pretty
much
back
[indiscernible]
(51:35).
And
had
that went
on
for
longer,
then
it
would...
Yeah,
definitely.
If
it
had
continued
for
a
couple
of
weeks,
it'd
have been
a
big
problem.
I
will
do a
shoutout
for
Fred
as
Chair
of
the
APMA
and
Flavio
Volpe
as
President
of
the
APMA. The
auto
parts
suppliers
went
to
court
to
get
a
contempt
motion
or
a
contempt
judgment and
an
injunction
against
the
truckers,
which
got
the
police
to
move.
Why
we
had
to
do
that,
I'm
not
quite
sure,
but
we
did
that,
and
I
think
some
really
good
work
to
deal
with
the
issue.
And
quite
frankly,
once
people
saw
that
you
can
move
people
from
the
bridge,
it
became
a
matter
of
time
to
move
people
out
of
Ottawa.
So,
auto
parts
supplier
should
get
some
real kudos
for
that.
Yeah.
It
happened
late
in
the
week,
which
helped
as
well, because we
had
the
weekend
coming
and...
Yeah.
Okay.
Maybe
just
in
terms
of
guidance.
I
appreciate
why
you
haven't sort
of
provided
quarterly
guidance
recently,
but
is there
an
expectation at
some
point
you
might
start
doing
that
again,
or
no?
That's
an
open
discussion in
our
end.
I
mean, there's
a
lot
of
uncertainty and
volatility
right
now,
so
we're
not
comfortable
doing
it,
and
we'll
reassess
as
we
kind
of
get
through
the
next
few
months.
Well,
would
you
now
–
right
when
it looked
like
things
were
starting
to
clear
up
a
bit,
Russia
went
to war.
So,
that's
the
[indiscernible]
(53:03).
One thing
happened...
Yeah,
one thing happened after
another.
Yeah,
blame
Putin.
All
right,
guys.
I
leave it
there.
Thanks.
Thanks.
Thank
you.
Thank
you.
Next
question
is
from
Ben
Jekic
from
PI
Financial.
Please
go
ahead.
Yes.
Hi.
The
question
is
for
Fred,
and
I
apologize
if
I
missed
the
detail.
But
when
you
say
CAD
40
million
cost
inflation,
I'm
assuming
that
is
meant
from
the
gross
profit
on
an
annualized
basis,
right?
Yeah.
That
would
be
material,
labor
and
energy.
And
that
was
the
number
we
threw
out
again
in
November
on
our
last
call.
Right.
Okay.
Thank
you.
Thank
you.
There
are
no
further
questions
registered
at
this
time,
so
[indiscernible]
(53:51)
back
over
to
Mr.
Wildeboer.
Well, thank
you
very
much
from
all
of
us
for
listening,
and
feel
free
to
ask
any
of
us
questions
at
your
leisure. Have
a
great
evening.
Thank
you.
The
conference
is
now
over.
Please
disconnect your
lines
at
this
time.
And
we
thank
you
for
your
participation.