Good afternoon, ladies and gentlemen, and welcome to the Linamar Q1 2023 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, May 10th, 2023. I would now like to turn the conference over to Linda Hasenfratz. Please go ahead. Thanks so much. Good afternoon, everyone, welcome to our first quarter conference call. Joining me this afternoon are members of my executive team, Jim Jarrell, Dale Schneider, Elliot Burger, Mark Stoddart, and members of our corporate IR, marketing, finance, and legal team. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast. I'll start off with a review of sales, earnings, and content. Sales for the quarter were CAD 2.3 billion, up 29% to last year on recovering markets and supply chains, as well as market share growth. Normalized net earnings for the quarter were CAD 121.7 million. EPS was CAD 1.98. EPS is up 83% over last year on stronger sales and launching business. Our industrial segment had an excellent quarter, with sales and OE significantly up at both MacDon and Skyjack on stronger markets and market share growth. An easing of supply chain issues helped our teams get product out the door. Our software acquisition also played an important role in both sales and earnings growth. Pricing increases helped offset higher costs that this segment has been experiencing. The mobility business had a strong quarter on the top line, thanks to recovering markets in North America and Europe and strong launch performance. A slowdown in China related to COVID outbreaks had a big impact on both sales and earnings for the quarter. Our Mills River Foundry continues to weigh on mobility segment earnings now that we own the business fully and are recording results at the OE level versus it being below the line. Notably, cost improvement plans are proceeding well at Mills River. We are seeing improvement every quarter. Higher costs continue to drag on results as well, notably energy costs in Europe, although customer pricing relief is helping to offset part of the cost. On the positive side, we do expect to see an improvement in the mobility segment earnings in Q2 of this year compared to Q1 of this year as China starts to recover. Europe grows on launching business, energy costs start to improve, and Mills River, of course, continues to improve as well. It's great to see the trend upwards in terms of net earning margins that we have been seeing since the low point back in Q4 of 2021. This quarter has been an excellent example of Linamar's diversification strategy paying dividends. Having a diverse business with investments in more than one market means market cycles that often do not overlap. When the mobility market is down, often industrial is up, and when the industrial market is down, often mobility is up. This is exactly how we have been able to generate consistent, sustainable earnings growth and free cash flow for our shareholders year after year after year. Since 2010, we have delivered 10 years of normalized net earnings growth, with 3 years of contraction peppered in there completely due to COVID. Our compound annual growth rate since 2010 has been 14%. We will be delivering double-digit earnings growth this year and next year. That will take our track record to 80% of 15 years delivering earnings growth to our shareholders. That is what consistent sustainable growth is, that is what a diverse strategy brings you. We saw another quarter of solid increase in content per vehicle in North America, again hitting a new record level. Launches are a big part of that, as was our Mills River acquisition and vehicles we have high content on being selectively prioritized for build by our customers. Commercial and industrial sales were up 53%, with solid growth at both Skyjack and MacDon on market growth and market share growth in key products. Salford also played a key role in growing sales in this area. CapEx has trended back up to a normal level, supporting global launches and growth as expected. CapEx as a percent of sales was 7.1%, exactly in line with the level of spending of 6%-8% that will support targeted double-digit growth. We do expect CapEx to be significantly up this year over last year and at the high end of our normal range. Next year, CapEx will grow somewhat again, still staying in our 6%-8% range, basically keeping pace with sales growth. We have a long history at Linamar at investing in new, leading-edge, proven technologies to drive efficiency and top and bottom line growth. Return for this investment consistently flows in within two-three years of the investment. Investments have picked up in the last 18 months as we work to launch a significant backlog of business driven by record levels of new business wins over the last couple of years. Earnings growth will be a result of that investment. We expect double-digit earnings growth this year and next year. Capital asset turnover will grow this year and next year. Return on assets will grow this year and next year. Return on capital employed will grow this year and next year. Return on equity will grow this year and next year. Securing new business making prudent capital investment to support those launches is what drives growth and returns and is the sign of a healthy and growing business. Free cash flow was CAD 19.4 million in the quarter on strong earnings despite heavier CapEx. We have CAD 1.3 billion of liquidity available to us, which is also excellent. Our net debt position has remained strong at just CAD 475 million, thanks to continued positive free cash flow. Leverage remains very strong at just 0.43 times net debt to EBITDA. Our strong balance sheet and liquidity means we have the ability to continue to pursue acquisition opportunities as they arise in a dynamic market and drive even more growth. Let's turn to a quick update on some of the headwinds that we are facing at the moment around supply chain issues, energy costs, logistics costs, and labor shortages. You can see overall an increasingly positive scorecard with every area of challenge now seeing at least some improvement. Energy prices are normalizing in Europe, and contracts are slowly following in line with that. Supply chain shortages are starting to improve and creating less disruption to our and our customer production schedules. Commodity prices have come off of highs seen over the last 18 months. We're starting to see a little more availability in labor markets, with recent job fairs back to historic levels of attendance in some areas. Chip availability is more consistent, although not yet at a capacity to fill all automotive demand. Much of the capacity installed over the last year were not the node sizes used by automotive. It'll be another 1 year to a year and a half until sufficient automotive size chip capacity is available. Good news also on the freight front with Asia to pre-COVID levels and Europe trending back down as well. We aren't yet fully back to normal levels, but we're making good progress. Overall, a reasonably positive scorecard on the challenge side. I'll turn now to a market outlook. Market demand is continuing to look good, with growth in most regions and businesses expected this year and next year. Supply chain issues do continue to constrain industry's ability to deliver on that demand, but it does feel a little less volatile than last year. Turning to the specific markets, industry experts are predicting growing light vehicle volumes globally this year to 15 million, 16.9 million, and 48.2 million vehicles in North America, Europe, and Asia, respectively. This represents 5%, 7%, and 2% growth. 2024, we'll see further growth of 2.5%-3.5% in each region. Industry experts are predicting on highway medium heavy truck volumes to be flat in North America and Europe this year, but up in Asia after a tough couple of years. Next year, we're going to see moderate growth in North America and Europe of up to 5% and again, stronger growth in Asia. Industry experts are predicting double-digit growth in the access market globally this year, with North America and Europe expecting high single digit and Asia low double digit. Next year, we'll see further growth of another 5%-10%. Lastly, the agricultural industry is predicting growth in the combine draper header market this year in mid-single digits in North America, but reasonably flat in other parts of the world. The windrower market will also see single-digit growth globally this year, but driving this time more out of Europe and Australia. There's a positive outlook for market growth in both tillage and crop nutrition equipment this year as well, with similar mid-single-digit growth expected in North America. Looking at the access market in more detail, you can see first strong double-digit growth in both North America and Asia, with more moderate growth in Europe in the first quarter of the year. All three regions are expecting solid growth this year and more moderate growth in 2024, as I already mentioned. Rental company demand for equipment is strong as companies look to counter fleet aging experienced during COVID. Equipment utilization in North America is ahead of 2022 in the first four months of the year. Utilization levels in Europe are well above 2022 levels. Our backlog at Skyjack is at a record level in dollars and up from last year, thanks to continued solid market demand. Delivery of orders continues to be impacted by supply chain challenges. As we work through these issues, we feel confident we can again grow Skyjack in double digits this year and next year. We are, of course, keeping a close eye on potentially shifting market conditions in the event of an economic slowdown. In the agricultural business, Q1 combine retails in North America were up a huge 117% over prior year, and high horsepower tractors were up 11%. The order book up significantly over last year for MacDon, and supply chain issues, though still a challenge, are improving and helping the team get product out the door. As noted, we expect to see market growth primarily in North America for combine headers this year. Our current forecast is for double-digit growth this year, again, for MacDon and the same for 2024. Salford is seeing a strong backlog in all products, well up over prior year as well. In conjunction with market growth referenced also mainly in North America, Salford is also predicting double-digit growth in 2023 and 2024. Looking at the mobility side, you can see vehicle inventory levels in North America have settled in around 36 or 37 days over the past few months, but are still well below historic levels. Refilling the pipeline with vehicles will still be a major priority for the automakers and will of course, take some time to get done. In looking at production levels compared to what was forecast at our last conference call back in March, you can see a slightly stronger Q1 in both Europe and Asia. Q1 ended at 21.1 million vehicles, up 6% from last year at 19.9 million. Q2 is forecast to be a lot stronger than Q2 of last year at 21.5 million, which is a 13% increase from prior year. The full year, as noted, is predicting overall growth at 4% over 2022. Looking at launches for the mobility business, you'll be pleased to know that we had another strong quarter in new business wins. Once again, a very strong quarter for wins in the electrified and propulsion agnostic space. Electrified vehicles continue to provide great opportunities for us and are really dramatically shifting the landscape of our mobility business. We had a really solid start to the year in terms of new business wins for battery electric vehicles, hybrid electric vehicles, and propulsion agnostic components. Year-to-date wins as such are nearly 80%. The majority of our mobility sales as soon as 2027 are now for electrified vehicles or are propulsion agnostic. Our strategy is to continue to grow this percentage to minimize the concentration of our business at risk as internal combustion vehicles ramp down over the next decade. Overall, our launch book has grown now to nearly CAD 4.2 billion. We are seeing ramping volumes on launching programs which are predicted to reach 35%-45% of mature levels this year, generating incremental sales of CAD 750 million-CAD 850 million. We'll see further growth of another incremental CAD 800 million-CAD 900 million next year. These programs are gonna peak, as I just noted, at CAD 4.2 billion in sales. We saw a small shift of about CAD 25 million of programs moving from launch to production last quarter, which was more than offset by the business wins that we saw. Launching business in conjunction with growing markets will result in double-digit sales growth for the mobility segment this year and next year. Let's turn to a summary of that top-line outlook and then look at the bottom line margins and next quarter in a little more detail. With strong markets and market share growth, we are expecting to see double-digit growth on the top line in both 2023 and 2024 for Linamar overall. That's driving from double-digit growth at each of Skyjack, our agricultural businesses, and our mobility business. Net margins will expand in 2023 on growing sales and significant growth in margins in the industrial segment, where margins are going to expand back into their normal range. Mobility margins will modestly contract for the year, with stronger margins expected in the back half than the first half of the year. This will mean growth in mobility segment earnings this year and significant double-digit growth in industrial segment earnings, driving significant double-digit growth in EPS in 2023. In 2024, we expect continued expansion in margins back into our normal range overall, driving out of the expansion in margins that we're expecting in both segments. This will mean double-digit growth in earnings in both segments next year and another year of double-digit EPS growth in 2024. We will also see strong positive free cash flow this year and next year, leaving us in an excellent position from which to drive further growth. Looking specifically at Q2, you should expect sales modestly up from Q1 of this year, but meaningful double-digit growth from last year. The mobility segment will see sales modestly up from Q1 of this year, but well up from prior year. Normalized OE will be up in double digits from Q1 of this year, but will not reach last year's levels, Q2 last year. Sequential growth will happen as China starts to recover, as Europe grows on launching business and energy costs starting to improve, and Mills River continues to improve. The industrial segment will see double-digit sales growth seasonally up from Q1 of this year and with more significant growth from last year. We will see double-digit normalized OE growth meaningfully up from Q1 of this year and more significant growth in comparison to last year. As a result, on the overall earnings side in Q2, you can expect meaningful double-digit EPS growth to Q1 of this year and more, even more significant EPS growth in comparison to Q2 2022. Moving on to an operational update, I'm very excited to announce the launch of a brand-new structural component manufacturing facility for Linamar in Welland, Ontario. This facility will be a flagship location for our rapidly growing structural casting business and a showcase for the very latest in high-pressure die casting technology. The facility will house state-of-the-art Giga Casting equipment capable of producing very large structural parts critical to efficiently lightweighting and simplifying complex assemblies for electrified vehicles. Giga Casting refers to very large, 5,000 or 6,000-plus ton high-pressure die cast machines. This equipment is leading edge. Linamar will be the first supplier in all of North America or Europe to invest in this type of technology. We will be installing three 6,100 ton presses, with the first press expected to be installed in January of next year and production on our first contract starting about a year after that. Construction on the facility will be starting immediately. There's an increasing trend of cast aluminum being used in vehicle architectures, particularly battery electric vehicles. Structural aluminum castings offer an alternative to traditional steel stamping and weldments, creating a less complex and more lightweight solution for OEMs. This is particularly important in a battery electric vehicle due to the inefficiencies created by the extremely heavy and bulky battery pack. We're seeing significant interest from our customers in Linamar bringing this capability to the market. As mentioned, to date, this size tonnage from a parts supplier only exists in Asia. Shipping from Asia for a part this size is just not gonna happen. We're excited about this new investment, the market leadership it provides Linamar, and the opportunities it will bring us in the vehicles of the future. Moving on to new business wins. On the mobility side, I'll highlight a few of our more interesting wins this quarter. First, I wanna highlight over $110 million in structural component wins for battery electric vehicles, adding to our growing portfolio of propulsion-agnostic structural components. Production of these components will start next year in both Spain and the United States. Secondly, we had a significant win for battery, a battery enclosure that will be used in a new plug-in hybrid pickup truck launching in 2024 with an annual volume of around 46,000 units. These parts will be produced at one of our locations in France. Lastly, I would like to highlight an additional CAD 111 million for various components that will be used in both battery electric and hybrid electric vehicles. We will start producing these later this year at various facilities in North America, in Europe, and in Asia. Turning to an innovation update, I'll highlight our new full battery electric vehicle demonstrator truck that we announced last week. This was a major R&D effort that our eLIN team have been working on to build a vehicle that our customers can test drive showcasing Linamar electric propulsion technologies. The pickup truck is a current generation 2,500 series truck, which was retrofitted with two of our utility duty Beam eAxles. This demonstrator vehicle showcases how Linamar's electrified propulsion capabilities are available not only in past car sizes and medium-duty applications, but also in large utility duty four-wheel drive pickup truck applications. Our engineering and sales teams will be visiting the advanced purchasing and engineering departments of our customers so they can personally test drive it to get a firsthand feel for the performance and handling. The demonstrator truck was on display last week at the Advanced Clean Transportation Expo, along with several other latest EV technology offerings from Linamar. As mentioned, we exhibited our utility duty Beam eAxle. We also showcased our medium-duty Beam axle, Beam straight eAxle, our eMatrix battery pack solutions, our FlexForm hydrogen fuel cell storage tank, and of course, our structural component capabilities. We had a lot of traffic in the booth. They were attracted in by our excellent technologies, and they stayed to learn all about them. As we've said before, this is an incredibly exciting time in our industry. A technology transition in the market of this magnitude creates significant opportunities for innovative companies like Linamar. We're well-positioned to win significant content in electrified vehicles as this transition plays out. Finally, we continue to execute on our global digitization journey with more and more connected machines, data connections, and robots being commissioned in our global plants every day. With that, I'm gonna turn it over to our CFO, Dale Schneider, to lead us through a more in-depth financial review. Over to you, Dale. Thank you, Linda. Good afternoon, everyone. As Linda noted, Q1 was a great quarter for sales and earnings growth despite the continuation of the supply chain issues impacting sales and other cost issues further impacting earnings net of any customer recoveries we received in the quarter. Q1 was another positive quarter for cash generation. As a result, we were able to maintain a strong level of liquidity at CAD 1.3 billion. For the quarter, sales increased 28.9% to CAD 2.3 billion. Earnings are normalized for any FX gains or losses related to the revaluation of the balance sheet and potentially other items that may have occurred. In the quarter, earnings were normalized for FX gains related to the revaluation of the balance sheet, which impacts EPS by CAD 0.07 per share. Earnings were further normalized for a net loss recognized in the quarter as we adjusted the accrual for the earn-out related to the acquisition of our Mills River facility as a result of the improvements in the outlook since Q4 of 2022. Removing this net loss impacted EPS by CAD 0.06 per share. Net earnings were further normalized in Q1 as a result of a net withholding tax paid in the quarter due to the repatriation of cash from our Chinese operations. Removing this net loss impacted EPS by CAD 0.09 per share. The total of these three issues impacted EPS by CAD 0.08 per share. As a result, normalized EPS for the quarter was CAD 1.98. Normalized operating earnings for the quarter were CAD 175.8 million. This compares to CAD 106.5 million in Q1 last year, an increase of CAD 69.3 million or 65.1%. Normalized net earnings increased to CAD 50.8 million or 71.7% in the quarter to CAD 121.7 million. Fully diluted normalized EPS increased by CAD 0.90 or 83% to CAD 1.98. Included in earnings for the quarter was a foreign exchange gain of CAD 5.8 million, which was a result of a CAD 6 million gain related to the revaluation of the operating balances and a CAD 200,000 loss related to the revaluation of financing balances. As I mentioned, the net FX gain impacted the quarter's EPS by CAD 0.07. From a business segment perspective, the Q1 FX gain of CAD 6 million related to the revaluation of operating balances was a result of a CAD 7.4 million gain in Industrial and a CAD 1.4 million loss in Mobility. Looking at the segments, Industrial sales increased by 58.9% or CAD 216.8 million to CAD 585 million in the quarter. The sales increase for the quarter was primarily due to the higher agricultural sales driven by growth in both the global markets and our global market shares for our products. Additionally as a result of the acquisition of Salford last year, the higher access equipment sales driven by the growth and also in the global markets and our market share growth for certain products in targeted markets. Higher sales prices also achieved in the quarter helped to release on our current supply chain cost pressures and then the positive impact of changes in FX rates from last year. Normalized Industrial operating earnings in Q1 was CAD 84.1 million. It was an increase of CAD 84.1 million over last year to CAD 97.5 million. Primary drivers impacting the earnings were the increased contribution from the strong agricultural equipment volumes, the increased contribution from the higher access equipment sales, the increased margins from the acquisition of Salford, and the positive impact from the changes in FX rates since last year. These were partially offset by increased SG&A costs that are supporting growth in the segment. Turning to Mobility, sales increased by CAD 297.8 million or 21.1% over Q1 last year to CAD 1.7 billion. The sales increase in the first quarter was driven by the increased volumes on both launching and certain other high-demand programs. Cost recoveries achieved, received in the quarter from our customers. The positive impact from changes in FX rates since last year and the sales impact of fully consolidating Mills River, now that we have 100% ownership of it. These were partially offset by the ongoing COVID-19 issues in China that is negatively impacting our OEM production. Q1 normalized earnings for Mobility were down over last year at CAD 78.3 million. In the quarter, Mobility earnings were impacted by the increased contribution on the higher launch in certain programs volumes. The positive impact and changes in FX rates since last year. These were more than offset, though, by the reduced contribution related to lower OEM volumes in China. The impact of consolidating our Mills River facility. The increased labor in utility, materials, freight costs, net of recovery, and the increased SG&A costs also supporting the growth in the segment. Returning to the overall Linamar results, the company's gross margin was CAD 300.5 million, an increase of CAD 102.3 million compared to last year, and this was due to the same factors that drove the segments. COGS amortization expense for the first quarter increased slightly to CAD 115.4 million compared to Q1 last year. COGS amortization as a percent of sales did decrease to 5% of sales. SG&A costs increased in the quarter to CAD 124.7 million from CAD 91.7 million last year. The increase is primarily the result of the incremental SG&A costs from the acquisition of Salford in our Mills River facility. The increased management sales costs supporting the growth of both segments, and the increased travel costs also supporting the growth. Financing expenses increased by $12.7 million since last year, mainly due to the additional interest as a result of the Bank of Canada and U.S. federal rate hikes that have happened, and also due to the increased debt from the acquisitions from last year and the share buybacks from last year. The consolidated effective interest rate for Q1 increased to 3.9%. Effective tax rate for the first quarter increased to 28.5% compared to last year due to an increase in non-deductible expenses compared to last year. The net withholding tax on the repatriation of funds and the unfavorable mix in foreign tax rates. These are partially offset by the decrease in tax expense now that Mills River is fully owned. We are expecting the 2023 full year tax rate, excluding the net withholding tax issued in Q1, to be in the range of 24%-26% and higher than the full year 2022 rate. For Q1, the effective tax rate would have been 24.3% if the repatriation of cash from our Chinese operations did not occur. Linamar's cash position was CAD 890.7 million on March 31st, an increase of CAD 30.2 million compared to December 2022. The first quarter generated CAD 181.7 million of cash from operating activities, which was used primarily to fund CapEx. As a result, the net debt to EBITDA increased to 0.43 times in the quarter from a year ago, mainly due to the acquisitions and share buybacks from last year. Based on our current estimates, we are expecting 2023 to maintain our strong balance sheet and leverage is expected to remain low. The amount of available credit on our credit facilities was CAD 425 million at the end of the quarter. Our available liquidity at the end of Q1 remains strong at CAD 1.3 billion. As a result, we currently believe we have sufficient liquidity to satisfy our financial obligations during 2023. To recap, sales and earnings for the quarter was a story of improving markets and increasing market share in both segments. The supply shortages that have been hampering OEM production requirements have continued to see improvement in adding additional sales in the segments. The supply-related cost increases continue to impact the earnings in both segments, and Linamar has continued its discussions with the customers to seek price increases and cost recoveries. Despite these challenges in the quarter, we still maintain a strong level of liquidity of CAD 1.3 billion. That concludes my commentary, and I'd now like to open it up for questions. Thank you. Ladies and gentlemen, we'll now conduct a question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay, your first question comes from Michael Glen from Raymond James. Michael, please go ahead. Hi, good evening. Maybe just to start, I just wanna make sure I fully understand the margin outlook for the mobility segment. Should we view then 1Q margin, and I'm thinking of this on a percentage basis, it is a bit of an interim trough, and we're going to continue to move higher from these levels then? Yes, that's correct. Okay. Then you still work with that longer-term 7%-10% margin for the mobility segment. Do you think, given the business mix and where your launch book is, like, is there a time frame? Do you still think that that's a realistic target? Like, can you get back there? I'm just trying to understand that, the higher end of that range in particular. Yeah. I mean, we think that it's still a reasonable range, and we should be back there within the next three years. Okay. Then if I'm thinking of that launch book, the CAD 4.2 billion launch book, how would you characterize the breakdown of that launch book between larger, more well-established OEMs and then smaller startups or newer entrants? I would say your split is 75%-80% would be traditional, and then, you know, 15%-25% newer startup companies. Okay. Just my final question. I know that one of the feedbacks that was given coming out of the Q4, you had a lot of questions surrounding your normal course issuer bid. Any updated thought process surrounding what you might do there? Yeah. I mean, of course, it's always on the table, but as we noted back after the first quarter, we have quite a heavy CapEx year this year. I think a prudent approach is appropriate at this juncture. We do look at the possibility of either a dividend increase or an NCIB every quarter with our board, and of course, we will continue to revisit that. Okay. Thank you. Your next question comes from Peter Sklar from BMO Capital Markets. Peter, please go ahead. Okay, good evening. On the mobility segment in your guidance, like the full year guidance in terms of the margin went from flat to modest contraction. I'm just wondering, like what's gotten a little bit worse in terms of headwinds since you reported Q4? Or is it just Q1 came in a little bit weaker, so when you average it all out, the margin's gonna be down slightly? Yeah, that's exactly it, Peter. Q1 just a little bit weaker on those weak, Asia volumes was, you know, even a little more than we thought it would be. Margins, therefore a little bit, weaker, but notably earnings still growing in the mobility segment thanks to top-line growth. Okay. Next is on the industrial segment, you gave some guidance on how it's gonna fall out in Q2 in terms of revenue and earnings. It sounds like it's gonna be really strong, like even stronger. You're guiding for even stronger than Q1, you know, which was just a stunningly profitable quarter. How do you think Q3 and Q4 are gonna play out? Because normally, like from a seasonal perspective, they're weaker than the first two quarters, and Q4 is weaker than Q3. It sounds like you can sell anything you can build. How do you think those quarters are gonna fall out? Yeah, I mean, you're right, the seasonal norm is, you know, slowing down in Q3 and Q4 somewhat from Q2. Q2 is normally the strongest quarter. I think that's still a good expectation because the seasonality is also to some extent related to shutdowns and, you know, that kind of disruption to the business in the summer and again at Christmas time. It's not just all about demand, but you're absolutely right. I mean, demand, you know, with the backlogs that we have in place, thanks to demand, we've got a really good line of sight for the rest of the year in terms of where we're going on sales. Yeah, I mean, just the backlog, I think, Peter, Linda mentioned the backlog is like the best we've ever had, right? To me, key things that could restrain that if things change in the summertime frame. Secondly, you know, supply chain, you know, issues are, you know, leaving, but they're still there, right? They're still persistent. You know, that sort of challenges some of those outputs as well later in the year. Yeah. Like, this level of earnings you're generating in the industrial segment, like, were you surprised by that, or was this in line with your plan? I mean, it was in line with the plan, although obviously, supply chain issues have been hard to predict. You know, it's good to see things improved a little bit in the first quarter, that was quite helpful, obviously, at being able to get the product out the door. Yeah. Mix always plays a big role in this business too, right? You know, if you're comparing the different product lines in both the ag or the infrastructure side, that... You know, if you're getting pulled on one product, it might be more beneficial, right? That plays out as well too. The margin level is right in our target zone, right? You know, this is a level of margin that we've seen before. Right. Okay. Lastly, I just wanted to ask you about this new Welland die-cast plant that you're doing, which sounds like it's a big. You know, this is gonna be a big project for you. Like, as you know, to ramp up aluminum die-cast facilities is very lengthy and can often be very problematic. I know you have some experience ramping Mills River, but it sounds like these new, like, very heavy tonnage die-cast machines you're putting in, like they've only been done in China, I think, is what you're saying. They've never been done in Europe or North America. Are you a little bit concerned that? 'Cause these things, these die-cast plants are very tricky to ramp up, and just wondering how you're going to? Yeah ... What you're thinking about managing this? Peter, we're the first supplier to install this equipment in North America and Europe. We are not the first company. Some of our OEM customers, automakers themselves, have installed capacity in North America and in Europe. This is not brand new technology for these regions, but it is new technology for the supply base, which I think is notable in terms of the market leadership that it offers us. I think that any new facility, particularly, as you've pointed out, a casting facility, is gonna go through a few years of a ramp-up launch phase, and this facility is not gonna be any different. I also think that we learned a lot from Mills River, and that's gonna be really helpful in terms of establishing this plant. You know, as I say, there's great talent around in North America that have experience at launching this type of equipment, which obviously we'll be tapping into. Peter, we've talked about this for about 1 hour, which we're really excited to do. This really falls really good into the strategy of our structural parts and growth. When you think about what this does with the customer side for saving the complexity of parts, weight, and all those things, it's really a massive thing. As Linda said, with, Mills River, You know, you go back, you know, we were the sort of the North American partner and not really the casting side of this. I think we have a strong understanding of what went wrong, what went right down there, which we will apply. Our resources have been resourced up. We've hired in people that have been working on Giga Castings in the world. We're working in partnership with the press manufacturer, also with tool manufacturers and the customer ultimately that we are connected with. We feel really positive about this entrance in it because we think we've covered all the ducks. You're right, there's gonna be certainly some challenges underway, right? You know, the other thing that we've started to get ahead of this is we're putting one of these presses on the floor in our Langenvil structural engineering company over in France, obviously, and we're going to develop there first. We're gonna learn from that and then apply that same tool that's coming over here, which is, like, got 400 coolant lines, just to be giving some specifics here. We really think we're doing this right. Peter, that first press in Langenvil will be delivered at the end of the month. Okay. Then just lastly, like your guidance for CapEx this year, you know, suggests CapEx is gonna be at an elevated level around CAD 700 million. Is a big part of that increase this Welland facility? It didn't increase. Our outlook on CapEx is actually identical to the outlook that we had last quarter. Our guidance hasn't changed at all. We, already, you know, already had the Welland plant in our planning at that time. To answer, is it a chunk of that CapEx for this year? Absolutely. It is a big chunk of it. Okay. Thank you for your comments. Thanks, Peter. Your next question comes from Krista Friesen from CIBC Capital Markets. Krista, please go ahead. Hi. Thanks for taking my question, and congrats on a good quarter. Could you just provide us with a little bit more color around what's going on in China right now, and have you seen sequential improvement as we've entered Q2? Yeah, I mean, for sure we felt a pretty significant impact in the first quarter and, you know, we are starting to see the markets pick up a little bit as we come into Q2. Yeah. I think, again, first quarter there was, you know, rolling downtimes. I mean, in fact, I think we had, you know, four-day weeks. Mark, right? Like it was four-day weeks, from what, our president was telling us of Asia today on that. A lot of issues circulating. It is starting to come back in sort of Q2. It won't be fully back to the levels, Q3, Q4, getting better, right? It's, you know, Q1, I think, was obviously the worst, we'll see a better moderate comeback through the, you know, the rest of the year. We gotta watch and see, but that's sort of the outlook right now. Thanks. Then we've seen one OEM earlier this year idle their facilities just to keep inventory relatively tight. Are you hearing that on a consistent basis, or are you hearing that from any other OEM at this point? No. I mean, it's sort of sporadic. I mean, we've seen some release cuts on different programs, vehicle, architectures, but that's sort of as we go. No other flatline facilities that we've seen are forecasting at this point. No. I think that OEM was playing a little bit of the game 'cause we've seen other OEMs increase their production to compensate for it to take market share. That makes sense. Again, I would still say... Sorry. Sorry, go ahead. I was just gonna say, yeah, there's still several dealing with supply chain issues too, right? That also has some impact to a lesser extent, but there is impact that does come on, and they gotta level set everything to sort of get everybody on the same alignment. Okay. Great. Just on the industrial side of the business, an amazing quarter. Was the strength equal between ag and Skyjack, or was there one that was really kind of leading the charge there? Yeah. We saw great growth out of both the agricultural business and Skyjack. Don't forget the ag business is, you know, growth at MacDon, but also new sales and earnings coming from Salford. That's, you know, a third factor in there. Great. Thank you. Congrats on the good quarter. I'll jump back in the queue. Thank you so much. Your next question comes from Brian Morrison from TD Securities. Brian, please go ahead. Thanks very much. Many of my questions have been asked, but if I can follow up on that, is the margin profile within ag, is it still exceeding that of the of Skyjack? Yes. Okay, great. I understand going to mobility, I understand the cadence of the operating margin improving throughout the year. If I can just nitpick on Q1, the decline in the operating margin. Can you just maybe rank like in terms of Asian volumes and inflation, launch costs in Mills River? What was the biggest impact to that decline? Yeah. I mean, for sure, Asia was a big part of that, like the reduction in sales and and earnings out of, out of Asia. You know, Mills River was significant. The, you know, unrecovered cost increases. You know, we got pricing relief, but not enough to cover the cost increases. That, you know, would also be a key element. Energy in Europe, Linda, has come down quite substantially over the past X number of months. I'm wondering going forward, do you have hedges in place or is this a tailwind to you and is that baked into your forecast? I mean, obviously as the prices have come down on the spot market, that has been helpful to some plants that are, you know, running right off the spot. Others had contracts in place that will catch up in terms of the energy cost improvement as those contracts fall off and new ones can get put in place. Watching the commodity only is impactful for any plants that aren't on longer term contracts or hedges. That's why we're playing a little bit of catch up. We're still saw some higher costs in the first quarter. That should improve as we go through the year. Yeah. Brian, the other side, on the commercial side with the customers, you know, we're all trying to, you know, just pass these costs along. You know, the best way is to have mechanisms set up with customers on some of these commodities, of course, and also energy, right? That's still in works with customers and, you know, some acceptance is there, some is not. You gotta sort of work that through too as we tick those off and get a way to resolve that. I mean, both ways, right? If it goes up, we get covered. If it goes down, they get covered, right? We just wanna try and mitigate some of those in a fair fashion with our customers. Okay. Thanks very much. You certainly illustrated the benefit of diversification there. Congratulations. Thanks, Brian. Ladies and gentlemen, as a reminder, should you wish to ask the question, please press star followed by one. We have a follow-up question from Michael Glen from Raymond James. Michael, please go ahead. I'm just wondering if you could comment on your balance sheet inventory levels with respect to Skyjack. As we go through the rest of the year, should we think about those inventory levels coming down from the Skyjack side? Mainly on the inventory issue is not just at Skyjack, but in the ag side is because of supply chain issues. We are carrying extra inventory to make sure we don't run out of parts, but we're also building inventory to get ready for the peak selling season. Yes, I would expect the inventory levels will come down in the second half. Are you able to indicate like a dollar figure or anything? Like what that excess inventory number might be right now? I wouldn't have an estimate on that. Okay. Okay, thanks. There are no further questions at this time. I'll turn it back to Linda for closing remarks. Okay. Super thank you. Well, to conclude this evening, I'd like to leave you with three key messages. First, we are thrilled to deliver earnings almost double the level of last year. A great shout-out to the success of our diversification strategy to allow us to deliver consistent, sustainable growth in earnings. Secondly, we're very excited about the investment in Welland for our state-of-the-art Giga Casting structural component facility, critical to the future of electrified vehicles. As the first supplier to invest in this equipment in North America, Linamar will naturally take a market leadership position in this technology. Finally, it's great to see continued gradual improvements in the supply chain, labor, and energy cost challenges that we've been experiencing for some time. Thanks very much, everybody, and have a great evening. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.