Greetings, and welcome to the Magna International Q3 2022 Results Conference Call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach the operator, please press star zero. As a reminder, this conference is being recorded Friday, November 4th, 2022. It is now my pleasure to turn the conference over to Louis Tonelli, Vice President, Investor Relations. Please go ahead. Thanks, Tina. Hello, everyone, and welcome to our conference call covering our Q3 2022 results. Joining me today are Swamy Kotagiri, Vincent Galifi, and Patrick McCann. Yesterday, our board of directors met and approved our financial results for Q3 2022. We issued our press release this morning outlining our results. You'll find the press release, today's conference call, the webcast, the slide presentation to go along with the call, and our updated quarterly financial review all on the investor relations section of our website at magna.com. Before we get started, just as a reminder, the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions, and uncertainties which may cause the company's actual or future results and performance to be materially different from those expressed or implied in these statements. Please refer to today's press release for a complete description of our safe harbor disclaimer. Please also refer to the reminder slide included in today's deck related to today's commentary. With that, I'll pass it over to Swamy. Thank you, Louis. Good morning, everyone. Happy to be here to provide a general update on Magna, as well as our Q3 results. Key takeaways from today's call. We continue to manage through a difficult operating environment, and our results for the 3rd quarter improved both on a year-over-year basis and on a sequential basis compared to last quarter. Excluding the disappointing performance at certain facilities which impacted our 3rd quarter and is contributing to our reduced outlook, our results were in line with our expectations. We expect another sequential improvement of earnings in Q4, including as a result of our efforts to secure cost recoveries from customers, and we have reduced our sales and margin outlook for 2022, mainly reflecting increased operating inefficiencies and lower production assumptions. While we are highly focused on addressing short-term external and internal challenges, we continue to make progress on our go-forward strategy to drive our future business. Let me briefly cover the current dynamics impacting the industry. We continue to experience supply constraints, in particular semiconductors. Improvement in the 2nd half of 2022 is not as much as expected. At this point, we anticipate some ongoing schedule choppiness through the end of the year and into the 1st half of 2023. Input costs remain elevated, with higher energy costs in Europe the most recent factor. We continue to make progress in customer recoveries, and our discussions with customers continue. Relative to our previous outlook, we expect only a modest increase in our net input costs for 2022. The stronger U.S. dollar relative to other currencies in which we operate, particularly the euro, continues to negatively impact our reported results. There remains risk going forward that high inflation and rising interest rates will impact auto consumers. In terms of tailwinds, dealer vehicle inventories remain below historical levels, and to this point, underlying auto demand remains resilient and constrained by tight supply. Global auto forecasters continue to expect increased light vehicle production in the coming years. Now turning to our 3rd quarter earnings. Relative to the 3rd quarter of 2021, consolidated sales were $9.3 billion, up 17%. On an organic basis, sales were up 27% compared to a 24% increase in global light vehicle production, representing 3% weighted growth over market. This outgrowth includes the impacts of continuing customer recoveries. EBIT margin increased 190 basis points to 4.8%. Increased vehicle production was the largest positive factor. Higher net input costs was the most significant offsetting factor in Q3. Our EBIT margin improved year-over-year in every operating segment. Our adjusted EPS rose 91% to $1.07 for the quarter. Our use of free cash flow was $210 million in Q3. During the quarter, we repurchased 3.1 million shares using $180 million in cash and paid out another $125 million to shareholders in the form of dividends. Pat will take you through the details of our revised 2022 outlook later. Let me take you through the broad strokes. Compared to our previous outlook, we are reducing adjusted EBIT margin at the midpoint by about 30 basis points to a range of 4.8%-5%, mainly related to three factors. We are experiencing a higher level of operating inefficiency in a few facilities. The EBIT impact from these operating inefficiencies is about 15 basis points. The most significant is the VES facility that we have highlighted last quarter. We have identified the issues and action plans are in place. We expect progress in improving the run rate of losses going forward. Our lower volume assumptions in North America and Europe result in lower sales. Relative to our last outlook, we are seeing more disruption costs from production schedule changes. These are partially offset by contribution on higher sales in China. Together, the volume, sales, and schedule volatility impact is approximately 10 basis points. Lastly, there has been some movement in a couple of areas of our net input costs, but overall, we are expecting about $20 million in higher costs, which is essentially the impact of lower sales of scrap steel and aluminum compared to our previous outlook as a result of lower market prices. Despite bringing our outlook down, we still expect improved sequential earnings in Q4 relative to Q3, mainly reflecting lower net input costs, partially offset by higher engineering expense. While we are tackling short-term industry challenges, we continue to take steps in our go-forward strategy. We are leveraging Magna's capabilities and platform technologies in areas such as 48-volt battery management, software stack, and sensors to enter growing adjacent mobility markets such as micro-mobility. Our recent Yulu investment allows us to enter the world's largest growth market for two-wheeled electrified mobility with India's largest two-wheeled electrified mobility-as-a-service business. Through both our collaboration with Cartken and our own internally developed robots, we are addressing last mile delivery. In the area of powertrain electrification, we are launching hybrid DCTs for Stellantis, starting with Jeep and Fiat models. Our agreement also includes additional future hybrid models for Europe. Our scalable hybrid technology is an important step in helping our customers electrify their fleet to improve fuel efficiency and performance and to meet regulatory requirements. To date, we have been awarded hybrid DCT business with three global OEMs, BMW, Mercedes, and Stellantis. Earlier this year, we broke ground in our LG joint venture on a new facility in Mexico that will supply inverters, motors, and onboard chargers. This is an important step in our ability to support our customers' powertrain electrification plans in North America. Lastly, we recently won another Automotive News PACE Award, our sixth such award in the past eight years, for a solution that offers real-time die adjustments during the stamping process. We are also awarded an Automotive News PACEpilot Innovation to Watch for a better performing aluminum die cast alloy used for structural applications. The innovation provides both a lower cost and lower carbon footprint. These awards recognize our efforts to drive innovation and technological advancements across Magna, and we are very proud of our continued success here. With that, I'll pass the call over to Pat. Thanks, Swamy, and good morning, everyone. I'll start with a detailed review of the quarter. Global vehicle production increased 24% in the quarter, with all key markets up by a similar percentage. Our consolidated sales were $9.3 billion, up 17% from the 3rd quarter of 2021. On an organic basis, our sales increased 27% year-over-year, representing a 3% weighted growth over market in the quarter. The increase was primarily due to higher global vehicle production, higher assembly volumes, the launch of new programs, and price increases to recover certain higher input costs. These were partially offset by the negative impact of foreign currency translation, lower sales in Russia, and customer price concessions. Adjusted EBIT was $441 million, and adjusted EBIT margin increased 100 basis points to 4.8%, which compares to 2.9% in Q3 2021. The higher EBIT percent in the quarter reflects earnings on higher sales, commercial settlements, a $45 million provision on an engineering services contract with Evergrande in Q3 2021, higher tooling contribution, and divestitures of loss-making entities. These were partially offset by higher net input costs, operating inefficiencies at a facility in Europe, higher launch and net warranty costs, and reduced earnings on lower sales at facilities in Russia. Equity income was down $7 million year-over-year to $27 million in the quarter. The decline reflects higher net input costs at certain equity accounted entities and higher electrification spending in our LG JV to support new launches and additional growth, partially offset by earnings on higher sales at certain equity accounted entities. Our adjusted effective income tax rate came in at 25.5%. The higher rate compared to Q3 2021 was due to lower R&D credits and a change in the mix of earnings, partially offset by favorable changes in reserves for uncertain tax positions. Net income attributable to Magna was $308 million, up $138 million compared to Q3 2021, reflecting higher EBIT and lower interest expense, partially offset by the higher income tax rate. Diluted EPS was $1.07 compared to $0.56 last year. Foreign exchange reduced our EPS by about $0.08 per share. I will now review our cash flows and investment activities. During the 3rd quarter of 2022, we generated $591 million in cash from operations before changes in working capital and invested $353 million in working capital. Investment activities in the quarter included $364 million for fixed assets, $125 million increase in investments, other assets, and intangibles, and $25 million for our investment in Yulu Mobility. Overall, we used $210 million of free cash flow in Q3. We also repurchased $180 million of our common shares and paid $125 million in dividends. At the end of the 3rd quarter, our adjusted debt to adjusted EBITDA was 1.39%, and our liquidity remains strong at $4.6 billion, including $1 billion in cash. Next, I will cover our outlook. In North America and Europe, our most significant markets, we slightly reduced our vehicle production expectations from our previous outlook, and we increased our volumes in China. We assume exchange rates in our outlook will approximate recent rates. Given recent currency moves, we now expect a weaker euro, Canadian dollar, and RMB for 2022 relative to our previous outlook. We have reduced and narrowed our expected ranges for segment and consolidated sales, largely reflecting lower volumes and the strengthening of the U.S. dollar, in particular relative to the euro. As Swamy indicated earlier, we reduced and narrowed our EBIT margin expectations. We now expect a margin range of 4.8%-5% compared to 5%-5.4% previously. We slightly raised and narrowed our equity income expectations. Our expectation for net income attributable to Magna has been reduced and narrowed largely to reflect lower sales and lower adjusted EBIT margin. We lowered our expectations for capital spending this year. Lastly, we reduced our free cash flow projections to the range of $400 million-$600 million. This mainly reflects expected lower earnings and higher working capital, partially offset by lower capital spending. With respect to higher working capital, we have been carrying increased levels of safety stock given ongoing supply chain volatility. We had expected that to decline by year-end. We are now assuming to remain above normal levels through the end of 2022. The higher working capital also reflects a change in timing of tooling collections. In summary, our 3rd quarter results were improved over both last year and last quarter, although we had expected a little bit better. We anticipate further sequential earnings improvement in the 4th quarter. We continue to focus on making improvements in our underperforming operations, managing our costs, and obtaining customer recoveries to help address the current challenges. We are making ongoing progress in our go-forward strategy. Thanks for your attention this morning. We would be happy to answer your questions. Thank you. If you would like to register a question or comment, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment, please, for our first question. The first question comes from John Murphy, Bank of America. Please go ahead. Good morning, guys. Just a first question on the implied guide for the 4th quarter. I think at the midpoint of the range, you know, the revenue is like $9.6 billion and the adjusted EBIT is about $550. A marked improvement sequentially from the 3rd quarter and a pretty significant improvement in profitability. I just wonder what the key factors are sequentially that are driving that. Because, I mean, it also looks like, I mean, it's about $110 million improvement in EBIT sequentially and only a $360 million improvement in revenue sort of at the midpoint. It implies sort of some big incrementals as well. Morning, John. Thanks for the question. Looking from Q3 to Q4, you know, we provide a range. If you look at the midpoint, I think roughly where you're looking, that math makes sense. Big picture, when we look at sales, we're seeing increased volumes from Q3 into Q4, but we're also expecting higher recoveries as we progress through the year. A good portion of that is booked through revenues as well. Then the offset against that would be foreign exchange headwinds on translation. On the margin side, as you look at our progression of customer recoveries and our input costs on a net basis, we're expecting improvements in Q4 relative to Q3. Then there's some small puts and takes, you know, primarily spending and timing of engineering and then D&A increasing just in normal course as programs launch. Those would be the big drivers, John. Okay. That's helpful. Then just a second question. Commercial settlements seem like they're, you know, reasonably material, certainly in the 3rd quarter and the 4th quarter. You know, Pat, can you kind of allude to or really, you know, detail whether they're relative to cost inflation or relative to, you know, some of the costs that you're incurring from volatility in schedules that the automakers seem to be playing ball with, and how we should think about those go forward. Maybe 3rd quarter, you know, actual, what you're expecting for the 4th quarter actual, how much of that is in period and what is it specifically for cost inflation or volatility in schedules as well? Yeah, when we're breaking out our commercial recoveries, John, we're speaking specifically not about customer recoveries related to input costs or production volatility. That's reflected in our $565 million or $570 million number that we've been guiding previously. When we talk about commercial recoveries, this is normal course recoveries that we would have every month, I would say. There's ups and downs. It just happened this quarter that they tended to go in our favor, but it covers areas such as tooling, launch, production schedules, program cancellations. There's a whole list, laundry list of issues that go into that category, and they bounce around from quarter- to- quarter. Like we said in the discussions, they just went in our favor this quarter, but we don't forecast those in our numbers. Okay. Just lastly, Swamy, philosophically, there used to be buffer stocks in the automotive value chain that used to sit on dealer lots as finished goods. That's now been worked down pretty dramatically. You know, those buffer stocks seem to be backing up into the suppliers like yourselves. I mean, how long do you think you're going to maintain these buffer stocks? You know, I mean, how consequential do you think this will be to 2023? Is this something that'll get worked out early in 2023, and you'll be back to pretty lean just-in-time inventory levels? Good morning, John. Great question. I think, one of the big impacts that we have is due to this start-stop, and because of trying to keep the continuity to the customers, obviously leads to inefficiencies within our plants and having these buffer stocks. The volatility has not improved as much as we had thought it would in the 2nd half of this year. You know, hopefully it does, and I think that will make a difference for sure in 2023. If you just look at the production versus the slack in the value stream, you know, down to the tier N, I think is gonna determine how stable can production releases be. Not just the release, but being able to stick to the release, I think is gonna make a difference. I believe it's going to start improving, but to get to a state of equilibrium, I think, it's gonna be a little bit beyond the 1st half of 2023 from what we see today. I'm sorry, Swamy. Just one follow-up on that. Will you have an idea of this stability or is it just gonna happen when it happens? I mean, is there any guideposts you could look to? John, I think typically, if you had asked me the question. I'm not giving you a hard time, a hard question. Yeah. No. It's fine. If you had asked the question about two or three years ago, right, we would have said we had a decent view into 13-15 weeks out, right? We get releases from the customer 13-15 weeks out, but the issue has been the releases don't materialize when you come to it, right? The parts are not picked up or something changes and so on and so forth. That has been the issue. Yep. Get the release, and hopefully the release sticks, I think is what we are hoping for, starting next year. Okay. Thank you very much, guys. Thank you. The next question comes from Adam Jonas, Morgan Stanley. Please go ahead. How are you doing? I just had a follow-up on the working capital safety stock question. Thanks for the clarity on maybe taking beyond 1st half for equilibrium. What is the quantum of working cap that we kinda have trapped in the system just so we kinda have an idea of what's in the bathtub and what could come out over time? My first question. Can you hear me? Yes. Adam, I think when you look at the working capital, it's a bunch of things, obviously, right? It changes from quarter- to- quarter a little bit, and part of it is due to these buffers that we've been talking about. I think it's difficult to quantify exactly. Maybe we can look at, you know, year- to- year. At this point, I won't be very accurate, Adam, to quantify exactly how much of that working capital is due to buffers versus other things. I would attribute most of the change to the normal average working capital that we have versus what we're seeing now, definitely to the buffers and the safety stock. Adam, if I could just. Sorry, I was just getting some data. We did hear your question. When we look at the working capital Swamy's talking, there's a couple of buckets to it. There's safety stock that Swamy was referring to specifically. When we look at that quarter, if you look at our average inventory turns where we expect things to be, that number is probably in the $200 million type range. The other piece that is driving working capital higher than expectations when we get to year-end is really when you look at the way the industry works, our working capital, our receivables are pretty automatic once they get into the system. They get paid per the OEMs, T&Cs. The one area where we can get slippage and where we're realizing it is the timing of your PPAP approval and your collections on tooling. That's also driving some of the higher receivables we see at year-end. If you think about the inventory, $200 million of safety stock in that range, and then the balance would be primarily related to timing of tooling and collections. No, that's really helpful color. Now, just as a follow-up, you know, we're heading into a global downturn. We're in some form of global downturn already, and as a supplier, you felt it on the production schedules for years. You've already been in a downturn in many ways. So are you seeing any signs right now that your OEM customers might be cutting back on some of the science projects, focusing on more of the proven money makers like internal combustion? I mean, argument could be made that when everyone's generating all-time high margins and money's free, that you can kinda launch on this, you know, the big ESG campaigns and the expensive stuff and sell loss making EVs and AVs and all that, and maybe that posture changes into a downturn. I don't know if you're seeing any indication of that yet, on the forward look for your customers. Yeah, great question, Adam. I think when we look at the long-term planning, we usually are at the table talking about strategically three to five years out. We've always talked about what is the sustainable plan when I say that long-term plan, taking into account the transition of the product from where we are over the next 10 years. We haven't significantly changed or seen a change in terms of their portfolio or program management. Obviously, we have an internal view also as we work on different call it platforms or product lines, an assessment of what we think, right, for the next five, 10 years. I wouldn't say there has been a drastic shift on any of the customer viewpoints as we have various discussions today. Thanks, Swamy. Thank you. The next question comes from Peter Sklar at BMO Capital Markets. Please go ahead. Good morning, Pat. I'm just a little confused on what the, you know, the net impact is of the, you know, not normal course commercial recoveries, but all these extraordinary inflationary impacts you're feeling on, you know, energy, rent, et cetera. What is the impact in Q3, and what is the impact in Q4 when you look at that elevated level versus the commercial recoveries that you benefited from in Q3 as you negotiated reimbursement for those extraordinary costs? Is it net a positive or negative? I'm just trying to figure out where you're at. Good morning, Peter. Yeah, let me try and clear it up. Forget about the commercial piece. If we're talking specifically about our $565 million we've talked about historically, we would have guided in the range of about 200 basis points in Q1 and 200 basis points in Q2. When we got into Q3, the number is coming down and the impact. The headwind year-over-year would be in the range of about 180 basis points. That's primarily as we, our launch year from last year is a little bit elevated, but we're also, our recoveries were back-ended. When you work through the math, basically, we're looking as we move into Q4 with a minimal amount of input cost headwinds on a year-over-year basis, Peter. Okay. The 180 basis points, since you're talking about the $565 million, that's a net number. That's elevated cost less recoveries, correct? Everything on a net basis. That's correct, Peter. Yeah. Okay. Next question. Could we have an update on management's thinking on how things could potentially unfold in, Germany this winter if there is an energy shortage and if the German government, was required to ration industry? I mean, how do you think that would play out? Do you think that they would curtail production of the auto industry in Germany? Yeah. I think, as you can imagine, Peter, this is a little bit more societal than just the industry. At least from the information that we see, the natural gas stocks seem to be ahead, compared to the normal years. You have to see the harshness of the winter and, you know, the rest of the stuff. From our conversation, the industry in general is talking to, you know, the policymakers to safeguard as much as possible, but that is something to be seen. It's no different than any supply shortage. It only takes one component, right, in the entire supply chain, to stop vehicle production. I think we are part of all these conversations with OEMs and policymakers to stay at the table to understand it. Other than remaining agile to address as it comes along, there is not a whole lot that we can do from our side, other than production planning to the extent possible. Okay. Thanks, Swamy. Just my last question, in your discussion on the downward revision to the margin guidance, the 30 basis points due to plant inefficiencies, if I do my math correctly, that's about, you know, a loss of $27 million in the quarter. I think you touched on it last quarter, but do you mind reviewing this plant in Europe that's incurring most of the loss, what it does, and what the issue is there? Yeah. Peter, I think, just a correction, Pat. I think it's 15 basis points, right? Mm-hmm. You're right, Peter. Most part of it is in one facility, as you mentioned, in Europe. If you just step back and look at it, we had a capacity constraint. There was a little bit of a change in the program, kind of put the facility over the cliff, in terms of the capacity constraints and therefore had to do some outsourcing of parts both to internal Magna divisions and external. As you can imagine, when you're shipping parts, there is a premium associated with it, and that is what has caused the issue that we're talking about. The issues have definitely been identified and there is an action plan in place, clearly. As you can imagine, to rebalance the capacity, which will reduce the premium cost, it takes time. The plan is in place. We understand the issue. Now it's just a matter of executing to that and bringing back capacity in an orderly way and reduce premium costs. I think that's what I meant when I talked about reducing losses and improving run rates going forward. Okay. Thank you for your comments. Thank you. The next question comes from Chris McNally, Evercore. Please go ahead. Thanks so much, team. Just a real quick one because I think the comments around Q4 were pretty important. In the old framework, I think of the $560 million net, it was $400 million on an absolute basis in 1st half, $160 million implied in the 2nd half. I think the comments were that Q4 would almost be neutral. Does that mean that there's a chance that maybe by the 1st half of the year, given the normal pace of the conversations, that we could have a tailwind from you know this non-commercial recovery inflationary bucket? Morning, Chris. Your math is bang on. If you know, when you look, it's $200 million, $200 million. That $160 million brings us to the $560 millon all in. There's a little bit of leakage year-over-year when we get into Q4. I think when we get into headwinds and tailwinds for 2023, we are in the middle of working through our business planning process. As you can imagine, the number of moving parts this year, given inflation and energy, it's been an incredible process trying to work through it. If you remember, Chris, if you go back to our guidance from February of last year, we did break down inflation into a couple of buckets. We bucketed them basically between sticky inflation, primarily labor, and then non-sticky inflation being commodities, and since that time, energy as well. So when I think about a headwind, I don't think we're gonna have a tailwind on labor for sure. I think labor is a sticky type of scenario, and we're gonna work on automation projects and bringing efficiencies into the plants to negate those costs headwinds. When you think about the other bucket, primarily energy, where it's really gonna be dependent on what Swamy talked about earlier, whether it's rationing or whatnot, that's one piece of it. Looking again just at the energy curves in Europe and where we settle, that's really gonna be the big driver of how 2023 shakes out. Then on top of all that, what we can recover as far as customer expectations. Sorry for the long answer. No, it's very helpful. Maybe a second on Steyr and a lot of the interesting things going on in obviously AutoTech and the IRA. You know, just sort of a two-part question. Maybe an update or a reminder, you know, Fisker's launching in the 1st half of next year. You know, how does it work in terms of either cost overruns or, you know, the launch cadence? Does Steyr take a little bit of a margin hit as you launch the program with them? Just remind us how costs are shared. A bigger picture, Swamy, I'm sorry I always ask this, but it sounds like there's you know the potential for a bigger move in Steyr in North America. It makes even more sense with everything domestic for IRA. Just any updates that you can share there on Steyr? I think from a perspective, the North American footprint, you know, we've always said that, the answer still remains, is if there is a appropriate business case, you know, we are very open for the footprint in North America. There is obviously various discussions on that topic, and they continue. As we've always said, we have remained very disciplined to say it has to make sense in the long run. On the other part, honestly, I don't think it's right on our part to talk about cadence of launches and so on. We would leave that to the customer and let them talk to it. You know, we have so many launches that we do with various customers, we don't comment on it, and we would. You know, it would be not in the right place for us to talk about a customer cadence and launch here. Maybe, Swamy, forget about the specific case, just, you know, typically in a launch year for a new program, is there an investment period on Magna's part where the, you know, if I think about BMW historically, where higher margins would dip? I would say that obviously it depends very much on the ramp curve and the launch, and it differs from customer to customer. You know, how they get their milestones is gonna drive that. Usually, right, we take that into account as we are going through the planning process. To the extent when that plan changes, you know, obviously because of programs, you know, the maturity and so on and so forth, that is what Pat talked about, you know, how the launch there is puts and takes, you know, from one quarter to other, depending on customers and programs. It's very difficult to say it is a one particular cadence every time during a launch. I mean, we see in some cases there is more, some cases I think it just sticks to the plan exactly. It's difficult to quantify. I'm not trying to go around, but I wish I could give a more concrete answer. No, much appreciated. Thanks so much, team. Thank you. The next question comes from Joseph Spak, RBCCM. Please go ahead. Thanks. Good morning, everyone. Maybe just, I know, I think, to John's first question, you talked a little bit about some of the factors here for the 4th quarter. If we zero in specifically on BES and Power & Vision, where it seems like there's some larger quarter-over-quarter margin assumptions, it's almost like 190 basis points in BES and 150 basis points in Power & Vision. I think BES, you sort of talked about, right, some of the efficiency improvements in Europe. I was wondering if you could help us help quantify maybe how much of that sequential improvement is there and what's driving the rest, and then what's driving the improvement in Power & Vision quarter-over-quarter. Rob or? Joe, we'll have to look at that. Sequentially, I don't have a good handle on what looking at it by segment, I think. Mm-hmm. Okay. I think a couple of big issues. Sorry, Joe. When you look at a couple of the big items, if you focus in on Q3, there is, we did have the unusual warranty charge in the P&V group, which will, it's obviously a one-time in nature. So that's one of the big drivers. When you look as well, as far as customer recoveries, those two big groups do drive a disproportionate amount of the change in headwinds, just given how they're heavy industrial groups. So that's another piece of it. So those are the two big off the top of my head. Okay. Issues. As Louis said, we have the detail. We'll just have to put it into a tight package for you, and we can take it from- Yeah, we can follow up then. We can follow up. Yeah. Thanks. I guess, you know, maybe just one sort of quick one. You pointed to FX. Obviously, we could all sort of see that on our screens. I mean, it seems like, you know, at current spot, that could be like, you know, maybe like $1.3 billion, $1.4 billion sort of top line hit to you next year. I was wondering if you think that sort of ballpark correct. Then just at the EBIT level, remind us, is it. I think it's mostly translation, but is there also some transaction exposure you have within Europe or anything? In my recollection, Joseph, from past, about a $0.01 Change in euro, U.S. dollar is about $150 million annually, so it is pretty significant. Canadian dollar, U.S., less significant, but it's probably $60 million for a $0.01 Change. Depending what assumptions you're making there, the numbers can be pretty big. Yeah. Okay. And Joe- Yeah. Sorry, Joe, on the second part of your question, you're correct. It's primarily translation impact. We do have a mature foreign exchange hedging process at Magna, which negates the majority of the transactional impacts. Okay. Swamy, I guess just, you know, very big picture. I know you don't update the 2024 targets you have, but, you know, at a very high level, and no one sort of has a crystal ball on production. I just wanna really understand, like if we do get back to the volume levels you assumed when you issued those targets, do you think that is still attainable, or has something else happened since then that sort of structurally changed that view? I guess said differently, like, is it really just sort of volume that's sort of the key driver to sort of sensitize what we should assume for 2024 margin targets? Joe, I think it's a good question. I think if you just fundamentally look at our operations and our plan, I would say it's very sound. Like you said, the key things are, one is volume, and in my previous comments, I did mention is also equally important is the inefficiencies that are caused due to this takt stop in production. I would say those from an operational perspective and, you know, to be very transparent, we have to address the underperformance that I talked about. Other than that, if you look at the foundational part of it, I think we feel pretty good. The input costs and the inflation stickiness that Pat talked about is obviously gonna have an impact on how we do and what we do. In short, I think if the extraneous events are not volatile and are not changing significantly, then I would say the margins that we have talked about are very reachable. There is not an underlying that puts a question mark. We feel pretty confident, but we gotta address all these market conditions that we're going through right now. Thanks for that. I appreciate it. Thank you. The next question comes from Colin Langan of Wells Fargo. Please go ahead. Oh, great. Thanks for taking my questions. Just to clarify, I mean, what is the light vehicle production assumption when we're looking quarter-over-quarter? 'Cause your growth, I think, at the midpoint is something like 4%. I know a lot of suppliers are talking more flattish. I mean, is it- Are you talking? of 4%? Are you talking about global Q4? Yeah, just overall, yeah, global Q4, what your kind of baseline is? I can tell you what it is. Our assumption for the full year, so year-over-year, is above +2%, which I think is pretty much in line with maybe even a little conservative relative to IHS. That's where we are full year globally. Okay, all right. If I look at the Q4 sort of implied rate, margins sort of jump to, like, 5.7%-ish at the midpoint. How should we think of it? Is that the right launch sort of rate as we look into 2023, or are there some, you know, seasonality or any maybe retroactive recoveries that are impacting that sorta exit rate? Yeah, I think all the above apply, Colin. Like I said earlier, we're really in the middle of a budget cycle here that we're kicking off. You know, we are gonna come to the market in February with our Q4 results given that guidance. It wouldn't be fair for us to give a number at this point 'cause we're really trying to zero in on where we're gonna land. Okay. Just lastly, any retroactive recoveries in the Q3 and Q4 results that we should be thinking about? If you think about the cadence of our headwinds on our net input cost of the $565 million that we had guided earlier, it gives you perspective that they were front-loaded, and part of that benefit in the 2nd half of the year, part of it was just the year-over-year impact on the cost side of it. The other piece of it is some of our recoveries are geared towards the back half of the year, and a portion of that would relate to the 1st half. We haven't broken it down, so we haven't got that detail. Okay. All right. Thanks for taking my question. Thank you. As a reminder, via the phone lines, you may press the one four to register a question or comment. The one followed by the four. Our next question comes from Michael Glen at Raymond James. Please go ahead. Hey, thanks for taking my question. I just wanna dig into the European energy situation just a little bit more. If we look back earlier this year, you guys had increased that cost guidance based on energy prices in Europe. If you look at the way energy prices in Europe trended in 1st half of the year versus what we saw in Q3, in particular, you had some pretty significant escalation take place in the European energy market, but it doesn't feel like you guys saw much pressure from that. I'm just trying to understand how, when we're looking at the spot market for natural gas, how we should think about that translating or impacting your results. Yeah, maybe I'll start, Pat, you can add. I think, if you look at the energy costs, both the gross costs were higher and also our expected recoveries were higher. Overall, I should say the net costs for us are higher. Obviously, the discussions with the OEM are, I think they understand the issue, right, as we have some of these discussions. We can't get into the details, obviously, with, you know, the granularity of the discussions in each case. I would say that that's the key point, Pat. Agreed. I think the other thing, Mike, you have to think through as well, is we do have hedging on energy to protect, or lock in or secure supply related to that. It's not, you know, we're just not looking at the 30-day forward curve and our numbers are moving up and down. The majority is what Swamy talked about, that we're into the customers like most of our competitors on energy because it's such a significant impact. That's the first piece. It spiked in Q3 for a short period of time, and if you look at the curves today, they're back down to March levels. I think the market's really bouncing around, but we're tracking it and managing it with the customers. At this point, would you say then that energy is now largely on pass-through with customers? Has that now been embedded into your arrangements? I think so part of this, you know, Mike, I think we're in a situation where in our main markets, we've operated in a virtually zero inflation environment. Some of our other markets, where whether it's in Brazil or Turkey or some of these evolving markets, we've had success in passing these costs through. We're lifting that model and using it in our more traditional areas. On a go-forward basis, when you think about energy or anything else we can de-risk our quotes on, that's one thing we have done to move the economics into it. When you think about what Swamy's talking about, we're talking specifically going in with raw data, factual, a good portion of the cost. That's not just our utility bill, those are surcharges coming through suppliers, and some of those suppliers are direct to suppliers. We are going through with facts, with data, fully transparent, and having a discussion with them. Mike, if you remember, we spoke earlier. It's an industry issue. It's not a Magna issue, and we've had more success when it's more of a broad industry issue. Okay. That's good information. Then finally, just in terms of what you're thinking about, from a technology investment standpoint, you've shown appetite to invest in some early technology ventures over time. I'm just wondering, is there anything on the battery side, battery materials, battery technology? I know you produce the battery trays, but is there any appetite for you to step in and get involved in the battery in any significant way? I think the appetite or our direction in investing in some of the technologies has always been very thoughtful. We have a roadmap in terms of where our technology and our products sit today and how we see them evolving given how the vehicle of the future is evolving. It's very well thought through how we do and what we do, and we are following that process. On the specific topic on the batteries, I think as we sit back and look at it from a system perspective, as you said, we make the battery enclosures, but there is enough tech which gives us a front-row seat of understanding how the thermal management is done, how the controls from a battery management perspective, if you look at our LG joint venture, what we do there in terms of the onboard chargers and so on and so forth. I think from that perspective, we are, you know, focused on figuring out where can we play a role in the ecosystem. I would say cells at the cell level is not something that we are currently looking at. Okay. Thanks for taking the questions. Thank you. That was our final question. I'll turn the call back over to Swamy Kotagiri for any closing remarks. Thanks everyone for listening in. We are obviously still facing a challenging industry environment. We remain focused on working with our customers to address cost inflation, and equally important, we are focused on addressing our underperforming operations. Thank you. Enjoy the rest of your day. Thank you. This does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you, and have a good day.