Auto parts supplier, number three? Yep. Number three. Okay. All right. Great. Thank you very much. As we're wrapping up the Barclays Global Autos Conference, very pleased to have with us Magna, their largest auto parts supplier globally. So we'll go through a series of fireside chat style questions. Anyone who has a question, please raise your hand in the room or send my colleagues an email at tl.young@barclays.com or joshua.cho@barclays.com. So with that, I want to just start with Pat McCann, the company's CFO, and Louis Tonelli, who heads the IR efforts. Pat, Louis, maybe we could just start taking a look at 2024 as we exit the year. Obviously, challenging year, a lot of volatility, customer mix issues. Give us a sense of, when we look back at the year, how much the customer mix issues, some of the production disruptions or whatever that we've had, have been a drag to you and what the setup is into 2025? I'll start and Louis jump in. I'm not sure if this is working. But if I look back in 2024, I would say the biggest disruption was the EV maneuvers by our OEM customers. That's really what we've been adapting to. If I compare just the production volatility in 2024 compared to what we would have seen in 2021, 2022, 2023, I think it was better. It was more stable. It wasn't as jerky. On the volume side, I think we've been pretty consistent in Europe. We were probably more conservative than most from February to where we are today. It was in line. And in North America, it was holding really until our release in October where we took out about 300,000 units. So if you fast forward to what does that mean for the fourth quarter, we went out and looked at our releases, what we had in the system, and we just took basically an approach that we feel comfortable with where they're at. We're trying to capture some of the WL downtime and some of the other European announcements. I think all in all, that's 2024. When we come into 2025 and beyond, we're in the middle of our BP right now, Dan. We gave guidance for 2026 in August. We updated it. When we updated at that point, we're basically seeing no growth in sales in Europe in particular. That's going to be pretty consistent, I think, for 2025. Then in North America, we're basically flattish. We're in the 16 million range. We're not really seeing this high growth. But I think what we are seeing, sorry for the long answer too, is your action about production. I think we're moving in a situation of being production constrained, not availability of chips and other key components to demand constraints. So I think it's, even though we have volatility in schedules, it's more planned and there's more line of sight into some of the downtime that's coming. Great. And then from a customer mix standpoint, obviously, that's been a dynamic. Do you have any preliminary views on how customer mix may factor into 2025? And then how do you manage around that? When we saw, for instance, there was a large OEM that was down a lot in the third quarter, how do you plan around that when you see these customers with elevated inventories? How do we plan around it? I think there's production planning, I would say, and then there's also just financial planning. So if you look at the financial planning, in the short term, we have line of sight really 13, 14 weeks out. And we're working that we want to be able to flex up and keep our operations flexible. And I think that's really the power of the Magna model that there's not, Louis and I aren't sitting at the top and we're not puppeteers basically on production. It's down at the local level. The EDIs are right into the divisions. And we coordinate once per quarter when we come up with our financial plan to say, "What are we seeing for inventory days? How does that impact what they're telling us for EDIs? How do we make a decision that we drive the organization on the production side?", so I think that's that piece of it on the inventory days that we consider. As far as the mix, I think we're so diversified. We obviously have more content on different vehicles, but the mix isn't impacting us as much as we would have. I think where we see our mix issues is, again, it's coming back to the EV versus ICE, where there was a pretty strong pivot by a lot of our customers throughout the year. We were here last year. I remember talking about this issue specifically, and you raised it. We were just finishing the UAW strike, and then it was like, "Let's talk about something else negative," and next year, we're going to talk about something good, right? And so if you go back and build a time machine to where we were last year, I feel a lot more comfortable with the EVs. It just seems the significant reductions that they've settled their plans. I think their volume projections are much closer to, I would say, what we're thinking, what consensus. And you had S&P Global up here. It's more in line. So I think there's less volatility talk on what I would hope going into 2025. We'll get more detail when we get to February. We have our outlook. I mean, on the EV point, maybe looking out a little bit, this is a question we ask everyone. Look, we don't know what's going to happen post-election, but there are indications EV policy may ease. What do you hear, if at all, from your customers? Has there been any change in the bidding activity that you've had? I would say on the bidding activity, there's been a slowdown just more broadly. And I love the way Louis puts it, is over the last three years, every quote that's been in front of us is an EV. So if you want to have a company in the future, you have to quote on it. I think with policy changes, our perspective on high capital, high engineered products, we're quoting on product that's launched in 2028, 2029. And I think I'm not a political analyst or whatnot, but to change something for a four-year period to repivot again, and then you have state legislation versus federal, I don't know how that all fits together. Again, if you go back to 2016, we lived the situation and you adapt to it. I think we're just seeing extensions on our existing programs. I think people are just getting a lay of the land. But listen, there's a lot of rhetoric in the paper. We have to see where things really settle. Let's talk about the margin side. And let's just start, remind us this year, and I recognize incrementals, decrementals vary by segment. Remind us just briefly what the baseline incremental, decremental margin should be, and if there should be any variation as we think into 2025. Normally, our decrementals for BES and Power & Vision are roughly 20%, Seating closer to 15%. I think Complete Vehicles is a bit of a different animal because of the nature of the contracts we have there. So it's typically a lower decremental. But keep in mind that we've been doing a lot on the restructuring side and the cost-saving side, operational excellence, which is helping to offset decrementals. And I expect that's going to continue. From a recoveries standpoint, pricing, when we look back at 2024, just in aggregate, how did that fare? What's the opportunity ahead? I mean, and let's think about pricing in two ways. One is sort of recovery of remaining inflation that you incurred over the last two years. Two is you and everyone else bid and won a number of EV programs over the last few years. Clearly, those volumes have come in below expectations. What's the process of recouping the investment, whether it was on R&D or CapEx for some of that spend? Let's break it into bucks. So on the inflation piece first, I think we're tracking to our expectations. We started the year with about a—we were expecting about a $630 million cumulative headwind over the last three years. Latest estimate, we're about $600 million. So we're really executing where we expect it to be. So that's a combination of primarily wage rates coming up and then higher recoveries against our customer and from our customers, and it's a partnership, right? So there's a bunch of things that go into it. I would say when you look at our recoveries, a portion of it is embedded with higher pricing, and then a portion of it is put as a one-time check. We're seeing more and more of that's embedded in the future pricing. Then just on that basis, as programs EOP and they roll on with the new economics, you automatically reset to current labor rates and whatnot. That's going to happen over time depending on the type of product. The second category on volume shortfalls we would call commercial. So that would lump into our commercial category. And that's completely outside our 600 I mentioned earlier. In that case there, the way the POs work in the industry is it's a fixed price contract, no minimums. And if you're flexing up or down by 10%, 20%, it's part of life. When things flex more down, like your example, what we're seeing in the EV world, we do go back to the customers and we do have very constructive conversations with them. We have, and we're getting a lot in the fourth quarter, recoveries related to lost volumes that are behind us. Another combination would be, are they going to buy capital to avoid the spend? Can we redeploy the capital? And then the last piece is you might have a higher piece price in your example because volumes are so much lower than they used to be. So it's a combination of factors. Some flow through EBIT, some flow right through the balance sheet if you're getting a check directly for capital, for example. Some of it just impacts the next year. So let's say the volume sometimes was 200 and now it's 100. You might have a higher price. So it just ends up in higher margin on the volumes next year. How about the Megatrend spend? This year you talked about $90 million of lower Megatrend spending. Is there opportunity to take more out in 2025? So we started the year expecting about $1.2 billion per year on average over the three-year period, 2024 and 2026. And as you said, we took out $90 million. We're expecting $90 million out in 2024. We've also said that we expect up to $500 million to come out of the entire three-year period, which implies more coming out of both 2025 and 2026. So yeah, we do plan to actually take additional Megatrend spending out of the next couple of years. And then the operational improvements that you referenced. So being 35 basis points-40 basis points from the 20 basis points-40 basis points, 25 basis points targets to 75 basis points, what's the line of sight on these operational improvements? Maybe you could just remind us what exactly those are, those underlying operational improvements you talked about in the margin. Your numbers are bang on. It was 75 basis points over the 2024, 2025 period. We're executing against half. We're on plan. It's pretty broad-based. It would be continuous improvement within the plants. We're seeing a focus on it because there's labor increases. Your business cases on a lot of these CIs, we would continue to see improvements are that much more beneficial. The other category would be we continue to take restructuring actions, right? We took restructuring in Q1, Q2. We're continuing to restructure. A lot of the restructuring is primarily cost avoidance type restructuring where you can, your example where we're flexing down to a, because volumes are lower. A lot of that's happening in Europe in particular. But I think what's also changed is the focus on automation and whatnot. So, I pick an example of an AMR, if you could put in an automated material mover. That way, there you can take out a forklift, and the cost is $100,000-$200,000 for an AMR. But then if you are running a three-shift operation, you can go to three operators. The payback is a year, roughly. And then the other one, Louis mentioned earlier in one of our meetings, is digitalization. So how do you put machine learning into all these edge devices so that you can start picking up on your presses? Are they running hot? How does that tie into preventative maintenance at one location? And then how do you share that information across the 300, as an example? It takes time to get there on that stuff, but I mean, because we got 300+ divisions, but that just gives us more opportunity for the future, really. You talked about restructuring, just two footprint questions. First, on Europe, 17 million LVP today, obviously well below 22 pre-COVID. I think most people are going to say, "We're not going back to 22 million." Do you feel like, sounds like maybe you're making some actions on the margin. Do you feel like your footprint today matches the current volume levels, or is there structurally more that you have to do? What is it? I mean, first of all, I agree with you. I don't think we're getting back to 21 million-22 million units. And we've had that view for a while. So we've been restructuring for quite a while. It's either restructuring by closing plants. We've actually sold plants. Exited Russia. Exited Russia. That's 1.5 million units alone. So we've been adapting our footprint. And when we talk about footprint changes, then we're talking a lot about plant closures specifically. We don't really have a large group office or corporate structure in Europe or North America. So we're going to flex our footprint. So long story short, you think about what we've been doing is we've been moving primarily our footprint in Europe from west to east. We've been doing that for cost reasons. And then the other place is what we're seeing change now is from ICE to EV, where we're going to transition a lot of our driveline facilities from mechanical drives into electronic drives so that you're not recreating capital. So you get to reuse capital that's already installed. So that's kind of our footprint change. Are we going to have restructuring on a go-forward basis? Yes. But it's more one-off. It's not going to be a big across-the-board footprint change. Now, that being said, if customers come out and take out restructuring in this one specific facility that impacts us, that we're shipping to, that could be a different story. Another footprint question. Post-election, we've heard a lot of questions on what happens with Mexico, potential tariffs. Again, still very early days. But maybe you can remind us within North America what your Mexico footprint is and what ability you have to offset any potential tariffs. Let's start with the sales. So if we're roughly $20 billion in sales in North America, it's roughly split 10 out of facilities in the U.S., five in Canada, five in Mexico. Just as a starting point. Trust me, we had all the questions today as well since the election. I think it's a real hard one, and if we go back to 2016, we're living it. So it really depends on where it starts and where it ends. The last time we talked about putting tariffs, I don't know where they want to put the tariffs. Is it on the vehicle or is it on the part? Last time it ended up impacting the industry was on steel and chips. But we really have to see how it evolves and where it goes. A lot of our facilities in Mexico would be shipping the same parts to a facility and customer in Mexico, and then the same part goes into the US. It really depends on how it impacts, number one, first, our customer. Are they going to physically move their footprint up into the U.S.? Effectively, I'm not a policy expert, but I think they want to move production back into the U.S. To do that, that means the customer has to move. Then the decision is, are you going to do that over a four-year period? It's almost impossible. So do we then deabsorb the tariff in the short term? Does it turn into a commercial discussion? Those are all the things that are up in the air, and I don't have a crystal ball. I know last time in 2016, when it all worked through, it ended up being a tariff, and it was more at the OEM level than it was at the supplier level. There's a lot of OEM capacity in Mexico. So it would be one hell of an undertaking if you think about trying to move any of that business. Yeah. When USMCA was enacted in 2019, 2020, was that any impact to you? No. End End of the day, no. And. The local content rules stayed the same. There was some change around minimum wage rates in Mexico. There was some wage pressure, but I think that wage pressure was happening regardless. Your components are mostly locally sourced. There's not much reliance in North America from China. Right. Right. We We generally source and produce locally. We're really in nearshoring. There would be some chips a little bit. Electronic components. Electronics. Yeah. Thank you. Great. Let's just go into some of the segments. BES, we just talked about 4Q implies a step up from what you did in 3Q, call it 6.8%. What's the right jumping-off point into 2025? Are there still ongoing sort of performance issues at some of these facilities? And then again, and I think you said before, you're sort of watching the inventory situation carefully. That's a consideration. Yeah, so you can't look at the Q4 as a jump-off rate because we talked about the kind of recoveries and how it tends to be back-loaded, but if you look at what we've said for the full year, the range that's implied is like 7.3-7.6 for BES. That's actually pretty close to the 7.4-8 that we started the year at, even though volumes have been off and sales have been off, so pretty good outcome, so I'd say that's probably a good starting point. We've done a good job on fixing underperformers. I think there's one big facility there that was challenged a couple of years ago, and we've made a lot of progress over the last couple of years. I think there's still room to make some progress there, plus operational excellence activities in that, so there's room to grow. We'll get into more detail in 2025, but I think that's your starting point really is what's the full-year margin. Great. Power and Vision, second half looks like it's doing better after sort of what was a tougher first quarter. Again, starting point. And then how do we think about within Power and Vision, the pace of the Veoneer synergies, which I think you said was sort of $70 million plus annual run rate by 2025? I'll answer in reverse. So on the Veoneer piece specifically, I would say we're executing against our plan on the integration. I think the integration's gone well. Our synergy capture is definitely on track for the 70. The 70 was the exit rate in 2025. So I think we're executing against that. We may be a bit ahead of schedule. On the P&V margin, I'm basically going to reiterate what Louis said, which is the cadence. I guess it was more pronounced in P&V this year was the cadence of earnings really drastically improves from the first half into the second half. And a lot of that why it's more pronounced is there's more EV exposure in that group that we had. We also have equity income that has high EV exposure. So when you have move on equity income without the sales, it really moves your margin around. And the last piece is there's a disproportionate amount of engineering spend in the P&V group. I guess that's primarily all of it, right? In the P&V group. And the recoveries against that application portion of engineering spend tend to happen in late part of Q3 and into Q4. So it's that pattern I think is going to continue. But if I look at the full year and where we're going to go, it'd be the same style that we should have a margin for the full year for 2024 as a good starting point going into 2025. Kind of like north of 5%, 5.1%-5.4% is the range that we expect for Power and Vision, and that compares to like 4.7% we had last year. Seating, what is the path going forward? It's had some underperformance over the years, and I think a lot of this has been customer mix and key programs. I think Chrysler Minivan, that's been a tough one. What's the path forward to getting this business more on track from a margin standpoint? I think so the margin in a seating business, if you're between 5% and 7%, is probably a relatively decent margin. Great return business, low capital. But when you mentioned the minivan, a lot of it was negatively punished by the minivan because of lower volumes, but also the production volatility on that program specifically was harsh. I think going forward, there's a lot of self-help in there. As we go through it, I think the operational team that we have in place. I think we really integrated the Hongli acquisition in China very well. We have a very solid business in China on the seat business. So I think it's a focus on that. As As we move forward past 2025 into 2026, the latter part of 2026, we do have an underperforming program on a price basis. It operates well, but the pricing is not favorable, I would say. And that program has been repriced, and it's relaunching at the end of 2026 on a staggered basis. So when you look at that path forward, I think a lot of the self-help is controllable. It's in place. When you look at the pricing, it's there. So now it comes down to whether volume is going to hold. And that's probably when I say hold, it's probably are they predictable and steady? I'd say for all the segments, you can also add in the fact that we've had this cumulative input cost that we've been eating. We've got some recovery from customers, still eating some. And we've always said that new programs that we were quoting in the last couple of years have new economics. And as those new programs kick in, the new economics should get away from the punitive input costs. So I think all the groups have, all segments have opportunity to grow as a result of those programs rolling over. Yep. Okay. Complete Vehicles. What is the process of filling growth now that Fisker is gone? Maybe you can just remind us, I think, capacity, who's still there, what's being, how much that uses, and how much capacity you have to fill. The pinch point in the facility is the paint line. That's roughly about 150,000 units. This year, we're producing the G-Wagon, and that's continuing on a go-forward basis. We were producing, or we are, it's running out, is the JLR I-PACE, E-PACE. And then we're also continuing to produce through 2025 is the BMW Z4 or Z4 and the Toyota Supra. And there's more assembly capacity, but it's just the way the model works. So when you look at what assembly capacity we have, we go out. So we lost Fisker. We talked about Fisker. And that was targeted. We were thinking about 20,000 units in 2024 and 30,000 in 2026. So we're looking to fill that spare capacity. So when you think about how do you fill that capacity, you're talking to people who want to we're not selling high volume. We're selling flexibility, speed to market, and localization. When you think about those three factors, we are talking to a lot of Chinese OEMs. In particular, obviously, we talked to all our traditional OEMs, but you're able to provide lower flexible manufacturing. So you can sell 20,000-30,000 units here. I don't want to bore everybody, but for example, the BMW Z4, the Toyota Supra, the Fisker, and the BMW 5 Series were all on one manufacturing line. That's what we sell. We sell that flexibility. Obviously, in quality, we're world-class in quality. That's a given. So I think that's pace. Now, it's very lumpy awards. I would say from time of award to time of launch is probably 18 months-24 months. I'd just add that if you look at our capacity, we've had 150,000 units. We very often run at 110, 120 and still run very good returns. So it's not like we need to be up at 140 to run profitable there. We can run at much lower, and we're taking costs out so that we can run at lower levels of volumes in the near term. Then maybe just more of a modeling note, if we're looking at either an FX perspective or raw math based on where we see prices today, if that holds, what does that do on 2025? I'm going to cover FX. Yeah, sure. On FX, so for Canada to U.S., about a one-cent change is about $70 million in annual sales. For Euro, it's about $160 million in annual sales. That's the impact of a one-cent change. So I think we were like 1.8, 1.08, 1.09 for the year in Euro. And right now, it's a little bit lower than that. So you can just do the math on that. That's kind of the impact. So at current rates, you probably have a little bit of headwind from currencies, but we'll see where we land for the year. Okay. Megatrend, help us understand strategically what has changed at Magna versus what is a pivot. Obviously, you and others sort of geared up for a significant EV opportunity. The volumes haven't played out. You've talked about reduced spend. The approach at Magna, should we view this as a strategic pivot, or is this more just the portfolio is in place, but you're more so geared around current market conditions? I'll start, Louis, and you jump in. Sure. I don't think our strategy has not changed. The strategy we have now goes back to 2013, 2014. You're looking at what's the car of the future going to be? And when we identified two big changes of what content can we attack in a vehicle, it was going to be electronics, hence ADAS in our world, and B was going to be electrification. So in the case of electrification, what we're doing is transitioning our ICE-propelled driveline systems, transmissions, four-wheel drive, all-wheel drive systems to mechanical to EV. If that transition takes longer, we just produce more ICE where you have the edge. As we're just putting in, it's all the exact same facilities. So ICE will last longer. EVs are going to trend up. So I have to start with EVs. Our view is EVs are still coming. There's a delay, but they're here. It's a secular trend. So I think what was new was the battery tray business. And we're the biggest metal fabricator in the world. And how do you take advantage of that skill set and that engineering expertise to manufacture these very, very complex parts? My view is we have to be on those first-gen. This is like a frame-type business where you're in it for the first time. You get gen two, gen three, gen four, just like we see it with our frame business. So again, it's not a pivot. We're just seeing a delay. We work on pricing, all the stuff Louis talked about earlier. I think in the case of ADAS, again, it goes back to 2014. We had an ADAS business. We see the Veoneer acquisition. It rounds out our product portfolio, gives us scale, and we're able to act. I think in the case of ADAS, we've seen not necessarily a delay. Some of it was tied to EVs delay. But the biggest change we've seen in the ADAS space this year would be the China for China type solutions. I think there is a pivot happening in China as far as how ADAS is being developed and sourced. Yeah, sorry. I was going to say just another example of our strategy. If I go back 10 or 15 years, lightweighting was a very important thing out there. And things like hot stamping and casting were being talked about and were trends that were coming. And so we developed a lot of capabilities around that. We're one of the largest hot stampers in the world. We have strong casting capabilities. So it's looking at a need in the market, a change in the market, and how do we fill that? And that's something, the same strategy we have today. If EV is delayed and ICE is extended, what's the impact to Magna? Is the point that you can have ICE extensions and the resource outlay on your part is relatively minimal? Correct. Yeah, correct, so how would I—what's a good example? We do a transfer case for a vehicle, and we now have the eDrive for the exact same vehicle. And if the eDrive version is lower, what we're seeing is that the ICE is being extended. So we have very low investment on that. You just continue to run it out. So it's not a perfect hedge, and you have CPV differences between the two because you have more sales in the newer products because they're recently designed, but you're able to take that product and run it longer. That's an example then where we're saying if you go to one of our powertrain facilities, we don't have an EV facility and then an ICE facility. They're the exact same facilities here. We have very common practices right through to assembly. And as EVs come along, we've already put a lot of capital in for battery enclosures. So as that comes up, we've already made the investments so we can leverage that, those investments that we made. A quick China question, and then we'll wrap on sort of capital allocation. To what extent are you seeing competition from Chinese suppliers in the West? Personally, I haven't seen it elevated. We've been competing against Yanfeng in the seating space for years. But as far as the other Chinese competitors, it hasn't. Maybe it's different for different suppliers, but we haven't seen it really all that elevated in our product categories. Okay. Let's free cash capital allocation to close it out. Sure. Give us a sense on the free cash dynamics because this year you're going to do $700 million at the midpoint. When I look at what you did pre-COVID, you averaged a billion eight per year. I know you've guided $1.8 billion-$2.1 billion for 2026. So what are the drivers beyond the EBIT improvement to get you to have a more substantial free cash flow recovery? So the delta at the midpoint to midpoint is about $1.2 billion, roughly. And that's broken down into three broad categories. I would say we have capital reductions in the range of about $400 million, which is what we're seeing just with the sourcing cycles. As part of that sourcing cycle, what we're seeing is our other asset spend, which is tooling and whatnot, being down about another $100 million. So you have $500 million. And if you look at where people are expecting Magna to be from 2024 to 2026 at the EBITDA level, it's about $600 million. And the EBITDA, I know it comes back to the EBIT, but those are the three big buckets. And EBITDA is coming back to what Louis said. We have reduced engineering. We have the improvements on the operational excellence. We have programs launching, but we're not really seeing a volume expansion in that space either. So I think it's a lot of self-help. It's an executable plan. And obviously, we're going to continue to squeeze on the engineering piece as much as we can and on capital. That's really the push within Magna at this point. That would be a large increase in your free cash flow. Correct. But just for perspective, we still generate a lot of cash from operations. If I go back to 2018, a lot of the delta has been in the elevated spending related to capital for quoting. Okay. In the 600. Right. Yeah. There's a few big buckets you put together, and it hasn't foundationally changed. So what people say is that it's a pivot on your strategy, it's a change in strategy. We're still doing what we've talked about doing. We've had some headwinds. We're going to deal with them. We are. We're going to come out, and we're going to be generating like we should be. Great. Final one. How do we think about the dynamic of leverage going forward? You have a 1x-1.5x target. You ended 3Q at 1.9x leverage. How critical is it to be operating in that range? And you resumed share buybacks. Do we just think about this as basically all the free cash flow can go toward the share buybacks? Not all of it. So we do have to, our strategy hasn't changed. We still want to be in that 1-1.5. How do you get to the 1.5? One option is delevering. So some cash will go to delever. The other part of it is EBITDA growth. So as you generate more EBITDA, you get a push on your debt levels too. So we're seeing EBITDA growth. And then you use the balance for share buybacks. But again, this isn't a pivot. This is an acceleration from where we expected to be. So we've been guiding for all of this year that we're going to be back within our leverage ratio by the end of 2025. That's still the case. What we've done is maybe accelerated three to six months as far as the buybacks. Leave it there. Awesome. Thanks, Louis. Thank you.