Good morning everyone and welcome to Nemak's Q3 2022 earnings webcast. Armando Tamez, Nemak's CEO, Alberto Sada, CFO, and Adrian Althoff, Investor Relations Officer are here this morning to discuss the company's business performance and answer any questions that you may have. As a reminder, today's event is being recorded and will be available on the company's investor relations website. I will now turn the call over to Adrian Althoff. Thank you, operator. Good morning and welcome everyone. We very much appreciate your participation. Armando Tamez, our CEO, will lead off today's call by providing an overview of business and financial highlights from the quarter. Alberto Sada, our CFO, will then discuss our financial results in more detail. Afterwards, we will open up for the Q&A session, which participants may access via dial-in or webcast. Before we get started, let me remind you that information discussed on today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions you not to place undue reliance on these forward-looking statements. Nemak undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I will now turn the call over to Armando Tamez. Thank you, Adrian. Hello everyone and welcome to Nemak's Q3 2022 earnings webcast. During the quarter, we saw continued positive demand trends as new product launches and increased customer production supported higher volumes amidst a further easing of semiconductor supply constraints in our industry. We also made good progress in ongoing efforts to address extraordinary inflationary pressures, including higher energy, raw material, labor, and transportation costs, successfully concluding negotiations with additional customers aimed at mitigating such effects on our results. During the period, higher volume and higher aluminum prices enabled us to deliver a 42% top line improvement on a year-over-year basis. In turn, volume combined with a better product mix, including parts for e-mobility and structural applications, helped drive a 37% EBITDA increase. By the end of the quarter, we have implemented measures to address inflationary effects in tandem with the large majority of our customers. I would to emphasize that we continue to work towards finalizing similar agreements with our remaining customers with the aim of concluding these discussions in the Q4. Meanwhile, on the operations side, we maintain a prudent approach to financial management with a focus on keeping the cost structure lean while supporting customer requirements linked to ongoing industry recovery, as launches of new electric vehicles. These efforts help us to keep leverage stable on a sequential basis. Turning to strategy execution, we made further strides in ramping up production of parts for e-mobility and structural applications in the Q3. Higher production levels were driven mainly by new launches of battery housings and structural parts for our customers in Europe and North America. I am also pleased to share that we initiated the set up of three new manufacturing facilities that will support recently awarded business to produce battery housings for fully electric vehicles of global customers. This business amounts to approximately $350 million annually, with total investment expected to be around $200 million. These facilities, which are being set up in Mexico, Germany, and the Czech Republic, will supply parts to a premium German OEM in North America and Europe. We expect to start production in Mexico and Germany in the second half of 2023, and in the Czech Republic in the second half of 2024. Moreover, once these facilities are fully online, we will have the flexibility to increase production capacity depending on customer demand and future business awards. On the sales and marketing side, we won contracts in the Q3 worth a total of approximately $40 million annually. Of this amount, the majority represented business to produce e-mobility and structural applications, bringing our total accumulated order book in this segment to approximately $1.57 billion annually. The main highlights for the period included winning business to produce cell frames for fully electric vehicles of a European OEM using existing capacity in China, where we will adapt processes and technology traditionally used for ICE applications to now produce parts for vehicle structures. This product features an innovative solution that was conceived and developed by Nemak in tandem with the customer, marking an important step forward in harnessing our leading edge design engineering capabilities to deliver higher value-added light weighting solutions for the global EV market. In fact, based on awarded business to date, we expect to become the largest supplier of cell frames to these customers' EV offering globally in the coming years. More broadly, we see tremendous opportunities across a variety of structural applications for EVs, given automakers need to reduce the weight of these vehicles, thereby enabling them to drive longer distances on a single charge. During the quarter, we also continued to pursue a robust pipeline of new opportunities focused on EVs, comprising potential business worth a total of more than $2 billion annually to produce battery housings, e-motor housings, and structural parts, among others. Before I conclude, I would to touch on significant industry recognition we recently received for our ongoing efforts to advance innovation in lightweighting and sustainability. This year, we were selected as a winner of two Altair Enlighten Awards. The first is in the sustainable process category, which recognizes our melting center in Monterrey and its recycling of secondary materials. The use of secondary aluminum alloys is a key lever that we have to achieve our environmental goals as a company, including emissions reduction. In fact, using recycled material can enable us to reduce energy consumption by more than 90% compared to primary material. The second award is in the Future in Lightweighting category for the development of new alloy, a next-generation aluminum alloy designed to help customers improve mechanical properties while reducing vehicle weight and costs. With that, I will now hand off the call to Alberto. Thank you, Armando, and good morning, everyone. I want to give you a quick recap of industry trends during the quarter, followed by a summary of our financial results. We had a positive quarter overall, showing an increase in both our top line and our operating cash flow, both on a year-over-year basis as on a sequential basis, mainly due to a stronger volume and product mix across our regions. We also made progress in negotiations with customers to address inflation, which allowed us to offset a large portion of the related effects on our results. The auto industry continued to show signs of recovery amidst easing supply chain conditions, particularly in semiconductors. As a result, light vehicle production in North America finished up 25% year-over-year on the quarter, while Europe showed a 20% growth due to the same drivers. In turn, China was up 31% in the quarter compared to the same period of last year, while Brazil saw a 33% increase. Additionally, on a sequential basis, light vehicle production in North America increased 3%, while in Europe it remained unchanged. Typically, in the Q3, OEMs reduce production levels due to customary maintenance stoppages. But this year, we see a stable sequential movement, which suggests underlying strength being driven by supply chain improvements. Going forward, we expect that pent-up demand for light vehicles, as evidenced by historically low inventory levels in the U.S. and long waiting times for vehicles in Europe, will lead to continued resilience in light vehicle production, and therefore, demand for components in most of our regions, which in turn could potentially help to offset any effect of softening general economic conditions, particularly over the short to medium term. Turning to our financial results, volume was 10 million equivalent units, 28% higher year-over-year, mainly attributable to higher customer production and new product launches across the globe, particularly in our e-mobility and structural application segment. On the revenue side, higher volume and aluminum prices drove the 42% year-over-year increase, rising to $1.2 billion, more than offsetting euro-dollar exchange rate effects. On a sequential basis, revenue finished 2% higher versus last quarter, mainly due to volume. During the Q3, EBITDA was $157 million, 37% higher versus the same period last year, mainly due to higher volume and improved product mix, supported by increased production of e-mobility and structural applications. This enabled us to more than offset the negative translation effect associated with the depreciation of the euro against the US dollar. Moreover, on a sequential basis, EBITDA was 5% higher than the Q2. Our EBITDA per unit, in turn, showed a 7% year-over-year increase to $15.7 per equivalent unit. As mentioned before, we have made progress in negotiations with most of our customers regarding inflation issues retroactive to January 1, 2022, which has helped to alleviate inflationary pressures on our business results. At the same time, following a disciplined financial agenda, we have continued to implement a variety of cost and expense optimization initiatives aiming to maintain strict control of our cost structures. Operating income in the quarter was $80 million, following the same dynamics that propelled EBITDA. This figure compares to the $28 million reported in the same period of last year. Net income in the quarter was $19 million, which compares to the $29 million net loss reported in the same period of 2021. This variation was mainly influenced by overall better results, which more than offset the accounting effect of the depreciation of the euro against the dollar. Moving on to capital allocation. We continued prioritizing strategic projects linked to vehicle electrification along with the deleveraging. Regarding CapEx, we invested $111 million, which was 35% higher than in the Q3 of 2021, investing directly in new product launches with a focus on our e-mobility and structural application segment. During the quarter, our net working capital level grew on a sequential basis due to a normalization trend following a relatively low balance in the Q2. However, on a year-over-year basis, it improved by $50 million as we continued focusing on reducing our inventory levels, which decreased by 8% on a sequential basis. As of the end of September, net debt was $1.3 billion, 11% lower year-over-year, due mainly to a combination of improved cash flow and exchange rate effects. On a sequential basis, net debt was 10% higher due to seasonal effects in working capital. Net debt to EBITDA and interest coverage ratios were 2.3 times and 8.7 times, respectively. Moving on now to regional results. During the quarter, North America volume was 5.6 million equivalent units, 30% higher year-over-year, supported by a higher customer light vehicle production and new product launches in our e-mobility and structural application segment. Revenue was $701 million, 51% higher than in the same period last year, supported by higher volumes and aluminum prices. In turn, EBITDA was $90 million, which compares to $56 million in the same period last year, as volume and a better product mix, together with commercial negotiations, helped us to more than offset inflation-related effects in the region. Europe volume was 3.1 million equivalent units, 18% higher year-over-year, due mainly to increased customer light vehicle production and new product launches in our e-mobility and structural application segment. Revenue was $365 million, 27% higher than the $288 million reported in the same period of last year, as volumes and aluminum prices outweighed the effects of the euro's depreciation against the US dollar. EBITDA was $51 million, slightly higher than a year ago, as volume product mix and commercial negotiations more than compensated for inflation-related impacts and the effect of the 15% depreciation of the euro against the dollar. Rest of the world volume was 1.4 million equivalent units, 48% higher year-over-year, mainly due to higher volumes in Brazil and China. Revenue during the quarter was $153 million, an increase of 42%, mainly related to volume and aluminum prices. EBITDA was $16 million, 48% higher than the same period of last year, driven largely by volume. This concludes my participation. I will now turn the call back to Adrian to open up the Q&A session. Thank you, Alberto. we are now ready to move on to the Q&A portion of the event. As a reminder, participants may ask questions directly via dial-in or send questions in writing via web. Operator, please instruct participants calling in on how to place their questions. Thank you. Ladies and gentlemen, if you'd to ask your question by phone, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment as we pull for questions. Our first question comes from the line of Louis Yen with Compass. Please proceed with your question. Hi, Armando, Alberto, Adrian. Thanks for taking my call and my questions, and then congratulations on the great results. I guess a couple questions from my side, and I guess the first one has to do with, with demand as we move forward. You mentioned clearly that, if we start getting some softness in demand, it might be partially compensated by the fact that, OEMs and then dealers have to restore inventory. Just wondering if you could talk a little bit about, those dynamics. What we've seen this year so far is that while demand that production from your customers in particular has been much higher than what demand is, implying that, inventories are in the process of being reestablished. Just wondering how much longer can we have, that situation going? if you could comment a little bit on the supply chain issues. It seems they seem to be improving. Do you expect them to be kind of back to normal anytime soon? Perhaps touch on the European side of the equation, right? Because at the end of the day, that seems to be the center of the crisis. Just wondering, as we move forward, how does this potential energy crisis translate into supply disruptions there? What are you planning to do there, et cetera? Any comments around that would be great. That'll be my first question. Thanks. Thanks, Louis. Good question. Definitely we are seeing, for instance, on the supply chain, some stabilization, especially on the semiconductor issue that, unfortunately, if you remember last year on the Q3, we had a major disruption due to the shortage of semiconductors. It seems that our customers are getting better visibility in terms of supply. I think we need to divide the different markets. I think on the North American side, we are seeing higher demand as we already presented. it is a combination of several factors. First, demand is there, pent-up demand is there, the availability of our customers to get better in terms of the supply chain issues that they were facing. I think that is very helpful. In addition to that, I think what you're mentioning related to low inventory levels from all our customers, they are trying to fill some of the lots with new vehicles. Definitely we are seeing that there is a lot of appetite from the customers to get new vehicles. The average vehicle is now approaching 12 years, which is probably the highest over the last 40 years. That's something that we are seeing also the price of used cars being reduced, which I think is very helpful also to have more appetite for new vehicles. Having said that, of course, there are some headwinds in front of us, higher interest rates, as some related issues with other, let's say, commodities in the supply chain. In Europe it is a little bit different. Certainly energy is the main issue that our customers are facing. Definitely what we are seeing is that most of the European countries are preparing to store natural gas to prevent a potential reduction in supply from the conflict that we are facing in Russia. In terms of demand in Europe, we are seeing probably less demand than what we were anticipating. I think there still is a healthy volume that we are seeing. In South America, even though the market is smaller, we are seeing more stability. we presented a solid performance both in South America as in China. In China, we saw significant improvement in the production as demand during the Q3. We are, to some extent, optimistic about the overall situation, especially in North America. The reduction that we saw in Europe, our customers took advantage and moved some of the semiconductors to build more vehicles. In summary, Luis, I think we are a little bit optimistic about how these supply issues will be solved. Hopefully we will see better demand in the next 12-18 months. Great. That's thanks a lot for the color there. I guess my other question has to do with, profitability. We saw a very nice improvement in profitability that, the 15.7 per unit. That's quite outstanding. If you could give us a little bit more color on the main drivers. I know you mentioned improving mix, some operating efficiencies, but I just wonder, there was also, a lot of comments you guys made about the, the negotiations with the customers and the fact that some of those negotiations to pass on costs were retroactive to January first. I'm guessing you had some big payments once you finalized those negotiations. Just wondering to try to understand, how much of the $157 million in EBITDA had to do with that so that we get kind of more of a normalized number. I'm guessing a little bit of that will happen also next quarter. To get some color there and also, more, I guess, medium to long term, the $15-$16 per unit kind of still a good range to think about? Or as you accelerate, the EV transition within your product mix, maybe it has a $17 on top of that, just to get a sense of, how you see that evolving and how much of an impact had the retroactive things that happened in the Q3. Thanks. Sure, Luis. Thanks for your question. Definitely this was a very good quarter for us. As you correctly point out, our EBITDA per unit was higher at $15.7. But what you can see when you see the EBITDA per unit on a year-to-date basis, I think you're starting to see how we are looking at in general after all these effects of customers' negotiations are taking place. So the year-to-date EBITDA per unit, it is close to $14 per piece. So that gives you a sense of more or less what we are gearing towards this year. Certainly part of this will be also reflected on our results during the next quarter. What we believe is gonna be, let's say a reasonable profitability figure for the end of the year is something close or slightly higher than what we have on our guidance, something close to the $13.7, $13.6 per piece. I think it is also important to highlight that as we are ramping up more products on the new segment, both on EVs and structural parts, we are starting to see that those products are contributing favorably to our overall margins, and that's generally moving our averages to the better. As these numbers will continue to progress positively, we are gonna see more and more contribution of this segment in our results. Going forward, I think your point about our long-term target of having an EBITDA per unit somewhere between $15-$16, that stays true. That's what we are aiming for, and potentially even higher, depending on how much more we can bring on the new segment, which is coming at better profitability than average. Great. That's great color. My last question has to do with, the electrical and the structural portion. I started to see on your presentations that you start to show it, where you are or what you're expecting in 2022, the kind of 12% of sales kind of thing. Just wondering if you could give us a bit of a, progression given the lead times, the construction of the new plants. How do we progress it? This year might be the 12%. How should we think about next year and the following? I know you wanna get to, I guess, 40% by 2025 and sixty percent by 2030. It is, kind of in on a year-over-year basis, how should we think, about that? Because clearly your backlog is quite strong, but it is obviously and certainly has to do more with the timing there. If at some point, you're planning to provide, more data points there, you know. I know it is tough because of, stuff to differentiate what's truly on the margin on those things when they're all combined, but, kind of more clarity on that front and what else are you seeing there would be helpful. Thanks. Related to the introduction of electric and structural components, we are very pleased with the progress that we are making. This year, revenue expected for this segment is in the range of about $470 million and growing. We think that we are growing at a even faster pace than the introduction of electric vehicles globally. I think that's all positive. We believe that the profitability that we are getting out of this segment is even higher than the legacy business, and we are very happy with that. We will continue striving to get new orders with higher profitability. That's the main driver that we are setting in our entire team. We believe that in the near future, we will be ready to potentially be open and disclose, let's say, more information related to this new segment. I think what we have mentioned in the past was the fact that we wanted to have a reasonable scale. I think we are moving in the right direction. Related to the percentage of revenue, at this moment in time, we prefer not to release that information. However, we are confident that we will double our size on the revenue side in the next probably 18 months to 20 months. Thanks. Finally, any changes on your guidance for, for this year, whether it is top line, even the CapEx in particular? as we look into 2023, I know it is too early and there's so many variables in play that will affect that. any initial thoughts about how we should see 2023? Perhaps some growth on the EBITDA side is kind of what is expected. Just any color you can give us there would be great. Luis Yance, for 2023, I think we'll have to wait for our guidance release early next year. But certainly the dynamics are positive for us, both on the ramp-up of new components that Armando Tamez just highlighted, which are coming with very good contributions, as the recovery of the industry that we are seeing overall, both mostly on the production side as all these matters related to pent-up demand and waiting times in Europe will eventually fall on higher production in regards of how demand for vehicles turns out. As we know, the customers are still working to replenish the inventories as to normalize the production schedules in Europe. All in all, I think it is a favorable environment for next year, but the details will be shared on our guidance earlier in next year. Great. Understood. Thanks a lot for your answers and congrats again on the results. Thanks. Thanks Louis. Next question comes from the line of Tom Swift with Morgan Stanley. Please proceed with your question. Hi. Good afternoon, guys. Just a couple of questions from my side. Just in terms of just coming back to the last question, just, in terms of the guidance for this year, any changes or not really? No. we are not changing the guidance. As we highlighted before, I think we are having favorable results. We believe that we are very comfortable to meet and exceed the guidance, but the numbers will not be changed for now. Okay. Understood. Thank you very much for that. I just to understand some of the pieces. I understand that the working capital was seasonal, but can you just elaborate a little bit as to what was happening in the Q3 specifically? Some of the moving parts looked a little bit different than usual. If you could just particularly on the payable side, if you could just elaborate what happened there, that'd be very useful. Thank you. Sure. As working capital has seasonal effects, so traditionally, it moves up and down during the year. Particularly this quarter, we see when we look at it sequentially, and we compare it to the Q2, we see a fairly or let's say, a higher increase than we normally show, and that's because the Q2 figure was way lower than what it usually is. We showed, as you may see in the reports on the Q2, we have -$60 million of working capital, which compares to about $150 million positive on this quarter. Most of that effect had to do with the seasonal effect that we see normally in the Q3, where we see higher working capital. It compares tough with the Q2, which was way lower than we would normally have. We expect that working capital to continue normalizing during the year, and we'll expect it to be back to normal levels by the end of the year. And that effect had to do both on the supplier side, as on the inventory side, which we are focusing on improving, which has been seeing reductions. With the normalization, especially on the supplier side, we should be seeing back to normal working capital figures by the end of the year. Okay. Thank you. Just so that's just a timing issue. Then I guess just my last question before I get back in the queue is can you just indicate what your minimum cash need is for the day-to-day running of the business, what would you say it is? Thank you. Sure. This has to do obviously with maintaining sufficient cash to deal with that seasonality that we see in working capital during the year. Normally, we'll feel confident, comfortable with something around $150-$200. I think that gives us plenty of room to deal with the seasonality effects of working capital. As you may have seen, we have had higher figures of that. That's essentially staying within a prudent cash balance approach. Okay. Thank you very much. Welcome. Our next question comes from the line of Marcelo Motta with J.P. Morgan. Please proceed with your question. Hi, everyone. Good afternoon. Thank you for taking my question. I have a question regarding the margins in Europe. if you look at the margin in Europe, it was 14%. That was a big contraction compared to the 17% that you had in 2021. Just wondering if now that you say that you still have some inflation pass-through to happen in the Q4 to reach 100% of our clients, do you think it is reasonable to believe that this margin, will recover? could it go back to the levels that it was in the previous year, or not? That is the first question. Marcello, good question. Certainly, we are seeing an increase, huge increase in energy in Europe, and we have been able to get a portion with some customers. We are still in negotiations, and we are expecting that we will finalize these negotiations during the Q4. Certainly our margins in Europe, we are expecting that once the energy prices and inflation is stabilized, our margins will be recovered. we are absolutely confident on that. our performance from the operational side in Europe is extraordinary. That's why we are very confident that our margins not only would be recovered, but I think will be improved. Having said that, we are making investments in the new product lines as I already indicated, and we are confident that the margins for the new products will certainly enhance our profitability. When looking at demand, do you feel that in Europe there might be a pre-production or companies are anticipating production because during the winter, there might be some potential rationing or let's say, a surplus on the ferries and, it might make more expensive, so we might see companies front-loading a little bit of volume. could it happen, part of the Q4 and reduce seasonality that we usually see in the Q4 or not? how to think about the volume dynamics in Europe, given, the potential rationing. not even the higher price, but the fact that they might have a lack of some of their raw materials. You mean demand for vehicles or demand for our products or sales of vehicles in Europe for the Q4? For your products, companies are anticipating production to build inventory so they can have the minimum to sell if there is a halt in production due to, energy rationing. The dynamic in Europe is similar to what we are seeing in North America, where there is a need to increase production, even though sales may change. The reason for that is that in Europe there are still huge waiting times for the delivery of new components. Certainly we are watching very carefully how the customers' production is moving, particularly with the issues that the European customers are facing with energy. So far we are seeing no changes, and production levels in Europe remain fairly strong for us. Perfect. Very clear. Thank you very much. Thank you, Marcello. Our next question is a follow-up from Luis Yance. Please proceed with your question. Hi, guys. I'm back again. just trying to get a bit more color on the EV side, if you could give us some color in terms of, how does the backlog look? Is it still, or how do you expect that to evolve going forward? Is it still heavily geared towards Europe? I remember it was two-thirds electric, one-third kind of hybrid. Is it still kind of around those kind of trends, or do you expect any changes there? I guess the other thing is, once you get, let's say, $1 billion in revenues or $1.5 billion, which is your backlog today in revenues from those sectors, how much of that do you think will be incremental business for Nemak? How much of that is internal combustion engine type of business coming down a little bit and this gaining market share? Or you see the traditional business is still kind of growing a little bit and this is just all incremental business. Trying to get a sense of that. Thanks. Okay. Thanks, Luis. Good question. Related to the book order that we have, which is 1.57, approximately a little bit more than $1 billion with electric components and the rest on the structural part, which by the way, they go mainly to electric vehicles. We are very confident that we will reach the $2 billion target that we set for 2025 ahead of this date with the progress that we are taking. I just want to make clear that we are looking to get new contracts with high profitability rather than just get the orders. I think we have, as I already indicated, in front of us, approximately a little bit more than $2 billion worth of business opportunities, and we are very selective. Where do we wanna invest our capital, which is limited? Certainly we are choosing what we consider the most attractive products based on customer, region, and product lines. Based on that, we will make our capital allocation, getting in consideration the highest profitability that we could make, the highest internal rate of return. Having said that, we are confident that our order book will materialize, and we will continue getting stronger and stronger. This year, we almost double our revenues and we will continue with this trend. We truly believe that the internal combustion engine is still strong. we are expecting in our business plan that the volumes not only will stabilize, but will continue growing because of industry recovery that we are expecting over the next few years. We will see most ly by 2027, 2028, a reduction, but at the same time, we will see higher revenue coming out of the new business. I think we are very confident that rather than reducing our revenue mid-term or long term, we are seeing or we are expecting that the revenues will increase as our profitability. Great. Thanks. Another question on capital allocation. Can you give some color, I guess, on some of the other items you haven't discussed? you discussed at length, the working cap side, but perhaps on the CapEx. This is still kind of $450 million-$500 million per year for a couple of years, given that you're in the high investment phase. Are there any potential asset sales from internal combustion engine? 'Cause I know some plants you can reconfigure them, but some others not. How do we think about M&A in this kind of new business that you're building? Any color there would be great. Yes, Luis. As we have discussed in the past, for us, capital allocation is very critical, and we put a lot of emphasis in making sure that we do all the investments the right way. Our capital program going forward follows a very thorough approach on what we can recondition of the existing business to the new one. There's obviously part of the investments needed that are directly geared towards bringing new capacity in place. Those numbers that you're saying look accurate. That's more or less what we are expecting for. We are aiming to invest as efficiently as we can, and we are trying to reconfigure some of the existing plants whenever they become available for the new segments. we are also building new ones, the ones Armando just highlighted during the call in Mexico and in Europe. it is a combination of both. Certainly we are very observant about how we are allocating capital, and we are doing it in the most effective way. M&A, any M&A that we could expect or selling assets? Not at this point. Great. Thanks. Thanks a lot again, guys. Mm-hmm. Thank you. Our next question is a follow-up from Tom Swift. Please proceed with your question. Tom Swift, your line is live. Hi. Sorry. Hi, guys. Just to come back to that, the point on the new manufacturing facilities. SOP is the second half of 2023 and then 2024. It was the total investment for $200 million. Has that investment, been completely spent, or is there still some of it to come out of CapEx? Tom, basically what we are doing is some investment this year to launch the facilities, but gradually we will be, let's say, continue with the investment. We are not investing this year the $200. I think it is gonna be in a period of approximately two and a half years, the total period to, let's say, launch these 3 new manufacturing facilities, as I indicated, in Mexico, Germany, and the Czech Republic. There is some of it i n this year's numbers, but it is still to follow on over the next two and a half years, essentially. Exactly. Yes, probably more one and a half years because we are already investing this year a portion, and then over the next 18 months, we will continue with additional investments to finalize the 3 manufacturing facilities. Okay. Understood. That's very clear. I guess broadly, just with on the point on CapEx, I think just two follow-on questions. One, When it comes to capital allocation and projects that you want to invest in, What's the measuring stick here? Is it a ROCE target? Is it some kind of period of payback? How do you think about CapEx, and what's the barometer for you to select certain projects and for you to tender for certain contracts from OEMs and for you to say you don't wanna go for these projects? How does it work, particularly in the EV/SC part of the portfolio? Yes, Tom, certainly as we highlighted, we are very prudent on how we approach our capital. How we select business is also a very thorough approach. Normally, the way we value every investment that we do and every opportunity of new business that we engage with is taking into consideration multiple indicators. On one side, you have the rate of return expectation, on the other side, you have paybacks and the corresponding risks with the platforms that the products are aiming for. We do a combination of those to select those products where we want to pursue and where we want to invest. Very selective. we are focusing ourselves very heavily on bringing projects with increased profitability and not just adding new products for the sake of adding revenue. That's why we are seeing numbers going up and down on our new business wins, and it is essentially a combination of what's available and also being selective in what products we want to engage with. Very clear. Thank you very much. I think my last question really is, if we split CapEx between maintenance and growth, what would you say broadly is the split and how ly is that to change going forward? Maintenance is fairly stable. There we are seeing close to $140 million-$150 million. That's CapEx that goes to maintaining the existing facilities as some tooling and some development expenses. The rest above $140-$150 million is strategic investments aimed both for growth as some replacement business when there is a need to change or adapt equipment. Very clear. Very helpful. Thank you very much. Thank you, Tom. I'd to hand it back to Adrian Althoff for the web questions. Thank you, operator. We'll now move on to questions from the web. We have a question from Alan James from Signum Research. It reads as follows: You announced a new plant in Germany and the Czech Republic. I'd to ask if, given the high energy prices in Europe, this decision does not represent a risk factor for the company. Yes. Certainly there is always a, let's say, an external risk in every project that companies make. With this particular customer, we feel very comfortable. As we have indicated, it is a German premium OEM in which we have a very long relationship with them. We truly believe that in the event that, for some reason, the volumes doesn't materialize, we will be able to recover a significant portion of our investment. This is a very, very strong player in the industry. As I indicated, our relationship with them has proven over many years that it is a very reliable customer. That's one of the things that we are considering for these new investments. The customer is very important, as the product line and the regions in which we feel comfortable. Yes, today we are facing this crisis situation in Europe related to energy, which has increased very high. However, as I indicated, we need to think long-term. We eventually think that this issue is a transitory issue and will resolve. How long it is gonna take, we don't know. As I indicated, we have a lot of confidence in this German OEM customer. Next question comes from Bert Mitchener from American Century Investments. Given that Nemak is rated just below investment grade and recent sharp rises in high yield credit spreads, is there any concern or stress on short-term financing arrangements or your ability to finance the new projects mentioned with the Q3 report? Yes. No, the direct question is no, we don't see any issue with our ability to finance CapEx. As we refinanced the majority of our debt last year with new facilities at very competitive terms. We don't have any needs to refinance anything significant in the next six years. we are quite healthy on that front. The capital expenditures that we are seeing ourselves going forward will be financed with our own cash generation and just a little bit of extra financing that we have from our committed credit lines. There's not an issue with our ability to fund our CapEx investments going forward. The next question comes from Till Moser from Schroders. He asks: Will you pay for the $200 million investment for the three new plants, is it your own CapEx or will the project receive contributions from your customers? And what are the EBITDA margins on these $350 million in annual revenues? I will take the first part of the question. it is related to the investment, Nemak has the capability to fund the $200 million. Certainly, the customers finance or pay for some of the tooling that will be dedicated for them. In that regard, it will be a combination, both the $200 million plus what the customers need to invest that we are not considering in the CapEx. At this point in time, we prefer not to release what the margins are for confidentiality reasons. What I can tell you is that those are very healthy margins. Certainly, as we have already indicated, our profitability in the new segment is higher than in the legacy business. Okay. Next question comes from Alfonso Salazar from Scotiabank. He asks: What are your expectations for your operations in Europe during the winter, given the ongoing energy crisis? And that's the first part of the question. The next part is beyond pent-up demand for new cars, what do you think can support higher sales ahead if interest rates increase and cars are becoming less affordable due to inflation and the structural change to premium, more expensive cars according to leading OEMs strategies? Related to our operations in Europe, I think certainly we are observing the situation very carefully and how the whole energy situation develops. As you may have seen in the press, I think it is quite favorable to see that most of the countries have already built up sufficient natural gas inventory within their reserves to cope with any supply issues of gas during this winter. We feel confident that from that point of view, the energy crisis will not have a serious direct impact on customers' ability to produce or the country's ability to meet the energy demands. Certainly we need to see how next winter, next year things develops according to that. On the cost side, certainly we are working with our customers to make sure that all these cost increments on energy are being passed through to the prices. From financial point of view, we shouldn't see any major effects, given these negotiations that we have achieved with our customers. Okay. In addition to that, Alfonso, what we are seeing, yes, we are seeing higher interest rates that are influencing, let's say, the cost of, let's say, the vehicles. One element that we are starting to see is that customers have eliminated all discounts and increased prices on their vehicles. What we are seeing as we speak is better financing terms that some of the customers are already offering. We are expecting that to some extent, if they, customers start seeing some effect on financial costs, that they will start offering more attractive rates to help sell more vehicles. That's something that for the moment we are starting to see. We need also to consider that unemployment rates are very healthy today. The age of the fleet, as I already mentioned, that is becoming older, not only in North America, but also in Europe. Next question is from Peter Valley from Bank of America. He asks, "Please share what percentage of Nemak customers are still remaining to reach inflation-driven agreements by the end of the Q4? As we highlighted, we have reached agreement with the majority of our customers. It is just a few that are pending. We should be able to close those by the end of the quarter. Next part of the question is how is Nemak's European operations prepared for a potential energy crisis in the upcoming. I think that question was already answered. Moving on, the next question would be from Lucila Gomez from Compass Group. Regarding the unitary EBITDA guidance of $13.6, could you say what would be how it'll be for the next quarters is $15.7 sustainable? Clearly $15.7 is a little bit higher than normal for this year, what we have seen. What we expect for the end of the year, as we highlighted, is to be at guidance or slightly higher. That's more on the range of between $13.6 and $14 per unit. Going forward, as we see more, as the production and sales of the new segments becomes larger, we'll see that overall unitary EBITDA increasing going forward. We'll see that together with the scale effect with recovery of volumes. Next question from Gabriela Chaparro from BCP Securities. "What is the amount available in your committed and uncommitted credit lines? We have altogether approximately $800 million of credit lines available. Half of that is committed, the other half is uncommitted, but with very good relationship banks. Follow-up question from Till Moser from Schroders. Can you elaborate on the role of the easing of semiconductor shortages and what it plays in the rising production of the OEMs? Yes. Certainly, as we have already mentioned, we are seeing that the customers are getting more semiconductors than last year, especially in the second half of last year was a significant drop in production due to lack of semiconductors. We are seeing that to some extent hasn't been solved 100%, but I think is going in the right direction. Our customers are able to get more semiconductors. We are seeing, as we have already presented, stronger demand in the Q3, and we are seeing already also very, very strong demand for the Q4, especially in North America. We are seeing stable also demand, at least the visibility that we have from our customers over the next few weeks is stable also in Europe and strong in South America and China. Next question is from Filipe Botelho from Lucror Analytics, and he asks about volume expectation going forward. Shouldn't we expect volumes to surpass the guidance given the volume of 36.9 million equivalent units to date? A s we highlighted on our last conference call, we are at least 1 million equivalent units higher than what we were planning for during the year, and we are seeing positive trends this quarter and next quarter. For sure, as we said, we'll be above guidance. The details, we don't wanna disclose them yet. For sure, our Q4 is not gonna be as low as it was indicated in the question. We should see a continued positive trend on our volumes. Okay. Next question is from Agustín Bonasora from PineBridge Investments, asking if we are taking any of the measures to avoid the impact of higher energy costs in Europe, other than negotiating with customers, such as hedging strategy. We engage in energy contracts with our energy suppliers, in particular in Europe. Those are strategic decisions taken strategically on when to hedge and when not to hedge. We have been trying to manage as much as we can the current situation to minimize the impact, and stay away from being 100% on spot buys. we are trying to gradually be increasing the amount of hedges that we do in both in Europe as in North America. Next question is from Mark Regenbogen from STRS Ohio. He asks, "What is the status of your Russian facility? Have you written off the entire book value to zero? As we announced before, after the conflict, we stopped production in our Russian facility. We are in conversations with our customers there, and basically waiting for them to have a final answer in what they're planning to do, related to that. We have not written off any of our assets in Russia yet. Next, Diego Garza from Lay Ventures asks, "Is there a chance we'll see a dividend or share buyback this year or in 2023? As we said, we are allocating most of our cash flow to fund our growth, which is coming at us, as we highlighted, in very good terms. Depending on how cash flow develops, we could see some of that, but for now, we are focusing most of our resources towards funding our CapEx needs and deleveraging. Next question is from Jacob Steinfeld from Ashmore. He asks, "How much of the EBITDA in Q3 is non-recurring, and from the cost recovery in first half? I think we already highlighted that the way we can see that is taking the year-to-date unitary figures as what we see a net effect of all the claims from customers as the inflation impact. Next question comes from Alejandro Vergara from Intercam. He asks, "The probability of recession in the U.S. has been increasing for 2023. What would you expect to be the impact on vehicle production if we get into a recession? Yes. W e have already conversations with the chief economists of major banks as industry experts. Everybody's expecting a mild recession. However, as we indicated, there are in the industry, in the market, some positives, low unemployment rate, old fleet in general. We don't expect, at least based on the information that we have from industry experts, a major decline. I think the fundamentals of the economy in the US are very strong. Certainly we may see that the customers will request to give some price reductions as some help with financing to potentially, let's say, balance supply and demand. There are no further questions at this time. With that, we conclude today's event. I would just to take this opportunity to thank everyone for participating. Please feel free to contact us if you have any follow-up questions or comments, and have a good day. Thank you. Ladies and gentlemen, you may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.