Linamar Corp Aktie

Good afternoon, ladies and gentlemen, and welcome to the Linamar Corporation Second Quarter 2026 Earnings Call. [Operator Instructions].

This call is being recorded on Wednesday, August 12, 2026. I would now like to turn the conference over to Linda Hasenfratz, Executive Chair of Linamar. Please go ahead.

Thanks so much. Good afternoon, everyone, and welcome to our second quarter conference call.

Before I begin, I will draw your attention to the disclaimer that we are currently broadcasting. Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President; and Dale Schneider, our CFO, both of whom will be addressing the call formally.

Also available for questions are Mark Stoddart, Chris Merchant and other members of our corporate IR, marketing, finance and legal team.

I'll start off with some highlights as usual. So a good place to start always is a quick reminder of the key value drivers that make Linamar such a great investment and how they played out this past quarter.

First, Linamar has a long track record of consistent, sustainable results driving out of our diverse business. And Q2 was another great example of that with exceptional earnings growth in our Mobility business, more than offsetting soft markets in our Ag business and other dynamics such as tariffs more broadly in our industrial businesses. Being invested in both businesses helps trim big swings up and down in individual markets and leaves us with a more consistent, sustainable level of performance.

Notably, again, this quarter, record sales and close to 10% earnings growth. The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment. It can be used on a large variety of types of products across different vehicle platforms and types of propulsion. It can also be assigned to our industrial divisions as well as our Mobility divisions.

This flexibility is allowing us to reallocate programs, our equipment from programs running under capacity to new launches or new areas in the business, which is really critical in this time frame of changing volumes.

Third, we've always run a prudent, conservative balance sheet. We target keeping net debt-to-EBITDA under 1.5x. Q2 saw net debt-to-EBITDA at 0.52 despite significant investment in CapEx for new programs. Our peers are much more heavily embedded with net debt to EBITDA more than 2.7x. That makes Linamar much more flexible to chase growth prospects in this opportunistic time, which we absolutely are doing.

Lastly, returning cash to shareholders is a key value creation driver at Linamar as well. And you saw that play out this quarter with a 10% increase to our dividend, continuing our pattern of regular dividend increases, reflective of our strong performance in terms of cash management. I also note the continued repurchase of shares in the market, which we have been steadily doing since November of 2024.

Turning to financial highlights for the quarter and highlights more broadly. It's been another excellent record-breaking quarter, illustrative of a strong strategy that's delivering results for today and tomorrow. We saw record sales in the quarter and strong earnings growth for our overall business.

Our Mobility business, in particular, had an exceptionally strong quarter, delivering record sales and record earnings. In fact, nearly 30% earnings growth. We also saw market share growth in every region as well as solid new business wins, notably in Canada and the U.S. specifically.

We are firing on all cylinders in the Mobility segment. And this despite global automotive markets being down again in terms of production volumes compared to prior year this quarter.

Finally, we are managing that tariff line field very well indeed with, again, more than 90% of our sales this year not impacted by tariffs. I will review the tariff situation in a little more detail in a minute.

Turning to the numbers. We saw record sales of $3.1 billion, up 18.8% over last year. Sales were up 14% in our industrial business with access markets growing, offset by continued softness on the Ag side. Sales were up 21% in the Mobility segment, thanks to recent acquisitions, but also launching business and several programs that are running at stronger volumes than the market as whole, offsetting those soft markets globally on the light vehicle side.

Normalized net earnings were $183 million or 5.8% of sales, up 8.7% over last year, and normalized EPS was $3.08, up 9.6% over last year on the back of a very strong Mobility segment performance.

Finally, free cash flow was again excellent at nearly $240 million. Strong cash flow drove from those strong earnings and continued focus on reallocating capital to control our CapEx spending.

I would summarize our results this quarter as being most impacted by recent acquisitions adding to top and bottom line, launches and strong production sales in Mobility and growth in Skyjack sales great continued efficiency and productivity improvements, all of which was offset by negative impact of tariffs in the Industrial Group and the negative impact of FX, the majority related to a weaker U.S. dollar in comparison to both the Canadian dollar and the peso as well as those weak agricultural markets.

Let's have a look at an update on the tariff side. So as mentioned a moment ago, more than 90% of our sales this year are not impacted by any tariffs. I think that is the most important takeaway for you on tariffs. The new 232 tariff scheme that came into effect April 1 on metal product derivatives are definitely creating a bigger impact to certain products in our industrial business than the previous scheme. 25% tariffs on full equipment value versus 50% on only the non-U.S. metal is, of course, quite different.

But the good news is the tariffs are only impacting select products in the Industrial segment and not impacting the auto side of the business at all. The impact on the sales that are subject to these tariffs is, of course, detracted from our earnings growth this year, as you saw illustrated in the Industrial segment results this quarter, but is diluted in our overall results by our strong Mobility earnings.

I will highlight the tariff impact expected for the next two quarters will certainly be less acute than we saw in Q2. Q2 is our strongest quarter seasonally for all of our industrial businesses, meaning it will experience the biggest tariff impact for the year. We continue to fully expect to grow earnings to new record levels this year, as Dale will shortly outline for you in our outlook.

Meanwhile, we're working on various mitigation strategies to minimize the impact of the tariffs, as Jim will outline for you. I will also note that the new Section 338 tariff, scheduled to take effect mid-August do not impact our market for our products.

I think this is another great example of the benefit of a diverse business. When all your eggs are in one basket, you are more vulnerable to specific dynamics in that industry. When you have multiple revenue streams, those same dynamics are not impacting all areas of your business. They also, of course, have a little bit different economic cycles. All of that helps to ensure a more consistent, sustainable level of growth as you have seen us deliver quarter after quarter and year after year here at Linamar.

I'll take a moment to also reflect on the impact of the decision by the U.S. on July 1 to not support an amendment to the USMCA agreement that would have both extended the agreement to 2042 from its current expiry date of 2036 and eliminated the need for annual reviews during that period.

In short, there is little to no impact to the trade agreement or any of the three countries of the U.S., Mexico or Canada from this decision from the U.S. I think there's been widespread misunderstanding of what is happening with USMCA, which I hope this chart helps clear out for you.

Some folks think USMCA was not renewed by the U.S. That is not correct. First, the agreement wasn't up for renewal. There was a proposed amendment on the table, which wasn't adopted.

Second, the decision by the U.S. to not amend the agreement did not impact the current agreement in any way. USMCA is still fully enforced and will continue until at least 2036. USMCA is currently expected to continue as not for at least another 10 years until 2036. And in my opinion, will continue well beyond that simply because the agreement has created enormous efficiency and prosperity for all three countries and what is a largely well-balanced trade portfolio, in particular between Canada and the U.S.

U.S. has not notified of its intent to pull out of or terminate USMCA in any way, and in my opinion, will not do so. The agreement is too important to too many businesses in the U.S. and the vast majority of states cannot continue.

Further, regardless of the fact that the amendment wasn't supported, the agreement could obviously be amended for further extension or anything else, including forgetting the annual review at any time with the agreement of all three parties. I, in fact, believe that will happen as well.

On the positive side, we are continuing to see customers looking at onshoring into North America parts and systems that they are currently buying from Asia or Europe. We are building up a significant list of new business opportunities and business wins for our North American plants in all of Canada, the U.S. and Mexico.

New business wins and quoting activity is quite strong in all regions. We're seeing continued very strong new business wins for our Canadian plants, continuing the momentum after a very strong year in 2025. So far this year, we have won quite a significant amount of business for our Canadian plants. In fact, we have already won 90% of the value of the full year of new business wins last year for the Canadian plants, and we're only halfway through the year.

And 2025, I will remind you, saw the highest level of business wins in Canada that we've seen in the last three years. Our strong, highly capable Canadian plants are punching way above their weight in terms of wins compared to the size of our global footprint, which is great to see.

We're also seeing great opportunities for our U.S. plants, particularly our newest acquisition, Aludyne, but also for our other existing American facilities. U.S. new business wins are already at the total value of new business wins in all of 2025, again, only halfway through the year.

I think it's key to note as well that our portfolio expansion, notably into additional structural components is dramatically increasing RFQ activity. This strategy has played out very positively for us. The tariff situation is also adding to stress in an already stressed supplier base, notably in the U.S. and Europe, which has, as you have seen, led to acquisition opportunities for us. We have so far completed three distressed acquisitions over the last three years.

Finally, I would like to again emphasize that our strong results and positive outlook is very much a result of what I think is an excellent and unique business culture at Linamar. Our culture has been fine-tuned over the last 60 years to be opportunistic, entrepreneurial and find something positive and actionable to grow our business regardless of the circumstances.

We are naturally responsive, nimble and move fast. We're innovative and creative in dealmaking and mitigating challenging situations, and we get things done. Those are the critical elements to not just survive, but to thrive in a challenging time like what we're experiencing.

So with that, I'm going to turn it over to our CEO, Jim Jarrell, to review industry and operational updates in a little more detail. Over to you, Jim.

Thanks, Linda, and great to be with everyone listening here tonight. As we reflect on the first half of '26, one word stands out to us, which is grit.

We delivered record quarterly sales of more than $3 billion and record operating earnings in Mobility. Importantly, these results were not driven by a single market customer or short-term tailwind. They were the product of disciplined execution across a diversified global platform. What makes these results particularly meaningful is the environment in which we were achieving them.

We continue to navigate uneven demand, trade uncertainty and cost pressures, yet like a well-built ship moving confidently through rough seas, Linamar continues to advance because of our strength of our operating model, the resilience of our teammates and the diversity of our business.

Across the organization, we are seeing the benefits of scale, operational excellence, commercial discipline and strategic acquisitions translating into strong earnings and cash flow. At the same time, we continue to win new business, reinforcing the value of our technology, our manufacturing footprint and long-standing customer relationships.

We are also maintaining a balanced approach to capital allocation, returning cash to shareholders, investing for future growth and preserving a strong balance sheet that provides flexibility in uncertain times.

Ultimately, these records are not the goal, they are the outcome. They are the evidence that our grit strategy is working, growth in revenue, income and our team continues to build the foundation for sustainable long-term value creation. Records are milestones. They're not our destination. They simply confirm that our grid is moving Linamar in the right direction.

As we are all aware, Linda mentioned, tariffs are causing a lot of uncertainty in global trade markets impacting business decisions, performance and the overall economy. It takes grit to deal with these tariffs and geopolitical issues, and we continue to proactively mitigate tariff impact through practical no-regret actions that improve our competitiveness regardless of how the tariff environment evolves.

We look at everything and anything to improve the situation, including regulatory and class reviews, distribution and structural optimization, target operational actions using our footprints supply chain rebalancing, cost actions, including supplier pricing, rebased resourcing adjustments and really disciplined commercial actions. Importantly, these initiatives do not require significant capital investment, any facility closures, major restructuring or disruptive operational changes.

We believe these targeted actions will help minimize tariff exposure while supporting continued growth, profitability and cash flow generation. Several of the measures are already in place, while others are actively underway, and we continue to weigh other additional measures as we continue to manage this environment to protect the long-term value. This is not a static situation. Things are consistently changing and will improve as clarity improves.

Let's turn to Skyjack. What was another great outstanding quarter for us. Despite ongoing tariff and market uncertainty, Skyjack delivered exceptional growth with volumes up 46% in the quarter and 53% year-to-date. Growth was broad-based across all major regions and product categories, demonstrating the strength of our brand, our execution and our customer relationships.

Even more encouraging, the industry outlook has improved dramatically since last quarter. What was expected to be a declining global market is now forecast to grow nearly 14% in '26, driven by strong demand from data center construction, infrastructure investment and continued fleet expansion by rental companies.

Looking ahead, industry forecast suggest growth moderates in '27, but remains positive across all major regions. Importantly, the underlying drivers supporting demand today, including data centers, infrastructure, housing and industrial construction remain firmly in place, providing a constructive backdrop for continued growth. While product mix always influence revenue performance, the bigger story is pretty clear.

Skyjack is winning. We're strengthening our competitive position, gaining momentum in key markets and capitalizing on attractive long-term growth drivers around the world. Innovation continues to be a key differentiator. During the quarter, we launched the SJ6940 RTE, setting a new benchmark in compact rough terrain electric scissors.

We were also proud to see the LanyardGO receive the Best New Product Award at the HIRE26 event in Australia, recognizing Skyjack's continued leadership in innovation, productivity and safety. The combination of strong execution, market recovery and product leadership positions Skyjack exceptionally well for continued growth. Skyjack isn't just participating in recovery, it's helping to lead it.

Turning to Agriculture. Market conditions remain challenging, with industry demand expected to be down approximately 15% in North America with Europe and the rest of the world flat to marginally down for the year.

Despite that backdrop, all three of our brands continue to gain market share on key product lines. MacDon increased global windrower share. Salford continued to grow its tillage position and Bourgault gained share in the U.S. air seeder market. In a down cycle, that's the ultimate proof point. It speaks to the strength of our products, our customer relationships and the execution of our teammates.

In North America, commodity prices remained largely unchanged, though we have started to see modest trends in the right direction. Overall, U.S. farmer sentiment remains less optimistic due to higher input costs. However, sentiment should become more clear when the USDA predicts its '26 yields following the summer crop tour process.

U.S. net farm income is expected to be $159 billion, up over $154 billion in '25, largely on the $14 billion increase in direct government payments. However, fertilizer and diesel fuel prices are squeezing farmer profitability.

As stated in Europe and rest of the world, the market outlooks remain largely unchanged. In Europe, the market is seen as being resilient in the face of geopolitical and commodity pricing headwinds ultimately resulting in a flat '26.

In the rest of the world, it's mixed. An example, South America, Brazil, corn and soybean yields are favorable and have some of the largest crop yields on record. In Australia, crop yield is expected to be down versus last year. However, still yielding crop results above the long-term average. As well, we continue to monitor global trade tensions, government bridge payments and channel inventory to react to all the key market signals that we need to see.

Just as exciting as what we're doing behind the scenes across our Agriculture business, we're accelerating automation and leveraging expertise developed in our Mobility operations to transform manufacturing productivity.

During the year, MacDon installed advanced mobile vending robots and continue to add automation to its facility to improve efficiency, throughput, quality and cost competitiveness. By the year-end, MacDon will operate approximately 340 robots per 10,000 employees, well above Canada's average of 240 and more than double the global average of 132.

At Linamar, overall, we are proud to say we run at a rate of 1,200 per 10,000, which I believe is a benchmark. This is another example of the Linamar advantage, transferring technology, automation and best practices across our businesses to strengthen competitiveness and drive long-term value.

In Agriculture, we're doing what great companies do during downturns, gaining share, improving productivity and preparing for the recovery to win.

Finally, looking at the automotive industry, we're seeing some tempered expectations quarter-over-quarter for '26 and into '27. In North America, '26 expectations are that light vehicles will be down 1.3% as production is expected to soften as affordability challenges, elevated vehicle prices and growing inventory levels weigh on demand.

Although sales have proven much more resilient than expected, the ongoing volatility in trade environment, coupled with higher energy costs are continuing to create a cautious outlook in the near term. For '27, light vehicles are expected to be flat to slightly down versus prior expectation of being up 2.3% as production is forecast to normalize and OEMs are aligning production with demand.

In Europe, expectations are that the light vehicle production will be down 0.9% versus the prior expectation of being down 1.8%. Production is forecasted to decline due to higher manufacturing and energy costs continued competitive pressure from Chinese imports and weaker export opportunities are weighing on regional output.

Growth in EV demand is providing some support for profitability and capacity utilization remain under pressure. For '27, light vehicle is expected to be largely flat versus prior expectations of being slightly up as more gradual recovery is expected, supported by improving vehicle demand, electrification adoption, although cost pressure and competition will remain.

In Asia, light vehicle production is expected to decline 2.1% versus prior expectations of being down 1.2%, mainly driven by weaker domestic demand in China, offsetting strong growth in India and parts of Asia. Export strength, government incentives and continued electrification provide some support. However, geopolitical risks and higher input costs are the main headwinds.

For 2027, production is expected to be flat to slightly up 0.4% versus the prior expectation of up to 0.8%, supported by demand in India and continued electrification. Globally, this positions light vehicle production expectations for '26 as being down 2.1% versus the previous 1.8%. And for '27, slightly flat growth of 0.7% versus the previous 1.5% increase.

Turning to our CTD performance for the quarter. Our key strategic acquisitions of Aludyne North America, and beginning in Q2 with the winning groups in Remscheid and Penzberg facilities are driving strong gains in existing and new customers. North America CTD was up 25% to $363. Europe was up 10.2% to $107 basically, and Asia Pacific saw growth with an increase of 12.6% year-over-year to $12.65. Globally, our CTD grew an astounding 20% year-over-year to $97.72.

Looking at new business wins for the quarter across both Mobility and Industrial, Linamar saw a new business win value of close to $800 million. Through our strategic acquisitions and takeover work, we saw significant program wins for components such as metals and a significant cylinder head program win. Our propulsion-agnostic new business wins on metals emphasizes our sustained momentum in Linamar's structural and chassis expansion, allowing Linamar to expand its propulsion agnostic portfolio across all powertrain types.

As I mentioned last quarter, Linamar services eight different mega markets in our 2100 plan, which are being displayed there. These mega markets have a combined potential between $15 trillion and $20 trillion in the next decade. Looking at two of our new segments that I've spoken about in the past few quarters, there are a few exciting developments that I'd like to discuss.

First, Defense. We continue to make excellent strides on displaying to the key primes and governments that Linamar's capabilities are directly applicable to this space. Our scalability, automation and expertise and core capabilities are being received extraordinarily well as has recently translated into an MOU with a large international prime, we're very excited to continue working with.

Looking at Robotics, the team continues to also make amazing strides. We've signed an LOI to be a manufacturer in North America for cobots and have recently signed a third LOI for manufacturing for humanoid robots. The takeaway is pretty clear and simple. Linamar is not defined by one industry.

Automotive is proof of our capabilities, not the limit of them. We are a global advanced manufacturing and product development technology partner. So before I hand it over to Dale, I'd like to spend just a moment looking ahead.

While much of our conversation today is focused on navigating tariffs, market uncertainty and other challenges, what excites us here most is the opportunity in front of us.

Linamar enters '27 with significant momentum across our business. We're built for growth. We have a strong launch pipeline, growing exposure to attractive end markets, increasing operational efficiency and a track record of winning in challenging environments. These are not future opportunities we're hoping to capture. They are opportunities we are actively launching, investing in and executing today.

As a result, we expect continued topline growth, another year of strong earnings improvement and further margin expansion. Our focus remains unchanged: profitable growth, operational excellence, creating increasing value for our shareholders. We're also investing for the future.

Capital spending will support major program launches, capacity expansion, automation and strategic growth initiatives. At the same time, we remain committed to maintaining a strong balance sheet, generating robust free cash flow and preserving the flexibility to pursue both organic and inorganic opportunities as they arise.

When I look at Linamar today, I see a company that is stronger, more diversified and better positioned than any time in our history. Our markets are evolving, technology is accelerating and our customers continue to look for innovative capable partners. We believe Linamar is uniquely positioned to capitalize on those trends.

The future isn't something we're waiting for. It's something we're building and certainly, the best is yet to come. With that, I'll turn it over to Dale to walk through a financial overview of the quarter.

Thank you, Jim. Good afternoon, everyone. Linda covered at a high level the financial performance in the quarter, so I'll jump directly into the business segment review, starting with the Mobility segment.

Mobility sales increased by $400.8 million or 20.5% over Q2 last year to $2.4 billion. This growth was mainly due to the increased sales from the recent acquisitions, which made a significant contribution in the quarter. Additionally, the higher launch and mature program volumes further boosted sales.

Positive impacts from FX changes since last year also provided a benefit in the quarter. However, these gains were partially offset by lower volumes on certain ending programs and reduced volumes on some EV programs.

Q2 normalized operating earnings for Mobility were up 28.6% over last year to $194 million. The improvement was driven by increased earnings from our higher volumes on launching mature programs, the recent acquisitions and operational efficiencies, though partially offset by lower volumes on ending programs and reduced EV volumes and the FX impact compared to Q2 2025.

Turning to the Industrial. Sales increased by 13.8% or $95.3 million to $783.5 million in Q2. This increase was driven by the significantly higher access equipment sales as a result of strong market demand. This was partially offset by lower agricultural sales in a significantly down market despite global market share gains on key products such as windrowers, air seeders and tillage equipment.

Normalized industrial operating earnings in Q2 decreased by $24.6 million or 23.8% over last year to $78.7 million. The decline reflected the impact of the new 232 tariffs and the lower agricultural sales, partially offset by the increased earnings from strong access equipment sales and operational efficiencies.

Starting with our overall cash position, which came in at $1.3 billion on June 30, an increase of $266.1 million compared to June 25. During the second quarter, we generated $341.4 million in cash from operating activities, which was partially used to fund the Q2 debt repayments, CapEx and share buybacks.

In Q2, we generated $236.5 million in free cash flow. And year-to-date, we've generated nearly $500 million in free cash flow. Turning to leverage. Net debt to EBITDA was 0.52x of the quarter, an improvement from 1.02x a year ago. The amount of available credit on our credit facilities was $725.2 million, and our liquidity at the end of Q2 increased to $2 billion.

Our NCIB program that was launched in Q3 '25 earnings call and will expire on November 16. This program authorized the purchase and cancellation up to 3.9 million shares. To date, we have returned over $92 million to shareholders through the repurchase of over one million shares. This brings the total cash return to shareholders since November 24 to $192 million with the purchase and cancellation of approximately 2.8 million shares. In addition, the company increased its quarterly dividend by 10% from $0.29 to $0.32 per share. These initiatives reflect our disciplined capital allocation strategy, maintaining a strong balance sheet, investing in growth and returning excess cash to shareholders.

Turning to outlook. I will outline Linamar's expectations for Q3, focusing on our Mobility and Industrial segment in addition to highlighting the changes to our outlook for 2026 from what was announced on our last earnings call.

Please note, we're not providing segment level guidance for full year '26 currently due to the elevated volatility in the global market and the ongoing geopolitical uncertainty, which makes the segment forecast less reliable.

Regarding the Mobility segment, our outlook for the third quarter is highly positive. We anticipate double-digit growth in both sales and normalized earnings driven by ongoing program launches, recent acquisitions and continued operational improvements. Third quarter margins are projected to continue to be within our normal range and to be relatively flat to Q3 '25.

In the Industrial segment, agricultural markets remain weak entering Q3. We anticipate industrial sales growth, but expect normalized operating earnings to decline by double digits with margins expected to contract from Q3 '25 levels and be below our typical 14% to 18% range.

The sales gains from the access markets will partially offset agricultural softness, though margins will continue to be pressured by the new amended 232 tariffs that began in April '26.

As a result on a consolidated basis, we expect double-digit sales growth, growth in normalized earnings and a modest contraction in normalized net margin as well as positive free cash flow.

For the full year 2026, our latest outlook is unchanged from what we provided in the Q1 call. We are expecting strong sales growth in the double digits, and we continue to expect growth in normalized EPS. We anticipate a modest reduction in normalized net margins, primarily due to the effects of the newly amended 232 tariffs as we continue to explore and pursue the mitigation strategies.

We continue to expect CapEx to increase from the prior year while remaining below our normal range as a percent of sales. We continue to expect very strong balance sheet with low leverage alongside strongly positive free cash flow. This outlook reflects the strong Mobility growth given the launches, the full year contribution from Aludyne North American operations at the Leipzig casting facility and 3/4 of the Winnings BLW facility, all supporting topline and bottom-line performance in Mobility.

The Ag market rate of decline is moderating, though the conditions remain soft with stabilization expected later this year or into early next year. The access markets are showing strong growth for '26 in the double digits.

Overall, the external environment remains mixed and visibility is still limited, but Linamar's fundamentals remain very strong. We have a very strong balance sheet, significant liquidity, and we continue to expect strongly positive free cash flow, which gives us flexibility to invest and execute. At the same time, Mobility is supported by launches, growth from acquisitions, which positions us well for continued growth as we continue to work through the mitigation strategies to reduce the impact of the tariffs on profitability.

Jim has already covered the initial thoughts on 2026, so I will not repeat that discussion. The slide is included here for your reference.

In closing, Linamar delivered a very strong quarter by delivering record sales, excellent normalized EPS and a very strong balance sheet and outstanding liquidity. We are well positioned to invest in growth, navigate volatility and continue returning capital to shareholders. Thank you, and I'd now like to open up the call for questions.

[Operator Instructions] And your first question comes from the line of Ty Collin with CIBC Capital Markets.

Maybe just to start off. So it seems like there's obviously been an inflection in the demand outlook for Skyjack, which is obviously positive to see. I mean, how do you feel that you're positioned from an inventory and a production standpoint to capture your share of that opportunity? And then why is the Q3 outlook seemingly calling for a lower growth rate than you were able to generate in Q2, considering the outlook for Skyjack and Ag have both improved?

Yes. I'll let Jim take the first question, but I'll just quickly answer the second. I mean, Q2 is always our strongest quarter for industrial. So that's just normal seasonality of the business. So I wouldn't read too much into that. And over to Jim on the inventory question.

Yes. I mean, just on overall Skyjack, we certainly have the production capability to take on any sort of uplift right now. And as we sort of talked about, all the signals are very clear in the market right now. We know a lot of the major rental companies are increasing their CapEx throughout the back end of this year and into next year. We've all talked about AI and data centers, which our products fit very well into. Our backlog is healthy. I can say it's probably almost double to what it was last year this time. Our order intake probably in the same boat, about double where we were last year. So really, all the indicators are pretty good. Utilization rates as well from the Rental companies are up. So really good signals, and we have the capability and the capacity.

The only concern that I would say, and we're on it clearly is supply chain, right? Like you've got a lot of supply chain issues that companies are dealing with, but we've got a good handle on it, and we've got inventory to satisfy customers.

Okay. That's great to hear. And then turning back to the discussion around tariffs. So I think since that original Section 232 rule change came into effect, I think a number of agricultural products were removed from the scope of that change. So are those incremental tariffs only impacting Skyjack at this point? And can you talk about, I guess, how you and your customers are managing those costs given how substantial they are?

Yes. From my side in regards to how we're dealing it with our customers, I mean, obviously, no customer wants to see a price increase. But what I had mentioned earlier, we're really focused on sort of reducing and mitigating the tariffs. And again, what we look at is optimizing HS code classifications, distribution models. There's also duty recovery like IEPA was basically reversed.

So there is some IEPA recovery that's going on, leverage the parts. So like, for example, a no regret thing would be have a scissor lift go across or boom go across the border into the U.S. and put a part on that you would buy in the U.S. anyway. So you reduce the value of that sort of derivative product to mitigate some of those tariff impacts going across the border.

With respect to your question about which product is it and which business, I'll just remind you that we're not disclosing which specific businesses and products. It is certainly localized to our Industrial segment. So that in itself is quite good news because, obviously, the Mobility segment is much larger, and we are not seeing any tariff impact in the Mobility automotive side of the business, which is a plus. And as Jim said, we're focused on mitigation. I will remind you, too, that we do think that Q2 will be the worst quarter from a dollar value of tariffs simply because it is the seasonal high for all of our industrial businesses. So the impact was a little higher in Q2 than it will be later in the year.

Okay. That's helpful. And if I could just sneak in one more and maybe follow up on that last comment you just made, Linda. So if I sort of plug in what's implied by the Q3 guide for the Industrial segment, it seems to imply an even lower operating margin rate compared to Q2. So I'm just wondering if that's sort of the right way to think about things for the rest of the year.

Do you mean for the industrial segment.

Sorry, that's for the Industrial segment.

Yes. Well, I mean, Q3 is always going to be lower margin-wise than Q2 in the Industrial segment for that matter, in the Mobility segment because Q3 has shut down, et cetera. And seasonally for Industrial, it's always lower. So you should always expect margins to come down in Q3.

Your next question comes from Brian Morrison of TD Cowen.

First question, should we anticipate more tuck-in acquisitions near term within Mobility? You did indicate numerous opportunities on the call, Linda, and the strategy is clearly working. And then I'm curious if they're margin enhancing out of the gate and how you're able to integrate them so seamlessly.

Yes. I mean from my side, Brian, again, there's a lot of opportunities out there for distress. I mean I think we get to look at all of them. And I think the first thing that the strategy for growth and technology. So again, I would, in my mind, though, some of it has slowed a little bit through the last couple of months.

I would say Europe has a lot more than North America today. But in Europe, it takes a little longer to get people's head around making those deals. So yes, for sure, we're looking at those and how we tuck those in is work with customers and Linamarize it as quick as we can. And you need to have a good solid plan upfront of how you'll consolidate, if you have to take plants out or change things, we really do an active job of that for day one.

I think the integration, I mean, we've done our fair share of acquisitions there for integrations over the last 10 years. I think we've learned a lot along the road, and we've developed a pretty good road map and process that we follow that we're always learning and adding to the playbook as well. So with every integration, you get a little bit better.

Okay. Maybe, Jim, if I turn to industrial, we all knew access was going to be strong, but it's, I think it was better than what we thought. And I understand the data centers and infrastructure. But is this largely scissor? Or are we seeing strength in booms and telehandlers as well?

We're getting strength across the board. But I would say, and maybe, Mark, you want to comment on this, like AI data centers is such a good place for our scissors today, right? And our new technology product lines really fit that, Brian. So yes, I think we're seeing a lot of scissor uplift but we're getting booms and telehandlers as well.

Yes. Brian, we've got some new products that have come out on the booms and we've got some electrified version and hybrid version. So some new technology that has been driving on the boom side of things. But yes, definitely, the new models that we've come out on scissors have really gained a lot of traction.

If you remember last quarter, we were basically saying that it would be more or less flat for the year, and we're seeing up for the market. And as I said, our backlog is probably about double last year. Our order intake about double, utilization rates, they're up. Another indicator we look at is canceled orders, which sounds a little weird. But yes, I mean, those are way down canceled orders. So, the uptick is really there and rental company signals are that they're going to buy more capital.

Okay. My last question, I was going to ask specifically on the impact of the tariffs, but Linda doesn't want me to go there. So is it fair to say that one of the industrial segments is more impacted than the others? And then I apologize in advance because you went through this, but I'm not totally straight on the 232. Is this largely direct tariff exposure on metal derivatives? Or is there also an impact to the margin decrements as volumes are down as you're not the importer of record?

Yes. I mean the biggest tariff impact is from the 232 metal derivative product tariffs, right, that come when you're, like there's a whole list of products that are covered that when you're shipping into the U.S. are going to be subject to tariffs. And when they changed the methodology for calculating the tariffs at the beginning of April, that did create a bigger impact for some of our industrial products.

So I think the thing to focus on is a couple of things. One, as I've mentioned a couple of times, Q2 should be the peak dollar-wise on the tariff side. Secondly, I think quite important to just remind you that the Industrial segment is less than 25% of our overall sales. So the bottom line impact to our blended business on the tariff side is much less impactful, right? I mean if I look at the full year, the impact of tariffs on our overall operating earnings is in single digits, and that's before any kind of mitigation.

Is it fair to say one of the industrial segment is far more impacted than the other?

We're not commenting on specific businesses within the Industrial segment. It's right down to the product level, right?

Like there's product levels depending on the derivatives and the HS code. So it's something you wouldn't really want to have out there.

Your next question comes from Michael Glen of Raymond James.

Can we just work through the Mobility margin expectation for Q3 again? I'm just want to make sure I'm clear. Is the Q3 Mobility margin, I think Dale might have indicated it's closer to flat year-over-year. Last year, it was 8.6%. But then I think you're also talking about there might be some seasonal weakness in Q3. I'm just trying to make sure I get the right number in my model.

Yes. Yes. We're guiding to flat to last year, which was sort of, by the way, a little bit of an unusually high margin for a variety of reasons of things that were happening in Q3 of last year. So we do think that Mobility margins are going to stay within our normal margin range in Q3. They'll be at a seasonally consistent level to what was achieved in the first half of the year. And again, yes, the reason you don't see expansion from last year is more to do with last year than it did this year. So we're still feeling good about where we're at with margins in the Mobility side.

Okay. And just you're talking about the record business wins that you're seeing? And maybe can you just speak to how that might impact your CapEx in '27 relative to '26? Should we think that there, we could be in for a bit of a bump in CapEx in '27?

We're factoring that into the outlook that I sort of talked about and Dale put up on the screen. So we're sort of capturing it today there. If you, just one more slide there. Yes. So you see CapEx increase from prior year, below normal range, but it will be an increase, we think, based off the momentum we have on the new business wins. And keep in mind, though, whatever is available inside Linamar, we reallocate and move around. So we try and mitigate that all the time and using flexible equipment. So that's another good piece of information to know.

Okay. And then just on the Ag business, I think we all had our sights on 2027 as a potential better year in Ag. Do you think that, that outlook is getting pushed out now?

Yes. I mean, the trough, the way the sentiment is sort of this trough in the market sort of lingers longer than expected, right? And some of the key things that I think we touched upon like commodity prices overall sort of remain pretty stagnant. There's higher input costs, meaning fuel fertilizer. Stocking levels on whole goods is very in a cautionary view and inventory levels still remain high.

And then when you look at the farmer sentiment, they're not that optimistic. They do have money, but they've delayed investments because they don't know what to predict. It's a very uncertain situation, right? And so that's sort of what we're seeing is this thing is just sort of lingering bouncing across the bottom. And then it depends on the product, like some of our order books are up in some of our products and some are down, and it's just all being played off of the inventories.

But really, I think the farmers are just sort of waiting to move based on probably getting government subsidies or whatever in the marketplace. So that's sort of how some of our customers we see in some of the like CNH, John Deere, are sort of reading the market right now.

Yes. But I would add that, I mean, for sure, the decline is moderating this year. I mean we're not seeing nearly the declines this year that we saw last year. And in fact, some areas of our ag business are actually up this year over last year, which is a really positive sign for things starting to pick up. So I think Jim's comment is very valid that we're bouncing along the bottom here. But I, of course, I'm a very optimistic person, but I personally think that we should see 2027 as a better year.

Okay. And then I just want to ask, do you have any content with Chinese OEMs in Europe? Is there any opportunity there?

Michael, we currently are manufacturing components in Europe for the Chinese that are there, and there's a fair bit of quoting activity.

A big growth momentum we're focused on in Europe at this point in time.

Your next question comes from Tamy Chen of BMO Capital Markets.

I'll be quick here. On the industrial side, so I just want to step back and make sure I understand the magnitude of the different moving pieces. So it sounds like the 232 tariffs is really the primary reason for the segment's margins last couple of quarters, including this one being below your normal range. and less so the Ag segment having pressure because of the end market. Is that the case? Like the bigger hit has been tariffs on margins in Industrial?

Yes. I mean, for sure, tariffs have been a big impact. But I mean, the softness of the ag business has also played a role, obviously.

Okay. And specifically for Q3, so I know that if you're looking sequentially, there's the seasonality in Industrial. But I'm a bit confused on the Q3 outlook for Industrial to have double-digit decline in operating income year-over-year. I mean that would negate the seasonality. Like I would have thought with the Access segment, the growth really accelerating here that the outlook might be a bit better on a year-over-year basis.

Yes. I mean, that is our current expectation. Obviously, tariffs are continuing to be a part of that, which we're having to factor in from a conservative perspective. But obviously, things could change over coming months in terms of what the impact of the tariffs are going to be. We all know there's discussions ongoing at the moment. So there's a chance that we see some changes there, which has not been factored in, nor has mitigation in our outlook.

Okay. Got it. Do you think at this point, with the demand there from the rental companies increasing fairly quickly in a matter of a quarter, do you think there's an ability for manufacturers such as Skyjack to possibly pass through some of the tariff cost just because it sounds like if I listen to the rental companies that they can't get their hands on enough of the equipment at this point.

Yes. I mean if we're talking about passing on to customers, it's always a sensitive subject and you're up against other competitors. So I mean we work those one-offs with each customer. Of course, I mean, if we can get a better price, we're going to do that. I mean the other way is you can get a customer, a rental company to say, "hey, we would take a lot more of those pieces of equipment in Canada or wherever and you make them in Canada, you're better off." So we do work with customers directly on both the commercial side or where they go, right, and that you can mitigate tariffs that way even better together.

Okay. Got it. And my last question is on the Mobility side. I'm curious what's driving the very strong new business wins in Canada? And where I'm getting from is, I think some people reading the headlines of some of the OEMs talking about onshoring, specifically going back to the U.S. Like how would you be impacted by all that? Like are you different because the components to the powertrain that you would supply? Those areas not really as big of a focus for the OEMs to specifically onshore back to the U.S.?

They don't need to onshore from Canada. We're already onshore. Like we're inside North America and under USMCA, which is still in full force, there is zero tariff on auto parts. So the onshoring is coming from overseas. It's coming from Asia or Europe and Canada is a winner in that. So that's why we're winning business in Canada and the U.S. and Mexico for that matter is because of the onshoring into the continent of North America.

In fact, just to give some other ideas around this, we have a sales program called MCMAGA. It basically stands for Make Canada, Mexico, America, great, again, sales program, which is really directly bringing onshoring back to North America where people want to have manufacturing done.

And what Linamar can do is offer any of those regions, Mexico, U.S. or Canada, and we think we're bigger, better together overall. A great example. We won a massive job and our customer wanted it to have it in the U.S. We sat down with them and said, but in fact, our process capability, our ability to launch this would be better to do it in Canada.

We collectively agreed we would do it in Canada because that's where the expertise was. So I think they really look beyond that short-term issue and look at, hey, what's the right thing for that program, that job. And of course, in that case, it was into Canada. So we have that flexibility to offer those three regions, and we'll work with customers on what's the right solution.

Yes. And onshoring is being driven by trying to avoid tariffs. And there's no tariffs from Canada into the U.S. or Mexico into the U.S. for auto parts that are USMCA compliant.

Our next question comes from Jonathan Goldman of Scotiabank.

Maybe just a housekeeping one. I apologize if I missed it. Did you get any IEPA refunds in the quarter? And if so, are you able to quantify the amount? And also, were those adjusted out of adjusted EBITDA if you did receive any?

It was like minimal, I mean, very, very little.

I guess another one, maybe Linda or whoever wants to take this. I'm interested on your thoughts about the proposed U.S. 50% content rule, aside from all the onshoring and tariff stuff. But would that rule, do you think impact your business positively or negatively?

Yes. I think that there's already a strong level of U.S. content in most vehicles being built in North America simply because of how the supply chain has developed over the last 30 years. I mean there's strong capabilities in Canada, strong capabilities in Mexico and strong capabilities in the U.S. and significant capacity in each region. So it's not surprising that given the highest level of population and automotive vehicle assemblies happening in the U.S. that there's a very high level of content coming from there as well.

So personally, I don't see that there will be a big impact on that. And I'll also remind you, we have 22 plants in the U.S. And so if there's a push to push more into the U.S., then obviously, that could be an advantage for our U.S. plants.

Okay. That's good color. Maybe just one more for me. We've seen some announcements and headlines about the U.S. OEMs talking about potentially moving into other verticals and industries to kind of maximize excess capacity, whether it's GM and Defense or Ford in battery storage. They've talked about kind of getting the supply chain in order. Have you had any conversations with OEMs about these potential entry points?

Yes, we have on both accounts.

And could these opportunities be material for Linamar?

Sure. I mean the Defense side, as you know, I've mentioned that. I mean, we've reached out to primes and we would consider GM automotive, Mobility, one of those primes as well, which we've reached out. And so again, they look at capability. And of course, our core capabilities match what they're looking forward to. So yes, those discussions are underway.

And do you have a timeline on when that might show up if you do get any wins there?

No idea at this point, really. I mean, again, we're in the infancy stages of those discussions, but again, Linamar is probably a well-known supplier of General Motors. So whatever they get into Defense in Canada, we're going to be participating at their time schedule. Defense is more driven to by governments and when they're buying.

[Operator Instructions] There are no further questions at this time. I would hand over the call to Linda Hasenfratz for closing comments. Please go ahead. Thanks very much.

Okay. To wrap up, I would like to leave you with our key message for the quarter, which is exactly where I started out. So again, we're thrilled to see record sales and strong EPS growth of nearly 10% in the quarter in a challenging environment. We are particularly happy with the performance of our Mobility group achieving record sales and earnings and growing market share in every region.

We are excited by the excellent level of new business wins we're seeing in the Mobility group overall, but notably in Canada and the U.S. with a strong pipeline still in the close process.

Lastly, despite a tariff crazy world, I'll just remind you, we still have more than 90% of our sales this year not impacted by tariffs at all and are not letting the tariffs that do impact impede our promise to grow top and bottom line growth again this year. So thanks very much, everybody, and have a great evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Linamar Corporation Q1 2026 Earnings Call. [Operator Instructions] This call is being recorded on May 6, 2026.

I would now like to turn the conference over to Linda Hasenfratz, Executive Chair. Please go ahead.

Thanks so much and good afternoon, everyone and welcome to our first quarter conference call. Before I begin, I'm going to draw your attention to the disclaimer currently being broadcast.

Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President; Dale Schneider, our CFO, both of whom will be addressing the call formally. And of course, available for questions, Mark Stoddart, Chris Merchant and other members of our corporate team.

Okay. I'm going to start us off with some highlights of the quarter. A good place to start is always a key reminder of the value drivers that make Linamar such a great investment and how they played out this past year.

First, Linamar has a long track record of consistent, sustainable results that drive out of our diverse business. And Q1 is just another great example of that with exceptional earnings growth in our Mobility business, more than offsetting soft markets across the board, as well as other dynamics like tariff in our Industrial business. Being invested in both businesses helps trim those big swings up and down in individual markets and leaves us with a more consistent, sustainable level of performance.

The second key point is our flexibility to mitigate risk. As you all know, our equipment is programmable. It's flexible. It can be used on a large variety of types of equipment across different vehicle platforms and types of propulsion in the Mobility side, for instance. So this flexibility allows us to reallocate equipment from programs running under capacity to new launches, which, again, is a big part of helping to keep our capital bill down, as you saw again this quarter.

Third, we've always run a prudent conservative balance sheet. We target keeping net debt to EBITDA under 1.5x. And in Q1, you certainly saw that. Net debt to EBITDA is 0.6, despite some significant investments and CapEx for new programs and acquisitions over the last year.

Our peers are definitely much more heavily indebted with net debt to EBITDA more than 2.5x. I think this really creates financial stress for them and risk in terms of soft markets and limits their flexibility to chase new business, which, of course, we are not restricted in the same way. And I think that gives us a big advantage.

Lastly, returning cash to shareholders is a key value creation driver at Linamar as well. You saw that playing out this quarter with our continued repurchase of shares in the market, which we have been steadily doing since November of 2024.

Okay. Turning to highlights for Q1. I would say it's been an excellent record-breaking quarter that well represented Linamar as the entrepreneurial, opportunistic and technology-driven business that we are that's really delivering growth both for today and for tomorrow. We saw record sales and earnings in the quarter for our overall business and our Mobility business specifically, despite every market being down and a world that's really devolved into a minefield of tariffs and volatility. Our Mobility business saw earnings growth of nearly 50%, driving partially out of acquisitions, but also launches in our global operations.

We saw great success in growing our technology portfolio with another strategically important acquisition of Winning BLW's Remscheid and Penzberg facilities. Through these acquisitions, Linamar significantly expands its forging expertise to include warm forging, expanding our already significant offering of precision gears to include precision bevel and helical gears for both the light vehicle and commercial vehicle markets. Having more products and processes to sell, notably proprietary technologies that our customers are looking for, really expands the pathways of growth potential for us at Linamar.

Another key highlight for me of the quarter is the excellent level of new business wins, also, by the way, at record-setting levels for our first quarter. And finally, we're managing that tariff minefield very well indeed with actually more than 90% of our sales at Linamar not impacted by tariffs. I'm going to review the tariff situation in a little more detail in a minute.

So turning to the numbers. We saw sales of $2.9 billion, up 16.1% over last year. Sales were up 6% in our Industrial business as the access markets start to recover, offset by continued softness on the ag side. And sales were up 19.2% in the Mobility segment, thanks to our Aludyne and Leipzig acquisitions as well as launching business offsetting those soft markets globally on the light vehicle side.

Normalized net earnings were $195.8 million or 6.7% of sales, up 17.1% over last year. Normalized EPS was $3.28, up 18.8% over last year on the back of a very strong Mobility segment performance. And finally, free cash flow was excellent at nearly $220 million, unusual for Q1, which often has negative cash flow. Strong cash flow drove from those strong earnings and a continued focus on reallocating capital to control our capital spending.

I would summarize our results this quarter as being most impacted by launches and strong production sales in Mobility, the Aludyne and Leipzig acquisitions, growth in Skyjack sales, which was offset by negative impacts of FX, the majority related to a weaker U.S. dollar in comparison to the Canadian dollar and the peso, as well as weak agricultural markets.

Okay. Let's have a look at an update on the tariff side. As mentioned a moment ago, more than 90% of our sales are not impacted by any tariffs. I think that is the most important takeaway for you on tariffs. And that does include the new 232 tariff scheme that came into effect April 1 on metal product derivatives. That is creating a bigger impact to certain products in our Industrial business than the prior scheme of 232. Obviously, 25% tariff on full equipment value compared to 50% on only non-U.S. metal is quite different.

But the good news is the tariffs are only impacting select products in the Industrial segment and not impacting the auto side of the business at all. The impact on the sales that are subject to these tariffs is -- of course, it's detracting from our growth this year, but in no way wiping it out given its impact on a smaller percentage of our sales.

We fully expect to grow earnings this year, as Dale will shortly outline for you in our outlook. Meanwhile, we're working on various mitigation strategies to minimize the impacts of the tariffs. And I think this is another great example of the benefit of a diverse business. When all your eggs are in one basket, you are more vulnerable to specific dynamics in that industry. When you've got multiple revenue streams, those same dynamics are not impacting all areas of your business and also have, of course, differing economic cycles. All of that helps to ensure that more consistent, sustainable level of growth as you have seen us deliver quarter after quarter and year after year.

Now on the positive side, we are continuing to see customers looking at onshoring into North America parts and systems that they're currently buying from Asia or Europe. We're building up a significant list of new business opportunities and of course, new business wins for our North American plants in all of Canada, the U.S. and Mexico. New business win and quoting activity is quite strong in all regions. We're seeing great opportunities for our U.S. plants, particularly our newest acquisition, Aludyne, but also for our other existing American facilities. U.S. new business wins are already at 60% of the total that was won in 2025, and we're only 25% into the year. We are likewise seeing continued very strong new business wins for our Canadian plants, continuing the momentum after a really strong year last year. In our first quarter, we won quite a significant amount of new business for our Canadian plants.

In fact, more than 70% of the value of the full year of new business wins last year for the Canadian plants, which in itself was the highest level of business wins we've seen in the last 3 years. And again, we're only 25% through the year. Our strong, highly capable Canadian plants are punching way above their weight in terms of wins compared to their slice of the global footprint, which is great to see. I think it's key to note as well that our portfolio expansion, notably into additional structural components, is really increasing our RFQ activity. This strategy has really played out positively for us.

The tariff situation is also adding stress to an already stressed supply base, notably in the U.S. and in Europe. This is leading to acquisition opportunities for us as you've seen us act on and the pipeline of distressed companies just continues to grow. We've so far completed 3 distressed acquisitions over the last 3 or 4 years, significantly adding to our technology portfolio as well as our global footprint and for very reasonable cost.

Finally, I wanted to emphasize again that our strong results and positive outlook is very much a result of what I think is an excellent and unique business culture at Linamar. Our culture has been fine-tuned over the last 60 years to be opportunistic, to be entrepreneurial, to find something positive and actionable to grow our business regardless of the circumstances. We are naturally responsive, nimble, move fast. We're innovative and creative and mitigate challenging situations and we get things done. I think those are critical elements to not just survive, but thrive in a challenging time like we are living in right now.

So with that, I'm going to turn it over to our CEO, Jim Jarrell, to review industry and operations updates in more detail. Over to you Jim.

Great. Thanks, Linda, and great to be with everyone listening tonight. As we step back and reflect on Q1, this was clearly a quarter of records for Linamar and more importantly, it was a record quarter that reinforces the strength and durability of our strategy.

We delivered record quarterly sales, record quarterly earnings per share and record levels of new business wins for a first quarter since 2014. These records were not driven by a single market or a short-term tailwind. They were the outcome of consistent execution across a diversified global platform. What stands out is how this performance was achieved. It came in a very complex market environment with varied volumes in regions and end markets alongside ongoing trade uncertainty and cost pressures that speaks directly to the resilience of our operating model and the discipline embedded across our teams.

Across the organization, we continue to see the benefits of scale, commercial discipline and operational focus translating into sustained earnings momentum and strong cash generation. At the same time, continued success in winning new business reinforces the relevance of our technology footprint and long-term customer partnerships. Equally important, our approach to capital remains deliberate and balanced, returning cash to shareholders, reinvesting organically and preserving balance sheet strength and flexibility. That balance is critical as we navigate the current environment and position the company for future opportunities. All of this ties back to GRIT, growth in revenue, income and our team. This quarter of records is not the objective, it is the result. It reflects how we run the business day-to-day and how we continue to position Linamar for sustainable long-term value creation.

So speaking of GRIT, I want to turn to the large issue everyone is rightly focused on, which is the new 232 tariffs announced by the U.S. administration just over a month ago. Linda has already outlined what these tariffs are and their high-level implications. Yes, they're a significant issue for us and we are not taking it lightly. From the moment these measures were announced, our teams have been working actively daily to identify and implement mitigation actions wherever possible. The current impact is concentrated on the industrial side of our business and spans a range of products, HS Codes, derivatives and component parts. While we're not going to outline specific products or classifications publicly, this protects our commercial relationships with customers, supplier governments and all stakeholders. This exposure is being actively and deliberately managed.

As you can see, we have taken a multi-lever mitigation approach, includes regulatory and classification reviews, distribution and structural optimization, targeted operational actions using our existing footprint, supply chain and cost initiatives and disciplined commercial actions. Some measures are already in place, others are actively underway and additional options remain under evaluation as we continue to manage this to protect the long-term value.

As Linda said, Dale will walk through this in our outlook. Again, this is not a static situation. We'll continue to improve as our clarity improves on this.

Okay. With that, let's take a look at Skyjack business and what a great quarter here. Despite the current headwinds stemming from the Section 232 amendments we just spoke about, Skyjack weathered the storm and saw volume increases by 66% over Q1 '25. This incredible performance by our Skyjack team was driven by scissors in North America and booms in both North America and Asia Pacific.

Looking at industry expectations for '26, North America is expected to be slightly up 1.4%. Europe is expected to be modest increase of 1% and Asia and Rest of World expected to see a steeper decline of 17% on the backdrop of tariff wars, leading to a global decline overall of 4% approximately. That being said, we're expecting that '27 will see a slight increase across all regions, primarily in North America on the continued growth in data center construction where Skyjack has created the optimal product to service these type of products.

As I mentioned last quarter, it's important to note that volume growth doesn't always equate directly to revenue as product mix plays a key role with booms and telehandlers commanding a higher price than scissors. The real story is Skyjack's ability to gain share and strengthen its position in a challenging market.

On the innovation side, we're very excited to say that our new SJ3232 E launched in Q1, adding a versatile range of electric slab scissors in North America and European markets. Also excited to say that all the new SJ45 and SJ45 ARJN battery-powered electric slab booms for North America and Europe have also been launched. These products emphasize the innovation capabilities of our Skyjack team to offer consumers with less space and a broader reach, providing solutions for all construction needs.

Turning to agriculture. Through the first quarter of the year, expectations are in line with another down year. Despite this, all 3 of our brands continued to see market share growth. MacDon's combine draper globally, Salford's tillage market share has grown over the last 12 months and Bourgault's air seeders saw gains in the U.S. market. Our ag teams have demonstrated resilience and is evidenced through these gains.

Looking at the expectations for '26, North America is expected to be down 20% to 15%. Commodity prices remain stagnant. Input costs continue to be high and pressuring farmer profitability. Large dealership groups remain very cautious on whole good inventory stocking levels. And although channel inventory levels are under scrutiny, OEM production levels are purposely underbuilding versus the retail sales level rate in order to shed some of these inventories.

In Europe, we have seen some improved outlook for combines, the primary market we participate in for MacDon. The market is seen as being very resilient in the face of geopolitical and commodity pricing headwinds, ultimately resulting in a flat '26. In the rest of the world, particularly Australia and South America, the market is expected to be flat to down. In South America, the market for combines is slightly negative with elevated market risk with tighter credit and government-backed financing.

In Australia, concerns over increased fuel and fertilizer costs, coupled with hotter and drier conditions are causing some concerns among farmer sentiment. We'll continue to monitor global trade tensions, government bridge payments and channel inventories to react to those market signals. As always, our focus at Linamar Agriculture will be on maintaining our market-leading positions. And how we do that is really through innovation.

Some innovation highlights from our agricultural team. The MacDon Group has launched its all-new MyMacDon app. The app directly connects users to their dedicated MacDon equipment, putting software updates, support documents and videos right into their pockets. Our MacDon owners can now access all resources, locate their nearest dealer, check active fault codes and view real-time data.

From the Bourgault team, they've launched the all-new CDi50. This product is not only transport-friendly, but it is designed to deliver unmatched efficiency and agronomic flexibility. The product is 50 feet. Yes, 50 feet. You can imagine how difficult it would be to transport a piece of equipment that size, but Bourgault team has done this very well.

Finally, looking at the automotive industry, we're seeing some tempered expectations quarter-over-quarter for '26. In North America, '26 expectations are for light vehicle production down 2% with higher fuel costs, affordability pressures and uncertainty weigh on demand. In Europe, production is expected to decline as elevated energy and manufacturing costs, rising imports from China and limited export opportunities continue to impact projected output.

Finally, in Asia-Pacific, growth is expected to slow in '26 as weaker domestic demand, geopolitical disruptions and rising input costs are weighing on output despite continued support from export activity in the parts of the region. In 2027, however, early projections indicate that we will see a small rebound across all major continents.

Turning to Linamar's CPV performance for the quarter. Our key strategic acquisitions of Aludyne North America, Leipzig and beginning in Q2 with the Winning Group's Remscheid and Penzberg facilities are driving strong share gains in existing and new customers.

North American CPV was up 24%. Europe was up 10.2% and Asia Pacific saw growth of 3.4% year-over-year. Globally, our CPV grew an outstanding 20% to $99.47. Looking at our new business wins for the quarter across both Mobility and Industrial, Linamar saw a new business win value of $758 million, a Q1 record going back to 2014. Through our strategic acquisitions and takeover work, we saw significant new program wins for components such as cylinder blocks, cylinder head assemblies. Our propulsion-agnostic new business wins on knuckles emphasizes Linamar's structural and chassis expansion, allowing Linamar to expand its propulsion-agnostic portfolio across all powertrain types.

Now looking at some recent news on the Mobility side. As you have seen, Linamar completed its third acquisition with the latest Remscheid and Penzberg facilities from the Winning Group. This acquisition aligns directly with our strategy to grow our capabilities, customers and expertise. The acquisition significantly expands Linamar's forging expertise to now include the warm forging, which drastically grows our already significant offering in precision gears to include both the bevel and helical gears. These 2 facilities are incredible strategic fit for Linamar. Not only do they strengthen the technology capabilities of Linamar, they build on our manufacturing capabilities and products where we are already strong, deepen our relationships with core customers and position us for continued growth by growing our content vehicle across multiple markets.

We're also extremely excited about the performance of both our Leipzig facility acquisition and our Aludyne North American acquisition. Both have integrated seamlessly into the Linamar family and are truly paying dividends. Leipzig, now known as Linamar Casting Solutions Leipzig in conjunction with the traditional Linamar facility have collaborated to win a major award of a fully machined heavy-duty truck axle for a highly attractive European on-highway OEM. The core capabilities we acquired at the facility of iron casting solutions and the state-of-the-art installation with 3D printed sand cores are propelling our operations to be able to expand further into the on-and off-highway markets through a broader offering. Finally, our largest acquisition of the 3 we've recently announced. Aludyne North America has been a tremendous success so far. In just a few months since acquiring Aludyne, our teams have been able to generate over $250 million in additional opportunities.

Leveraging the vast selection of casting solutions, we're able to support a deep product depth and provide solutions for mobility applications we hadn't been able to do before. As mentioned -- as I mentioned last quarter, Linamar services 8 different mega markets in our 2,100-year plan, which you can see displayed. The 2 segments I wanted to focus on today are robotics and defense. We've had some exciting new developments that people are recognizing we are an advanced manufacturing and product development company capable of delivering to any of these markets.

In robotics, we've signed an LOI to be the contract manufacturer in North America for cobots. We partner with 2 separate parties to build humanoids and are also working with software companies on artificial intelligence development for the brains of those humanoids. It's incredible to see our teams drive the growth and we're extremely excited of the progress we're making.

In the defense, the strides we made are nothing short than exceptional. Our traction with the key defense primes, not only in Canada, but in the U.S., Europe and other regions, continue to grow. The takeaway is simple. Linamar is not defined by one industry. Automotive is proof of our capabilities, not the limit of them. We are a global advanced manufacturing and product development partner.

With that, I'll turn it over to Dale to take us through the financial overview.

Thank you, Jim and good afternoon, everyone. Linda covered a high level of the financial performance in the quarter, so I'll jump directly into the business segment review, starting with Mobility. Mobility sales increased by $365.3 million or 19.2% over Q1 last year to $2.3 billion. This growth was mainly due to the increased sales from the Q4 acquisitions, which made a significant contribution during the quarter. Additionally, the higher launch and mature program volumes further boosted sales. However, these gains were partially offset by the negative impacts of FX rate changes, lower volumes of certain ending programs and reduced demand for some EV programs that continue to experience weaker market conditions.

Q1 normalized operating earnings for Mobility were up 46.3% over last year to $183.5 million. The improvement was driven by the increased earnings from the higher volumes on launching mature programs, the Q4 acquisitions and operational efficiencies, though partially offset by lower volumes on the ending programs and EV programs and the negative impact of FX.

Turning to Industrial. Sales increased by 6.6% or $42 million to $675.4 million in Q1. The increase was driven by the higher access equipment sales supported by global market share growth for scissors, booms and telehandlers. This was partially offset by lower agricultural sales in a significantly down market despite global market share gains on key products such as draper headers and air seeders. Additionally, there was a negative FX impact in the quarter.

Normalized Industrial operating earnings in Q1 decreased by $20.9 million or 16.5% over last year to $105.7 million. The decline reflects the lower agricultural sales, the FX impact and a moderate impact from tariffs on certain industrial products, partially offset by the increased earnings from the strong access equipment sales. Starting with our overall cash position, which came in at $1.2 billion on March 31, an increase of $281.5 million compared to March last year. During the first quarter, we generated $281.6 million from cash from operating activities, which was used partially to fund Q1 CapEx and share buybacks.

Turning to leverage. Net debt to EBITDA was 0.6x at the quarter, an improvement from 1x a year ago. The amount of available credit on credit facilities was $805.6 million and our liquidity at the end of Q1 significantly increased to $2 billion. Free cash flow in the quarter was $218.6 million.

Our current NCIB program was launched at Q3 '25 earnings call and will expire on November 16. This program authorized the purchase and cancellation of up to 3.9 million shares. To date, we have returned nearly $59 million to shareholders through the repurchase of approximately 696,000 shares. This brings our total cash returned to shareholders since November 2024 to $159 million with the purchase and cancellation of approximately 2.4 million shares. This initiative reflects our disciplined capital allocation strategy of maintaining a strong balance sheet, investing in growth and returning excess cash to shareholders.

Turning to the outlook. I will outline Linamar's expectations for Q2, focusing on Mobility and Industrial segments, in addition to highlighting the changes in our outlook for 2026 from what was announced at our last earnings call. Please note, we're not providing segment-level guidance for the full year '26 at this time due to the elevated volatility in global markets and ongoing geopolitical uncertainty, which makes segments forecast less reliable.

Regarding Mobility segment, our outlook for the second quarter is highly positive. We've anticipated double-digit growth in both sales and normalized operating, driven by ongoing program launches, recent acquisitions and continued operational improvements. Second quarter margins are projected to expand further within our normal range, reflecting strong sales performance, effective launch execution and consistent cost control. In the Industrial segment, agriculture markets remained weak entering Q2. We anticipate Industrial sales growth -- but expect it to -- sorry, we anticipate agricultural sales growth, but we do expect normalized operating earnings to decline by double digits with margins below our typical 14% to 18%.

Sales gains from access markets will partially offset agricultural softness, but margins will be pressured by the new amended 232 tariffs that began in April of '26. As a result, on a consolidated basis, we expect double-digit sales growth, growth in normalized EPS and a modest contraction on normalized net margins, as well as positive free cash flows.

For the full year '26, our latest outlook is largely consistent to what we provided on the Q4 call with a few key updates. We are now expecting stronger sales growth in the double digits and we continue to expect growth in normalized EPS. We now anticipate a modest reduction in normalized net earnings margins, primarily due to the newly amended 232 tariffs as we continue to evaluate and pursue mitigation strategies. We continue to expect CapEx to increase from prior year while remaining below our normal range as a percent of sales. And we continue to expect a very strong balance sheet with low leverage alongside strongly positive free cash flow. This outlook reflects the strong Mobility growth driven from launches, a full year contribution from Aludyne North American operations and the Leipzig casting facility and the newly announced Winning facilities, all supporting top and bottom line performance in Mobility. The ag market rate of decline is moderating though the conditions remain soft with stabilization expected later this year with access markets showing signs of growth.

Overall, the external environment remains mixed and visibility is limited, but Linamar's fundamentals remain strong. We have a very strong balance sheet, significant liquidity and we continue to expect strongly positive free cash flow, which gives us flexibility to invest and execute. At the same time, Mobility is supported by launches and growth from acquisitions, which positions us well for growth as we work through the impact of the amended 232 tariffs.

In summary, Linamar delivered a very strong quarter, delivering record sales and record normalized EPS, a very strong balance sheet, excellent liquidity. We are well-positioned to invest in growth, navigate this volatility and continue to return capital to shareholders.

Thank you and now I'd like to open up for questions.

[Operator Instructions] And your first question comes from Ty Collin with CIBC.

Appreciate all of the color and commentary around tariffs in the prepared remarks. I'm just wondering, can you actually quantify the impact of the changes to the Section 232 tariffs within the Industrial business? And is the guidance factoring in any of the mitigating actions that you're looking at? Or would those mostly fall outside of 2026?

I mean, we're not quantifying the impact of the tariffs. It's a moving target. I can tell you that we considered the tariffs in our estimate of growing our earnings next quarter and for the year. I'll reiterate that more than 90% of our sales has no tariff impact whatsoever. We have some mitigation in there, but there's more work that we are working on.

Yes. What we've done to date is in, right? So the mitigation that we've done on sort of Phase 1 is in. But then as I've mentioned, in the area of mitigation ideas and things we're working on, I mean and sort of reiterate, like, I mean, we're looking at HS Code classifications to review to see if we can engineer that.

Certainly, government, you've seen the government of Canada come out recently and say, "Hey, we're going to get tariff relief with loans." The other thing that also helps is the SRF funds that we've been working on as well. And this also talks about working with the U.S. side, too, right? So we're working with the U.S. side, certainly distribution models, right, that you have. So we've done a step 1 on that.

Again, we're not going to move production, like big levels of production. But what I can say is we'll do things that have low effort, easy to implement, right, and use existing infrastructure. Things like flashing software, right, doing some calibration, those all have cost elements that we could play with.

And certainly, supply chain rebalancing, right, look at things that are not tariffed and can I meet our product somewhere where we have an existing facility to not have a tariff impact. And then obviously, commercial discussions with customers. We got to remain competitive. We've got very good competition globally on this stuff. But can we actually have customers say, hey, reallocate some of the orders into Canada, right, reposition stuff.

So those -- a lot -- some of those things that I just mentioned are not in, right? And so as I mentioned, things should get better, right? But those are things that we would sort of update as you go.

Okay. Got it. And obviously, the consolidated net margin guidance went from expansion to a modest contraction. But it seems like sales have been stronger than expected to start the year. Is it fair to say that but for the incremental tariff impacts, the margin outlook would have been in line with or even a little bit better than your initial outlook at the start of the year?

I think that makes sense, right? I mean -- from the -- we had the expansion there last time. The big change was the impact of the 232.

And you're correct. Sales are stronger than expected. Like, I mean, you noticed that we increased our guidance for sales outlook for the Industrial segment. So sales are a little stronger and we've got a bit of a headwind on the tariff side. So it's impacting margins, but not significantly, okay? It's a modest impact.

Okay. That's helpful. And then if I can just ask one more just around the Iran war. Can you maybe just comment on whether you're seeing any cost pressures in the business today related to that? And what sort of hedges or contractual protections you have in place to offset or mitigate those costs, particularly in Europe?

Yes. We haven't really seen anything on the cost side. We've seen supply concerns, challenges around the world sort of thing from the Strait of Hormuz stoppage there. So we currently are working at the supply chain side, but no cost issues. Our obvious concern is as it continues, if gas prices keep going up or stay there, it'll have an impact on other things.

Your next question comes from Brian Morrison with TD Cowen.

Good quarter. Maybe I can start with the Mobility side. The distressed acquisitions, they really seem to be contributing in a positive manner, both from a technology standpoint and financial performance. I mean, with your balance sheet and free cash flow being a staple, is there an -- I assume there's an appetite, but is it fair to say there's many more opportunities to pursue out there?

There is endless. Like, I mean, it's incredible, Brian, to see it. And I think North America, maybe not as much as there was. There's still a few things out there. But Europe, to me, is just a whole place of uncertainty and it's in a real tough position. The issue with Europe, though, is speed. It just seems slower and -- to react to these changes, right?

So we've been talking to a lot of customers about different issues and it just seems to take a lot longer for them to come to that decision, right? But for sure, there's a lot of things out there that we keep focused on. But really, it's sort of customer-driven with us.

Okay. Just sticking with Mobility, 8.1% margin. Is there any recoveries in there? Or is it just fair to say this is operational efficiency and leverage driven by a large increase in sales?

This is the sort of status quo right now. There's no real -- nothing like that.

Yes. I mean, it's a reflection of launches, more of our launches continue to play out and the acquisitions that are rolling in. So it's a combination of factors that have taken us to this point. But we're in our normal range, right, 7% to 10%, we're right in the middle.

Yes. No, it's best-in-class. I guess on Industrial, is there any actions you can take -- and I'm speaking with -- on agriculture, pardon me. Is there any actions you can take with the dealers, I realize it's a challenged market, just in order to position yourself to take advantage of an eventual turn? Or is it just an overall industry destock?

Yes. I think we're sort of ready with the dealers. I mean, from our standpoint, it's just the whole good inventory levels. They're just very cautious. When you even think about farmer sentiment, like, they want to purchase. We were just talking about this earlier. They want to purchase and they probably have the capacity to. They just don't feel confident because there's been -- input costs are higher. The government payment stuff plan has been slow. So I think that uncertainty, Brian, is just like everybody is just watching inventory and not ready to position.

But there is pent-up demand out there. And -- but we're positioned, I think, really well when this dial turns. I think we're going to be really well-received because, I mean, we create the value on the field, right, the farmer field, which is really the critical thing.

Yes. I think we just need to see that we're feeling a little more confident. And I think there's still just a little too much uncertainty out there for them in terms of their farm income and where things are going because as Jim said, there's pent-up demand there. So as soon as they start to feel a little more comfortable with the status quo and where things are going, I think we're going to see them getting out there and buying.

Yes. And I think we sort of said and I think the market said this, most OEMs, like CNH and AGCO and the others, John Deere, they thought this year we'd probably see a recovery sort of back half, people starting to buy. I mean, CNH, I think, just came out with their and said the ag, this is a historical low point in North America demand. So like it's hard to know when this thing starts to bounce back. But I think those are the different things we're watching.

Your next question comes from Michael Glen with Raymond James.

Maybe just to start, Linda, you're probably very close to what's happening with the USMCA negotiations. Are you able to just shed a bit of insight into your expectations regarding any future tariffs that might come into place, anything along those lines, how you think those talks will go?

Yes. I mean, I think that it's not something that's going to get resolved quickly. Obviously, all the parties are in discussions, but we're not far away from this midyear time frame. I have a feeling that's going to end up being extended.

But the point is, I think that USMCA is way too important to both the United States and Canada for anybody to decide to withdraw from it. I think that the negative implications of that would be quite significant to the U.S. And as a result, I think are there going to be things that we need to negotiate? Yes, of course. There are things that are irritants to the U.S., probably the same on the Canadian and Mexican side.

So let's have some discussion around that and try and work through to solidify our commitment to this agreement so we can move on from that. I think my feeling is that's where we'll end up. I think it'll take a little bit of time to get there.

Okay. And then just to go back to the M&A, these are distressed acquisitions. You only recently closed them. So are they dragging on the overall segment margins at this point in time?

I don't know which you're referencing. Like the acquisitions that we've made over the last year have all been distressed. Like, they've been distressed.

Are they dragging...

We bought them.

Are they dragging on this?

No, not at all. They were all accretive right out of the gate. I mean, the assets were distressed, but we negotiated ahead of acquisition to make sure that they'd be accretive day 1.

Yes. So we worked with basically the seller, we worked with customers and then we brought forward our own, like, operating efficiencies sort of they come day 1 with that positive accretive side. So it was like sort of 3-pronged, work with the seller, work with the customer to make sure -- but then bring the Linamar sort of way inside, like day 1, the operating efficiencies, leverage the supply chain stuff, work those -- so it was sort of 3-pronged. But yes, every one of those distressed were accretive. And each one of the customers sort of came to us to say, "Hey, can you guys jump in and help out?" And we're a trusted partner. So we were able to sort of work that system.

Okay. And then just finally on agriculture. Do you have any insights into what the used equipment market looks like in some of your core products at all?

I don't really have a good feel of that right now. Yes, I'm not sure.

Michael, most on MacDon side on headers is a little high. I think we saw on Bourgault and seeders, it seemed to be dropping.

Yes, if you recall on sulfur products.

Sulfur would be very low.

We have been working with the dealers to see how we can help with our product that they have in regards to assisting on doing some reconditioning and that to be able to move the used stuff off because obviously, if there's more used, they're forced to buy new, which is what we want to see.

Your next question comes from Etienne Ricard with BMO Capital Markets.

On Skyjack, the volume outperformance relative to the industry continues to be quite notable. What have you done right from a distribution standpoint?

I think it's our product. I think our product -- again, when you think about the big beautiful bill that was passed in the States, I think AI distribution mega centers are a big part of the market that we're supplying and that market is obviously quite good and our product line really fits into that nicely.

And it was interesting. We were at CONEXPO, American Rental Association and that product was like really well focused from a lot of the customers. And so to me, I think it's really product-based. And when you think about just the results that Linda highlighted here, like we've launched 6 new products sort of in 2026.

And our efficiency bringing things to the market has been faster. And so we're getting that recognition on the sales side.

Interesting. And staying on Industrial and tariffs, are there ways for Linamar to leverage the footprint that you have on the Mobility side in the U.S. to manufacture maybe a bit more industrial equipment that would be tariff-free?

Yes. I mean, as we -- as Jim outlined earlier, the idea of us tooling up to make product in the U.S. is -- like, it's a huge investment. What we could do is, like, things that are on the fringe, right, that we're not going to need an investment for to just reduce the value of the unit going across the border, which is some of the stuff that Jim was talking about.

Yes. I think to me, our view of this is low effort, easy to implement, which means minimal cost to do that. And we do have footprint in the U.S. So, I think, for example, if you have a part that's tariffed, but I can then put that part and it's not tariff going in the U.S., I meet my machine over the border, put that part on. Now I've reduced the cost going across the border, right? And so there's things like that.

Software flashing, we do -- you can maybe do software flashing or calibration over the border. That reduces, again, the transfer cost going over the border. So those are things that are sort of no cost, low effort, easy to implement that I think our focus is on those because, again, moving footprints around, it costs, like, huge money and the time and disruption that would have created, it'd be really, really significant.

Okay. And you've mentioned multiple times the importance of culture and best practices. How do you make sure these are adopted across firms that you acquire, especially given you've been more active recently?

Yes. I mean, that's a great question and I could spend about 2 hours with you on that. We do -- there's a great book called from Erin Meyer, it's called Cultural Mapping (sic) [ The Culture Map ]. Every time we do an acquisition, we do a cultural mapping. And Linamar has a very specific culture. These are 8 different categories that you map. And you then do the mapping to the acquisition target. And then you say, okay, what is the gap analysis and how do we fill the gap? And then basically that's how you ingrain the culture and then through training, right, and having integration discussions, meetings. And in fact, when we went to Aludyne, Linda and I go to every facility and we do a welcome, right? And we really ingrain that Linamar culture day 1 and that's not negotiable.

And I think it's more than just words on a slide and words on a wall for us. It's how we live the business every day. Like, when Jim and I go in to visit and talk to them about how they're running their business and where the improvements can come from, when we go in and do a cat exercise to look for ways to improve, we're living that culture real time with them. So it becomes ingrained because it's sort of -- it's hard coded into the systems that we have, the processes that we use to improve the tracking of how we track our performance and so many -- in how we evaluate the performance of our people, it's hard coded in.

So it's not just some poster we put up on the wall. It's how we live and interact with them every day. And it takes work for sure. But we've got a pretty good system for doing it because we've done quite a few acquisitions over the last 10 or 15 years and I think we've learned a lot.

There are no further questions at this time. I would now like to turn the call back over to Linda Hasenfratz.

Thank you so much. Okay. To wrap up, I'd like to leave you with our key message for the quarter, which, frankly, is identical to what we started out with. So we are thrilled to see record sales and earnings in the quarter overall, thanks to those record Mobility earnings, up nearly 50% over last year. We are very happy to continue to acquire great technology companies like Winning to enhance our product offering to our customers.

We're excited by the excellent level of new business wins that we're seeing with record levels achieved here as well in the quarter. And lastly, despite a crazy tariff world, we still have more than 90% of our sales not impacted at all and we are not letting the tariffs that do impact and impede our promise to grow top and bottom line again this year.

So thanks very much, everybody and have a great evening.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to Linamar Q4 2025 Earnings Call. [Operator Instructions] This call is being recorded on Wednesday, March 4, 2026. I would now like to turn the conference over to Linda Hasenfrat, Executive Chair. Please go ahead.

Thank you, and good afternoon, everyone, and welcome to our fourth quarter conference call. Before we begin, I'll draw your attention to the disclaimer that is currently being broadcast. Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President; and Dale Schneider, our CFO, both of whom will be addressing the call formally shortly. Also available for questions are Mark and other members of our corporate IR, marketing, Financial.

I'll start us off with some highlights of the quarter. I think a good place to start is always good quick reminder of the key value drivers that make Linamar touch, a great investment in how they played out over this past year. First one has a long track record of consistent sustainable results driving out of our diverse business. Q4 and 2025 was another great example with exceptional earnings growth in our Mobility business more than offsetting stock markets in our Agricultural business.

Being invested in both businesses, hopstream make swings up and down in individual markets and leave that with a more consistent, sustainable level of performance.

The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment that can be used on a large variety of types of products across different vehicle platforms as well as [indiscernible] propulsion. This flexibility is allowing us to reallocate equipment from programs running under capacity to new launches helping helping to keep Capital build down, as you saw again in 2025, with CapEx down 24% despite the significant backlog of launches that we are actively investing in.

Third, we have always run a prudent conservative balance sheet. We hereby keeping net debt to EBITDA under 1.5x. 2025 net debt-to-EBITDA at 0.77 despite significant investment in new businesses, such as the Aludyne acquisition as well as CapEx for new programs. Our peers are much more heavily indebted with net debt to EBITDA more than 2.5x. This creates financial stress and risk for them in times of soft market that limits their flexibility, limit switch Linamar is not restricted by. This gives us a huge advantage in the market.

Lastly, returning cash to shareholders is a key value-creation driver at Linamar as well. You saw that play out this quarter with our continued repurchase of shares in the market which we have been semi doing since November of 2024.

Okay. Turning to highlights for the quarter and 2025, I would say it has been a really strong year. But I feel like really well represents Linamar as an entrepreneurial, opportunistic technology-driven business that is delivering growth for today and for tomorrow.

We saw another record year of record earnings despite every market being down and a world devolved into a minefield of tariff, an environment to fund by uncertainty, volatility and profound structural change across the global economy. Those record earnings included outstanding growth for our Mobility segment earnings, which were up 47% in the quarter and 34% for the year.

We saw great success in growing our technology portfolio with strategically important acquisitions, such as the Aludyne aluminum casting technology business as well as the GF Life big Dekoiron casting facility. These businesses are bringing great new process capabilities to us that are already resulting in significant new business wins and quoting opportunities.

Having more products and processes to sell, notably proprietary technologies that our customers are looking for, absolutely expands the pathway and growth potential for us significantly.

Not only as our team delivering on earnings growth again for the 13th year out of the last 16, that's 81% at the years, by the way; but also are delivering excellent free cash flow almost $1 billion worth in 2025. And careful cash management is absolutely key in challenging economies keeping us sound and flexible to jump on those opportunities out there.

And finally, we are managing that tariff minefield very well indeed with the manageable level of tariffs that we are actively mitigating the impact of. I'll review the tariff situation in more detail in just a minute.

Turning to the numbers. We saw sales at $2.5 billion, up 5.9% over last year despite tough industrial markets. Sales were down 13% in our Industrial business, but both ag and access sales impacted. Sales, on the other hand, were up 13% in our much larger Mobility segment with 1.5 months of Aludyne and launching business, offsetting soft markets that we saw in both North America and Europe.

Normalized net earnings were $136.4 million or 5.4% of sales, up 22% over last year. And normalized earnings per share was $2.28, up 25.3% over last year on the back of a very strong Mobility segment performance. I would set our results this quarter as being most impacted by launches and firm strong production sales on the Mobility side, of course, our Aludyne acquisition, and that being partially offset by those weak industrial markets.

Cash flow was very strong at $362 million. For the full year, our results were very strong as well. We saw sales of $10.2 billion, moderate soft option in 2024 on the Industrial segment declined. But despite such, we delivered record earnings of $622.1 million or 6.1% of sales, another year of earnings growth and margin growth at Linamar. EPS hit $1.36, up 5.6% over prior year, driving out a strong Mobility segment performance and as noted, nearly $1 billion of free cash flow to finance growth opportunities.

Finally, let's have a look at an update on tariffs. Despite the myriad of tariffs put in place over the last couple of months, Linamar continues to have a manageable level, a bottom line impact. The 232 metal derivative tariffs continue to be the only area of any reasonable impact to us. And almost all that impact is for our Industrial businesses. but the level is manageable and we're actively working to mitigate the impact of the site.

New in the quarter were Section 122 ateliers established to replace the [indiscernible] tariff deemed illegal. The good news is these tariffs have little to no impact on us.

So there's three key reasons for all of this. Number one, we followed for a long time in strategy of producing products in the same continent as our customers, not chasing low-class labor around the world. As a result, we're not making products in Asia or Europe that shift to the U.S., which would have triggered tariffs.

For products that we're producing in Canada and Mexico and shipping to the U.S., our products are the USMCA compliant for virtually everything that we're shipping in, meaning no tariffs for our customers on the mobility side, where, of course, they are the important record for us on our industrial products where we are the importer of record ourselves and less, of course, by the 232 derivative tariffs that I just mentioned.

Our largest business is our automotive business where our customers as one are the important record and would, therefore, be responsible for paying tariffs at and [indiscernible] become applicable. I do worry about the growing impact of tariffs on our automaker customers, however, as they continue to build out, whether they be metal test, vehicle tariff type tariffs for offshore purchases, the cost to our customers as we have seen are in the billions and there is concern about potential impact to vehicle pricing and, therefore, demand longer term. Our reality, unfortunately, we are already seeing play out.

On the positive side, we are seeing customers looking at onshoring parts and systems. They are currently buying from Asia or Europe in this uncertain environment. We're building up a significant list of new business opportunities and business wins for our North American plants in all of Canada, the U.S. and Mexico, New business win and quoting activity is quite strong actually in all of those regions.

The U.S. is still respecting the USMCA agreement units parts can be supplied from the U.S., Canada or Mexico, tariff free as long as the U.S. MCA compliance. Where the job goes, we'll depend on where we have capacity, where we have experience and team is available to take on the work as well as, of course, the customer fun.

We're seeing great opportunities for our U.S. plants, particularly our newest acquisition, Aludyne. And we also saw a very strong year in 2025 for new business wins for our Canadian plants. In fact, we won more dollars of new business in 2025 for our Canadian Mobility plans that we've seen in 3 years. And we are at a 5-year high in terms of Canadian plant wins as a percentage of global mobility business wins. Our strong highly capable Canadian plants are really punching above their weight in terms of wins compared to be a slice of our global footprint, which is great to see.

I think it's key to note as well that our portfolio expansion, notably into additional structural ones as a result of our acquisitions, is dramatically increasing our MQ activity. This strategy has really played out positively for us. The tariff situation is also adding stress to an already stressed supply base, notably in the U.S. and Europe. This is leading to acquisition opportunities for us, as you've seen us act on, and the pipeline of the trust companies seems to just continue to grow.

Finally, I will emphasize that our strong results and positive outlook is very much a result of what I think is an excellent and unique business culture at Linamar. It's a culture that we fine-tuned over nearly 60 years to be opportunistic to be entrepreneurial in something positive and actionable to grow our business regardless of circumstances. We are naturally responsive. We're nice, we're innovative, we're creative in deal-making and mitigating challenging situations. So we get things done. These are critical elements to not just thrive but to thrive in a challenging in time.

So with that, I'm going to turn it over to our CEO, Jim Jarrell, to review industry and operations update in more detail. overview, Jim.

Great. Thank you, Linda, and great to be with everyone listening today. First, we are proud of our performance in 2025. As Linda mentioned, we generated excellent free cash flow, record normalized EPS and saw another year of strong Mobility margin expansion, all while positioning the business for the future expansion. These results reflect disciplined execution in a very challenging environment. There's a great thing. People often forget what you say, what you do, but we'll never forget how you make them feel.

In '25, we made our employees, our customers and our shareholders feel valued, respected and supported, which to achieve our mission to be supplier, employer and investment of choice. So I want to personally thank our employees across the organization for their grid, which stands for using our guts, resilience integrity and teamwork to grow, grow our revenue, grow our income and grow our team. This was our focus in 2025 and remains our focus in 2026,

Continued volatility, limited visibility and macroeconomic headwinds are testing companies globally, ever-changing tariffs shifting consumer demand disruptive technologies, cost pressures, talent shortages and regulatory changes are all part of the -- but tough times do last tough teams do, and of course, Linamar is one tough team.

What sets us apart is our entrepreneurial lines that we just don't react we attack every challenging opportunity with purpose. We stay true to our long-term vision, operate with lean discipline and make agile, decisive moves. And I think we all witnessed last year a great example of this in Linamar, 2 exciting and strategic acquisitions, both [indiscernible] add over $1 billion of growth to Linamar. These businesses not only strengthen our technology base but also expand our CPV enhance our ability to serve global customers in key markets.

So let's move over to our operating segments. Let's start with the auto industry. When we first started the year, lots of uncertainty surrounded our automotive business. consistent changes to tariff cast a fog over our industry and led to significant negative assumptions.

If I look back to the market expectations for the year in terms of production, North America was expected to be down 9.3% for the full year but ended up only down 1%. Similarly, Europe was much stronger than expected in '25, being down only $1.2 million versus the original expection of 3.1. In Asia Pacific, originally expected to be up only 0.7, ended up 6.9, a region where Linamar is growing at an exceptional pace,

Overall global production was up 3.7% versus the original expectation being down almost 2%, a great resilient year across the auto sector. Looking at the most recent forecast for '26, North America is expected to be down 2.2 on fears of increased pricing pressure, Europe is expected to be down 0.4 as domestic demand is expected to grow but will be offset by increased imports from Greater China and Asia Pacific is expected to be flat as industry experts growth will slow as aggressive pricing of domestic markets met with marginal increase in end-customer demand. Globally, this leads to a slight decline of 0.4% versus the prior 2% projected increase.

Turning to Linamar's CPV performance for the quarter. Once again, we saw growth in all three of our regions. North America CPV was up 19.2% to $329. Europe was up 5.9% to [ 92 82 ]. And Asia continues to see growth with an increase of 0.4 year to $10.43. Globally for the year, our CPV remained flat over '24, totaling close to $80.

In Q4 and through the whole year, our commercial teams continue to deliver on our core gold, keep winning business. We secured a grand total of $1.5 billion, again, $1.5 billion in new Mobility business wins. One of our key internal sales program was coined McMaga, May Canada, Mexico and America great again sales program. Pitru will see our most recent onshoring successes with structural engine components and 2 other key wins with Asian OEMs.

As I said through the past few slides, Linamar Asian operations chased with key overseas has been a great success through '25 and will continue through '26. Linamar's long long-standing strength in structural components supported by recent acquisitions position us well for continued growth.

Turning to our Industrial segment started with Skyjack and AWP market, '25 was a market facing strong headwinds, sticky interest rates, tariff pressures and delayed infrastructure projects. There were many elements stacked against our Skyjack business. Despite these challenges, Skyjack delivered an outstanding Q4, growing unit volumes by 15.9% in a market that was down 1.5 globally.

If we look at the full year, Skyjack demonstrated its grid and exceptional product quality with total unit volumes up 12.1 versus a market that was down 19% globally, an exceptional year of performance at mid-negative environment. This success was driven by exceptional market share gains, especially in cities globally and booms in Europe, '25 was a clear signal that Skyjack is winning with our innovation and customer connectivity.

As I mentioned last quarter, it's important to note that volume growth doesn't always equate directly to revenue as product mix plays a key role with booms and telehandlers commanding higher prices than scissors. The real story though is Skyjack's ability to gain the market share and strengthen its position in a tough market.

Looking at the expectations for this year, North America and Europe are expected to start to rebound with a growth of about 1.4% and 1%, respectively, and a sign that some of the recovery is coming when comparing to our Q3 outlook. Asia Pacific and Rest of World is expected to be softer in '26 with a decrease of 5.3 and an overall pretty well flat market outlook globally.

For '25, our Skyjack team was recognized by the largest rental player United as the Supplier of the Year recipient. This is a huge accomplishment, and I would like to congratulate our Skyjack team for demonstrating its exceptional performance, consistent quality delivery, reliability and partnership.

On the innovation side, we're very excited to say that our new SG28 to all-electric telescopic boom has been launched, specifically designed for China and Southeast Asia markets.

Turning to the Ag business, '25 was a challenging year globally due to a multitude of factors. In North America markets were pressured due to trade issues surrounding U.S. soybeans and Canadian corn oil, which has recently eased as China is now buying both again. Dealer inventories and credit lines have receded, though they are still elevated,

There was a reluctance to stock, hold goods and dealers are still remaining cautious about their inventory levels, given farmer buying intentions. This is impacted by the large federal stimulus package, which was expected in 2025 that did not materialize. It was announced very late in '25, but will only begin to flow now in early spring of '26. And the benefits of that is expected really only to help the working capital and operating lines required to support spring crop inputs.

Our Linamar Ag division, MacDon SaltrBorgo, all tracked largely in line with the North American market at 25, being down 27%. Although for the year, we saw market share improvement in key segments like combined drapers in the U.S. and Europe, tillage market share in the U.S. and air-sea market share also in the U.S. With a view to the coming year in the ag cycle overall, some peers have stated that was a trough while others are saying later '26 before the industry turns positive again in '27.

We will continue to monitor global trade tensions, government bridge payments and channel inventories to react to those market signals. As always, our focus at Linamar Agriculture will be on maintain market-leading position solutions that drive technology, productivity improvement and global growth.

Turning to some industry recognition, what an accomplishment by each of our brands, all of them, yes, all of them received 2026 AE50 awards for top innovative ag products. released to the market in the past year. This is an incredible feat. And again, congratulate each and every one of our employees from these groups. We continue to deliver innovation across all of our groups. And I know our teams we'll continue to build and offer exceptional products to our head and customers.

Before I hand this over to Dale, I want to put our diversification in perspective. Linamar is not just an automotive or even a mobility company, we're an advanced manufacturing and product development company participating in multiple global mega markets you see here on the screen. That distinction matters. It gives us access to a much larger opportunity set than a traditional auto supplier and allows us to apply our capabilities, scale precision, quality execution where the world is going next.

Diversification is not a size strategy for it. It is a growth multiplier, And it positions Linamar to win across industries that matter for the future. '26 is shaping up to be an exciting year for Linamar as we take diversification to another level to build the next chapters of our growth story,

A few areas, in particular, defense, robotics and power energy are becoming more relevant platforms for our future. Defense is not new to Linamar. It's a return to our roots with today's global environment and NATO commitment, our ability to deliver is a powerful advantage. We have made many inroads with prime manufacturers who are seeking Canadian and global partners to help safeguard the world.

At the same time, our robotics business is gaining momentum. By leveraging our strength in precision metallic parts, electric mechanical assembly, actuators and smart manufacturing systems, we have engaged global partners to position Linamar the center of automation, collaborative robots and humonoid platforms. The technology foundation is out there and the opportunity is real, it's up to us to figure out how to capitalize on

it. We're also expanding in power energy, highlighted by our new strategic partnership with Regen resource recovery to commercialize battery-grade graphite and strengthen the domestic supply chain. Another example of Linamar moving with purpose into growth future-focused markets.

The takeaway here is that poblinamar is not defined by one industry. Automotive is proof of our capabilities, not the limit of them. we're a global advanced manufacturing and product development technology partner.

So with that, I'll turn it over to Dale to walk you through the financial overview for the quarter and outlook for the year.

Thank you, Jim, and good afternoon, everyone. -- was covered at a high level of financial performance in the quarter. I'll jump directly into the business segment review, starting with Mobility.

Mobility sales increased by $223.6 million or 12.9% over Q4 last year to $2 billion. The increase was driven primarily by several factors. First, we saw higher sales related to our Linamar Structures acquisitions, which contributed meaningfully to the quarter. Second, there was a favorable impact from changes in FX rates compared to last year. In addition, sales benefited from launching programs and higher volumes on programs where a substantial content.

These positive factors are partially offset by lower production on certain ending programs as well as reduced volumes uncertainty electric vehicle programs, which continue to be impacted by softer volume demand.

Q4 normalized operating earnings for Mobility were up 47.3% over last year to $132.1 million. Improvement reflected earnings contributions from the Linamar Structures acquisition, benefits from launching programs and higher volumes of programs substantial content. These positive factors were partially offset by lower production on certain [ lending ] programs and EV programs.

In addition, executive management bonuses were reinstated in Q4 '25 and whereas mill bonuses were awarded in Q4 2024 due to the impairment losses in that period.

Turning to Industrial, sales decreased by 13.2% or $84 million to $553.1 million in Q4. The decrease reflects softer demand across both of our end markets and access. Lower overall market demand weighed on sales, although this was partially mitigated by continued market share gains in sensors globally.

In Agriculture, sales declined in line with the market significantly down despite market share gains in both U.S. and Europe. These items were partially offset by a favorable foreign exchange impact compared to Q4 last year.

Normalized Industrial operating earnings in Q4 decreased $23.5 million or 25.7% over last year to $67.9 million. The earnings decline reflects the continued pressure across both the access and in cultural end markets, resulting in lower sales volumes despite market share gains achieved in each.

In addition, the quarter included a moderate impact from tariffs on certain Industrial products. These impacts were partially offset by a favorable FX rates compared to prior year.

Starting with our overall cash position, which came in at $911.1 million on December 31, a decrease of $143.5 million compared to December '24. During the fourth quarter, we generated $471.4 million in cash from operating activities, which was partially used to fund CapEx and debt repayments.

Turning to leverage. Net debt to EBITDA was 0.8x at the quarter, an improvement of -- from 1x a year ago. The non-available credit on our credit facilities was $1.2 billion at the end of the quarter. Our liquidity at the end of Q4 significantly increased to $2.1 billion.

Our 2025 MCIP program launched in Q3 will expire on November 16. This program authorizes the purchase and cancellation of 3.9 million shares. To date, we have returned nearly $39 million to shareholders through repurchase of approximately 462,000 shares. This brings our total cash return to shareholders since November '24 to nearly $139 million with the purchase and calculation of approximately 2.2 million shares. This reflects our disciplined capital allocation strategy, which is maintaining a strong balance sheet, investing in growth and returning excess cash to shareholders.

Turning to the outlook. I will outline Linamar's expectations for '26, focusing on our Mobility and Industrial segments for Q1. Our guidance for 2026 is unchanged from what was announced at our last earnings call. Please note, we are not providing segment guidance for full year '26 at this time, due to the elevated volatility in the global markets and ongoing geopolitical uncertainty, which makes longer-term segment forecast less reliable.

Turning first to Mobility segment, our outlook for the first quarter remains very strong. We expect double-digit growth in sales and double-digit growth in normalized operating earnings, supported by ongoing program launches, contribution from recent acquisitions and continued operational improvements across the business.

Margins in the first quarter are expected to continue to expand and move further into our normal range, reflecting the improved mix, strong launch expectation and sustained cost discipline.

For our Industrial segment, market conditions remained challenging as we enter into the first quarter. We expect lower year-over-year sales and normalized operating earnings, driven primarily by double-digit declines in both ag and access equipment end markets. Margins in the first quarter are expected to be within our normal range, though.

Overall, we expect year-over-year growth in normalized earnings driven by Mobility performance, while Industrial remains pressured by significantly weaker agricultural and access equipment markets. Free cash flow generation in the quarter is expected to be positive, supporting our very strong balance sheet and low leverage. Capital expenditures will continue to reflect our disciplined approach, with spending focused on launch activity while remaining below our normal range as a percent of sales.

Looking ahead at 2026, we continue to expect normalized earnings and margins -- sorry, expect growth in normalized earnings and margins, supported our strong Mobility performance and disciplined execution across Linamar, partially offset by continuing pressure by the Industrial end markets.

In Mobility, strong top and bottom line growth is expected to be driven by ongoing launches and full year contribution from the recent acquisitions of the Aludyne North American operations and the life and casting facility, which will support both sales and earnings. Importantly, this growth is expected despite the vehicle market forecast to decline by 0.4% globally '26, North America would be down roughly 2.2%, underscoring the strength of our content growth, launch execution and operational performance.

In Industrial, market conditions remain mixed, agricultural equipment markets are expected to remain down year-over-year in global volumes down mid-single digits and North America experiencing a market announced double-digit decline. That said, the rate of decline is moderating, and we expect stabilization in the second half versus 2025. access equipment markets are expected to be relatively stable and steady, with modest global declines, partially offset by low single-digit growth in both North America and Europe.

Free cash flow generation is expected to remain strongly positive, supporting our very strong balance sheet low leverage and disciplined capital allocation approach. Capital expenditures are expected to increase from prior-year levels, reflecting ongoing launch activity while remaining below our normal range as a percent of sales, consistent with our continued focus on capital efficiency.

Overall, while the market conditions remain mixed and visibility remains limited, Linamar enters 2026 with strong financial flexibility and operational resilience, positioning the company well for continuing delivering earnings growth.

In summary, Linamar delivered a strong quarter in excess of [ 25 ] with record normalized earnings, a very strong balance sheet and excellent liquidity. We are well positioned to invest in growth, navigate volatility and continue to return capital to our shareholders.

Thank you. I'd like to open up for questions.

[Operator Instructions] Your first question comes from Ty Collin with CIBC,

Maybe the first one just on the quarter. Mobility margins came in a little bit lighter than I was expecting, despite some pretty strong top line performance in the segment. I guess, is there anything specific to call out there apart from the bonuses that you already mentioned? Or should we really be looking at things on a full year basis as a starting point for thinking about 2026?

I mean I think mobility margin has always softened up a little in the fourth quarter. That's not unusual at all. And frankly, as reaching 7.5% for the full year, which is our normal range, I think, is pretty fantastic. I was pretty happy with our performance in the quarter.

Yes. I think the couple of the issues that, as Dale mentioned, the bonus obviously one thing. There was some impact of Novalis JLR and a little bit of next period. But again, that was offset with some upside with the Aludyne, which we closed what was in mid-November, I guess, we closed mid-November. So that would have had a few weeks in there before shutdown.

Okay. Got it. Got it. And I appreciate you didn't really want to give specific guidance by segment for 2026, given some of the uncertainty. But I mean can you give us any sort of high-level color on how we should think about operating margins in each segment compared to 2025? Or any sort of puts and takes that we should keep in mind there?

I mean we're a little hesitant to provide segmented outlook, as Dale, I think, perfectly stated due to some of the uncertainties around markets. I mean I think the good news is our outlook for this year is absolutely unchanged. I mean we are looking for growth -- top line growth on the bottom line. We're going to expand our margins, and I think that's a real positive. If you take a look at guidance. Obviously, the trends are continuing from last year with strong Mobility group performance.

And as Dale also mentioned, it's a tougher start to the air for Industrial, but we do see the market declines moderating through the year. So that should give you a bit of a sense and that are a little bit more clearly for you next quarter and we can see the year shaping up a little more.

Okay. Great. And if I could just sneak one more in. Just wondering if you could share some updated thoughts on how you die now that you've been under the hood for a few months there. How has that been performing compared to your expectations? And what sort of opportunities do you see for that platform going forward?

I would say it is going to plan and probably a little bit better than planned. And I would say the amount of business opportunities that it has created with the structural segment that we're now in a deeper way and having some U.S. facilities has created a lot of opportunity and new business wins. Quite frankly, I'm pretty pumped up about our new business wins year-to-date based off of the structural casting side, which has been super marked.

I mean that's been probably out of the gate for the first couple of months, the best we've ever had. And so I think it's creating a lot of opportunities. And having a new, good, trusted operator is probably the key for that reason of getting growth.

[Operator Instructions] Next question comes from Brian Morrison with TD.

Yes. Congratulations on the quarter. It looks like free cash flow was insane yet again, positive outlook for next year. When you talk about the highlights or the distressed global asset opportunities, do you need to digest the current acquisitions before potential more M&A and we should think about NCIB near term? Or both really remain at the forefront or both are equally top of mind right now?

I mean we're continuing with the NCIB, as I stated in my comments. I think we've been pretty consistent with our buyback, and we remain committed to that. As noted, we -- there's lots of opportunities out there, certainly on the distressed or otherwise side. So like anything, you look at, what have I got the cash for, what the people for. And one thing I know is we've got a lot of cash, and we've got a lot of super strong and talented people. So there's time when you need to be opportunistic if the deal is right.

Yes. And I would just add, Brian, to the distress side, as Linda mentioned in her comments, like there's no shortage of that. And I would particularly point you to Europe as a real key area for that discussed because, again, capacitization, and they probably don't work as fast on consolidation or making decisions. So I think there's a real catalyst over there that we continue to to work on.

But one key underlying thing for us to ever do a distressed, you need to have the backing of the customer, right? The customer group has to be engaged. And it just takes, again, in North America, probably a little easier to do that than it is in Europe. So we find that it takes probably a little longer in Europe.

And I'd also add, Brian, that the integration of Aludyne has gone very well. And so it's not like we have lack of resources if we were to look at other M&A activities right now. .

Okay. And just when you mentioned defense and robotics, is that organic growth that you're looking for? Or are we be talking about M&A for critical mass?

Basically organic. I mean, again, these prime defense contractors, if you think about us now talking about 5%, right, of GDP being pushed through, they need to have manufacturing partners in North America or Canada, I should say, directly. And so when we connect with those client manufacturers and provide them our experience and history around defense, they get pretty excited. And I think a condition of a prime to get a contract out of the Canadian government will be having partners as well.

And then on the robotics side, the partner in -- I was in China and just connecting with good technology partners that have advanced robotics in collaborative robots and humanoid, and they obviously need a support of a company to distribute or make things in North America. So that's how we're doing it. So really not on an acquisitive side, more on an organic growth side.

Okay. And maybe one more for me. Just last question. Jim, last quarter, when you and I spoke, we talked about the Mobility margin, it was just asked previously, but I just want to drill down a bit more on it. You did imply that Q4 should be consistent with where it was in Q3, maybe a bit softer because of seasonality, I get it. But when I strip out Aludyne, it doesn't seem like that should have any impact. So it does seem a bit softer.

Is that just -- were you expecting the bolus is to be in Q4? Or is there any other factors that may have weighed on the margin or...

Yes, Brian, not really that I can come up with it. It could be some mix issues, some higher margin issues maybe dropped off earlier or something like that. But really, there would be no real big cost changes or anything like that other than the moment that Dale, you mentioned.

And sorry, just to be clear, was that anticipated when you made your Q3 commentary or no?

Yes, I would say we would have had that factored in, for sure. .

But steady as building of 7.5%?

And to this margin discussion as well, you would have noticed in the MD&A that we mentioned that was a factor on the sales side, but not a factor on the earnings side. I mean, as you know, we have formal and informal hedges. So -- that has a real impact on margins as well, right? If your top line is getting beefed up by FX and you're not seeing bottom line fall through at the same level than the also going to be impactful. So I think that's worthwhile noting. .

You now have a question from Jonathan Goldman with Scotia Bank.

Maybe just another one on margins at this time on Industrial. I think you were talking about contraction below the normal range in Industrial for the entire year. looks like you beat that a bit. And if you were to take the guidance for the full year previously, it would imply a margin in Q4 about 10.5 at best. It looks like you beat that by 200 bps.

So I'm just trying to find out maybe what are the drivers of that view, if anything, kind of differed versus your expectations?

Yes. I mean, I would say, in the Industrial segment, mix is a big factor. So how much is agricultural versus how much is access because the margin profile is different. So to me, the bigger impact for Q4 was a strong quarter for the AG guide stronger than we would have expected. So margins did come in a little stronger than we thought.

That's good color. I appreciate that. And I guess another 1 another strong quarter for access, material performance versus your end markets. You did talk about how it would be one-to-one volume. -- revenue growth because of mix and pricing. But how should we think about outperformance being sustained into 2026? And could you remind us of the different drivers that are supporting the outperformance?

Yes. I mean, for 2026 on the asset side, overall, the global, we're looking at it flat North America up a little bit, Europe up a little bit and then rest of world now. So again, from that perspective of the market, if you track the market, we should have a little bit of an uptick on access market for.

Okay. That's good color. And then maybe 1 more on capital allocation, and you obviously have your priorities listed in the presentation. But if you were given a menu of only 2 options here between a buyback and M&A, what's more attractive?

Well, I mean obviously, growing your business is going to be more attractive. I mean our first priority, we have been very clear when it comes to capital allocation and growth, we want to invest in a business that's going to generate earnings year after year and create growth in itself. So 100%, our first priority is always investing growth.

Sorry, but just to finish, we're also committed to returning cash to shareholders. That's why we put our capital allocation framework in place last year, just saying, number one, strong balance sheet; number two, growth and number 3, we're going to return cash to shareholders. And we've been pretty consistent with that over the last couple of years with NCIB and a good track record of continued increase in dividend.

Yes. And just to add, and this is maybe subjective comment, but you saw at the gate grid. So we have a major focus in the company, growing our revenue, your income margin and your team, and we believe strongly that it's up to us to keep growth on the top line and bottom line and had teammates for our employees to be satisfied.

So really a strong focus and a very strong entrepreneurial culture, too, and it really is important to get people the data for the growth side.

Definitely. And it's nice to see the results reflected in the share price as well.

As there are no further questions at this time. I will now turn the call over to Linda Hasenfrat for closing remarks. Please continue.

Great. Thanks so much. Well, to wrap it up, I'd like to leave you with our key message for the quarter, which is identical to what I started out with, Linamars continuing to deliver on earnings growth with now 81% over the last 16 years registering bottom line growth, notably almost every 1 of those years, double-digit growth. That is an outstanding performance and really the definition that consisted sustainable growth.

Number two, strong growth in our product and process offering largely through or technologies is dramatically increasing our addressable market in our Mobility business and leading to setting new growth opportunities.

Number three, we are generating exceptional levels of free cash flow to fund those acquisition opportunities and organic growth while keeping our strong balance sheet impact. And finally, not only is the tariff situation manageable, but we are actively leveraging such to find new opportunities for growth successfully. So thanks very much, everybody, and have a great evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Linamar Q3 2025 Earnings Call. [Operator Instructions] This call is being recorded on Wednesday, November 12, 2025.

I would now like to turn the conference over to Linda Hasenfratz, Executive Chair. Please go ahead.

Thanks very much. Good afternoon, everyone, and welcome to our third quarter conference call. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast.

Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President; and Dale Schneider, our CFO, both of whom will be addressing this call formally. Also available for questions are Mark Stoddart and some other members of our corporate IR, marketing, finance and legal teams.

I'll start us off with some highlights of the quarter. A good place to start is a quick reminder of the key value drivers that make Linamar such a great investment and how they played out this quarter. First, Linamar has a long track record of consistent sustainable results driving that of our diverse business. Q3 was another good example with exceptional earnings growth in our mobility business going a long way to offset very soft markets in our agricultural businesses. Being invested in both businesses has trim big swings up and down in individual markets and leaves us with a more consistent, sustainable level of performance. Strong mobility performance this year will carry us to a bottom line growth for the year despite a tough year for Industrial, just like two years ago when Industrial took us to a profit -- to a growth for the year -- profit growth for the year despite a tough year in mobility.

The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment that can be used on a large variety of types of products across vehicle platforms and types of propulsion. The flexibility is allowing us to reallocate equipment from programs running under capacity to new launches, helping keep our capital build down, as you saw again this quarter, down 30% over last year without restricting our ability to grow.

Third, we've always run a prudent conservative balance sheet. We target keeping net debt to EBITDA under 1.5x and Q3 saw net debt to EBITDA actually at 0.76x, so under 1x and excellent level to be at given great opportunities in the market today.

Lastly, returning the cash to shareholders is a key value creation driver at Linamar as well. You saw that play out this quarter with the renewal of our NCIB program for another 10% of outstanding shares.

Okay. Turning to highlights for the quarter. I would identify these as our most relevant accomplishments. First, we announced two exciting acquisitions for us with Aludyne aluminum casting technologies in the U.S. and the GF Leipzig ductile iron casting facility for commercial vehicle components in Germany. In aggregate, they represent more than $1 billion in sales and will contribute in our normal operating earnings range. Aludyne is a company that was in distress but with excellent technologies and a solid team, and we're excited to bring them into the Linamar family. GF Leipzig similarly has unique capabilities for very large ductile iron casting, well suited for growth opportunities in Europe. Again, with a great team, and we look forward to welcoming them to Linamar. Both acquisitions will feed our existing plants in North America and Europe with machining business, which creates exciting new growth opportunities. Jim will describe the acquisitions in more detail shortly.

Secondly, we were thrilled with the excellent growth in our Mobility segment earnings, up 88% and growing margins to the top end of our normal range. The impact of launches and operational efficiencies is having a big impact on the segment.

And third, wow, what a great quarter in free cash flow, hitting over $320 million in the quarter, thanks to that careful management of that capacity. And finally, we continue to be modestly impacted by the myriad of U.S. tariffs in place. And in fact, are using the situation as an opportunity to chase new business with our automotive customers looking to onshore products from Asia and Europe and to chase acquisition opportunities with distressed suppliers. I'll come back to the tariff situation in just a moment.

Turning to the numbers. We saw sales at $2.5 billion, down 3.6% over last year on tough industrial market. Sales were down 26% in our industrial businesses, largely the agricultural business down in markets that are dramatically down. Sales were actually up 7% in the Mobility segment with the launching business adding to market growth of 4.6%. Normalized net earnings were $150.1 million or 5.9% of sales. Normalized EPS was $2.51, up 6.8% over last year on the back of a very strong mobility segment.

I'd summarize our results this quarter as being most impacted by, first, higher sales earnings in the Mobility segment on that launching business and strong volume on key platforms. Secondly, operational improvements and cost reductions that are happening actually in both segments as well as fixed and overhead cost reductions and that being offset by those steep declines in the agricultural market.

Cash flow strong at $321 million as noted. We expect to continue to generate free cash flow in 2025 for another strongly positive result for the year.

Finally, let's have a look at an update on the tariff side. Despite the myriad of tariffs put in place over the last couple of months, Linamar continues to have a manageable level of bottom line impact. New in the quarter were tariffs announced on 232 metal product derivatives. So far, more than 900 categories of parts containing metal have been identified that are subject to 50% tariffs on the non-U.S. metal content of those products. This is having some impact to certain industrial segment products, not automotive. We are developing strategies to mitigate these costs as best possible, but I would say they are manageable and not impacting our bottom line materially. The balance of the tariffs are having no or minimal impact.

And I think there's really three key reasons for this. One, we have long followed a strategy of producing products in the same continent as our customers and not chasing low-cost labor around the world. As a result, we're not making product in Asia or Europe that ships to the U.S. and would trigger tariffs. Secondly, for product produced in Canada and Mexico, our products are USMCA compliant for virtually everything we ship into the U.S., meaning no tariffs for our customers on the mobility side, where they are the importer of record or for us on our industrial products where we are the importer of record unless caught by those 232 derivative tariffs that I just said.

Our largest business is our automotive business, where our customers are the importer of record. And I think that's the third key element. And therefore, those customers would be responsible for paying tariffs in the event any become applicable, although happily none are as yet. I do worry about the growing impact of tariffs on our automaker customers as they continue to build up, whether it be for metal tariffs or vehicle tariffs or part tariffs for their offshore purchases outside of North America. The cost for our customers, as we've seen are in the billions, and I am concerned about potential impact to vehicle pricing and therefore, demand longer term.

On the positive side, we are seeing customers looking at onshoring parts and systems they are currently buying from Asia or Europe. We're building up a good list of new business opportunities and business wins for our North American plants in all of Canada, the U.S. and Mexico. The U.S. is still respecting the USMCA agreement, meaning these parts can be supplied from any of the three countries, tariff-free as long as they are USMCA compliant. Where the job goes it really depends on where we have capacity, experience and teams available to take on the work as well, of course, as customer preference.

The tariff situation is also adding to stress in an already stressed supply base, notably in the U.S. and Europe, and this is leading to acquisition opportunities for us as you saw us acting on in the quarter.

Finally, I'd like to emphasize that our strong results and positive outlook is very much of a result of what I think is an excellent and unique business culture at Linamar. Our culture has been finely tuned over nearly 60 years to be opportunistic, entrepreneurial and find something positive and actionable to grow our business regardless of circumstances. We're naturally responsive. We're nimble. We move fast. We're innovative. We're creative in dealmaking and mitigating challenging situations, and we get things done. Those are the critical elements to not just survive but thrive in a challenging time.

So, with that, I'm going to turn it over to our CEO, Jim Gerald, to industry and operations updates in more detail.

Thank you, Linda, and great to be with everyone listening here tonight. As I've emphasized over the past few quarters, the theme you see on the screen remains our guiding focus at Linamar in 2025 and certainly will continue for the foreseeable future. Our commitment to growing revenue, profits and growing our team is fundamental to our long-term success. We've certainly been saying the time we're in a business person is nightmare, but an entrepreneur's dream. Volatility, limited visibility, macroeconomic headwinds are testing companies everywhere, tariffs, shifting consumer demand, disruptive technologies, cost pressures, talent shortages and regulatory changes are all part of that puzzle. But from our side, tough times don't last tough team to do, and certainly, Linamar is one tough team. And what sets us apart is our entrepreneurial mindset. We don't just react. We attack every challenge and opportunity with purpose. We stay true to our long-term vision, operate with lean discipline and make agile, decisive moves.

So with that, let me do an update on the quarter covering our two reporting segments and the markets we operate in. Let's start with the auto industry. Global production grew this quarter, North America up 4.1%, Europe, 1% and Asia Pacific leading with 5.8% growth. Forecast for '25 have improved, not just to easing tariffs, but also because OEMs now have a clearer understanding and stronger plans for vehicle types and propulsion systems across global markets.

North America is projected to be down just 2% versus 3.9% last quarter, Europe down 1.8% versus 2.5% and Asia up 4.4% versus 2.5%, and that's driven by China's strength and tariff de-escalation. That would bring a global production up 2% for the year. Looking ahead to 2026, North America is expected to be down 2.6%, Europe and Asia relatively flat, resulting in a modest 0.5% global decline.

Turning to Linamar's CPV performance for the quarter. We saw growth across all three key regions. North America grew 1.3%, Europe, 1.2% and Asia delivered exceptional growth of 21% year-over-year, really driven by program launches Linda mentioned, and increased volumes on key platforms where Linamar has strong business. With growth in every region, global CPV rose 1.6% year-over-year, reinforcing the strength and consistency of our global footprint.

In Q3, our commercial teams continue to deliver on our core goal, keep winning business. We secured $457 million in new business wins with $195 million in body and chassis components, significantly expanding our position in key structural parts like cross members and knuckles. Linamar's long-standing strength in structural components supported by recent acquisitions position us well for continued growth.

A major highlight, mobility new business wins now total over $1.8 billion in annualized value over the last 12 months. By staying focused, executing with discipline and seizing opportunities in these kinds, we're reinforcing our position as a leading supplier.

The biggest news that Linda highlighted is the -- in the mobility, two transformative acquisitions, Aludyne North America and Georg Fischer's Leipzig facility. Aludyne North America adds 13 facilities, 2,400 employees and advanced casting technologies like squeeze casting and magnesium thin high-pressure die cast with a strong portfolio of structural components, knuckles, shock towers, subframes and rear axle housing, this acquisition boosts our content per vehicle and strengthens our leadership in lightweighting. Leipzig brings exceptional capabilities in large single-piece casting, including one of the largest box sizes in Western Europe for production, supported by 3D sand printing and high automation, it offers 350-plus products across nine end markets and 40-plus customers, expanding our reach in the off-highway and industrial segments.

Why these acquisitions? Simple, they fit perfectly. Aludyne and Leipzig bring advanced casting technologies. Both companies offer full-service design and engineering, giving Linamar full value chain coverage from design to validation to manufacturing, a major differentiator in a competitive market. Aludyne has reputational excellence and is a category killer in aluminum metals with leading market share in North America. Leipzig is a technology leader in Europe, known for high-quality ductile iron casting and innovation in off-highway applications.

Together, they provide significant growth opportunities and bring over $1 billion in annualized revenue, expand our CPV with key customers accretive day one and operate within our target 7% to 10% OE margin range. Their strategic footprint, Aludyne in the U.S. and Leipzig near our European plants enhance our ability to support OEMs locally and scale globally. These acquisitions were entrepreneurial, opportunistic and were driven by innovation, reputation and long-term growth We're proud to welcome these teams to Linamar and excited to deliver even greater value to our customers.

Turning to our Industrial segment, starting with Skyjack and the aerial work platform market. While the market continues to face headwinds from interest rates, tariff pressures and delayed infrastructure projects, signs of recovery are emerging. Despite these challenges, Skyjack delivered an outstanding Q3, growing unit volumes by 46% in a market that was down 9.3% globally. Year-to-date, Skyjack is up 11.3%, outperforming a market that's down 23.3%.

The success is driven by exceptional market share gains, especially in scissor lifts globally and booms in Europe. It's a clear signal that Skyjack is winning with our innovation and customer connectivity. It's important to note that volume growth doesn't always translate directly to revenue as product mix plays a key role with booms, telehandlers commanding higher prices than scissors. Dale will touch upon that again, but the real story here is Skyjack's ability to gain share and strengthen its position in a tough market.

On the innovation front, Skyjack was awarded the 2025 Rental Editor's Choice Award in Micro XStep Scissor Lifts designed for maximum productivity in tight spaces. They also launched the eDrive scissor lift offering the highest working height in their range with 0 emissions and lower operating costs, a win for customers and sustainability. In this time frame we're in, Skyjack is not just navigating the storm, it's leading the way forward.

Turning to agriculture. While the market remains challenged, Linamar continues to perform and innovate. As the 2025 growing season wraps up, North American harvests are strong, but low commodity prices and trade issues are limiting exports and farmer profitability. Still, U.S. farmer sentiment is resilient and federal payments are expected to drive demand into 2026. Dealer inventories and credit lines are easing, though still elevated, which is holding back whole goods stocking. In Europe, wheat crops are strong, corn yields are down due to drought and heat stress. And in Northern Russia, we are seeing their best crops in three years. In Australia, soil moisture is solid in key regions and China presents a major canola opportunity as Canada faces tariffs.

Despite high inventories and macro pressures like interest rates and stimulus uncertainty, the '25 outlook remains unchanged. North America down 30% Europe down 5% and the rest of the world flat. Our Linamar Ag divisions, MacDon, Salford and Bourgault are tracking with the market, down 29% in volume, but gaining share in key products and regions. Timing of deliveries and inventory pull ahead impact mix, but our teams continue to outperform.

On the innovation front, Salford launched the AB230 air crew engineered for the CaseIH Trident and Dry Hi-Flow equipment. It delivers faster speed, higher rates, great coverage and less compaction, driving maximum productivity and nutrient accuracy. While market cycles are beyond our control, our focus on innovation, execution and customer value keeps us ahead. We're building strength today to lead tomorrow.

And with that, I'll turn it over to Dale for a deeper dive into our financials.

Thank you, Jim. Good afternoon, everyone. Linda covered at a high level of the financial performance in the quarter, so I'll jump directly into the business segment review, starting with Mobility. Mobility sales increased by $127.6 million or 7.1% over last year to $1.9 billion. This growth was driven by a significant increase in sales from launching programs, higher volumes in mature programs and foreign exchange impacts compared to Q3 last year. These gains were partially offset by lower volumes on electric vehicle programs and reduced production for certain.

Q3 normalized operating earnings for mobility were up 87.7% over last year to $165.9 million. The strong improvement was driven by an increase in the sales from launching programs, the higher volumes on mature programs and benefits from operational efficiencies, cost reductions and a favorable product mix.

Turning to Industrial. Sales decreased by 26.3% or $221.6 million to $619.7 million in Q3. The decrease was primarily driven by significantly lower agricultural sales in a sharply down market. Additionally, access equipment sales were marginally reduced due to the softer market demand. However, this was largely offset by strong market share gains in scissors and continued market share growth in Europe. Normalized industrial operating earnings in Q3 decreased by $78.5 million or 56% over last year to $61.7 million. This decline was primarily driven by significantly lower agricultural sales. These pressures were partially offset by improvements from operational efficiencies and cost reduction.

Starting with our overall cash position, which came in at $1.2 billion on September 30, an increase of $407.9 million compared to September last year. Third quarter generated $389.7 million in cash from operating activities being partially used to fund our Q3 CapEx and debt repayments.

Turning to leverage. Net debt to EBITDA was at 0.8x in the quarter, an improvement from 1.1x last year. The amount of available credit on our credit facilities was $978.2 million at the end of the quarter. Our liquidity at the end of Q3 significantly increased and was very strong at $2.2 billion.

Our 2024 NCIB program launched at Q3 '24 earnings call will expire on November 14. This program authorized the purchase and cancellation of up to 4 million shares. To date, we have returned nearly $100 million to shareholders through the repurchase of approximately 1.8 million shares. The TSX has approved the renewal of Linamar's NCIB program for the next 12 months. Under this renewed program, we may repurchase and cancel up to 3.9 million shares, representing 10% of our public float between November 17, 25 and November 16, 2026.

We have also implemented an automatic share purchase plan to enable repurchases during blackout periods. This initiative reflects our disciplined capital allocation strategy, maintaining a strong balance sheet, investing in growth and returning excess cash to shareholders, particularly in today's market environment.

Turning to outlook. I will outline Linamar's expectations for 2025, focusing on Mobility and Industrial segments. Our guidance for 2025 is generally consistent with what was announced at our last earnings call with only a few notable updates. Please note, we are not providing segment level guidance for '26 at this time due to the elevated volatility in the market and ongoing geopolitical uncertainty, which makes longer-term segment forecast less reliable.

Our guidance for Mobility segment in 2025 is largely unchanged from what we said at our last earnings call. We continue to expect sales growth and double-digit normalized operating earnings growth, driven by operational improvements, cost reductions and new program launches. These margins are forecasted to expand and remain within our normal range of 7% to 10%.

What's new, we are now including a small increase in sales from the acquisition of Aludyne's North American operations, which will further support our growth trajectory. We are also starting to experience some effects from the Novelis fire, Nexperia chip shortages and the JLR cyberattack. However, these industry challenges are evolving rapidly, and it's still too early to assess their full impact on our business.

Guidance for Industrial segment also remains consistent with our previous outlook and continued expectations for double-digit declines in both sales and normalized operating earnings, reflecting the ongoing market declines in the ag sector and the softness in the access equipment markets.

With new margins are now expected to contract and fall below our normal range of 14% to 18%. We are now starting to feel some impacts on tariffs, primarily in the industrial business. But as Linda mentioned, these are manageable and not material.

At a consolidated level, our guidance is generally unchanged from the last call. We expect a modest decline in sales for 2025 with normalized EPS projected to grow and net earnings expected to expand. Free cash flow generation remains strongly positive, supporting a very strong balance sheet and solid leverage. What's new is CapEx as a percentage of sales is now expected to decline from prior year and remain below our normal range of 6% to 8%, reflecting our disciplined CapEx reallocation process.

Looking ahead to 2026, guidance remains broadly consistent with our previous discussions. We anticipate continued growth in sales, net margins and EPS supported by strong free cash flow generation and a robust balance sheet.

While softness in the industrial markets will moderate biscuits contribution, the strength of the Mobility segment is expected to more than offset this impact, resulting in overall consolidated growth. What's new to the Mobility segment is expected to deliver ongoing sales and earnings growth, benefiting from a full year of contributions from both the Aludyne North American operations and Georg Fischer Leipzig casting facility. As a result, we are now expecting sales growth to improve from modest growth to a more substantial increase. CapEx -- sorry, capital expenditures are anticipated to rise from prior year, though they will remain below our normal range. Our projections reflect only the impacts that are currently known for tariffs, Novelis fire, Nexperia chip short and the JLR's cyberattack as the uncertainty remains regarding the full extent of these issues.

In summary, Linamar's guidance for 2025 and 2026 is generally unchanged from our last earnings call with only a few updates reflecting recent developments. Our operational discipline, strategic acquisitions and strong free cash flow generation continue to support our financial strength and resilience.

Thank you. And now I'd like to open up the call for questions.

[Operator Instructions] Your first question comes from Ty Collin with CIBC.

Maybe just want to start off on the ag business. I'm wondering if you could kind of expand on what sort of visibility or indications you have so far into 2026 now that we're later in the year. And are you still optimistic that this year will be the bottom? Or is there a risk that the cycle might be a little more protracted and kind of bounce along the bottom next year?

Yes. I mean ag cycles are typically down for two to three years. So this is the second year of a down market for the ag business. So it would not be abnormal for next year to be down as well.

We're waiting to give a more specific outlook for 2026 for the time being. But could go either way, frankly. It could be another soft market or we could see some rebound. I think we'll have a better sense come March for what we're going to see in that market.

Maybe just a couple of things to keep in mind, as Linda said, like the 2-, 3-year cycle is something that we've seen in the past. But I mean, what we talked about in the notes there was farmer sentiment still is pretty strong. Other things that we also see is dealers are sort of concerned about new and used inventory levels. So orders are being affected at this point in time. Again, crops have been great. And then if you look at the farm net cash income that it's basically flat, but it's up with a $40 billion, I think, $40 billion sort of incentive from the government, but that has not been paid out. So there's a reluctance of dealers to buy at this point in time.

Once that $40 billion gets out in the talk in the U.S., that may bring on some encouragement to that. And then still in '26, there's not a good understanding what incentive base would be out there as well. So it's a really difficult one to make a call on. And when you look at what CNH has said and AGCO and these others, they are very much in the same mode, but they just don't know where this is going to play out next year.

Okay. That's really helpful color. And then sticking on the ag business. I mean, it seems like that segment went from kind of taking share in the first half of the year to sort of declining more in line with the market as of the end of this quarter. I mean is there anything to call out there in terms of execution or dynamics within your distribution channels?

I mean I wouldn't read too much into that. I mean one quarter to the next, it could just be timing of deliveries. If I look at year-to-date, we're still seeing market share growth on the ag side. So I wouldn't read too much into that.

I think timing, what Linda said, timing is also an important for that, right, because we're tracking the market of large tractors and combines and the timing of taking a short line piece of equipment is going to be different, too. So I think that what Linda said year-to-date is really the key thing to be looking at.

Okay. Got it. And if I could just sneak one more in on the buyback. I think last quarter, you indicated that you expected to sort of step up buyback activity in the third quarter. I appreciate that probably was put on the back burner given some of the M&A activity. But now that, that's through, can you maybe just update us on your thinking in terms of resuming buyback activity in the near term?

Yes. You identified it absolutely correctly. We were prioritizing the M&A activity in the quarter, and we absolutely intend to be back out buying as soon as back out is over.

Your next question comes from Brian Morrison with TD Cowen.

First question maybe for Jim on mobility. I mean this is best-in-class margins. Your cadence has gone up 100 basis points sequentially each quarter this year to 8.6%. So is there anything like recoveries or onetime items in this quarter? Are we stating that it's simply operational excellence and it's sustainable?

And can you just clarify for me, are the new launches, typically, they take time to ramp to their target margin. Are they actually being margin enhancing?

Well, I think you've hit a few of the different things. I think launches are starting to see the fruits of the launch. I think the volumes on some of the mix programs on some of the key programs are very good that we're seeing. And certainly, I think our CAT system, our operational elimination of waste culture is playing out. I mean we are hopeful to keep ourselves into this margin at this time. And for the foreseeable future, it looks that way.

I would just say that they're adding to the strong result this quarter was a somewhat favorable product mix, which can shift around. But Jim is right, being midrange is probably a pretty realistic expectation.

And midrange being 8.5%, Linda, correct?

That 7% to 10% range that we normally target.

Okay. Okay. And then maybe just in terms of takeover business. I assume that the new businesses that you've taken on, I assume that there's restructuring of contracts and these margins will be in line or with your current performance in mobility?

Yes. I think you're talking the acquisitions or takeover business that we chased.

Yes. Sorry, your acquisitions, but I assume would be.

Acquisition, yes, we're basically -- we're going to be in the range that we declared the 7% to 10%. So middle of the range, probably keep that in your mind as Linda said.

So, yes, each one of these Aludyne has a North American footprint. We have a game plan on how to operate that going forward. So that's a pretty focused plan. And then the Leipzig facility is one facility over there with 300 teammates. Again, both of these accretive day one, both get us about $1 billion of sales, Brian, and really in the normal range of operating margin.

Okay. Just quickly on Industrial. I assume -- thank you for the answers. But in terms of Skyjack, I presume is this growth predominantly coming in North America with the scissors? Or is it more international side that we're seeing with your new facilities?

It's a little bit of both, but I would say the -- most of it would be North American scissors and European would be the boom side. And again, as I think I highlighted, it's -- the revenue side doesn't just match to the increase in volume because scissors obviously are a little less in the sell price.

And it's actually great to see the growth that we're seeing on scissors in North America. It's been very solid.

For sure. For sure. Linda, last question. I think this quarter, we've talked about this many times, but this quarter certainly justifies your view of diversification. So I'm going to come at this a little bit differently. So your valuation, I mean, look, it's below average, it's below auto peers, it's below industrial peers. Your free cash flow is clearly very impressive. You got minimal leverage. You're a bit heavier now with your acquisitions in terms of mobility. But like would you consider -- I understand you're going to be active buyback, but would you consider alternatives that would substantially enhance shareholder value, such as like a substantial issuer bid?

Yes. I mean it's not something that we have looked at. I feel like the -- that we're considering, I should say, in any seriousness. And that's really just because there's so much opportunity out there in terms of growth, whether it be takeover business or acquisition opportunities that the last thing I want to do is tie up a huge amount of capital in doing a substantial issuer bid when I would much rather be buying a business or funding organic growth.

Your next question comes from Michael Glen with Raymond James.

Just to start, can we just go back and dig into this Skyjack outperformance again. It's just the numbers that you're indicating are just quite substantial. So I'm really -- maybe it's a function of needing to repeat it again, but these gains -- like are you -- can you give some quantification of where your market share, how much your market share has increased? What you're doing with pricing overall on product? Any additional insights into where you're getting these gains from?

I think the market share on our scissors is the technology and probably our commercial ability to have a better commercial setup for our customers on the scissor side.

Yes. I mean we are absolutely growing scissor market share. As already noted here in North America, we're growing boom market share in Europe, which has been a real target for us. So it's great to see that. I'd just like to reiterate again what Jim has said a couple of times now that 46% increase in volume does not, in any way, result in 46% increase in sales. So if you're selling a lot more scissors and not as many telehandlers or booms, then that has a material difference on the sales front. So please don't read into the 46% volume increase that we increased sales like that at Skyjack.

I think the more relevant point is we're growing market share -- and I think that's actually fantastic, especially here in North America and in the U.S. where we have all the tariff situation going on and all of the focus in that regard. So I think that's a huge plus and a huge kudos to the Skyjack team for managing that.

And the other point that I just forgot about product development, like we've come out with a lot of new products also. So that also would give you some benefit as well.

Okay. And you are or were the largest market share already with scissor lifts in North America?

Yes. I believe that's true.

Okay. And just to go back to Brian's question on the margins. A lot of your peers are speaking about commercial recoveries or commercial settlements. You didn't state that as one of the items impacting margins. I just want to clarify that there were no outsized recoveries or settlements in the quarter for the mobility.

Nothing substantial other than maybe engineering changes or whatever would be typical, but nothing out there. Quite frankly, in our mindset is we got to think towards helping customers through productivities longer term here, right? That's sort of the natural way of the game has been played for decades. So our view is as we get better, we should share some of the improvements and that helps us gain new business as well. So we'd be also working on that.

Michael, as we've talked about, most of our commercial issues were resolved. late last year or the Q1 of this year. So as Jim said, there's really nothing flowing through in this quarter.

Nothing new. I mean, obviously, if we had commercial agreements a year ago for price changes, then that's going to continue to deliver from then forward.

Okay. And are you -- so it's $1 billion combined for Aludyne and GF. Can you give the number for each acquisition?

Yes. I mean Aludyne was around $800 million in sales and...

It's about CAD 850 million, CAD 150 million split, right, Aludyne CAD 850 million and CAD 150 million Aludyne sorry, GF. GF has one plant, Michael, and then Aludyne is the 13.

Okay. And then just when we think about M&A, just right now in the Mobility segment, should we think about M&A dollars really be focused with mobility given the takeover work and some of the distressed opportunities emerging?

I mean it's across the board. I would say there's no shortage of opportunities. I would say there's a lot higher level of distress in the mobility side for sure. But there is a lot of other activity in the industrial side that we're seeing as well. A lot of stuff is sprouting out of Europe, of course, that's got a lot more drag on the market there.

So again, we come at this very opportunistic based on our customers sort of saying, hey, we'd like Linamar, you guys to jump in to see if we can make something happen and working alongside the customers because I think they have a high degree of trust in us to be able to execute and have a sustainable long-term company.

Your next question comes from Jonathan Goldman with Scotiabank.

Maybe just circling back on the Mobility margins. So you did 8.6% in the quarter. If you look at the same quarter Q3 in 2019, you did 7.5%. If you go back a year, 2018, you did 6.5%. So 200 bps delta, 100 bps delta. It looks like volumes currently are kind of below those levels previously, maybe in line. Just could you help us think about what's driving the delta there? You did call out a few items. But if we have same volumes, what's really driving the expansion relative to those 2018, 2019 levels?

Yes. I mean I'd just reiterate the key things that we've already mentioned, launch is gaining traction that obviously makes a big difference. Solid volumes on mature programs. So programs we have good content on platforms we have good content on that are actually running pretty strong, great cost improvement work by the plants. There's some overhead reduction that we did as well just in terms of overall economic conditions, a little bit favorable on the product mix, some of the price increases negotiated a year ago that have been long on the table that are obviously going to be part of the year-over-year comparison. All of that is adding up to the strong results.

So -- and all of that is sustainable, okay? So we feel like being in that mid part of the range. I mean, obviously, Q4 would be a little lower just given shutdowns, et cetera. That's pretty normal to see Q4 margins a little softer. But if I'm looking out through next year, I think mid of that range is probably not unrealistic for the full year performance.

And the one thing I would also mention on Q4 is Dale mentioned in his comments is some of the disruption stuff, right, that we're still not clear in our minds how that will shake out with the Novelis with the Ford aluminum side, Nexperia, and some of the JLR. So some of that still we're sort of thinking through for Q4, but those should all get flushed through the system in Q4, and we should be like full throttle, I think, in next year.

That's a good point. If we do think about this as a baseline maybe going forward, if we strip out volume and supply chain issues, is there more that you guys can do on these structural internal initiatives to maybe build on the margin expansion you already have?

I mean I think that 8.5% is pretty good. So we're pretty happy with that.

Yes. And we never stop. I mean our whole culture is about taking waste out. We never stop. But I think the normal range, 7% to the 10% is very good. And if we can be middle of the road on that, that's excellent from an operational standpoint.

Understood. And then I guess another one, Linda. I appreciate your comments on not wanting to tie up capital to the balance sheet with buybacks and thinking about growth and M&A. But what's the appetite for large-scale M&A? And specifically, I'm thinking about aerial work platform assets that may be coming to the market in the near term.

Yes. I mean we like to run a conservative balance sheet. But that said, I mean, we have let ourselves go above our target range of 1.5x if we felt like we had a really good line of sight to bring it down under that 1.5x quite quickly.

So have we entertained bigger acquisitions in the past? Yes, we have. I mean we've certainly done that and gone above our 1.5x. And if we felt that we have that good line of sight and also the people to manage something. So I'm obviously not going to comment on specific potential targets.

I think there's actually quite a lot of bigger opportunities out there that could be interesting, but it's got to make sense financially. It's got to make sense in terms of technology. It's got to make sense in terms of our ability to take on that opportunity.

So you're not going to see us put ourselves unduly at risk, that's for sure. But we do have a very strong -- we're in a very strong position right now. So I think that gives us flexibility to do a variety of things.

Your next question comes from Etienne Ricard with BMO Capital Markets.

So just to circle back on M&A, you sound quite optimistic about more acquisition opportunities. How do you think about the pace of integrations? In other words, are you capacity constrained in terms of the executive team integrating these businesses? Or do you think you can continue to do more?

I mean the two that we're doing right now fit perfectly into our organizational structure. And quite frankly, in the Europe in the Leipzig facility, it's actually going to get some help that we're going to get as well. And that actually can really boost our technical ability back wheel over there. Over here, it fits right into our structures group. We've got manned and everybody is there to start day one. So yes, I think we've got a good play right now. Again, it depends on the acquisition. The Mobex that we bought a few years ago, that was distressed financially. It was distressed operationally. That takes a lot more horsepower. The Aludyne acquisition was distressed financially, but operationally, it was very, very good. So it depends on the acquisition, how you will play out. But I think we still have horsepower to deal with a few of these other distressed things.

And as Jim points out, we've got different groups in different areas. I mean, on the agricultural side, on the access side, we've got Europe, we've got North America, like it's not just one team. We don't integrate these acquisitions from a corporate level. We do it at a group level, and we've got a lot of great horsepower at the group level to manage those integrations.

Okay. Appreciate the details. And in mobility, how do you expect the pace of new awards to trend over the foreseeable future given the trade uncertainty? In other words, could we see more contract extensions?

I think so. I think we've seen a pullback, I mean, pretty clear pullback in North America on EV. And Mark, maybe give some color on the...

Well, I think there's -- we're not seeing a reduction in our opportunities of new business wins. There's just not a lot of new programs in regards to like what we've seen in the past, but we have a lot of activity in regards to the takeover business, especially in Europe, where we're starting to see customers moving business from financially scrap suppliers, whereas in the past, they would continue to work with them. And I think there's a different sort of feeling in regards to the European OEMs to move product out, and we're seeing and have been able to win a fairly significant amount of business in Europe and seeing a lot of opportunities there.

In North America, there's obviously the battery electric vehicle, not a lot of activity, but we are seeing areas around electrification on range extenders in regards to pickup trucks. A lot of the OEMs are working on a few programs with that. We are seeing some engine development programs for engines both pure ICE and hybrid applications for emissions coming up in 2029. So we continue to see a lot. And obviously, the acquisition from Mobex and now this one with Aludyne, a lot of opportunity on the structural chassis side in regards to both ICE, hybrid and battery electric vehicle.

And one other thing on the growth side, which we didn't talk about. But when you think about the One Big Beautiful Bill, and you think about Canada, Carney's Bill Canada plan, that's obviously great for Skyjack and things like that, but it also has a major impact on our mobility business and manufacturing because U.S. data centers, you've got massive gensets and all these things that we supply into those companies that supply those. So there's another whole category of growth that we're also pursuing in both of those industrial as well as mobility.

There are no further questions at this time. I will now turn the call over to Linda Hasenfratz for closing remarks. Please continue.

Okay. To wrap up, I'd like to leave you with our key message for the quarter, which is exactly where we started out. First, Linamar is being entrepreneurial. We're being opportunistic. We've already secured over $1 billion of revenue and growth for 2026 in a challenging environment with our two new acquisitions.

Secondly, we're seeing excellent growth of nearly 90% in our Mobility segment earnings, thanks to outstanding work at our global plants.

Third, we're generating exceptional levels of free cash flow to fund both acquisition opportunities and organic growth while still keeping our strong balance sheet intact. And finally, not only is the tariff situation manageable, but we are actively levering such to find new opportunities for growth.

Thanks very much, everybody, and have a great evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.