Martinrea International Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Ocampo - rmark Securities Inc. - Analyst : You, guys, paused your buyback program, which certainly seems like the prudent thing to do, just given the uncertainty. But I am curious if you, guys, have paused any other discretionary spending, whether it's capital-related, expenses, or even hiring.

Question: David Ocampo - rmark Securities Inc. - Analyst : Do you, guys, have an updated guidance or refreshed view on where '25 CapEx is going to come? And do you, guys, have any flexibility with your suppliers to drop that even further?

Question: David Ocampo - rmark Securities Inc. - Analyst : Okay. And I think, last quarter, there was quite a bit of discussion on, just, the hidden assets at Martinrea, whether it's the real estate or your position in NanoXplore. I'm just curious: Is there any additional thought on potentially monetizing it or on surfacing some of the value that may be hidden behind-the-scenes that investors may not be appreciating, whether it's a sell-down of your position in NanoXplore to potentially buy back Martinrea stock, here, just given the current levels?

Question: David Ocampo - rmark Securities Inc. - Analyst : Okay. And then, just the last one, just on the -- I think you, guys, disclosed, previously, a potential M&A transaction. Do you, guys, put that on pause in the event -- just given the current market conditions?

Question: David Ocampo - rmark Securities Inc. - Analyst : I think my question was more specific, I think, to that Tier 2 European supplier that you called out, where it may not close for another 2 to 3.5 years.

Question: J. Michael Glen - Raymond James Financial, Inc. - Analyst : Just to think about from Canada to -- sorry, from Canada to the US, from Mexico to the US, maybe speak to the two separately. What's the prospect of your facilities, in those markets, supplying parts into US assembly? Is that something that can be accomplished, right now?

Question: J. Michael Glen - Raymond James Financial, Inc. - Analyst : Okay. And then, based on what we learned on Tuesday night, with the revisions, those parts would be deemed USMCA-compliant?

Question: J. Michael Glen - Raymond James Financial, Inc. - Analyst : Okay. So we've read a few articles, over the past week or so, regarding, I believe, Stellantis is going to move some volume from Mexico into the US; and then, General Motors talked about moving volume from Mexico into the US. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:30PM, MRE.TO - Q1 2025 Martinrea International Inc Earnings Call Do you anticipate or the way those would line up, would that -- would you continue on with your supply, related to whatever business you have there? Or would you have to shift it to the US to continue to participate?

Question: J. Michael Glen - Raymond James Financial, Inc. - Analyst : Okay. And I'm just trying to -- for myself and just to, maybe, hear you guys speak about it. It's, maybe, a bit of a broad question. But, like, the risk associated with the parts infrastructure that you have set up in Mexico, over the past number of years -- I know it's been a substantial investment for you, over time, and that's now a large business for you -- is that something -- how concerned are you, regarding the outlook, right now, for that part of your business, what's made in Mexico?

Question: J. Michael Glen - Raymond James Financial, Inc. - Analyst : I'm just wondering to -- you talked about the restructuring in Europe. But given what these tariffs mean for the Europe assembly into the US, right now, do you have any insights like how -- what are your customers over in Europe? Number one, how much exposure do you have to Europe product that goes into North America? And what's the -- what production outlook have the OEMs, over there, shared with you for this year?

Question: Tamy Chen - BMO Capital Markets - Analyst : I have two that are also tariffs-related. First, I'm just wondering, when I saw the exemption for USMCA-compliant parts, that was very encouraging to hear. But I'm wondering on this aspect. If I take GM, as an example, when Mary, this morning, says, one of the things they also -- it sounds like they're starting to look at is to further increase US parts content, among their supply base. As I understand, an assembled vehicle coming from Canada or Mexico to the US, the non-US content part still has that tariff. So I'm just wondering: How do you -- or how should we interpret that aspect? Do you believe that your customers will gradually start to have that discussion with suppliers such as yourselves, that although your parts are USMCA -compliant, do you think they'll gradually want their supply base to have more and more of the content made in the US?

Question: Tamy Chen - BMO Capital Markets - Analyst : Okay. I understand. That's helpful. And that segues to my follow-up question is: I think, at this point, year to date, we might have just seen very few actual downtime or similar type announcements by OEMs, directly in response to the tariffs. We've gotten a little bit more clarity, recently, this past week. I'm sure you're having frequent discussions with your customers. Do you expect, at this point, going forward, we'll start to see some more material production-related decisions by your customers, now, that we seem to be at a little bit more clarity, in terms of the tariffs? And is your sense from your discussions with your customers -- like is the hope or expectation, still, that ultimately tariffs on the sector just eventually goes away? Or do you think customers are now -- your customers are now expecting that some form of auto tariffs may stay in the system for some amount of time, longer than initially thought?

Question: Tamy Chen - BMO Capital Markets - Analyst : Interesting.

Question: Brian Morrison - TD Securities Inc. - Analyst : I apologize. I joined late. So I missed a lot of the call. But I wanted to ask, similar to Tamy's question, on your new business awards, are you being told by the OEMs, at all, where to build these parts?

Question: Brian Morrison - TD Securities Inc. - Analyst : Right. Makes sense. And then I guess, just -- sorry, on your guidance, it's unchanged for the year. I see that. But it seems like North American production forecasts have come down, especially from the IHS of the world. I'm wondering what is factored into your North American production forecast in your guidance?

Question: Brian Morrison - TD Securities Inc. - Analyst : So sorry, are you looking for flat year over year? Or what's in your assumption?