Martinrea International Inc Q2 2019 Earnings Call Transcript

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

Question: Mark Neville - Scotiabank Global Banking and Markets, Research Division - Analyst : Maybe just first on China. You took the impairment charge this quarter. I guess I'm just curious of the plan moving forward. Do you still have facilities? Is there rightsizing that needs to be done, is there any costs associated with that? Just any more help on that would be great.

Question: Mark Neville - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then the rightsizing in Brazil, that's now complete?

Question: Mark Neville - Scotiabank Global Banking and Markets, Research Division - Analyst : And Fred, you mentioned, I think, $95 million of tooling working capital into Q2. I appreciate sort of the call from quarter-to-quarter to call those. What should that number be? Or sort of how do we think about the working capital you talked about?

Question: Mark Neville - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Maybe just on the margin. Again, another good quarter. You're tracking sort of at above your targets. But I guess just regionally, at this point, is sort of North America doing, again, a good 9.5 this quarter. Is that about sort of where you think it should be or sort of where you hoped? And I guess is the rest of the improvement now sort of rest of the world in Europe? Or no? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 06, 2019 / 3:00PM, MRE.TO - Q2 2019 Martinrea International Inc Earnings Call

Question: Mark Neville - Scotiabank Global Banking and Markets, Research Division - Analyst : And I guess for Europe, you mentioned higher launch but lower volumes. I'm just sort of curious what's the bigger headwind and, I guess, thinking that if these launch costs go away, if the volumes don't recover or remain flat, is it still, I guess, an issue you maybe already answered, but is there some way for that to go up?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Just back on China, CAF, is that Changan Ford? Or is it another customer?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Yes. Yes. Okay. And like -- so that was the fluids business. What's the lesson to be learned with that? Is it just there was too much customer concentration? Or like were the programs not bid properly? I'm just wondering what the conclusion is. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 06, 2019 / 3:00PM, MRE.TO - Q2 2019 Martinrea International Inc Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Yes. Like I don't know a lot about CAF, but I noticed that their sales collapsed in 2018. But did they have some platforms that didn't sell? Or what happened to them?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. I want to switch to Europe. So if you look at your European results relative to Q1, they tailed off quite a bit. Like what was going on at JLR? Were -- did some of the platforms you were exposed to have weak volumes? Because it was quite a drop-off in your performance relative to Q1.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then the last thing I wanted to ask you, just a bit of an open-ended question. With what's going on at Tower, like does that open up any opportunities for Martinrea? Like how do you think the customer -- typically customers, I would think, don't like it when private equity owns a supplier. And I'm just wondering if you think there's going to be any fallout in the stamping sector and any additional opportunities for yourself. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 06, 2019 / 3:00PM, MRE.TO - Q2 2019 Martinrea International Inc Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : And was a merger between Martinrea and Tower ever a possibility? Or just the customers would not have allowed that?