LIMAFLIMAFOTC
Loading
Operator: 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.
Linda Hasenfratz: 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.
Jim Jarrell: 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.
Dale Schneider: 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: [Operator Instructions] Your first question comes from Ty Collin with CIBC.
Ty Collin: 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?
Linda Hasenfratz: 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.
Jim Jarrell: 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.
Ty Collin: 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?
Linda Hasenfratz: 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.
Jim Jarrell: 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.
Ty Collin: 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?
Linda Hasenfratz: 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.
Operator: Your next question comes from Brian Morrison with TD Cowen.
Brian Morrison: 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?
Jim Jarrell: 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.
Linda Hasenfratz: 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.
Brian Morrison: And midrange being 8.5%, Linda, correct?
Linda Hasenfratz: That 7% to 10% range that we normally target.
Brian Morrison: 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?
Jim Jarrell: Yes. I think you're talking the acquisitions or takeover business that we chased.
Brian Morrison: Yes. Sorry, your acquisitions, but I assume would be.
Jim Jarrell: 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.
Brian Morrison: 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?
Jim Jarrell: 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.
Linda Hasenfratz: And it's actually great to see the growth that we're seeing on scissors in North America. It's been very solid.
Brian Morrison: 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?
Linda Hasenfratz: 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.
Operator: Your next question comes from Michael Glen with Raymond James.
Michael Glen: 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?
Jim Jarrell: 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.
Linda Hasenfratz: 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.
Jim Jarrell: 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.
Michael Glen: Okay. And you are or were the largest market share already with scissor lifts in North America?
Jim Jarrell: Yes. I believe that's true.
Michael Glen: 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.
Jim Jarrell: 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.
Linda Hasenfratz: 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.
Michael Glen: Okay. And are you -- so it's $1 billion combined for Aludyne and GF. Can you give the number for each acquisition?
Linda Hasenfratz: Yes. I mean Aludyne was around $800 million in sales and...
Jim Jarrell: 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.
Michael Glen: 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?
Jim Jarrell: 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.
Operator: Your next question comes from Jonathan Goldman with Scotiabank.
Jonathan Goldman: 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?
Linda Hasenfratz: 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.
Jim Jarrell: 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.
Jonathan Goldman: 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?
Linda Hasenfratz: I mean I think that 8.5% is pretty good. So we're pretty happy with that.
Jim Jarrell: 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.
Jonathan Goldman: 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.
Linda Hasenfratz: 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.
Operator: Your next question comes from Etienne Ricard with BMO Capital Markets.
Etienne Ricard: 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?
Jim Jarrell: 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.
Linda Hasenfratz: 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.
Etienne Ricard: 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?
Jim Jarrell: 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...
Mark Stoddart: 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.
Jim Jarrell: 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.
Operator: There are no further questions at this time. I will now turn the call over to Linda Hasenfratz for closing remarks. Please continue.
Linda Hasenfratz: 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.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.