Magna International Inc (MGA) 2003 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Intier Automotive first quarter results conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. At that time if you have a question, please press the one followed by the four on your telephone. As a reminder this conference is being recorded Wednesday May 7, 2002. I would like to turn the conference over to Donald Walker, President and Chief Executive Officer of Intier Automotive. Please go ahead, sir.

Thank you. Good afternoon, everyone. Thank you for joining our conference call to discuss our 2003 first quarter results. My name is Donald Walker, President and CEO of Intier. I'm joined today by Michael McCarthy our CFO.

I hope all of you were able to attend our annual general meeting earlier today either in person or on web cast. On May 6, '03 our board directors approved our financial results for the first quarter ended March 31. Following approval of the financial statements we announced the results at our annual general meeting in a issue of the press release. Hopefully everybody has a copy of the press release.

Today I will provide comments on our first quarter results. Michael will then discuss our financial performance for the first quarter and provide our updated outlook for the full year of 2003. Following Michael's comments we will be pleased to answer any questions you have. As a reminder our discussions today contain forward-looking statements with any applicable securities legislation we will provide a full disclosure at the end of the today's session.

During the first quarter we accomplished many tasks. We successfully launched many complex new programs during the quarter including significant programs such as the complete seats for the Chrysler Pacifica. Door panels for the Toyota Avensis and the cockpit module for the Nissan Micra. We also launched a sizable level of takeover window regulator business during the quarter.

We continue to move the right direction in our results in Europe. We improved the bench of performance in our European Intier segment while the same time launching many new products some of which I just mentioned. We implemented a new organizational structure in our closures business to better meet the needs of our global customers. We have global closures management team focused on modular systems which is the fastest growing area in the closure segment. Activities in the modules continues to accelerate not only in the door modules we've talked about, but also in mid-gates, rear gates and tailgates.

We've also realigned our our purchasing activities for the closures group on a global basis which gives us opportunity for cost reduction on a go forward basis. From a financial perspective we have lots of opportunities to improve our results. Over the next production volumes and certain key programs launched caused higher than expected launch cost during the first quarter.

Additionally, the competitive marketplace in which we operate continued to intensify as our customers continually seek cost reductions. As a result, we saw some lower selling prices during the first quarter in both North America and Europe to meet our customer's requirements. We are confident our continual focus on world class manufacturing, reducing our purchase components, costs, implementing some engineering solutions, new innovations and new product program launches will result in lower cost solutions and improve margins on a go forward basis. We continue to generate strong free cash flow and have never had a stronger balance sheet.

Overall, we are well positioned to take advantage of growth opportunities including new business awards from our customers, takeover business from our competitors, new partnerships and joint venture opportunities and strategic acquisitions. I will now turn it over to Michael to review the financial.

All comparative information discussed today is a comparison between the first quarter of 2003 to the first quarter of 2002. Also our financial results are reported in U.S. dollars. And as such are results directly affected by the average exchange rate used to translate the results of operations having a domestic currency other than the U.S. dollar.

For Intier Automotive, the main currency has had an impact on our foreign exchange translation of the, the British pound and the Canadian dollar all of which have appreciated relative to the U.S. dollar. On a quarter-over-quarter basis the Euro strengthened approximately 22%, the pound 12% and the Canadian dollar 5%. This has had an impact on our financial results. Consolidated sales increased approximately $153 million or by 17% over $1 billion.

Approximately $70 million of this increase or half of or nearly half of the increase is due to foreign exchange translation made up of approximately $54 million due to the appreciation of the Euro and pound and $16 million due to the appreciation of the Canadian dollar. Operating income, however, has not experienced the same positive impact. Operating income increased by a moderate $200,000 due to foreign exchange translation. The 22% strengthening of the Euro relative to the U.S. dollar have the impact of increasing the amount of operating losses.

Certain in performing divisions that substantially offset the positive impact but all the strengthening currencies have a profitable operations. Overall our production sales increased $152 million or by 19% to $948 million. Tooling and engineering sales remain strong increasing 1% to $83 million reflecting our strong order book going forward. North American production sales grew to $576 million compared to $521 million.

As a result of higher light vehicle production volumes, higher average content per vehicle and the strengthening of the Canadian dollar. Vehicle production volumes increased approximately 2% to 4.2 million units compared to 4.1 million units. And the average content per vehicle increased $139 compared to $128. New products included complete seats for the cars Pacifica. As well as products that launched during the latter half of 2002 such as our complete seats and overhead overhead system for the Saturn Ion.

European production sales increased $98 million to $373 million as a result of higher average content per vehicle on the strengthening of the pound and Euro. Vehicle production volumes remain unchanged at approximately 4.3 million units. Average content per vehicle increased $87 compared to $64. New products contributing to the increase include door panels for the Toyota Evensus. The cockpit model for the Nissan Micra, the instrument panel for the IB88 and the instrument panel console and door panels for the Jaguar XJ series. Our gross margin increased by 15% or by $16 million to $124 million.

As a percentage of sales gross margin was 12% for the quarter compared to 12.2% for the prior year. Higher startup costs due to lower than anticipated production volumes on certain new program launches, unfavorable product mix and higher customer price reductions have had an adverse impact on our gross margin percentage. Overall our operating income increased approximately 6% to $30.1 million. Operating income at the North American interiors business decreased by $10.9 million to $12.6 million for the first quarter of 2003.

Operating income is adversely impacted by increased startup costs associated with new program launches. Lower vehicle production volumes on certain key programs and lower selling prices. Partially offset by increased sales from higher vehicle production volumes and increased content from new product launches. Operating income for the European interiors business increased to $2.2 million to $2.7 million for the first quarter of 2003.

This increase was due to increased production volumes on certain platforms, continuing operating efficiency at underperforming divisions and lower appreciation expense. These improvements were partially offset by increased startup costs associated with new product launches and increased SG&A costs due to increased production sales and approximately $1million of redundancy costs and higher affiliation fees. Operating income for the closure of business increased by $7.7 million to $14.6 million in the first quarter of 2003.

This increase was due to increased sales from higher vehicle production volumes. And increased content from new product launches as well as the strengthening of the Canadian Dollar to the U.S. dollar. This increase was partially offset by lower selling prices, higher SG&A costs associated with higher production sales, increased affiliation and social fees and strengthening of the Euro to the U.S. dollar which have the effect of increasing operating losses at certain European operations. Diluted earnings per share was 27 cents for the quarter. Up 8% compared to 25 cents in the prior year, earnings per share is increased due to our higher operating income.

Interest expense, equity income and income tax as a percentage of sales remain relatively unchanged. I will now discuss our cash flow. We continue to generate significant free cash. Before financing activities we generated $46 million from operations, $47 million from working capital and spent $27 million on investment activities. Resulting in free cash of $66 million. This compares favorably to the $21 million of free cash generated in the first quarter of 2002. Our cash position improved to $306 million and our debt excluding the convertible series preferred shares was $91 million resulting in net cash of $215 million.

Finally, we increased the declared dividend in the quarter. In accordance with our corporate constitution, our board of directors declared a dividend in respect of the first quarter of 10 cents per share representing a 5 cent per share increase from the prior quarter. I will now discuss our 2003 outlook. As discussed at our annual general meeting today, we are launching many new programs during 2003 including programs such as the Chrysler Pacifica that launched in the first quarter. Cadillac SRX and the BMW 6 series which is scheduled to launch in the second quarter. Ford Free Star, Chevy Colorado, and the BMW-X3 during the third and fourth quarters. As such, we expect strong content growth for 2003 and into 2004.

For 2003, we are expecting full year average content growth of 17 to 20% in both North America and Europe. In North America the growth in the second quarter is expected to be below this range, however. Q4 is expected to exceed this range. The Western Europe anticipated growth is inclusive of revised exchange rates that include a Euro exchange rate of approximately 1.06 and a pound exchange rate of approximately 1.57 relative to the U.S. dollar. We are expecting full year late vehicle production volumes of 15.8 million units in North America and 16.1 million units in Western Europe.

Based upon the volume estimates, product mix and foreign exchange rate assumptions and tooling sales estimates, we expect full year sales of between $4.35 billion to $4.45 billion. We expect full year capital spending between $130 to $150 million. A large part of which is for machinery equipment for new program launches in 2003 and 2004. As in prior years we expect to fund our capital spending programs from cash generated from operations.

Just a reminder, the discussions today contain forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks and assumptions and uncertainties which may cause the company's actual future results and performance to be materially different from those expressed or implied in these statements.

These risks, assumptions and uncertainties include but are not limited to industry [Inaudible] including reductions and increases in production volumes, the company's financial performance and changes in the economic and competitive market to which the company competes, relationships with OEM customers, customer price pressures, the company's dependence on certain vehicle programs, currency exposure, trade and labor disruption, recall and product liability costs, price in concessions and cost absorptions, energy prices and certain other risks, assumptions and uncertainties disclosed in the company's public filings. The company disclaims any intention and takes no obligation to update or revise any forward-looking statements to reflect subsequent information, events or circumstances or otherwise. This ends our formal comments. We will now be pleased to answer any questions.

Thank you. Ladies and gentlemen, If you would like to register for a question, please press the 1 followed by the 4 on your telephone. You will hear a three tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. If you are using speaker phone, please lift your handset before entering your request. Our first question is from the line of Wendy Needham from Credit Suisse First Boston. Please proceed with your question.

Good afternoon.

Hi, Wendy.

Can we talk a little more about North American interiors. Should we expect to see this margin run rate through the rest of the year? Or just into the second quarter? Can you help us out there?

The North American interiors has been impacted really by three things, Wendy. One of them is the product mix on some of our key programs. The vehicle production volumes were down first quarter compared to the first quarter of the prior year. We hope that those programs from our volume perspective will see improvement in the other quarters.

We also launched a number of programs in the first quarter most significant being the Pacifica and some of the ramp up in the volumes on some of the programs were less than we expected in the first quarter. The launches were very successful, but the ramp up wasn't quite what we had expected. And finally we had some price concessions in the first quarter which we certainly hope to be able to offset in the future as we go forward. And we also -- some of the pricing negotiations that are in return of future business opportunities that will have going forward later on beyond this year.

Do you normally take your price hits in the first quarter? Some companies do and others seem to spread them across the year. Do you see a disproportionately in the first quarter or was this year because then you should have seen it last year. So last year's margin should have been depressed as well. Or was this year unusually bad for pricing?

We are basically taking them as we incur them so we haven't front loaded it. Some of the negotiations have just -- are being finalized now and direct back to the beginning of the year so we haven't had a lot of time to try to offset these as much time as we would like. But pricing pressure is fairly intense right now. We have gone through a lot of discussions and I would suspect it would continue into the second quarter. But as we get through later in the year we will see more improvement.

Okay. If I can just ask one other. You combined the closure operations. But in any case the margin improved pretty nicely from last year. Have you made progress in the troubled European closure operations? Was just North America going gang busters? What happened there?

A combination. We launched some new products in the closure in North America but we also made some pretty good headway in our European. We lost as you know last year, a lot of money over there. We are still not where we want to get to in Europe but it's not as bag loss as we had last year.

Okay, great. Thank you.

Our next question is from the line of John Novak of TD Newcrest. Please proceed with your question.

Mike, can you give us a sense of what caused the changes in account's receivable inventory and payables and how that likely looks to shape up in the second quarter?

I can certainly talk to it in terms of days. I think that's a little more meaningful. I think our receivables are pretty much in line for where we are. I think right now we are running at 52 days which is on par. And our payables, we were up over 80 days which we have items in there that we will be paying in the second and probably third quarter. So I think we generated other working capital in the first quarter. We certainly won't see that type of generation out of working capital going forward. I don't expect. In fact, we may see a use of working capital in the second quarter.

Okay. With respect to North American content, was the reason why it was down versus Q4, was that primarily again just mix in price concessions?

Both of those items would have had a factor, yes.

Okay. Thank you. That's it.

Our next question is from the line of JP Benson of CIBC World Markets. Please proceed with your question.

Good afternoon, guys. I guess one for Mike and one for Don. Mike, you indicated what you are assuming for the Euro and pound in terms of your guidance. Can you share with us your C-dollar assumption.

I'm sorry, which dollar assumption?

Canadian dollar.

Yeah, we were at 67 cents.

You are using 67 for the full year now?

That's what was in -- when we do our forecasts, we do the forecast, we build them from the ground up. So when we did that, that was the rates we used at that stage and we haven't adjust it.

Okay. And, Don, a number of new products talked about at the annual meeting today. Some we have seen before like the thin film seats and the headrest. I'm curious when you think some of these may impact the revenue line and if you can update us a little bit on the still relatively new, the alliance with Delphi and if you are seeing any fruits from that in terms of just more quoting activity.

Yeah. Obviously, when I talked at the annual meeting is that this is out in the market and didn't want to give away competitive information on new products. But a lot of the new technologies we were seeing today some we have already landed contracts and they will be coming in over the next two to three years. Some of the newer ones in we get contracts we wouldn't see the production for probably 3 to 5 years, depending on what program it's in on. On the alliance with Delphi, I don't have a quantitative amount, it's still relatively new. But they've got engineers working with our people and vice versa. We are looking at some future quotes as well as looking at what we are currently paying for products and seeing if they can give us lower prices based on either their technology or the amount of buy they have. I don't have the numbers off the top of my head. But, everything I hear internally it's working well so far.

Okay. Circle back a little bit on some of these new products, this membrane seat looks like it could sort of -- don't want to overstate it, but could change the way things are done, at least on certain vehicles. Is this something we could see in commercial production in sort of '06, '07 that kind of time frame.

It could certainly be in that kind of time frame. We have done the testing and we think it's market ready. It will have to be designed into a vehicle. You are looking at '06 by the time you got in there. And you can have a mesh seat you could also cover it with cloth or leather if somebody didn't like the mesh seat it still gives them the thin profile. From the packaging and weight standpoint it helps. On specific programs they would use it as a selling piece to help sell the vehicle. I hope we could get it into production in the '06, '07 time frame.

Okay, that's all for me. Thank you.

Our next question comes from the line of Nick Morton of RBC Capital Markets. Please proceed with your question.

Good afternoon. Having all that cash must be nice but it's a little bit inefficient. What do you plan to do with it?

We worked very hard on operations and we have been trying to take money out of our working capital and we have been successful with that. And we've also been trying to control our capital spending and are able to launch the new products we got. So how do we plan on spending it? We aren't going to spend it unless we have good opportunities. I think we will continue to see a shakeout in the supplier industry given the pricing pressures out there, especially if there is a downturn in the market and we have some people that are stretched financially and aren't making very good profits or growth. I don't know how successful they will be in offsetting the pricing pressure.

If that does happen, then I think there will be more opportunities of takeover work or to buy companies or form joint ventures. I think in the past the expectations from the seller has been higher than we have been willing to pay. On a go forward basis, if the industry does sort of level out, then I think the expectations or the ability to buy something of better value will be there. We have nothing imminent to announce. We are certainly looking at some opportunities either some acquisitions or getting into some new markets. We do have to resolve our flow issue long term. Obviously when we are sitting on cash we aren't going to be issuing more shares. Gives us lots of opportunities to react to things that may come along.

Are there any deals out there that would need all that cash? Any major deals you are thinking about?

Well, there is some potential maker deals. Nothing we are close on. And I don't know if I would be real keen on spending all the cash we got on a particular deal anyway. We are spending a lot of time taking a look at where we want to be product-wise and customer-wise and the competition is out there and what sort of shape they are in so we don't have anything imminent. We're starting to look. I wouldn't have been comfortable doing any sizable acquisitions a year ago because we had a lot on our plate. But I think we were in a lot better shape management-wise and workload-wise. We are getting further along in our launches to take something on bigger.

And to add to that, in any given month our requirement for funding working capital goes through a different monthly cycle. We do have a need for our cash or a good amount of it mid-month as we find working capital.

Okay. That's great. Thank you very much.

Our next question is from the line of David Tyerman of Scotia Capital. Please proceed with your question.

Yes, broad question in the margin area. It seems to me looking at your margins over the last ten or so quarters that you are in the kind of 12ish% range fairly steadily. I'm wondering whether you feel there is room to take that higher. And if so, any sense of over what time frame?

Again, we are always targeting to improve our margins. Again, in different quarters I think historically our margin does vary. I think historically the second quarter usually we have a better margin as a percentage. And as Don alluded to earlier, I think we have had some price reductions retroactive to the beginning of the year. And so we will be as we will be going forward having more of our engineering and purchasing and cost reductions solutions trying to implement those.

As we continue to grow at the rate we are growing and we are growing a lot of new sales which gives us a drag because we are launching a lot of new products with no contributions from the sales yet. Assuming we will continue to grow, we will continue to see obviously some startup costs. But right now we are going through '03 into '04 it's fairly heavy for us and I also think we have a number of underperforming divisions that we will continue to turn around and will help, mainly in Europe but we have some in North America as well. In steady state I would say we keep on improving. But it depends on pricing pressure from the customers and how successfully we are in driving those costs through to our suppliers and offsetting them in engineering.

It sounds to me like we probably shouldn't count on a lot though there are nuances that can occur this year. The price reductions retroactively doesn't occur through the whole year. By and large it sounds like with high growth rates and the give and take of the business it's going to be tough to get margins higher. Is that a fair assessment?

Again, as our top line does grow, our manufacturing overhead costs shouldn't grow at the exact same rate. That should also give us upside on our margin with nothing else changing.

Are you saying you have excess capacity that you will be filling up and that will have a positive contribution?

Again, I wouldn't excess capacity may not be the right word. We certainly think we could improve.

On the intensified costs or customer pricing, is this likely to be a drag do you see going forward? It seems like it was in the quarter. Is this a one off or is this -- have things got worse and could they continue to accelerate on what you are seeing right now?

Well, hopefully they won't get worse than they are now, we get reductions and it stays on a go forward basis unless we can offset that. Typically we are able as we get further into the year to offset some of it. But pricing pressure I think is here to stay in the industry. And hopefully it won't get any more intense than it already is and we have to try and keep on-offsetting it. As we launch new programs it falls to the bottom line.

Fair enough. Can you give some idea roughly of how much unusual impact you think there was in the quarter from the intensified pricing pressures and also the lower than expected volumes on some of the launch programs?

I don't think we will get into that level of detail.

Better way to put it, was your margin materially impacted by this? By many tenths of a percent or is this fairly nominal.

I think at the end of the day our margin as a percentage of sales was 12% for the quarter compared to 12.2%. That is a change. But I wouldn't call it an overly drastic change.

So it sounds like what you are saying is that these affected you but not dramatically?

Yeah, I guess so.

Tax rate, you being at the high 40s range, the high 40s, is this sort of where we are for the time being?

Again, I think our tax compared to the first quarter of the prior year rate if you take away the nontaxable amortization is slightly lower but we do continue to have losses in jurisdictions where we aren't benefiting the losses.

Do you have a sense based on your plans where those are going? Where the tax rate is going? We should use in planning and modeling.

Other than it's decreasing, I'm not going to be giving a target percentage, though.

Okay. Fair enough. The equity earnings have topped off in the last couple of quarters. Are we at some kind of new sustainable run rate in that area?

Sorry? Could you repeat your question.

The equity earnings have popped up in the last couple of quarters. You are starting to generate earnings there. Are we at some kind of new run rate on that?

I think what we generated in the quarter is probably a reasonable number. I think it was $300,000. It's not that dramatic a figure.

No. Fair enough. Mike, you gave a couple of assumptions I didn't catch. The Euro that you are using in your planning and the Sterling.

Yeah. I think the Euro was $1.06 and the Sterling was $1.57.

Thank you. And the Pacifica volumes, will they be -- at what run rate do you expect to see them in Q2? I think they were 5,000 units in March.

Give me a second here. I'm just trying to find my sheet here on volumes. I don't have that handy here, David. I will have to get back to you on that.

That's great. And two last questions. The X 3, what exactly are you providing for that vehicle?

In the luggage room area, we are doing the area, the luggage room of the vehicle and we also have some other interior trim on it.

And is it material and content per vehicle. Can you give us anything on that?

We don't talk about our content per vehicle on vehicles. Certainly until at least they are in production.

Fair enough. And the last question, Asia, you have one plant there I believe so you are actually one of the magnet companies that have some real sales there. Can you give some sense of where you see your strategy going in Asia?

I say three stages. Let's talk about China and it's probably one of our focuses right now. We have a number of people on the ground there now looking at buying components over there and we see some opportunity to get reduced prices and we have been in the process of making sure we've got good suppliers and tooling capability and everything else. But the first stage would be to lower our purchase cost by buying componentry over there.

Second, and we are starting to look at that now would be, do we want to manufacture ourselves to ship back so that we can continue to get the cost savings but also experience over there and we've got some product lines that the customers would like us to supply them over there. If we can get into production on products we ship back to ourselves, and the third stage would be to add more capacity, manufacturing capacity to try to take advantage of the growing market there. Don't want to get in there too quickly. We were making good headway in looking at purchasing opportunities.

Also in Asia we are having discussions with potential partners to make sure that we can supply product mainly in North America to the Koreans, but also taking advantage of their success in the market.

Okay. On the production side, it sounds like you don't want to move too quickly. But it is something that customers are already asking for?

Yeah, there is opportunities, but we have a lot on our plate and I don't want to rush over and put a lot of assets in the ground right now.

Is there a risk that you get left behind by Johnson controls and some of the other big players here?

Depends on the product line. First in theory, you get contracts but everybody is established over there and there's going to be a big market. I don't think we will be left out.

Okay. Fair enough. Thanks very much.

Next question is from the line of Peter Sklar of BMO Nesbitt Burns. Go ahead and ask your question.

Going back to this decline in your operating profit in your North American interior segment, it was quite dramatic especially when you look at it quarter over quarter compared to the fourth quarter. Now, you provided the three reasons that accounted for, mix, launches and price concessions. Was there any one of those three factors that out weighed the other? Or was it pretty well -- each was contributing? I'm just trying to get a better understanding of how you can experience such a, you know, that's a pretty hefty decline.

Well, I think clearly each of the them are contributing. I'm not going to rank I think any of them, Peter. I think it's the description of why the profitability is declined is probably as much detail as we will give.

And when you talk about mix, your first factor, mix on key programs, are you referring to the minivan?

The minivan for the first quarter last year to the first quarter this year was down by 5%. Yes.

Offsetting that all your other top programs were pretty well up.

We had other programs that went the other way.

And, Don, one thing I don't understand about what you are say being price concessions. One of the issues with the price concession is that you reached a resolution with your customer at the end of the quarter and was retroactive to the beginning of the quarter so you didn't have time to do anything about it. I would think you are always looking to reduce your costs. What is it about the fact that you have taken a price cut that put you in a stronger position to get further price reductions? Is there a element of passing it down the line? Is that what you are talking about?

Well. partly. And I guess partly is where you put your focus and if we are going to be giving pricing to our customers and part of that is that we want them to be working hard and pushing any cost savings suggestions and there is typically a delay. In theory should there be delay? No, because we always work on it but human nature when you are looking at reducing costs and it will be equally shared all the way down the chain and we expect the customer to try to work on implementing some of these cost savings suggestions to counter it.

And just following up on the pricing issue. I think you have said that pricing pressures have intensified or remained intense. Is your sense that you are giving back more now than you did say last year?

It's been difficult for a number of years. It depends on the programs and the timing and depends on what they are offering as far as future contracts and what we are willing to move on. It's tough and is it tougher? I don't know. Everybody is under a lot more pressure because of the amount of incentives out there with the car companies.

That's all I have. Thank you.

Our next question is from the line of Fadi Chamoun from UBS Warburg. Please proceed with your question.

Good afternoon, gentlemen. One question is you usually talk to us about five under performing plan and three on the European side. Can you give us some update on where we stand? I know the last quarter you told us we were almost break even on a combined basis.

I would repeat that same comment and compared to the first quarter of the prior year we improved.

And do you expect improvement on the European side going forward but particularly from these plans?

In our interior segment we did have improvement in the quarter and Europe and that's where the underperformers are in Europe, in that segment.

And can you break down for us the margin on the European side between the interior business and the closure business. Some details on how they both did.

Our segment breaks down our interiors business between Europe and North America as Don talked about, at the beginning of the call, our closures business we restructured and we are running that on a global basis. Going forward and that's the way we will disclose it.

Okay. Last question is on the GMP-900 program. How did the economics of this program change after the last announcement that you made and especially given that you have the smallest content in terms of manufacturing on it? Does it still make sense for you to be the program integrater now?

Yeah. The program integration isn't directly linked to supply. So we will continue to be the integrater. We think the customer is very happy with the integration work we are doing in all the programs including that one. We historically never talk about what we hope to win in the future. That was brought out -- we did an estimate a couple of years ago because General Motors announced how much it could be worth and we wanted to clarify that.

We still won a significant chunk of business in the range of $200 million to date on the 900. We weren't successful in getting the uplevel door panel which is the bulk of the business on the door panels. We are still courting some other business. However, with GM we won a lot of other interior business. Overall we are quite pleased with the amount of business we won and will be launching with GM on that program and other programs. It won't change our position as integrater.

And is all the content under the program been allocated now? Are you hoping to get more or are you going into more content on this program now?

Everything hasn't been awarded. Who knows if we will get more or not. We are always courting on lots of different programs including the 900. Hopefully we will win some. But I don't want to speculate on what we win and what we won't win on business that's not awarded yet.

Great. Thank you.

Our next question is a follow-up question from the line of John Novak of TD Newcrest.

Mike, with relatively flat volumes in the second quarter versus the first quarter of this year, are we still going to see the seasonal margin uptick that you usually have from Q2 versus Q1?

I hope we will see some uptick but I wouldn't expect certainly where perhaps the movement that we had in the past to be repeated and that's from the perspective of again we are launching a lot of significant programs in North America that really will add to our topline growth in the latter part of the year.

But we should still see some improvement from the first quarter, is that correct?

We are going to do our best.

Thank you.

Our next question is a follow-up question from the line of David Tyerman of Scotia Capital. Please proceed with your question.

Just following up on that question. Why would there be a seasonal uptick if the volumes are relatively unchanged?

Again, as we talked about on other calls, David, it's very dependent on the mix of the volume. So depending on where we in our forecast believe the mix will come from. To have an impact.

So is this normal that in Q2 your mix is richer for you?

Historically Q2 has been a strong quarter for us on our content per vehicle, yes.

And margins? I'm wondering is it just because normally Q2 has high production volumes so your margins go up because you are shipping a lot? Or is there something unusual in Q2 that causes the margins to go up anyway?

Again, let me just clarify to make sure there is no misunderstanding with the comments that we made with John. When I am talking about an uptick, I'm talking about an uptick compared to the first quarter of this year. So quarter over quarter as opposed to an uptick compared to the second quarter of the prior year. And again if you look at historically, sales in our second quarter compared to sales in our first quarter, they have been stronger. You just, in your fix cost base you just get a better utilization in your fixed costs.

Right, but the reason for that is normally there is higher production in Q2 than Q1 but that doesn't look like the case in this year. Why would the margins go up on that basis? That's essentially what I'm asking.

Again, it would depend on our mix.

But the mix doesn't normally change from Q1 to Q2, does it? In a normal case.

Well, I don't know how else to answer your question, David. We have many different programs so in our forecast we build our forecast up based off of different programs. In the buildup of our forecast right now, the mix is what it is.

It wouldn't be something that we expect to see year after year, but in our forecast it's just the way it's turning out.

Your mix is stronger this year it sounds like, is what you are saying?

You can conclude that.

Okay. That's what I'm concluding then. Thanks.

Ladies and gentlemen, as a reminder if you would like to ask a question, please press the 1followed by the 4. Gentlemen, at this time there appears to be no further questions.

Okay, appreciate everybody calling in and for your interest. Thanks very much.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.