This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk08: and we expect further improvement in the coming quarters. As discussed on previous calls, this erratic production environment over the last year or so has made it difficult to adjust or flex our labor in real time, resulting in poor absorption of overhead costs. With some recent improvement in production environment, we are seeing some relief on this front. As always, we continue to execute on our Martin Ray Operating System, or MOS, initiatives And we continue to see a lot of opportunity here. As I've said before, we are still in the early innings of what we can achieve on this front. Finally, we are making great progress on new program launches. We expect our launch activity and in turn launch costs to continue to reduce as the year progresses. With that will come improved margins. The key is a continued reduction in short-term disruptions from our customers. To sum it all up, we are making good progress toward our 2023 outlook. and are right where we expect to be at this point. And we are anticipating an even greater improvement in the coming quarters. Quickly, I want to say a few words about VoltaExplorer, our 50-50 JV with NanoExplorer aimed at commercializing the production of graphene-enhanced lithium ion batteries. VoltaExplorer held its battery day on April 5th at our demonstration facility in Montreal. The event was well attended by analysts, investors, and government representatives, which speaks to the level of interest in the project. The day consisted of a tour of the demonstration facility, as well as presentations and technical discussions by management. The presentation is available on our investor relations section of our website for those that are interested. To summarize where we're at, the demonstration facility is up and running and producing batteries. Our technology has been validated internally and by third parties. and confirms the advantages of graphene-enhanced lithium-ion batteries over existing technologies, which include greater capacity, longer life, and faster charging speeds with enhanced safety. We remain on track with our expected milestones and anticipate that we will proceed with building a 2-gigawatt-hour facility to start production in 2024, conditional on validating the project economics, obtaining financing on favorable terms, and completing site selections. We expect to make this final decision over the next several months. With that, I'd like to thank the entire Martin Rea team for their continued dedication and commitment in these challenging times. And with that, I'll pass it to Fred.
spk02: Thanks, Pat, and good evening, everyone. As Pat noted, our first quarter results were much improved sequentially as we benefited from a more stable production environment with a lower level of chip-related production shutdowns and customer call-offs during the quarter. While we continue to face headwinds from supply shortages, cost inflation, and higher than normal launch activity, our expectation for results to be better in the first half of this year, followed by a further recovery in the back half of the year, appears to be on track thus far. As supply chain bottlenecks improve and our launch activity normalizes, we believe 2022 will be a transition year to a strong multi-year period of strong volumes, sales, margins, and free cash flow, and our Q1 results are a positive data point that gives us confidence that this will be the case. Taking a closer look at our performance quarter-by-quarter, production sales were up 30% on industry production volumes that were up 6% in our core North American market. Our sales growth uppaced overall market growth materially, given a positive mix, as programs that were most impacted by the production shutdowns of previous quarters also saw more pronounced recoveries as production began to normalize. These include programs such as the Chevy Equinox in Sierra and Silverado large pickup truck platforms that we have discussed at length on previous calls. Adjusted operating income margin came in at 3.8%, a marked improvement from the losses generated in the previous two quarters, and representing incremental margin on production sales of 19%. Some will lower than normal for us due to the continued inflationary cost pressures we are facing in energy and material, including freight costs. Tooling sales declined during the quarter, off an unusually high level in Q4, and as such, total sales were up just under 10%. Adjusted EBITDA of $112.4 million was up almost 80% quarter-by-quarter, a notable achievement given the persistent industry challenges that we continue to work through. Free cash flow was negative in Q1, reflecting the timing of working capital flows for both production and tooling-related capital. As noted in the past, Tooling-related working capital, in particular, can be lumping and unpredictable between quarters. Seasonality is also a factor, as we tend to harvest working capital in Q4, but we tend to deploy it in Q1. Looking at our performance on a year-over-year basis, first quarter adjusted operating income and EBITDA results were generally consistent with year-ago levels. Recall that Q1 2021 was the first quarter that we began to feel the impact of chip and other supply shortages on our operations. Of course, we expect our results to surpass these levels, getting back to our pre-COVID performance and expectations. Turning to our 2023 outlook, we continue to expect to achieve total sales, including tooling sales, of $4.6 to $4.8 billion, an adjusted operating margin exceeding 8%, and more than $200 million in free cash flow. We're off to a good start in 2022, as our Q1 results demonstrate, and we expect further improvement as we progress through the year as supply conditions and launch activity normalize, and we get some relief on the cost side through some combination of input cost normalization and our cost recoveries through commercial negotiations. As Pat mentioned, demand for vehicles remains robust, and inventories continue to trend near an all-time low. We should support strong industry production volumes for several years. We also expect our own sales growth to outpace industry volume growth, given the substantial amount of business that we won in the recent years that we continue to launch on. Finally, our capital spending is expected to decline to a range approximating depreciation as a percentage of sales in 2023. Two main drivers continue to be second generation programs and our flexible well lines, which require less capital than their first iteration. and getting past their heavy investment cycle on aluminum. This is one of the key drivers underpinning our outlook for over $200 million in free cash flow in 2023. Our track record of delivery on our financial target speaks for itself, and we are confident that this will continue to be the case as we deliver on our 2023 outlook. Turning to our balance sheet, net debt increased quarter-by-quarter to $922 million in Q1. Our net debt to adjusted EBITDA was 3.3 times at the end of the quarter an increase from approximately 3.1 times last quarter. An increase in non-cash working capital, both production and tooling related, reflecting the timing of working capital flows as previously discussed, contributed to the increased debt levels. Overall, we are comfortable with our balance sheet position and expect to remain well within the covenant stipulated in our amended credit agreement with our lenders that we announced last quarter. And with that, I now turn you back over to Rob.
spk07: Thanks, Fred and Pat. Just one further note from me. Our AGM will occur on June 7 and proxy materials will be posted shortly. We'll have a live in-person meeting and hope to see some of you there. We'll give some presentations on the status of our industry and company. And as the AGM will be close to our all-field facility, we are open to providing tours to those who can make it subject to overall numbers. There are some really exciting and innovative things happening there. And with that, we conclude our formal remarks. Thank you for your attention this evening. Now it is time for questions. We see we have shareholders, analysts, and competitors on the phone, also some employees, so we may have to be a little careful with our answers, but we will answer what we can. Thank you for calling.
spk01: Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your hands up before making your selection. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2. So please press star 1 at this time if you have a question. There will be a brief pause while participants register. We thank you for your patience. Our first question is from David Ocampo from CarMax Securities. Please go ahead.
spk09: Thanks. I was wondering if you guys can give us an update on how we should be thinking about the uses of free cash flow, especially as we head into 2023 with that big $200 million-plus guidance. I was just wondering if a bulk of this could be reinvested into Vault Explorer, just given the rollout of their facility, or should we be thinking about this $200 million as more potential for paying down debt or even shareholder distributions?
spk07: That's a good question. We're looking forward to getting to that position. I think probably initial focus would be on paying down debt. We have revolving lines and any free cash flow would do that initially. It's not clear in the context of Volta as to whether we would invest or the extent to which we would if we do. We're in the midst of looking at financing alternatives there and working with our partners at NanoExplore. We're very excited about the future for that, but we're certainly not necessarily going to put our free cash flow there. And I think there's other potential uses of that as well. But we're looking forward to positive free cash flow and strengthening our balance sheet, first of all.
spk09: That's helpful commentary. And then my second one here is just following up on the inflationary pressures. I guess maybe for Pat, when you guys are negotiating new contracts with customers, are you changing the way that you have pass-through provisions within the contract? So if costs move up or down, both you and the customer are well protected, or should we think about the old automotive contracts as kind of status quo?
spk08: Well, for new quotes, we're certainly using the newer numbers that are out there today, but a lot more focus on indexing, you know, components and those types of things that can be indexed. You know, some of these costs may be more short-term, like energy costs may not, you know, go on for years and years. So, you know, there's options such as quarterly reviews and those types of things that have been discussed. So, There is a method for every one of the inflationary items out there currently, and we've been tapping into all of them.
spk09: And I guess for your current contracts, do you expect the negotiations to be wrapped up prior to 2023, or could that potentially be a risk for your 8% margin target?
spk08: Based on our rate, I would expect we'll be pretty much wrapped up this year.
spk09: Okay, that's it for me. Thanks a lot, guys. Thank you.
spk01: Thank you. Next question is from Mark Neville from Scotiabank. Please go ahead.
spk06: Hey, good evening, guys. Hi. Hi. Pretty impressive quarter. I guess I'm just – I can understand how sales were up sequentially and just year over year I think was pretty surprising. Is it really just mixed instead of regional weighting?
spk02: I mean, at the end of the day, that's really what it comes down to. General Motors, for example, is our largest customer, and we have quite a bit of content on some large platforms there. And if you look at their production volumes in the back half of last year, they were impacted more so than most. And then we saw a fairly rapid recovery as we embarked on 2022, and we ended up in a very – I'm not saying a perfect situation because all the customers were still experiencing production shutdowns, but as it relates to certain of the key platforms, the ones were actually quite strong and stable.
spk06: Okay. In terms of... I'm just trying to... Again, when you talk about further improvement to margin in the second half, some of it's predicated on supply chain, which is also the launch cost. I guess I'm just trying to understand how material... the tailwind from lower launch costs will be, just because supply chains are still quite uncertain. Maybe just trying to isolate what's in your control.
spk08: So as far as launch costs goes, as I've said the last two calls, we've had a significant amount of launch activity, more than we've ever had before, and in a very difficult time, especially when it comes to resources. So the costs have been higher than normal because of those two things. But they're receding as the customers smooth out their launch curves. One of the problems has been as a customer launches, they have a specific launch curve. And in normal times, we can follow that curve with our headcount and our cost. And as the volumes go up, then our margins go up as well. But it's been very erratic for some of our biggest launches because, as I said last time, they'll run two or three days and then suddenly stop. In the past, you could lay off people. You could send people home. Even for a few weeks, you could manage those types of things, and they weren't nearly as frequent. But today, given the employment situation, especially in the United States, if you do that, then they don't return to work in a lot of cases because there's so many jobs out there. So we've had to manage it much different. But, again, you know, they're improving. We're seeing steadier pulls from our customers on the new launches. And as that happens, our costs become more in line. You know, we get more stability. It's still going to take some time for some of them. Some of them are still really struggling in certain platforms. As far as material and those types of things, our logic here is that when we negotiate with a customer X cost for a component or a part, material is spelled out, overhead is spelled out, labor rates are spelled out, and so forth. So the intent from the customer is that a lot of this stuff becomes pass-through, especially material. So the materials have changed a lot, and so our discussions with our customers are, you know, that's still got to be passed through. And so far we've had a lot of cooperation with a lot of the customers, and we're making some good headway. One of the issues, or I'd say two of the issues, are a little bit more difficult to wrestle through. One would be logistics, because a lot of this inflationary cost is transportation, and that's a little tougher because it's erratic to some extent, and energy. especially in Europe. As I said, energy costs in Europe are seven times higher than they were a year ago, and they're affecting everybody. So those are a little harder to wrestle through, but we are making good progress.
spk06: So when you're talking with your customers about recoveries and material costs, is that retroactive or just sort of on a go-forward basis? Like, let's reset and we can earn a normal margin. You're not trying to recover...
spk08: I would say it's not a standard approach. It's dependent on the platform, dependent on the customer, depending on the situation, things the customer needs, things that we need, and it's all negotiation. There is no single path for all customers or platforms. Every deal has been a little different. That's right.
spk06: Yeah, okay. That's understandable. One last question, I guess, just Energy prices in Europe, again, I can understand they're way up. How material is that? I don't know, as part of your cost structure, what percentage is energy, more specifically Europe?
spk02: Yeah, and I'll provide a little bit of guidance on the overall impact of the inflationary cost increases because I did comment on it when we followed our third quarter. We had quantified at that point about $40 million annualized. When we filed Q4, I noted at that point that it had increased further, and since then it has increased even further, largely related to energy, which has jumped even more substantially since the conflict in Europe started in February. And at this point in time, that magnitude is sitting at somewhere north of $100 million annualized, and as we noted earlier, We are actively trying to recover some of that from our customers, and we have some success there. So there's some positive momentum in that. And then there's also an expectation that at some point some of these costs will normalize later this year.
spk06: That's super helpful, Fred. And I guess just to follow up on David's last question, again, talking about going into 2023 with sort of the negotiations done, I mean, a way to think about it, that sort of a big chunk of that $100 million tagline is not there next year. Again, you might not recover it, but it's not there next year.
spk02: That would be the assumption, yes. Right.
spk06: All right, thanks, guys, again. Good job on the quarter. Thank you.
spk01: Thank you. Next question is from Michael Glenn from Raymond James. Please go ahead.
spk03: Hey, thanks for taking the question. Just to go back on to the sales volume in North America, like when we look at it on a platform by platform basis, are there any, like on the Equinox platform, is there notable content per vehicle change between Q1 this year and Q1 last year?
spk02: No, that's a fairly mature program, so it would be the same.
spk03: Okay, and same on Silverado, it would be similar type CPV overall?
spk02: Yeah, Silverado would have launched before 21.
spk08: But Silverado is adding capacity. Remember, they've launched in Oshawa. So they are building Silverados at a higher volume than previous. But our content on that increases the same. Contact for vehicles.
spk03: And when you think about the production sales in North America for the quarter at $824 million, I mean, all else being equal, it's going to bounce around a bit quarter to quarter, but you would generally expect it should stay in and around that type of level through the balance of the year?
spk02: Well, I guess time will tell. I mean, there's still some instability in the volumes, particularly with certain customers, so we're keeping a close eye on it. but I don't see it at this point dropping drastically from those levels.
spk08: I think there's actually more opportunity because if you look at the percent of the launches that we're having, the majority of them are in North America. So the benefits, we should see some benefit as some of those launches that are struggling with our customers start to smooth out.
spk07: The general trend line is up.
spk03: Okay. And then just in terms of, are you able to give some updates for CapEx guidance for this year, 2022?
spk02: Yeah, at this point in time, no change based on my comments on the last call. Essentially consistent year over year. As we head into 2023, as we noted in our guidance, we expect our CapEx to decrease year over year. And where we sit right now, nothing has changed.
spk03: Okay, and then any thoughts on working capital through the balance of the year?
spk02: Well, obviously in Q1, we saw an increase, as I noted in my opening remarks. We generally see that happening in Q1 based on seasonality. Of course, we also had a surge in volume in Q1 as well, so that contributed to the working capital increase. But I'm expecting by the end of the year, based on seasonality as well, essentially to normalize back again. So it's a typical trend on what we see on an annual basis as it relates to working capital. So nothing unusual from where I sit.
spk03: So would you think that you could have a flat working capital year?
spk02: It really will depend on where we land on tooling, and that's the one element where it's not as predictable. It kind of jumps up and down. Right now we're actually sitting at actually around a flat working capital as it relates to tooling. So that's going to be the one flyer, but I don't see it increasing too much year over year, but we'll obviously keep an eye on it and manage it.
spk03: Okay. And then can you give a comment? as to where you stand with Matelsa? Can you update us? I can't remember exactly the last guidance that you gave with respect to what the contribution from Matelsa should be, but can you give an update as to how we should think about that?
spk02: Yeah, we're generally on track there. So I think we said for 2022 it would be flattish, and then we'd be positive in 2023. So the one headwind that we're dealing with right now is the inflationary cost pressures, and the Matassa plan in Germany in particular has been hit hard by energy. So we're working through that. That's kind of masking some of the progress there. If you take that out of the equation, we're on track. If not, maybe slightly ahead.
spk08: Yeah, I'd say if we didn't have the inflationary costs, we would be slightly ahead of plan post-pandemic. Remember, we kind of pushed off some of our activity earlier. due to the inability to get resources there. But once we got back into our cadence, I'd say we're slightly ahead. I actually visited there last month, and I was pretty pleased with what I saw.
spk07: And there's a tailwind with our Mexican operations, too. So the higher North American volumes are helping us there. And of course, with Tuscaloosa, that's a big launch for us, and that's on track.
spk03: And your customer base over in Europe, are they When you have conversations with them, how do they think about or how do they feel about the rest of the year in Europe?
spk08: From a volume point of view, they still seem pretty positive, at least the ones that are able to build and aren't dependent on parts from Ukraine, let's say. VW has been affected a lot by that. We don't have a lot of VW work. We have some. But we're in some higher-end vehicles, some of their EVs. For both BMW, Daimler, they're still pretty positive. In the case of some of the others, it's not quite as clear. But we haven't seen a drastic volume impact at this point. Just costs have affected, again, energy being by far the greatest.
spk07: At the same time, we were talking about regionalization. North America is pretty strong. I know that the markets go up and down a fair bit, but we think the underlying economy is pretty strong, especially in the United States. And so North America is, I think, pretty bullish from an auto industry perspective. There's no question in Europe there's a lot of uncertainty. And so, you know, we're... We're pretty happy to be flattish in the context of where it is, but we think the European situation is more likely to get better than worse.
spk08: Yeah, I visited again our German plants last week, and they're really banging it out right now. For the first time in at least one of the plants, the need for people has come up this last year or this last few months. So I haven't seen, from a volume point of view, a big change. Okay, thanks for taking the question.
spk03: No problem.
spk01: Thank you. Our next question is from Krista Friesen from CIBC. Please go ahead.
spk00: Thanks for taking my question. I can appreciate that we'll hopefully see some improvement in the back half of the year, but I was hoping you could kind of speak to some of the puts and takes in Q2, and if you think that could end up being worse than Q1 just based on the fact that there's a real possibility in Q2 we could see the full quarter, could see the war in Ukraine, or will that be offset by the fact that you've been able to renegotiate some of your contracts?
spk08: Yeah, I would say, you know, let's neutralize the war for a moment and just say it stays as is. I would expect I can't say sales-wise whether it would be as high or not, but the improvement activity from an operational point of view, the launch, continuing issues and costs receding some. Again, it's somewhat dependent on the customer's ability to meet their curves, but we're seeing improvement there. And then our... you know, work with the customers on inflationary costs and that progress is continuing, I would expect all those to be positives for us. Not understanding exactly where sales is coming in. Now, there's other, you know, headwinds such as aluminum costs, as you know, have gone up. That's on an index and it corrects itself over time. But those kind of things, we're not sure where they're going to land. But, you know, that's my two cents. I don't know, Fred, if you have a different view.
spk00: Perfect. Thanks. And then I was just wondering how you're thinking about mix. It sounds like you're on some very successful programs right now, but from what I've heard, the OEMs have been prioritizing their higher margin vehicles, which tend to be the larger pickup trucks, and eventually we'll see the mix shift back to something more normalized. Do you see that impacting your earnings?
spk08: Well, we've seen in the case of GM, for example, they've been pretty much running across the board. I won't say their chip issue is corrected, but it's a noticeable improvement over the previous two quarters. Some of the other customers are still struggling. There's a little bit more hit and miss. But I don't see it getting worse. I think you're going to see that situation get better. Now, if they're impacted negatively by the China lockdown, which may have some post effect, if there are parts that aren't coming when they should be or something, we don't see that. But I think it's good. going to get better, not worse, for the other customers. And where GM's at right now, as an example, who's our largest customer, is frankly as good as I've seen it in two years.
spk00: Great. Thank you. Congrats on a good quarter, and I'll jump back on the queue.
spk08: Thank you. Thank you.
spk01: Thank you. Next question is from Peter Scalar from BMO Capital Markets. Please go ahead.
spk05: Pat, you've kind of answered my question, which was on aluminum. So as you know, I use a lot of aluminum because of Hansel and your other casting operations. And like I understand, like you get trued up by the customer and there's all these formulas and things in that. But I find sometimes there can be leads and lags. And I'm just wondering if there are any distortions in Q1 or like were there any leads and lags or anything to note about the Q1 adjustments?
spk02: As it relates to Q1, nothing significant. So there was really no positive or negative there. But based on the current trend now, the price of oil has in the last couple of weeks come back down a little bit. So depending on where it lands, the impact could be bigger in the second quarter and likely negative. But it's hard to tell how significant that is at this point.
spk08: We're kind of buying ahead. So where the price is today is two or three months out for our utilization. It's kind of like oil. You know, whatever the price of the barrel is today isn't necessarily affecting gas right away. So there is a lag internally as well as externally. Right. And, like, are you protected in all your aluminum, or is there some... Yeah, I mean, the far majority of our material is protected. It's just that when it comes to steel, which is what we use the most of, it's protected in a much shorter time frame than aluminum. There are some... Some materials, aluminum materials, a few, and some steel products that we take care of ourselves, but the far majority are covered.
spk05: Okay. And then just lastly, Pat, I just wanted to ask you, so, you know, you had this really strong recovery of operating earnings in North America during the quarter, and like, what do you think was the larger factor? Was it like the revenues you generated from the favorable mix, like the revenues came in very strong, or was it you know, the more stable operating environment where you just didn't have, you know, that customer's stop-go kind of production schedules? Or is it really hard to, you know, figure out? It's hard.
spk08: They both contributed. The mix contributed. The volume contributed. And we certainly have seen some improvement on the operations. But we're still getting poked a bit on operations with some of these launches, again, because of the unsteady pull. But I expect that's going to get better, like I said earlier, and it has definitely gotten better since last year. So it's just moving, but it's moving slow. And then lastly, you know, the commercial negotiations. You know, we've been working very hard with our customers in correcting some of the cost picture, and that's helping as well.
spk05: So you felt that in Q1 then?
spk08: A little bit, yeah. Yeah, certainly a little bit of it.
spk05: And Pat, the thing I don't understand, when you talk about this more stable operating environment, you keep referring to how that's helping your launches, but that should help all your production, not just programs that are in launch, but mature programs as well.
spk08: So if you take a look at our programs that have been stable, sales were very good on those this month. Most of those are this quarter. A lot of those are GM programs. a lot of our launches are big programs. Some of the big programs that we've been talking about, but the pull from the customer has been unsteady. So again, you know, we run in two or three days and then stop and run the next week and then stop and you're carrying all this overhead and all these people, you're not getting that, that smoothness in the operation. And when you don't have that, there's excess costs built in. You have extra people, And you try to cut some of those costs down by taking some of the people out, but then they don't come back, as I said. And it really is difficult in the operation to get the cadence going when you don't have steady pull. In some of these launches, our customers are struggling to have a steady pull, whether it be chips or something else in their supply chain. But it's better now than it was last quarter, and I expect it will continue to get better. So we'll continue to see improvement in that.
spk05: Okay. And you haven't called out any particular launch issues, which, as you know, often arise. So I assume you're happy with the launches. There's nothing significant to report there.
spk08: Yeah, the launches themselves, again, you know, we had our struggles in the front end of it with lack of resources, like I said. But now it's more... you know, this steady state that we're lacking. And, you know, again, I'm expecting that to get better. But, yeah, I'm a lot more happy with where we're at today than we were a year ago in some of this. And a lot of it, frankly, was resources. We just couldn't get enough people. And I don't want to paint the wrong picture. Resources are still really tough, especially in the United States. It's still really tough. And people are working very hard to you know, to manage the day-to-day. But that's not unique to us. That's across the board for the supply base.
spk05: But, like, when you say resources, you're talking about engineering, or are you talking about, like, you know, people on the plant floor making the stuff?
spk08: In our case, it's more plant people, for sure. But some of those plant people are technical people, too, right? You know, whether you have machine repair controls people, die makers, those types of things. And, you know, again, it's getting better, but it's been very, very tenuous at times. But better today than it was a year ago by far.
spk05: Okay. Thanks for your comments, Pat.
spk01: Thank you. Next question is from Brian Morrison, TD Securities. Please go ahead.
spk04: Thank you, Fred or Pat. I just want to make sure I understand the PASA 2023 outlook slide. Okay. When you talk about the $40 million annualized going to $100 million annualized, that's all three buckets of material, labor, and energy, correct, with the recent increase just simply due to energy?
spk02: Yeah, that's correct, yeah. And the two largest pieces of that are material and energy.
spk04: Right. So with some recovery at that point in time, $100 million annualized and inclusive of Q1, that's where we currently stand, correct? Correct. Okay. So from a recovery standpoint improving, we're sort of past the peak. of that cost pressure.
spk02: We're still seeing some movement.
spk08: We're still seeing a bit of a movement target. That's why we really work hard to try to get things on indexes so we can pass them through a lot easier, but not all components work that way. It's not as erratic as it was, but there is still movement. Okay.
spk04: But when I look at the next bucket, then you get to the operations, customer production, and efficiencies section, the flex in the labor at this point in time, it would seem that we're sort of past the peak in that bucket. Is that correct?
spk08: It's more stable than it was a year ago, as I said. It is not optimal yet. It's still a struggle. Some states more than others, frankly, but improving. We're finding all kinds of very unique ways to get people to work and stay at work. And I've been very creative. I've been pretty proud of some of what the team has come up with to help ourselves out.
spk04: Okay. And in terms of heavy launch cycle, do I understand that correctly that we should see normalization in the second half of 2022 or is that more into 2023?
spk08: I'd say the later, the latter part of 2022, I would expect most of these launch curves to be pretty steady. Well, when we say get back to normal, we're always launching something someplace. So there will still be launches, but this very high volume of launches will be reduced for sure.
spk04: So when do you see that normalizing? Is that second half or is that later? Second half.
spk08: I'd say mostly second half. We should be at normal levels by the end of the year.
spk04: Yeah, yeah. Okay, thank you. That's helpful. And then just the last question, sort of a housekeeping question. What was the program that had the cancellation that had the restructuring charge?
spk02: I didn't hear the question. CAMI. So General Motors announced a number of months ago that they were going to cease production of the Equinox in their CAMI facility in Ontario. And we had some work on that platform, and it resulted in a right-sizing one facility and actually a closure of another that were in the process of doing.
spk08: Now, GM makes that vehicle in three plants, so they're consolidating. And so we still have the business. We just have it in a different location.
spk02: Yeah, they're going to continue making that vehicle in Mexico. Yeah. Out of two facilities.
spk04: Understood. Okay, that's all I have. Thank you very much. Thanks.
spk01: Thank you. Once again, please press star 1 if you have a question. Next question is from Benny Hickett from TI Financial. Please go ahead.
spk05: Hi, I actually wanted to ask a question, but Peter asked identical questions, so I'll go back in the queue.
spk07: Thank you. I guess we answered. Yes.
spk01: We have no further questions at this time, Mr. Svoboda-Boas. I'll return the meeting back over to you.
spk07: Well, thanks, everyone. Thanks for spending part of your evening with us, and we hope that we've informed you well. If there's any follow-up questions, feel free to give us a call or Neil Forrester a call at the numbers in the press release, and have a great evening.
spk01: Thank you. Your conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
Disclaimer