Martinrea International Inc. (MRE) Earnings Call Transcript & Summary

Good afternoon, everyone. This is Edison Yu from the DB Autos team, and we are pleased to welcome Martinrea to the conference. Just a brief introduction. Martinrea is a Canadian-based Tier 1 auto supplier, focused mainly on the design, development and production of lightweight structures and propulsion systems for light vehicles across the globe. The format of this session will be a presentation with slides that should be visible in your webcast window. Then we will use any remaining time for Q&A, and I encourage anyone listening to submit questions online. With us today from the company, we have Pat D'Eramo, the CEO since 2014. Pat was previously at Dana, where he led the commercial vehicle group. And we also have Fred Di Tosto, the CFO since 2011. With that, I'll hand over to the team.

Good afternoon. This is Pat. If you go to Page 3, we'll start there. Martinrea, just for those of you that aren't familiar with us, is a leading Tier 1 automotive supplier in the lightweight structures and propulsion systems area. We've been a fast-growing company over the last 19 years or so. We're now operating in 57 locations, including sales and engineering centers in 10 countries. Go to Page 4. I'm not going to get into any detail here, but just to show our history from 2001s. We basically are a company of a number of acquisitions. Most of those acquisitions were distressed or bankrupt companies, and our latest being -- acquisition being the Metalsa Body in White group, which I will discuss in a few minutes. On to Page 5. Over the years, we developed our vision Mission 10 principles, which become rooted in the company. Page 6. Our focus culturally is on lean and having strong operations and developing leaders that have an entrepreneurial spirit. And of course, treating all of our members with dignity and respect, focusing on our people, our customers, our investors and, of course, the communities in which we work. Let's go to Page 7. So I'm going to briefly talk about where we are globally on our operations. Some of this may be familiar because other companies are probably experiencing or have experienced the same thing. But in North America, the majority of our plants were idled, the exceptions being the industrial plants which continue to supply to our industrial customers. We're now starting to see a smoothing of the volumes or at least the releases. 2, 3 weeks ago, it was a crap shoot whether you'd really ship to a release or not. And this week, it's actually been very good, comparatively speaking. Similar story in Europe. We were idle in all of our plants in Europe. We are running in the majority of those plants now. The customers are coming back. It seems to be more centered on which customer and what location but we are starting to see a trend in the right direction there as well. And of course, in China, we resumed operations in March. We're running at or above projected volumes in China in all of our plants. Page 8. So as we've come back to work, and I'm only going to touch on this briefly because the approach we used was similar to many. This is 1 area I thought that the supply base as well as the OEMs, worked very well together to develop return-to-work strategies for safety. We took a very regional approach. So what was required in the region is where we focused because whatever we did, we wanted to make sure we managed it particularly well. But it's somewhat typical in what other companies are doing with personal protective equipment, limiting visitors, spacing people. We've come back with no incident so far and are pretty pleased with the situation as it stands. With that, we'll go to Page 9. Talk a little bit about what happened when the pandemic affected our customers. So in March, when the customer shut down, we reacted very quickly. We had the benefit that for a number of years, we've been practicing on a downturn plan because as you all know, in this industry, we've been talking about a downturn for 5 years. And we actually practice with a 25% reduction level. We never anticipated 100%, but practicing at 25% in all of our business units in our overhead gave us some tools that we could execute on very quickly. So we shut off all the valves that were -- that we could shut off very quickly. We immediately laid off a number of people. And for the remaining salaried people, we reduced salaries between 20% and 50%. We secured our balance sheet and our liquidity position, withdrew financial guidance for obvious reasons, established a framework for returning to work, including the enhanced safety protocols that I touched on a moment ago. And then in the interim, we partnered with OEMs and other suppliers in the community outreach initiatives for the production of components for ventilators and other personal protective equipment. If you go to Page 10, I'm just going to touch on it real briefly because there's a good story here. As many of you are aware, General Motors volunteered to get into the ventilator business to increase the volume of ventilators that were lacking at the time. And of course, they went to the supply base and they asked for suppliers to provide different components, 1 being the ventilator stand. Now we do a lot of business with GM, but we don't do any real business with GM in our industrial group, so they weren't familiar with it. And they went to a different supplier initially for this ventilator stand. And in the 11th hour, that supplier acquiesced then decided not to do it, and GM was left in a bind. They came and asked us if we could do it? They brought a stand to us. We reverse engineered it. And in a very short time frame, our industrial group was able to turn it around, work with GM and get in production for now a couple of months, where we'll end up building something in the area of 33,000 stands with General Motors. So it was a great hats off to our industrial group and our metallics group that helped them along the way. In other areas such as in Spain, we built face shields, aerosol boxes for hospitals and local law enforcement. And in our Alfield facility in Vaughan, we did buy a facemask machine, which is now in production for internal use; it will provide all the facemask for our company globally. And we'll have enough excess capacity to provide for families who otherwise couldn't afford masks in some of our countries where the pay is much different. This will pay for itself within 3 months. So it is a good investment, and I was really pleased with the timing of getting it up and running. Okay. Let's move to Page 12. So those of you that are familiar with our company are familiar with our strategy. Prior to the shutdown, our strategy as well as our financials were on track. As we restart, our 4-pillar strategy remains intact though there are some business plan timing items that are -- will obviously be adjusted. But we continue to work in our plants after they were closed. And what I mean by that is we brought a number of the right people in to focus on both our program management to assure our launches continued on schedule and continuous improvement or lean activity, so we could make improvements to the shop floor while the shop floor was down and had access to equipment and the facility in a way that you can only typically do at a holiday. Next page. As I've preached and those of you that have heard it before, probably get tired of hearing me talk about lean. Lean does continue to stay in our forefront. We continue to emphasize our rules of engagement around lean, the way we think, being humble because we know there's always a better way and engaging our people at all levels and learning by doing. Involving our core people, our lower level people, is now the next big step our company will take to enhance continuous improvement efforts in all of our operations this coming year. So where are we at based on this activity? If you go to Page 14, please. So for 2020 and during the shutdown, as I said, we did a lot of activity relative to operational improvement and cost reductions. We improved layouts and worked on our high-frequency delivery systems. We improved speed and efficiency of some of our equipment. We eliminated redundancies. When we noted a lot of people working from home, we found redundancies and frankly, things that we didn't need to do that we have been doing. So between this, the operational improvements and the integration activities of Metalsa, going forward, we will be able to run at full production. So the same production numbers we ran prior to the shutdown and we're anticipating this could be as early as the fourth quarter, but we will run with 1,300 less people globally or 7% of our workforce. So those efficiency improvements and discoveries and the integration have helped a lot and will certainly help the bottom line as we go forward. Now production numbers are less than anticipated, let's say, they run at 80%. That number far exceeds 2,000 with direct labor being the variable. But salary and indirect will become a permanent layoff at about 1,300. Next page. So if you look over the -- that page being 15. As we look over the last 5 years, what are the results of our strategy been and real briefly, 72% improvement in safety, 34% improvement in quality. We've doubled our operating income from 4% to 8%. You need to exclude the GM's strike and the higher tooling sales, but a really good improvement over the 5-year period. A reduction in net debt to adjusted EBITDA went from 2.6 to 1.5, and this is despite the fact that we bought 8% of our company back. Annual adjusted EPS improved from $0.98 in 2014 to $2.27 in 2019. And we maintained strong launch execution throughout, which has been one of the key points to our success in this. And then lastly, as promised, $127 million in free cash flow in 2019. Next page, 16. It's just the number of quality awards we received this past year from Land Rover, GM, Nissan, Ford, some of our bigger customers. I won't go into the detail, but one of the things it's always nice to be reminded of your good work. Next page, 17. So let's discuss a bigger picture. We view ourselves primarily as a lightweighting company. So how does this affect our strategy going forward? Page 18. So if you -- so step back a little bit. Between COVID and protest, it's easy to forget we were talking about before March. But in the next 6 months or so, as people start to take their masks off and things become more normalized, we're going to start talking about climate change again. Despite the fact that gas is cheap as we all know, CO2 is the driver behind the reduction or the needed improvement in gas mileage or miles per charge. U.S. reduction is not as aggressive. On the lower left-hand side, it's still going to be close to 55 miles per gallon, possibly in 2025. And if you look to your lower left, you can see the improvement curves in Japan, China, Europe, which are more aggressive than the U.S., but even so, the U.S. continues on a downward angle. And so there's 3 ways to achieve what we need to achieve as far as miles per gallon or miles per charge. One is obviously the powertrain, another is the weight and the third is the aerodynamics, and aerodynamics is relatively negligible when you talk about the other 2. And of course, being a lightweighting company, that's one of the primary drivers to improving CO2 reduction globally in the automotive industry. Based on that, if you go to Page 19, we're moving, and I'd say we've been working on it for about 1.5 years, toward a new sales and engineering strategy. It will be a significant change in the way we've done business in the past, which is to sell-through 2 channels -- to sell and engineer lightweight structures or propulsion systems, with the exception, again, of our industrial group, which has its own customer base, which allows us to enhance our product portfolio. And what I mean by that is, unlike a lot of our competitors, most of our competitors tend to be stampers and welders or they tend to be aluminum casters, but not too many of them are balanced in both. We have a very large stamping and welding business and a pretty large aluminum casting business. And our strategy with lightweight structures and propulsion systems will allow us to marry those materials together to provide products for the future that should grow our revenue and margins by providing these system solutions, expand our product offerings, enhance focused technology solutions such as multi-material joining. And I've talked a lot about multi-material joining over the years, and we're now at the point we're starting to see it come to fruition. And of course, creating long-term deep partnerships with our customers, and doing this through engineering and preferably more content. So if you look on the lower left-hand side, these are just some examples of body structure parts that are in our lightweight structures group and chassis. And then on the other side, the lower right-hand corner, is our propulsion system groups. Anything that moves the car or stops the vehicle will fall into this category. So our fluids business, our aluminum engines, aluminum transmissions and a lot of our assembly business that's associated with it. Go to Page 20, please. So just to go a little deeper into our lightweight structures group, of course, vehicles have been made from steel long before I was born. It's heavy and it's cheap, comparatively speaking. Aluminum, on the other hand, is expensive, yet lighter. And as we move forward, we note that our OEMs are designing more and more vehicles with multi materials. One of the biggest challenges to multi-material vehicles is to be able to join unlike materials. And joining unlike materials being in the aluminum business as well as the metals business is an area that we have focused on from the last number of years. And in 2020, we're introducing multiple products into the market through our customers that have both aluminum and steel joined together with different processes. On the right side of that picture, are chassis and the similar story in chassis. We make steel chassis, we make solid aluminum chassis, we make hollow aluminum chassis, we make married aluminum chassis. And now this year, we'll introduce our first hollow aluminum and steel chassis married together. And that will be launched by Ford this fall. So great progress. It's interesting to be able to talk about something for 2 or 3 years and then start to see it happen. So we're very excited about this activity in our lightweight structures group. If you go to Page 21. In our propulsion systems, we're migrating the business based on powertrain changes. So engine blocks become electric motor housings. Fuel systems are replaced by battery trays and cooling systems that are associated with it. And a lot of that capital is not significantly different when you're making one type of tube versus another. Brake lines will continue as they do today. We're already putting them on EVs, such as Tesla's. And then transmissions will change, but there will be transmissions in the future. So this migration will give us sort of the best of both worlds, where we're still making a lot of the ICE product, but as things migrate into EVs and hybrids, we'll be able to easily move our capacity or our current processes into new products. Next page, 22. I want to talk real briefly about our latest acquisition, which was the acquisition of the structural components and passenger car business from Metalsa. That business was a leading manufacturer in lightweight body and chassis structures. So it fits into 1 of our 2 commercial groups very easily. State of the art production facilities in Germany, Mexico, U.S., China and South Africa. Key customers such as Daimler, BMW, Volkswagen and now Audi. Purchase price was $19.5 million in cash, subject to certain post-closing adjustments, inclusive of working capital on a debt-free basis. The transaction closed on March 2, 2020. Please go to Page 22 -- excuse me, 23. So what was the strategic rationale? One is it diversifies our customer base, adding a significant amount of revenue to our lightweight structures business, about EUR 400 million. And a lot of that business being with BMW and Daimler. In fact, it takes the BMW and Daimler mix in our metallics business from about 4% to 24%, which is one of our strategies to widen our customer base. It transforms steel metal-forming group that was specifically a North American player and to now a global player, add strong reputable engineering capabilities in the heart of Germany, which will support both our European and North American customers from an engineering standpoint. It enhances our lightweight multi-material joining technologies. This company was already going down the same road we were, so we are able to adopt the same technology. Though the approach is a little different, it gives us more variation in what we're allowed to do. And the new Daimler S class, which has an aluminum, cold-rolled steel and hot stamp steel product will be launching this fall. So another multi-material product. And it established some capacity that we needed. We needed more capacity in Mexico around the San Luis area, which we now have. And because of a big win with Daimler in Tuscaloosa, Alabama, we were going to have to build a new plant. And because of this acquisition, it came with a plant that was already in Tuscaloosa with enough space to fit the new product in. So it was a win-win on that point. Potential synergies. Restructuring is now underway. We actually made quite a bit of progress in Mexico during the downtime in -- or Germany, it was a little bit slower because we're unable to get our integrators over there. And that's now changing. We've got our team in Germany, working with the local team. And then opportunities for additional cost savings, because we have some plants that are relatively close, we'll be able to share some overhead as we go forward. We go to Page 24. So where's the market headed relative to ICE versus EVs and hybrids? EVs are still coming. You could debate the speed in which they're coming. I think it will be relatively the same as it was prior to the crisis. When it comes to Martinrea, 75% or more of our product is agnostic to the powertraining. So whether it's an ICE, a hybrid or an EV, our products would be similar, chassis, body and white and brake. Our fuel and engine blocks and to some extent, transmission housings, do get affected, as I said earlier, as we translate into new business products such as electric motor housings, which we haven't announced, but we did win our first electric motor housing, which we'll talk about in Q3. And then we are already in the battery trade business. Also, we don't talk a lot about it when we talk about going from ICE vehicles to EVs, there is a lot of hybrids. And in fact, a lot of the wins that we've seen as we go forward are hybrids. And to us, a hybrid is the best of both worlds because you get the classic products such as powertrain, engine blocks, fuel lines and so forth. And then you get the new electric portion of the vehicle, which is the electric motor housing, the battery tray, and of course, in either case, you have brake systems. As you go to the next page, Page 25, you can take a look at what does the evolving market look like for Martinrea? So about a year ago, when we looked at our portfolio, about 5% of our vehicles were hybrid or EV and 95% were ICE. As we go forward over the next 4 years, that changes from about 70% to -- 95% to 77% ICE vehicles and from 5% to 23% hybrid and EVs, which is right in line regionally with the change or the projected change in EVs. So very good alignment. 14% of that 100% is actually hybrid, 9% is all EV. And you can see in the center, 3 of the key vehicles that are all EV that we won, the EV 2A -- or EVA 2 rather, which will be in Tuscaloosa, Alabama. That's the one I referred to earlier; the Ford Mach E, which launches in the fall; and then the Geely PMA 1, which will be for China, in China, and we will provide the product in China as well. Page 26. As a young company, sustainability has become more important activity in the last years. Our environmental activity marries well with our lightweighting and lean strategy. And additionally, we've had a number of our offices, the Canadian head office, the tech center in Auburn Hills, Michigan and a number of our plants achieved a 0 landfill in 2019. I touched on the cultural approach that Martinrea has and the priority around safety, and you've seen the results reflected in what I showed you earlier today. And from a diversity and inclusion point of view, our focus has been on women in manufacturing, and we're very happy with a lot of the progress that we've made over the last 2 years. And from a governance point of view, we have all the key items that you need for the Board of Directors. Outside Board of Directors, we pay based on a variable depending on the success of the company and feel very strong and comfortable with where we sit from a governance point of view. I can't spend any more time on this due to the time that we have, but please refer to our website if you want more information on our environmental, social and governance activities. And with that, I'm going to pass it to Fred Di Tosto. Fred?

Thanks, Pat, and good afternoon. I will cover off some key financial highlights and maybe touch upon a couple of macro points if time permits. So I'd like to start on Slide 28, and talk a bit about our 2019 results, acknowledging that the past is not where our minds are focused on these days. But I think it's useful to understand where we were pre-COVID. And we were in a good place. 2019 was another great year for the company, especially when you take into consideration some of the headwinds we and the industry faced during the year, including a prolonged UAW GM strike. The slide outlines some highlights there, including increased sales, a strong margin year, the best EPS performance in the company's history, a good year of free cash flow, and we ended the year well-positioned from a balance sheet perspective. So as you can see, pre-COVID, we were performing well, on track, coming off a solid year, and quite frankly, a solid 5-year run, during which time our operating margins essentially doubled. Then COVID hit and stopped us and the industry in its tracks, the early stages of which was visible in our Q1 results. So I'm turning to Slide 29. This slide outlines our Q1 2020 results. As you can see, sales, operating margin and adjusted EPS were all down year-over-year, essentially due to the COVID-19-related shutdowns, which kicked in, in the middle of March. Prior to the shutdowns, we were on track to meet Q1 guidance, which we withdrew for obvious reasons. COVID-19 has clearly presented some challenges for the industry and our business. And as a result, we've had to divert our attention and energy from our core business plan activities and respond to the situation at hand. To some extent, as Pat already noted, we've been working on our downturn plans for a number of years now. So we were prepared. Our downturn plan actions were such that we were able to react quickly. Ultimately, our response has been measured, prudent and decisive with an emphasis on safety, cash conservation, enhancing liquidity. Slide 30, please. In terms of cash conservation in response to COVID, we aggressively flexed and reduced our cost base and eliminated discretionary spending across our global footprint. These actions have included employee layoffs, temporary reductions of salaried employee base wages up to 50%, the curtailment of nonproduction spending and the delay of capital and tooling spending where and when appropriate. In that regard, we're actually working towards decreasing our cash CapEx spend for 2020 by up to 20% from pre-COVID levels, which were projected to be relatively flat year-over-year. In addition, we also temporarily suspended the repurchase of common stock under our normal course issuer bid, the continuation of which to be reassessed at a later date. We also took measures to prop up our liquidity position, as noted here. We ended Q1 with about $300 million in available liquidity, increased that by another $280 million in April and also have another $236 million available to us in the form of asset-based financing, which is baked into our banking facility. With all this in place, we believe we have more than enough liquidity to withstand the COVID-related downturn and the corresponding restart and recovery. Slide 31, please. In connection with our COVID response, I'd like to touch upon our balance sheet for a minute. As you can see here on this slide, we've done a great job over the last number of years, strengthening the balance sheet and keeping our leverage ratio in line with our targeted range of 1.5x. Entering the crisis with a strong balance sheet, along with our available liquidity has allowed us to navigate our way through this crisis with confidence. Needless to say, as a result of the production shutdowns and the corresponding decline in EBITDA we are experiencing now, our net debt-to-EBITDA ratio will increase from current levels and exceed our target range in the short term. Our net debt-to-EBITDA ratio for bank covenant purposes is 3x. And based on the current view, our -- and customer restart plans, we do not see us exceeding this threshold. Now the reality is there's still a lot of uncertainty out there. So if the shutdowns persist for whatever reason or there is a second wave of shutdowns or the recovery happens to be a lot slower than expected, we may have to have a discussion with our banks. Quite frankly, we won't be the only ones. With that said, we don't see that as a hurdle that we cannot overcome. We are good credit and have a very strong relationship with our banks and are comfortable that we would overcome this potential risk. As a matter of fact, we have already initiated discussions with our banks on the topic, more specifically around what we can do to give us more flexibility going forward. We want to come out of this crisis strong and be in a position to capitalize on opportunities as they arise. We are positioned well to do so. Slide 32, please. I'd like to look forward now for a bit. This slide outlines our sales profile over the last decade or so. Clearly, as you can see, our top line has grown significantly over the years, hitting just under $4 billion in '16. 3 years following that, our sales were essentially flat, if we exclude the impact of our assembly business moving to a purchase component consignment model. This flat sales profile was a result of us being strategically more focused on operational improvements, margin optimization, profitable product wins and allocating capital to its most profitable use. These things will continue to be at the core of our thinking and activity going forward. But with the tremendous progress we have made over the past number of years and now that our core business is strong, we're turning our attention to growth again. We saw some growth in sales in '19 despite the overall industry being flat or down in some areas, driven by organic new business wins. We see more organic growth coming over the next few years, absent, of course, the impact COVID and the corresponding recovery will have on overall volumes in the short term, which, at minimum, will result in 2020 sales being lower year-over-year. We shall see how the recovery plays out beyond that, but there are definitely positive signs out there. Notwithstanding, we are committed to growing the enterprise over time in a disciplined and prudent manner. That commitment and change in focus to some extent is demonstrated in the Metalsa acquisition we closed in March of this year. Been a while since we've had one of these, but ultimately, M&A is in our DNA. And this one, in particular, is a good transaction for us for many reasons Pat outlined. Undoubtedly, as the dust settles from the COVID downturn, other opportunities will present themselves, and we'll be ready and in a position to capitalize on such opportunities, of course if they make sense for us. Cracks in the supply chain are already surfacing. So stay tuned. Slide 33. With that, our North American vehicle platform portfolio is positioned quite nicely. This slide outlines our top 10 platform exposure in North America. It's pretty clear that trucks, SUVs and CUVs have been gaining market share over the last number of years, and there is nothing out there to suggest that this trend will change post COVID. And we like that. As you can see here, we have a heavy complement of trucks, SUVs and CUVs in our portfolio, so we are well positioned. About 75% of our current mix in North America is tied to this segment of the market, and we see that growing over the coming years. This will ultimately represent a tailwind as we recover from the current crisis. Consistent with that, current OEM restart schedules are clearly focused on replenishing truck and SUV inventories based on need. Please turn to Slide 34. I'd like to quickly touch upon our operating margin profile. We have clearly made a lot of progress in this area, the last number of years as outlined here. As noted previously absent the GM strike and higher tooling sales, our operating margin would have exceeded 8% in '19, up from 4% in '14. Not many companies out there can say that they've essentially doubled their margin in the last 5 years. It is clear we have gotten stronger in a lot of places. Our margins clearly show it, driven by operational excellence and a prudent and hurdle-based approach to quoting work and allocating capital. Now in light of the COVID pandemic and uncertainties it brings, we have withdrawn our medium-term operating margin targets, which had us going at 9%. Obviously, there are still a lot of moving pieces out there, volumes, timing, type of recovery, mix and so forth. With that said, all is being equal, once the market recovers, there is no reason why our margins couldn't get back to pre-COVID levels. Fundamentally, we are the same company today as we were pre- COVID. The company focused on operational excellence and a prudent, disciplined approach to allocating capital. Expect more of that from us going forward as we emerge from the COVID-related downturn. And that includes continuing to outperform our peers. So I turn to Page 35. From a margin perspective, on an absolute basis, we are outperforming our competitors as this chart on 2019 operation margins outlined. It's been very nice to be able to highlight this point in the last while, we have definitely come a long way. It wasn't too long ago, we were at the bottom of this list. Really nice to see the progress, and we aim to keep it this way going forward. Page 36. I'd like to spend some time talking about cash flow. We have obviously become a significant operating cash flow generator over the years, as you can see on this chart. The issue has been that it hasn't historically translated into free cash flow of any significance. And that was for a very good reason. We've been building the business and optimizing our margin profile, and that requires investment as you can see here from our recent CapEx levels. However, we have said that eventually, free cash flow would turn positive, and that is exactly what happened in '19. '19 was a big year for us, a turning point of sorts. As I noted earlier, we generated $127 million of free cash flow in '19, a result we are very proud of. Now absent the COVID crisis, we were expecting 2020 to be another solid year of free cash flow. Unfortunately, that's not going to happen for obvious reasons. Based on current industry projections for the rest of the year, we are currently targeting to be free cash flow breakeven in 2020. But that is still a bit of work in progress as we continue to assess the impact COVID will have on the market and our CapEx and tooling programs. Looking forward, once we get 2020 behind us, we expect to revert back to being a positive free cash flow generator, similar to what you saw in '19, subject, of course, to market and volume environment. That is our commitment, and the team is focused on it. Slide 37. I also wanted to quickly touch upon our capital allocation framework. Obviously, in the moment, our current focus is on protecting the balance sheet, weather the COVID-19-related storm. We're getting through this crisis in good shape and are comfortable with our positioning on that front. Longer term, as already noted, we are committed to growing the enterprise. And as such, we will not shy away from investing in the business as long as it makes sense and the opportunities meet our hurdles. Notwithstanding, we're always going to be committed to maintaining a strong balance sheet. This is paramount in any capital allocation decisions we make. This philosophy is being put to the test with this COVID downturn. A strong balance sheet is allowing us to weather the storm with confidence. Lastly, we're also not adverse to returning capital to shareholders via dividend growth over time and/or the repurchase of shares with excess cash at the appropriate times. We have demonstrated that commitment over the last couple of years via dividend increases and a significant amount of share buybacks. Since we instituted our normal course issuer bid in '18, we have purchased just under 10% of our outstanding common shares. Now as noted earlier, we have suspended the buyback program in light of the COVID downturn. We will reassess the program at a later date once things stabilize, but the aim is to continue applying this philosophy of thinking over time. And finally, turning to Page 39. From a macro perspective, we clearly live in an unusual world these days. The pandemic is clearly taking its toll on our industry. With that said, there are several reasons listed here to be positive and even bullish about the future for Martinrea and our industry from where we sit today. Starting from the top, things have been challenging, but it's getting better. We have likely bounced off the bottom. In May, U.S. SAAR $12.2 million during a time where most of the population was in lockdown is a good sign. We are in restart mode and things are headed in the right direction. From the bottom of Q2, our global economies are already starting to expand. The back half of the year should be decent from a volume perspective. And 2021 will be a good year, a minimum of growth year from 2020. U.S. MCA is now in place. And from our perspective, it's a good deal for North America and us. Bulk of our business is in North America, the best trading region in the world. People are still driving cars. Miles driven decreased a lot in March and April, but have rebounded strongly as people get back to work and their lives. Parts still need to be replaced and demand appears to be strengthening. Vehicle is a safer mode of transportation where you can control who you are with and how to socially distance. Public transportation may never be the same, which would support demand for vehicles. The trend towards remote work may also have positive implications for the auto sector. More and more people are working from home. They're willing to move away from the downtown core for more space, a backyard, a driveway and all that comes with a vehicle. The cost of buying a vehicle is low, financing is cheap, incentives are out there, gas prices are low, all good for vehicle demand. We are also likely going to see some auto stimulus, maybe some sort of scrappage program that could provide a boost to the industry's recovery. Further, the average vehicle age is still 12 years or so, so replacement is needed at some point. And finally, I think we will see the valuation multiples and perhaps volumes of automotive players, including automotive parts suppliers such as us, go up driven by the notion that we are in the early innings of a new cycle, perhaps still in the pre-game warm up. We're already seeing multiples improve. So I think we're a bit over time. So that's all we wanted to cover with you today. So thank you for your attention.

This is Edison. I really appreciate the very insightful presentation. And yes, unfortunately, we're running about 4 or 5 minutes over. So once again, thank you for all the color. And hope to see you join us next year.

Thank you.

Thanks.