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Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Neo Performance Materials Q2 2018 Earnings Announcement Conference Call. [Operator Instructions]Ali Mahdavi, you may begin your conference.
Thank you, operator, and good day, everyone. Today's call is being recorded, and a replay will be available starting tomorrow in the Investor Center on our website located at neomaterials.com. Speaking first today will be Neo President and CEO, Geoff Bedford; Neo CFO, Rahim Suleman, will then provide additional details of our Q2 financial performance. Finally, we will open the call to questions from analysts only. Please note that some of the information you will hear during today's presentation and discussion will consist of forward-looking statements, including, without limitation, those regarding revenue, EBITDA, volume, gross margin and other income and expense measures and future business outlook. Non-IFRS financial measures will be used during the conference call. Further information regarding Neo's use of non-IFRS measures is available in Neo's Q2 2018 earnings press release, which is available on SEDAR and on our website at neomaterials.com. Actual results or trends could differ materially from those discussed today. For more information, please refer to the risk factors discussed in Neo's most recent quarterly reports, which were filed on SEDAR earlier today and are also available on our website. Neo assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Financial amounts presented today will be in U.S. dollars. Let me turn the call over to Geoff Bedford for opening remarks. Geoff?
Thanks, Ali, and welcome, everyone. Neo's strong operational and financial performance in 2018 continued through the second quarter with higher revenue, operating income and adjusted EBITDA over the prior year period. In the quarter, consolidated revenue rose to $110.4 million, an 8.7% increase over the prior year quarter. Neo generated net income of $19.1 million or $0.48 per share with adjusted net income of $12.5 million or $0.31 per share. Adjusted EBITDA increased to $17.9 million, a 20.7% gain over the prior year period. Year-to-date, revenue was $230.6 million, a 10.7% increase over 2017. Net income and adjusted net income were $28 million or $0.70 a share and $22.8 million or $0.57 per share, respectively. Adjusted EBITDA on a year-to-date basis rose 4.8% over the prior year period to $37.1 million. We closed the quarter with $74.7 million in cash on hand after paying a $3 million dividend. Our cash balance was impacted by an increase in working capital in the quarter, but we continue to generate strong free cash flow due to nominal debt, low exposure to commodity pricing risk and relatively low CapEx requirement. Rahim will give more detail on the financial performance of the 3 business segments for the quarter and year-to-date. I'd like to provide some color on our overall positioning in several rapidly growing markets and on our business strategy going forward.If I had to summarize Neo's core business strength and growth opportunity, it would be this: driving product innovation in partnership with customers to both expand existing markets and to create new market opportunities. This has proven very successful for Neo and the company's predecessors over the past 25 years. Today, wholly 20% of current revenues are derived from products that did not exist 5 years ago. Whether in magnetics, in engineered rare earth products or in rare metals, product innovation through customer partnerships has been a powerful and long-term differentiator for Neo. This is particularly true for our Magnequench segment, where we are the global market leader of magnetic powders for bonded and hot deformed NdFeB magnets. Continuing product information -- innovation has positioned us to benefit from 2 large and powerful global macro trends: the ongoing electrification of vehicles and the increasing penetration across multiple industries of high-efficiency motors powered by rare earth magnetic materials. In the automotive space, Magnequench powders are now used in the larger magnets that drive vehicle traction motors. That technological breakthrough was made possible by years of work by Neo scientists and engineers and through our strategic partnership with Daido and Honda. Our materials are now utilized in the traction motors of the Honda Accord hybrid in North America, the Honda Insight hybrid in the U.S. and the Honda Fit and Freed hybrid in Japan. Moreover, our magnetic powders are increasingly integral to dozens of smaller electric motors that are used in virtually all modern automobiles today. You can find them today in fuel pumps, power steering systems, folding mirrors, trunk door lifts and many other areas of a vehicle. Importantly, we are not limited to growth in sales of pure electric or hybrid electrics start/stop vehicles. Improved efficiency and capability are important across all vehicle types. As a result, Neo is able to address large and rapidly growing markets across the automotive sector with our functional materials.Our materials are also increasingly used in powered motors in factory automation systems, home appliances and many other systems where small, lightweight, efficient operations and precision control are needed. As in vehicle motors, Neo provides the functional materials that enable these applications to perform the specifications required. Let me provide an example. One of our customers, Denmark-based Grundfos, is a global leader in the design of electric water pumps. Grundfos is highly focused on advancing sustainability and innovative product design. According to Grundfos, electric pumps make up 10% of the world's total electricity consumption. But that is due to the fact that up to 90% of these pumps run full speed continuously, which is very energy-inefficient. To tackle this challenge, Grundfos designed variable speed pumps that utilize Magnequench magnetic materials to improve operational efficiencies. The result: pumps of today consume 17% of the energy of older designs. Grundfos estimates that if all pumps were upgraded to higher efficiencies, the world can save the equivalent of the residential energy consumption of 1 billion people. These are the types of global macro trends that continue to drive demand for Neo's products and allow us to play an important role in larger sustainability initiatives.Our Chemicals & Oxides segment also produces the number of vital, functional materials that play an important technological and economical role in our customers' applications. Our auto emissions catalyst business, where we are a top 3 global supplier of these materials, continues to see growth opportunities. The auto catalyst market is expected to grow at a relatively robust 5% to 10% annual growth rate for light- and heavy-duty vehicles combined between now and 2025. Neo makes the functional materials that are integral to these emission catalysts, and those catalysts are used in both conventional and hybrid electric vehicles. Not only is global demand growing for these emission catalysts, but emission standards are also requiring more and more complex catalysts to be manufactured. This is where Neo excels due to our ability to develop ever more complex catalyst materials in close coordination with our customers.Our third business unit, Rare Metals, also produces a range of materials that are required ingredients for many future-facing industries. This includes companies in aerospace, LED lighting, superconductivity applications, consumer electronics, batteries and many others. Increasing global demand for high-performance superalloys that use a high-purity niobium and tantalum we produce has been an important growth driver in our Rare Metals segment. These superalloys are increasingly used to enable jet engines and turbines to operate at higher temperatures, which increases their fuel efficiency. That helps to cut operational costs and reduce air emissions. Our Rare Metals segment has also successfully qualified and is now delivering high-purity indium to customers in the CIGS thin-film solar power industry. We are currently increasing our indium production capacity for this high-growth application. Looking forward, we continue to see strong secular growth across our product portfolio. The highly engineered materials we make are often the essential ingredients to many technologies that improve sustainability, increase fuel economy and reduce environmental impacts. By continuing to drive innovation in our product suite and by integrating further downstream to help our customers drive their own product innovation, we believe that Neo is well positioned for sustained organic growth across multiple markets.With that, let me turn the call over to Rahim for additional detail on our Q2 financial performance.
Thanks, Geoff, and good day to everyone. In our Magnequench segment, revenue for the quarter rose by 33% compared to the prior year quarter. That was largely due to a combination of higher volumes and increased selling prices from higher rare earth input costs, which are subject to pass-through mechanics with customers. Sales volume in the period increased by 9% compared to Q2 2017. Adjusted EBITDA in the quarter was $13.4 million, a 20% improvement from the same period in 2017. This was driven by higher volumes, continued strong operating performance, strategic purchases of other non-rare earth raw materials and a favorable product mix. On a year-to-date basis, Magnequench sales volumes were comparable to the prior year period. Revenues were up 25%, largely due to the increased selling prices from the higher rare earth input costs. Adjusted EBITDA was $28.9 million, a 17% improvement from the same period in 2017. Again, this was the result of continued strong operating performance, strategic purchases of other non-rare earth raw materials and the impact of selling prices being adjusted on a lagged basis and favorable product mix. In Chemicals & Oxides, revenues for the quarter was $36.7 million compared to $41.4 million for the prior year quarter, a decrease of 11.3%. Volume decreased to 1,776 tonnes from 2,178 in the same period in 2017, a decrease of 18.5%. Adjusted EBITDA for the quarter was $5.2 million compared to $6.4 million in the prior year quarter, a decrease of 19.2%. For the 6 months ended June 30, 2018, C&O revenue was $81.9 million compared to $84.4 million in the corresponding 2017 period, a decrease of 3.1%. Volume during the period was 3,783 tonnes compared to 4,468 tonnes in the corresponding 6-month period in 2017, a decrease of 15.3%. And adjusted EBITDA was $8.7 million compared to $14.7 million in the prior year period, a decrease of 40.7%.A number of factors have affected the results of our C&O business in the quarter and year-to-date. First, as we have previously discussed, Neo implemented a new wastewater treatment system in our Zibo plant in 2017. That caused an increase in premium freight costs for the first half of 2018, where we spent $1.1 million in Q2 2018 and $4.1 million year-to-date. Fortunately, we believe the supply chain is now adequately replenished. And under current operating parameters, we do not expect continuing premium freight cost from this production system change.Second, volumes, revenues and adjusted EBITDA were impacted by the timing of our production plan in our Jiangyin heavy rare earth separation plant. This plant plans its production runs on a campaign basis, and we began this year's campaign production run in Q3 as opposed to Q2 in the prior year.And third, product sales in our separated rare earth business are often subject to normal changes in customer purchasing patterns, and these can affect volumes and profitability in any given quarter. In general, demand remained steady for many of the engineered rare earth materials that we make in the C&O segment. Many of our products are highly engineered materials that are essential to applications in high-value markets. And given that most of our contracts contain commodity pass-through mechanics, Neo has relatively low long-term exposure to commodity price risk. That is the case in both our C&O and Magnequench segments. Our Rare Metals segment saw a continuation of the strong improvement of recent quarters as the segment's Silmet facility has achieved full production capacity following the fire in 2015. Revenues for the quarter were $21.3 million compared to $21.1 million in the prior year quarter, an increase of 1.2%. Volume increased to 139 tonnes compared to 129 tonnes in the same period in 2017, an increase of 7.8%. Adjusted EBITDA was $2.5 million compared to $2.6 million in the 3 months ended June 30, 2017, a decrease of 3.2%. For the 6 months ended June 30, 2018, revenue in the segment was $44.1 million compared to $39.5 million in the prior year period, an increase of 11.7%. Volume was 274 tonnes compared to 222 tonnes in the same period in 2017, an increase of 23%. And adjusted EBITDA in the period was $6.3 million compared to $5.2 million in the same period in 2017, an increase of 21.1%. In general, the Rare Metals segment benefit in the quarter from higher sales in its gallium trichloride business, a key ingredient in LED lighting, as a key customer recovered from a fire that happened in mid-2017. Sales were higher of tantalum and niobium, driven by the additional production capacity that we had in our Silmet manufacturing plant. The segment also saw higher selling prices for tantalum and gallium. These factors were partially offset by lower hafnium sales volumes. On a consolidated basis, let me note the following additional results and activities in the quarter. The company reported other income of $7.9 million related to the partial settlement of an insurance claim from the fire that affected Silmet in 2015. This is included in other income and is not included in EBITDA, adjusted EBITDA or in adjusted net income, as Geoff mentioned earlier. The cash from this partial settlement was received in July 2018.SG&A expense was $11.9 million and $25.1 million, respectively, for the 3 and 6 months ended June 30, 2018. That compares to $16.2 million and $27.1 million in the corresponding periods last year. Lower SG&A costs in the current 3-month period relates to lower legal costs associated with outstanding intellectual property disputes and with certain SG&A costs being project-based, which mean that they can be higher or lower in any given period. Neo invested $4.6 million in R&D expenses for the quarter, which represented 4.2% of consolidated revenue. This compares to $3.9 million in the same period last year, an increase of $700,000. Year-to-date, R&D expenses totaled $9 million compared to $7.2 million in the corresponding period in 2017, an increase of $1.8 million. Neo continues to prioritize making strategic and appropriate investments in R&D to develop new applications for its products and to strategically position Neo in meeting customers' needs for technical solutions.CapEx spending for the quarter totaled $3.9 million and $6.2 million for the 3 and 6 months ended June 30, 2018, respectively, and $2.9 million and $4.3 million for the same periods ended June 30, 2017. The majority of capital expenditures related to capital projects performed at were Zibo, Tianjin and our Silmet facilities. Cash taxes paid in the quarter were $3.1 million with $6 million being paid year-to-date. And as Geoff noted, we closed the quarter with $74.7 million in cash on hand after paying a $3 million dividend to our shareholders. We have approximately $27.8 million available under credit facilities with nominal amounts drawn. Neo continues to have a very strong free cash flow profile despite the decrease in cash from December 2017. Working capital increased this quarter, primarily attributable to higher inventories from replenished in the auto catalyst supply chain, from higher inventory costs and from the timing of the production run -- the campaign production run in Jiangyin. In the past 12 months, Neo has generated $35.8 million in cash flow after capital expenditures, cash taxes and working capital but prior to dividend payments, the NCIB purchases and the IPO costs. A quarterly dividend of CAD 0.095 per common share was declared on August 9, 2018, for shareholders of record at September 21, 2018. And as part of our ongoing normal course issuer bid, Neo purchased and canceled 54,646 shares with an aggregate disbursement of $0.7 million. Our financial position remains strong. Neo's global team continues to improve operational efficiencies across all 3 business segments, and demand across our product suite remains very good.With that, operator, let's open it up to questions.
[Operator Instructions] And our first question comes from the line of Mark Neville from Scotiabank.
Just first on the Chemicals & Oxides, I just want to make sure I'm understanding. So I think you referenced this, but the idea is you do fill your production quota in the back half.
Yes. Yes, that's right. We campaign those -- the separation capacity, we campaign those facilities. And the plan is to use the production quota from the second half.
Maybe I'm getting a little too granular. But I'm just curious as to why 1 year versus the other there would be a difference, really, in the production to schedules. If there's any reason at all.
Yes, yes. So first, this is -- we have 2 separation facilities in China, Zibo and Jiangyin, and this is only related to Jiangyin. And the timing of the production, because it's more efficient to campaign as opposed to running slower all year, the timing of those campaigns is really dependent on where the inventory levels are, where our customers are giving us from a forecast point of view, rare raw material purchasing and where we see that. So there's a number of factors that go into that and why we campaign in the interval that we do.
Okay. And then just, I guess, consolidated for C&O. Whatever we want to assume for auto catalysts, but I guess broadly speaking, the idea is sort of flattish volumes year-over-year. So you make it all up -- or a lot of it up in the second half. Just again, broadly speaking, that's the idea?
For the separation business, yes, but it's subject to inventory, yes.
Yes, okay. And on the margin, just if you get a heavier weighting, and again I understand it's the heavy, so maybe there's a different margin profile. But -- look, is that margin dilutive or accretive to sort of the average for that segment? If you can give me that or care to tell.
I mean, as a percentage or per kilo? I guess I would say it would be generally accretive. The heavy rare earths are worth more, and the margins are generally higher there.
Okay. And maybe just last one on the auto cat. I think you're down year-over-year in the first half. You mentioned I think, in the -- some diesel but I wasn't sure if that's sort of program-specific or broader comments. And then, again, I think you could mentioned some higher inventory in that business as well, so I'm not sure if that sort of speaks to your expectations for the second half or sort of what you're seeing in that business. But sort of any color on what you think happens would be appreciated.
Yes. Sort of the macro comment is we -- I think generally, we're seeing lower demand for diesel products than our 3-way catalyst or our gasoline products. I think that's a general mix shift in the market, where generally, we're seeing demand for diesel automotive down, relatively speaking. So that impacts our program mix as well. But I think when we think about auto catalysts as we look out longer term, we don't see that as impacting our business over the long term. Again, we're qualified across multiple platforms in both 3-way and diesel, so there's a mix impact. But longer term, I don't think that's an overall demand impact.
Our next question comes from the line of Yuri Lynk from Canaccord Genuity.
Just want to touch on the CapEx, if we can get an update there, obviously, elevated as you told us it would be earlier this year. Can you fill us in on how the capacity expansion plans at Zibo are progressing? And when that might start to flow through into increased volumes?
Yes. So the plan for that capacity expansion was the second half of this year, and that continues to be what we're targeting. So we would likely see production late this year or starting early next year to come into effect there.
Okay. And market-wise, we're talking, I would assume, auto.
Yes.
Yes, yes. That capacity is targeted towards auto, our auto emission and catalyst business.
Okay. And just kind of the -- can you quantify what you're adding and how that might come in over the next 12 months once it starts up in -- later this year?
Well, I think -- so it will come up in increments, and I think a lot of that will be dictated by what we're seeing from our customers and programs. So I think at this point, it's hard for us to sit here and quantify exactly how we think that program will ramp. But I do think from a capacity point of view, it's adding another 20% to our capacity, potentially, once it's sort of fully built up. But as I said, that will come in in increments.
Okay. Switching over to Magnequench. How do we think about -- I know it's a lot smaller than it used to be, the HDD portion of that business. Can you just quantify what -- where volumes were this quarter and your expectations going forward for that business?
I think that the trends that we're seeing in that end market is kind of consistent with the trends that we would've expected and the trends that we would've communicated. So that segment is now kind of, call it, 12% to 15% of the Magnequench segment generally. And we've talked about kind of anticipating a steady -- like a small decline, call it, 5%-ish per year in that segment. And I think all the evidence that we're seeing right now is kind of still consistent with that outlook.
Our next question comes from the line of Ace Mirali from CIBC.
I'm calling in on behalf of Scott Fromson here. I was wondering if you guys could tell us about the impacts of the U.S. trade tariff on China and how you see that impacting the business.
Yes, sure. So keep you in mind, I mean, the U.S. market is relatively not as big a market for us. It represents 20% of our consolidated sales. But when you back away some of our Rare Metals business, which isn't impacted here and the products that are coming out of Europe and Thailand, it drops to below 10% of our consolidated revenues. So it's -- and sitting here today, none of our products are captured by the current list of products that are included in the tariffs. But I will say that some of the proposed lists could capture some of our products. And we've begun to talk to our customers about several things. One is thinking about how we could supply those products either out of Europe or more out of Thailand, moving some production around. We're also -- most of our customers are global, so we're talking to them about where else they might be able to receive this product and use it. And then lastly, quite frankly, we're talking to them about pricing and the need that we'll be -- if we're impacted by these tariffs, we're going to have to be thinking about our pricing, and we're having that discussion with them as well. So as we sit here, it's not a significant impact to us, but it's something that we're clearly watching closely.
And just another question regarding the SG&A. Does management expect higher legal costs in the coming quarters? And are there any specific projects that are expected to contribute to a higher expense through the remainder of 2018?
No. I mean, I think that from a general perspective, I think that the SG&A cost has kind of normal quarterly fluctuations, but those are generally not significant. In terms of higher legal costs in any given quarter, I mean, that's very much dependent upon the activities that are happening globally in that -- at the litigation universe. So it's kind of difficult to comment on the amount of activity that happens in any future month. I would say that we considered it, like present in the environment that we operate in, we plan for and managed these litigation costs as we go through. And in the foreseeable future, we kind of continue to plan for and see that as part of our base business.
And just one last question for me, and I'll pass it along. Is there any -- can you give a percentage of the annual Chemicals & Oxides sales that the campaign would represent?
Sorry, try the question again for me.
Yes. What percentage of the annual Chemicals & Oxides sales does the campaign represent?
Are you referring to just call it the delay from running in Q2 to Q3, like the impact year-over-year?
Exactly, exactly.
Okay. I would say of consolidated sales, it would be a couple of percentage points. So the C&O sales, I believe, would be 5. I probably would have to check to give you a more specific number than that. But I mean, we're talking about, as we said, one out of the 3 facilities having moved their campaign production to Q3 from Q2, and if we would've run partial Q2 last year as well. Like the campaign would not -- in the prior year, the campaign wouldn't have been on April 1. It would've start partly through Q2. So it's a partial quarter for one of the 3 business units. So it's a couple of percentage of the C&O sales.
Our next question comes from the line of Stephen Harris from GMP Securities.
Just wanted to clarify a couple of points. On the traction motors, you sort of led with that as a sort of a positive development at Magnequench. How significant is that overall as a share of revenues? And what do you see in the trajectory for that over the next little while?
We haven't been, I would say, specific as to the exact quantum of sales, I mean we talk about it being $10 million, primarily in the back half of 2017. So we're certainly growing from that base. And I think in terms of significance, the customers really launched the core of the programs this year. So there -- we think -- we're pretty excited about what that traction motor will grow to and what the trajectory looks like. We haven't provided specific guidance as to that number, but I would say it's becoming more significant and, particularly, a significant growing opportunity because as you know, today we talk about it in the context of one customer. And we're not limited to supply one customer. I mean, we work very closely with our partners on this to ensure that it gets deployed the right way and gets deployed successfully and there's a path to do that. But we think that as the market continues to grow, we're pretty excited about where we see this continuing.
So over time, this could be a 15% to 20% part of Magnequench? Is that possible?
I think -- yes, I mean, when you talk about the art of the possible, over time, it could be extremely significant to -- a growth factor of Magnequench. So no, it wouldn't obviously replace. It's a net new, but it could be much more significant than the type of number that you presented there. I mean, if you look at it from a market-sizing dynamic -- I don't know, Geoff, if you want to give specifics on the size of the motors and these types of things. But there's -- it could be significant.
Yes. I think what Rahim was referring to there on the size of motors, if you think about sort of the micromotors that we would be in, there might be grams of our product in it, some of the bigger magnets in the automotive systems. For example, power steering could be 100 grams. And these motors, each of the kilograms have our product in it. So from a quantum point of view, it's a much bigger product on a per-kilogram basis going into each application.
Got you. And just also a more technical question. On the tax rate, it looks like it dropped pretty sizably, that it's about 15% on the quarter. Now I assume most of that relates to the, I'd say, insurance settlement.
That's correct. I think fundamentally our tax rate is kind of in the same range that we've talked about in the past.
Okay. So no change on that going forward either?
Correct.
Our next question comes from the line of Mac Whale from Cormark Securities.
When you look at -- in the automotive space, typically, you'll get some projection of what production levels you'll see over the next quarter or 6 months. I'm wondering, could you speak to whether those are tracking higher or lower than -- like whether your actual numbers come in roughly where you're expecting or whether you're seeing higher volumes than originally projected?
I would say that on balance there, we're seeing what had been projected to us, and we're talking over the next 3 to 6 months from our customers. Other than, as we talked earlier, we did see some decline or softening of the diesel catalyst, the products going to diesel. But generally, I think we're seeing things on trend to what we had -- what we have been told 3 months ago.
And the diesel space or -- catalyst, though a lot of that switch that customers have been doing is from diesel to gasoline, what's the net impact to you guys if -- in that scenario if basically diesel goes to 0? Is there a net difference, either in margin or in revenue, that you would see?
So I would say that it's kind of a short term, long term question. I think that we're qualified in a number of different platforms, both diesel and 3-way catalyst. So I think that to the extent that diesel is replaced by 3-way catalyst motors, long term, we wouldn't see a net impact on that to us. I think as margins go, I would say, again, it's real similar. There's different products at different margins. But when we look on balance, I think they're relatively consistent as far as margins. So quarter-to-quarter, as you're -- we're putting production plans in place. And if a customer doesn't take inventory that we thought they were going to take, we don't necessarily have the ability to substitute that right away. But over the long term, we don't see a significant impact by a switch from diesel to 3-way catalyst in our business.
And when you look -- one of the things that you've -- that you talk a lot about with your customers is the fact that they come to you to solve problems. Is the innovation required in the gasoline engine catalyst space noticeably different than what you would see in the diesel space?
I think that there's requirements in both spaces that continue to drive the need for newer, higher-performance catalysts. So we were with -- I was visiting one of our larger auto catalyst customers a few months ago, and I asked that question specifically. Are you still spending money on R&D and diesel? Just trying to get an outlook of what their thoughts were, and his answer was yes. So I think that we continue to see efforts in both diesel and 3-way going forward, and I think we'll continue to work with our customers on both of those.
Okay. And then just lastly on -- in the Rare Metals. Sounds you're back to full production at Silmet, and you're seeing a lot higher demand in the gallium chloride. So I'm wondering whether you're at -- like how far are you in terms of capacity utilization? Do you expect to see a lot more growth? Do you have to invest there at all? I'm just trying to get an idea of what the outlook is for capacity.
I mean, I think we continue to make investments in the normal course of business. We continue to develop new products. Geoff cited one in his remarks today, and that's not a major capital investment for us anyway. But regardless, I think that as products change, we'll continue to make capital investments to support those. But I don't -- I think that we're kind of -- we have enough capacity to continue to grow. So we're not using 100% of the capacity available at Silmet by any means, but it takes time for us to qualify and continue to grow with more customers.
[Operator Instructions] Our next question comes from the line of Mark Neville from Scotiabank.
I just want to follow up on the traction motor opportunity. Again, I know it's -- I understand it's on 3 programs now with your current customer. For '19, I don't know if you can answer, but has there been any new programs added? Or would there be any new customers, potentially, for next year? Or is it sort of a longer-term opportunity with the new customers?
Yes. So we continue to dialogue with other customers. I think that at this point, sitting here, it's likely a longer-term opportunity than something specific in '19 with new customers. We continue to work with Honda on their platforms and looking for ways that we can increase our volume there. But for new customers, it's probably not necessarily a '19 implementation.
And sorry, just on Honda, would there be new programs added for '19 or maybe you can't comment that -- yes.
Yes . I think at this point, it's a little early to comment. I think what we're trying to do is make sure that -- these cars are sold in various parts of the world. And when we look at the growth and the opportunity on the platforms we're on, we see that as very exciting. So from our perspective, what we want to do is make sure we do this well and do it right. And that's how we'll get on more platforms going forward.
And on the existing platforms, just sort of the penetration in those platforms with your product versus sort of the other product, do you have a sort of rough idea where that is? Like would it be 10% of the -- go ahead.
Yes. I think -- so for us, I don't think we're going to talk specifically about that. But I can tell you that when we think about the plants and where we're running, we're the technology running through that plant. There's other geographies that are doing it different -- using a different technology. But where we're being sold, we are that technology in that location.
[Operator Instructions] And we have no further questions in queue. I'll turn the call back to the presenters.
Thank you, again, for joining us this morning. We look forward to speaking with you again during our third quarter conference call, which will likely be scheduled in November. This concludes today's call. Have a great day.
This concludes today's conference call. You may now disconnect.