Faraday Copper Corp. — Interim / Quarterly Report 2024

May 2, 2024

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MARTINREA INTERNATIONAL INC. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Martinrea International Inc. Table of Contents

		Page
Interim Condensed Consolidated Balance Sheets		1
Interim Condensed Consolidated Statements of Operations		2
Interim Condensed Consolidated Statements of Comprehensive Income		3
Interim Condensed Consolidated Statements of Changes in Equity		4
Interim Condensed Consolidated Statements of Cash Flows		5
Notes to the Interim Condensed Consolidated Financial Statements
1.	Basis of preparation	6
2.	Trade and other receivables	7
3.	Inventories	7
4.	Property, plant and equipment	7
5.	Right-of-use assets	8
6.	Investments	9
7.	Provisions	10
8.	Long-term debt	10
9.	Lease liabilities	12
10.	Income taxes	12
11.	Capital stock	12
12.	Earnings per share	14
13.	Finance expense and other finance income	15
14.	Operating segments	15
15.	Financial instruments	16
16.	Contingencies	20
17.	Guarantees	20

Martinrea International Inc. Interim Condensed Consolidated Balance Sheets

(in thousands of Canadian dollars) (unaudited)

	Note		March 31, 2024	December 31, 2023	December 31, 2023
ASSETS
Cash and cash equivalents		$	173,694	$	186,804
Trade and other receivables	2		826,880		695,819
Inventories	3		558,119		568,274
Prepaid expenses and deposits			32,310		33,904
Income taxes recoverable			20,080		11,089
TOTAL CURRENT ASSETS			1,611,083		1,495,890
Property, plant and equipment	4		1,947,889		1,943,771
Right-of-use assets	5		231,103		238,552
Deferred tax assets			199,925		192,301
Intangible assets			42,119		42,743
Investments	6		67,654		60,170
Pension assets			15,943		16,303
TOTAL NON-CURRENT ASSETS			2,504,633		2,493,840
TOTAL ASSETS		$	4,115,716	$	3,989,730
LIABILITIES
Trade and other payables		$	1,211,451	$	1,176,579
Provisions	7		13,749		29,892
Income taxes payable			22,096		25,017
Current portion of long-term debt	8		11,178		12,778
Currentportion of lease liabilities	9		49,385		48,507
TOTAL CURRENT LIABILITIES			1,307,859		1,292,773
Long-term debt	8		1,019,016		956,458
Lease liabilities	9		203,100		210,469
Pension and other post-retirement benefits			38,774		37,261
Deferred tax liabilities			27,492		27,588
TOTAL NON-CURRENT LIABILITIES			1,288,382		1,231,776
TOTAL LIABILITIES			2,596,241		2,524,549
EQUITY
Capital stock	11		634,079		645,256
Contributed surplus			45,945		45,903
Accumulated other comprehensive income			127,132		95,753
Retained earnings			712,319		678,269
TOTAL EQUITY			1,519,475		1,465,181
TOTAL LIABILITIES AND EQUITY		$	4,115,716	$	3,989,730

Contingencies (note 16) Subsequent event (note 11)

See accompanying notes to the interim condensed consolidated financial statements.

On behalf of the Board:

“Robert Wildeboer”	Director
“TerryLyons”	Director

Page 1 Martinrea International Inc.

Martinrea International Inc.

Interim Condensed Consolidated Statements of Operations

(in thousands of Canadian dollars, except per share amounts) (unaudited)

		Three months ended	Three months ended	Three months ended	Three months ended
	Note		March 31, 2024		March 31, 2023
SALES		$	1,323,913	$	1,303,889
Cost of sales (excluding depreciation of property, plant and equipment and right-of-use assets)			(1,074,409)		(1,066,197)
Depreciation ofproperty,plant and equipment and right-of-use assets(production)			(76,967)		(70,306)
Total cost of sales			(1,151,376)		(1,136,503)
GROSS MARGIN			172,537		167,386
Research and development costs			(10,977)		(9,278)
Selling, general and administrative			(78,191)		(78,523)
Depreciation of property, plant and equipment and right-of-use assets (non-production)			(4,070)		(4,366)
Loss on disposal of property, plant and equipment			(112)		(42)
Restructuringcosts	7		(6,255)		-
OPERATING INCOME			72,932		75,177
Share of loss of equity investments	6		(634)		(1,378)
Net gain on disposal of equity investments			-		5,273
Finance expense	13		(20,173)		(19,046)
Other finance income	13		5,443		224
INCOME BEFORE INCOME TAXES			57,568		60,250
Income tax expense	10		(13,918)		(12,079)
NET INCOME FOR THE PERIOD		$	43,650	$	48,171
Basic earnings per share	12	$	0.56	$	0.60
Diluted earningsper share	12	$	0.56	$	0.60

See accompanying notes to the interim condensed consolidated financial statements.

Page 2 Martinrea International Inc.

Martinrea International Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

(in thousands of Canadian dollars) (unaudited)

	Three months ended	Three months ended	Three months ended	Three months ended
		March 31, 2024		March 31, 2023
NET INCOME FOR THE PERIOD	$	43,650	$	48,171
Other comprehensive income (loss), net of tax:
Items that may be reclassified to net income
Foreign currency translation differences for foreign operations		31,391		2,621
Items that will not be reclassified to net income
Share of other comprehensive loss of equity investments (note 6)		(12)		(11)
Remeasurement of defined benefitplans		(1,028)		375
Other comprehensive income, net of tax		30,351		2,985
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	$	74,001	$	51,156

See accompanying notes to the interim condensed consolidated financial statements.

Page 3 Martinrea International Inc.

Martinrea International Inc.

Interim Condensed Consolidated Statements of Changes in Equity

(in thousands of Canadian dollars) (unaudited)

				Accumulated
				other
			Contributed	comprehensive	Retained
		Capital stock	surplus	income	earnings	Total equity
BALANCE AT DECEMBER 31, 2022	$	663,646 $	45,558 $	124,065 $	543,636 $	1,376,905
Net income for the period		-	-	-	48,171	48,171
Compensation expense related to stock options		-	110	-	-	110
Dividends ($0.05 per share)		-	-	-	(4,019)	(4,019)
Other comprehensive income (loss) net of tax
Remeasurement of defined benefit plans		-	-	-	375	375
Foreign currency translation differences		-	-	2,621	-	2,621
Share of other comprehensive loss of equity investments		-	-	(11)	-	(11)
BALANCE AT MARCH 31, 2023		663,646	45,668	126,675	588,163	1,424,152
Net income for the period		-	-	-	105,494	105,494
Compensation expense related to stock options		-	332	-	-	332
Dividends ($0.15 per share)		-	-	-	(11,827)	(11,827)
Exercise of employee stock options		358	(97)	-	-	261
Repurchase of common shares (note 11)		(18,748)	-	-	(10,321)	(29,069)
Other comprehensive income (loss) net of tax
Remeasurement of defined benefit plans		-	-	-	6,760	6,760
Foreign currency translation differences		-	-	(30,915)	-	(30,915)
Share of other comprehensive loss of equity investments		-	-	(7)	-	(7)
BALANCE AT DECEMBER 31, 2023		645,256	45,903	95,753	678,269	1,465,181
Net income for the period		-	-	-	43,650	43,650
Compensation expense related to stock options		-	42	-	-	42
Dividends ($0.05 per share)		-	-	-	(3,839)	(3,839)
Repurchase of common shares (note 11)		(11,177)	-	-	(4,733)	(15,910)
Other comprehensive income (loss) net of tax
Remeasurement of defined benefit plans		-	-	-	(1,028)	(1,028)
Foreign currency translation differences		-	-	31,391	-	31,391
Share of other comprehensive loss of equity investments		-	-	(12)	-	(12)
BALANCE AT MARCH 31, 2024	$	634,079 $	45,945 $	127,132 $	712,319 $	1,519,475

See accompanying notes to the interim condensed consolidated financial statements.

Page 4 Martinrea International Inc.

Martinrea International Inc. Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars) (unaudited)

	Three months ended	Three months ended	Three months ended	Three months ended
		March 31, 2024		March 31, 2023
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES:
Net income for the period	$	43,650	$	48,171
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets		81,037		74,672
Amortization of development costs		2,494		2,613
Unrealized gain on foreign exchange forward contracts		(796)		(4,784)
Finance expense		20,173		19,046
Income tax expense		13,918		12,079
Loss on disposal of property, plant and equipment		112		42
Deferred and restricted share units expense (benefit)		(184)		5,436
Stock options expense		42		110
Share of loss of equity investments		634		1,378
Net gain on disposal of equity investments		-		(5,273)
Pension and other post-retirement benefits expense		564		694
Contributions made topension and otherpost-retirement benefits		(568)		(623)
		161,076		153,561
Changes in non-cash working capital items:
Trade and other receivables		(118,212)		(131,868)
Inventories		18,607		(21,975)
Prepaid expenses and deposits		1,983		3,259
Trade,otherpayables andprovisions		21,396		107,426
		84,850		110,403
Interest paid		(20,678)		(23,299)
Income taxespaid		(25,118)		(32,577)
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	39,054	$	54,527
FINANCING ACTIVITIES:
Increase in long-term debt (net of deferred financing fees)		49,464		47,094
Equipment loan repayments		(2,710)		(4,240)
Principal payments of lease liabilities		(12,324)		(10,954)
Dividends paid		(3,907)		(4,019)
Repurchase of common shares		(15,910)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES	$	14,613	$	27,881
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (excluding capitalized interest)*		(58,273)		(83,416)
Capitalized development costs		(1,045)		(1,765)
Increase in investments (note 6)		(8,130)		-
Proceeds on disposal ofproperty, plant and equipment		978		131
NET CASH USED IN INVESTING ACTIVITIES	$	(66,470)	$	(85,050)
Effect of foreign exchange rate changes on cash and cash equivalents		(307)		(2,428)
DECREASE IN CASH AND CASH EQUIVALENTS		(13,110)		(5,070)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		186,804		161,655
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	173,694	$	156,585

*As at March 31, 2024, $53,063 (December 31, 2023 - $75,800) of purchases of property, plant and equipment remain unpaid and are recorded in trade and other payables.

See accompanying notes to the interim condensed consolidated financial statements.

Page 5 Martinrea International Inc.

Martinrea International Inc. Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Martinrea International Inc. (“Martinrea” or the “Company”) was formed by the amalgamation under the Ontario Business Corporations Act of several predecessor Corporations by articles of amalgamation dated May 1, 1998. The Company is a diversified and global automotive supplier engaged in the design, development and manufacturing of highly engineered, value-added Lightweight Structures and Propulsion Systems.

1. BASIS OF PREPARATION

(a) Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’ (“IAS” 34) as issued by the International Accounting Standards Board (“IASB”), and on a basis consistent with the accounting policies disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2023.

(b) Basis of presentation

These interim condensed consolidated financial statements include the accounts of Martinrea International Inc. and its subsidiaries. The notes presented in these interim condensed consolidated financial statements include in general only significant changes and transactions occurring since the Company’s last year end, and are not fully inclusive of all disclosures required by IFRS for annual financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements, including the notes thereto, for the year ended December 31, 2023.

(c)

Presentation currency

These interim condensed consolidated financial statements are presented in Canadian dollars, which is the Company’s presentation currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand, except per share amounts and where otherwise indicated.

(d) Recently adopted accounting standards and policies

Amendments to IFRS 16, Leases - Lease Liability in a sale and Leaseback

On September 22, 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16). The amendments introduce a new accounting model which impacts how a seller-lessee accounts for variable lease payments that arise in a sale-and-leaseback transaction. The amendments clarify that on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising from a sale-and-leaseback transaction. After initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease liability such that it recognises no gain or loss relating to the right of use it retains.

The Company adopted the amendments to IFRS 16 effective January 1, 2024. The adoption of amendments to IFRS 16 did not have a material impact on the interim condensed consolidated financial statements.

Amendments to IAS 1, Non-current Liabilities with Covenants

On October 31, 2022, the IASB issued Non-current Liabilities with Covenants (Amendments to IAS 1). The amendments specify that covenants to be complied with after the reporting date do not affect the classification of debts as current or non-current at the reporting date. Instead, the amendments require a company to disclose information about these covenants in the notes to the consolidated financial statements.

The Company adopted the amendments to IAS 1 effective January 1, 2024. The adoption of amendments to IAS 1 did not have a material impact on the interim condensed consolidated financial statements.

(e) Recently issued accounting standard

The IASB issued the following new standard:

IFRS 18, Presentation and Disclosure in Financial Statements

On April 9, 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements (replacement to IAS 1). The new accounting standard introduces three sets of new requirements to improve companies' reporting of financial performance and give investors a better basis for analyzing and comparing companies:

• improved comparability in the statement of profit or loss by introducing three defined categories for income and expenses (operating, investing and financing) and requiring companies to provide new defined subtotals, including operating profit;

• enhanced transparency of management-defined performance measures by requiring companies to disclose explanations of those company-specific measures that are related to the income statement; and

Page 6 Martinrea International Inc.

Martinrea International Inc. Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

• enhanced guidance on how companies group information in the financial statements, including guidance on whether information is included in the primary financial statements or is further disaggregated in the notes.

The new standard is effective for annual periods beginning on or after January 1, 2027. The Company is currently assessing the impact of the new standard on the consolidated financial statements.

2. TRADE AND OTHER RECEIVABLES

		March 31, 2024	December	31, 2023
Trade receivables	$	783,885	$	643,959
Other receivables		42,199		47,923
Foreign exchange forward contracts not accounted for as hedges(note 15(d))		796		3,937
	$	826,880	$	695,819

The Company’s exposures to credit and currency risks, and impairment losses related to trade and other receivables, are disclosed in note 15.

On March 27, 2024, Martinrea entered into an accounts receivable program agreement to sell up to $100,000 in trade receivables without recourse and on an uncommitted basis, subject to predetermined limits for certain customers. Under the agreement, the receivables are sold on a fully serviced basis, so that the Company continues to administer the collection of such receivables. The Company derecognizes the trade receivables sold under the program when it transfers substantially all the risks and rewards of ownership of the receivables. As at March 31, 2024, no receivables were sold under the program.

3. INVENTORIES

		March 31, 2024	December	31, 2023
Raw materials	$	268,287	$	256,038
Work in progress		73,272		69,474
Finished goods		49,982		51,202
Toolingwork inprogress and other inventory		166,578		191,560
	$	558,119	$	568,274

4. PROPERTY, PLANT AND EQUIPMENT

	March 31, 2024 December 31, 2023
	Cost Accumulated amortization and impairment losses Net book value Cost Accumulated amortization and impairment losses Net book value
Land and buildings Leasehold improvements Manufacturing equipment Tooling and fixtures Other assets Construction inprogress	$ 247,101 $ (50,494) $ 196,607 $ 240,789 $ (47,664) $ 193,125 89,028 (60,731) 28,297 86,038 (58,881) 27,157 3,223,004 (1,835,036) 1,387,968 3,131,621 (1,751,642) 1,379,979 40,634 (33,148) 7,486 38,627 (34,302) 4,325 92,924 (61,572) 31,352 87,808 (59,052) 28,756 296,179 - 296,179 310,429 - 310,429
	$ 3,988,870 $ (2,040,981)$ 1,947,889 $ 3,895,312 $ (1,951,541)$ 1,943,771

Page 7 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Movement in property, plant and equipment is summarized as follows:

									Construction	Construction
		Land and		Leasehold	Manufacturing		Tooling and	Other		in
		buildings	improvements			equipment	fixtures	assets		progress	Total
Net as of December 31, 2022	$	173,433	$	30,205	$	1,310,227 $	5,145 $	30,675	$	399,088 $	1,948,773
Additions		25		-		5,115	6	886		287,066	293,098
Disposals		-		-		(986)	-	(223)		(135)	(1,344)
Depreciation		(7,003)		(4,362)		(239,027)	(779)	(9,760)		-	(260,931)
Impairment		-		-		(666)	-	-		-	(666)
Transfers from construction in
progress		30,797		1,619		328,984	19	7,477		(368,896)	-
Foreign currency translation
adjustment		(4,127)		(305)		(23,668)	(66)	(299)		(6,694)	(35,159)
Net as of December 31, 2023	$	193,125	$	27,157	$	1,379,979 $	4,325 $	28,756	$	310,429 $	1,943,771
Additions		15		-		100	-	197		38,860	39,172
Disposals		-		-		(570)	-	(6)		(514)	(1,090)
Depreciation		(1,807)		(1,121)		(62,924)	(220)	(2,029)		-	(68,101)
Transfers from construction in
progress		921		1,963		47,890	3,316	4,074		(58,164)	-
Foreign currency translation
adjustment		4,353		298		23,493	65	360		5,568	34,137
Net as of March 31, 2024	$	196,607	$	28,297	$	1,387,968 $	7,486 $	31,352	$	296,179 $	1,947,889

5. RIGHT-OF-USE ASSETS

	March 31, 2024 December 31, 2023
	Cost Accumulated amortization and impairment losses Net book value Cost Accumulated amortization and impairment losses Net book value
Leased buildings Leased manufacturing equipment Leased other assets	$ 322,003 $ (152,039) $ 169,964 $ 316,314 $ (141,483) $ 174,831 109,158 (49,722) 59,436 107,162 (44,985) 62,177 5,647 (3,944) 1,703 5,364 (3,820) 1,544
	$ 436,808 $ (205,705)$ 231,103 $ 428,840 $ (190,288)$ 238,552

Movement in right-of-use assets is summarized as follows:

				Leased
		Leased	manufacturing		Leased
		buildings		equipment	other assets	Total
Net as of December 31, 2022	$	185,281	$	67,320 $	1,464 $	254,065
Additions		10,626		12,022	1,017	23,665
Lease modifications		13,647		19	22	13,688
Depreciation		(31,896)		(16,382)	(935)	(49,213)
Foreign currencytranslation adjustment		(2,827)		(802)	(24)	(3,653)
Net as of December 31, 2023	$	174,831	$	62,177 $	1,544 $	238,552
Additions		-		566	388	954
Lease modifications		904		-	-	904
Depreciation		(8,504)		(4,188)	(244)	(12,936)
Foreign currencytranslation adjustment		2,733		881	15	3,629
Net as of March 31, 2024	$	169,964	$	59,436 $	1,703 $	231,103

Page 8 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

6. INVESTMENTS
		March 31, 2024	December	31, 2023
Investment in common shares of NanoXplore Inc.	$	53,738	$	54,384
Investment in common shares and convertible debentures of AlumaPower Corporation.		4,036		4,036
Investment in common shares and convertible debentures of Equispheres Inc.		9,030		1,000
Other		850		750
	$	67,654	$	60,170

As at March 31, 2024, the Company held 38,466,360 common shares of NanoXplore Inc. (“NanoXplore”) representing a 22.7% equity interest in NanoXplore (on a non-diluted basis). NanoXplore is a publicly listed company on the Toronto Stock Exchange trading under the ticker symbol GRA. It is a manufacturer and supplier of high-volume graphene powder for use in industrial markets providing customers with a range of graphene-based solutions.

As at March 31, 2024, the Company held 14,952 class A shares, 14,952 class C shares, and 17,010 series A preferred shares of AlumaPower Corporation (“AlumaPower”), including 11,120 series A preferred shares resulting from the conversion of $1,365 (US $1,066) convertible debentures on January 12, 2024, representing a 13.1% equity interest in AlumaPower (on a non-diluted basis). AlumaPower is a private company developing aluminum air battery technology for a variety of end markets, including automotive.

As at March 31, 2024, the Company held 1,120,591 series B-3 preferred shares and 7,116,594 series B-4 preferred shares of Equispheres Inc. (“Equispheres”), including the acquisition of 7,116,594 series B-4 preferred shares pursuant to a private placement offering on March 1, 2024 for an aggregate purchase price of $8,030, and the conversion of $1,000 convertible debentures into 1,120,591 series B-3 preferred shares on the same date, representing a 6.8% equity interest in Equispheres. Equispheres is a private company developing technologies for the production and use of advanced materials in additive manufacturing.

The Company applies equity accounting to its equity investment in NanoXplore based on NanoXplore’s most recently available financial statements, adjusted for any significant transactions that occur thereafter and up to the Company’s reporting date, which represents a reasonable estimate of the change in the Company’s interest. The shares in AlumaPower and Equispheres are classified as fair value through other comprehensive income. Accordingly, the common shares are recorded at their fair value at the end of each reporting period, with the change in fair value recorded in other comprehensive income (loss).

Movement in equity-accounted investments is summarized as follows:

		Investment in
		common shares of
		NanoXplore
Net as of December 31, 2022	$	48,749
Additions		8,452
Share of loss for the period		(2,799)
Share of other comprehensive loss for theperiod		(18)
Net as of December 31, 2023	$	54,384
Share of loss for the period		(634)
Share of other comprehensive loss for theperiod		(12)
Net as of March 31, 2024	$	53,738

As at March 31, 2024, the stock market value of the shares held in NanoXplore by the Company was $98,089.

Page 9 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

7. PROVISIONS

			Claims and
		Restructuring	Litigation	Total
Net as of December 31, 2022	$	4,380 $	3,526 $	7,906
Net additions		27,266	375	27,641
Amounts used during the period		(3,444)	(1,944)	(5,388)
Foreign currencytranslation adjustment		(425)	158	(267)
Net as of December 31, 2023	$	27,777 $	2,115 $	29,892
Net additions		6,255	386	6,641
Amounts used during the period		(22,463)	(327)	(22,790)
Foreign currencytranslation adjustment		29	(23)	6
Net as of March 31, 2024	$	11,598 $	2,151 $	13,749

Additions to the restructuring provision during the first quarter of 2024 totaled $6,255 and represent employee-related severance resulting from the rightsizing of certain operations in Mexico ($2,802), Germany ($1,683), Canada ($1,234), and the United States ($536).

8. LONG-TERM DEBT

The Company’s interest-bearing loans and borrowings are measured at amortized cost. For more information about the Company’s exposure to interest rate, foreign currency and liquidity risk, see note 15.

		March 31, 2024	December	31, 2023
Banking facility	$	1,003,445	$	938,129
Equipment loans		26,749		31,107
		1,030,194		969,236
Currentportion		(11,178)		(12,778)
	$	1,019,016	$	956,458

Terms and conditions of outstanding loans, in Canadian dollar equivalents, are as follows:

		Nominal	Year of		March 31, 2024	December 31, 2023	December 31, 2023
	Currency	interest rate	maturity		Carrying amount		Carrying amount
Banking facility	USD	SOFR + 1.70%	2027	$	597,136	$	529,496
	CAD	CORRA + 1.70%	2027		156,309		408,633
	CAD	CORRA + 1.95%	2027		250,000		-
Equipment loans	CAD	2.54%	2026		12,896		14,142
	EUR	2.46%	2026		5,239		5,818
	EUR	1.40%	2026		5,008		5,677
	CAD	5.22%	2025		2,179		2,598
	EUR	0.00%	2028		870		870
	EUR	1.05%	2024		485		1,930
	EUR	0.26%	2025		72		72
				$	1,030,194	$	969,236

On February 23, 2024, the Company’s banking facility was amended to extend its maturity and enhance certain provisions of the facility. The primary terms of the amended banking facility, with now a syndicate of ten banks (down from eleven), include the following:

• an unaltered unsecured credit structure, with a $100 million increase in total borrowing capacity;

• unchanged financial covenants, including a maximum net debt to trailing twelve months EBITDA ratio of 3.0x (excluding the impact of IFRS 16, Leases);

• a new non-amortizing term loan of $250 million at variable interest rates;

• available revolving credit lines of $350 million (down from $500 million) and US $520 million (similar to the previous facility);

• available asset based financing capacity of $300 million, similar to the previous facility;

• accordion feature which provides the Company with the ability to increase the revolving credit facility by up to US $300 million, similar to the previous facility;

Page 10 Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

Martinrea International Inc.

(in thousands of Canadian dollars, except per share amounts)

• pricing terms at market rates including transitioning the interest rate benchmark of the Canadian revolving credit line from Bankers’ Acceptance (“BA”) to the Canadian Overnight Repo Rate Average (“CORRA”);

• a maturity date extended to February 2027 (from April 2025); and

• no mandatory principal repayment provisions for the revolving credit lines, including the new non-amortizing term loan, similar to the previous facility.

As at March 31, 2024, the Company had drawn US $441,000 (December 31, 2023 - US $401,000) on the U.S. revolving credit line, $160,000 (December 31, 2023 - $410,000) on the Canadian revolving credit line, and $250,000 (December 31, 2023 - $nil) on the Canadian non-amortizing term loan. At March 31, 2024, the weighted average effective interest rate of the banking facility was 7.1% (December 31, 2023 - 7.1%). The facility requires the maintenance of certain financial ratios with which the Company was in compliance as at March 31, 2024.

Deferred financing fees of $3,691 (December 31, 2023 - $1,367) have been netted against the carrying amount of the long-term debt.

Future annual minimum principal repayments as at March 31, 2024, before the extension of the Company’s banking facility noted above, are as follows:

				Scheduled	Carrying
		Scheduled	amortization of		amount of
		principal		deferred	outstanding
		repayments		financing fees	loans
Within one year	$	12,443	$	(1,265) $	11,178
One to two years		10,760		(1,265)	9,495
Two to three years		1,010,200		(1,161)	1,009,039
Three to four years		193		-	193
Thereafter		289		-	289
	$	1,033,885	$	(3,691)$	1,030,194

Movement in long-term debt is summarized as follows:

		Total
Net as of December 31,2022	$	1,070,368
Net repayments		(71,647)
Equipment loan repayments		(17,104)
Amortization of deferred financing fees		1,022
Foreign currencytranslation adjustment		(13,403)
Net as of December 31,2023	$	969,236
Net drawdowns		52,064
Equipment loan repayments		(2,710)
Deferred financing fee additions		(2,600)
Amortization of deferred financing fees		276
Foreign currencytranslation adjustment		13,928
Net as of March 31,2024	$	1,030,194

Page 11 Martinrea International Inc.

Martinrea International Inc. Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

9. LEASE LIABILITIES

The Company enters into lease agreements for land and buildings, manufacturing equipment and other assets as a part of regular operations as a means of efficiently utilizing capital and managing the Company’s cash flows.

Movement in lease liabilities is summarized as follows:

		Total
Net as of December 31,2022	$	273,120
Net additions		23,665
Lease modifications		13,688
Principal payments of lease liabilities		(47,204)
Termination of leases		(174)
Foreign currencytranslation adjustment		(4,119)
Net as of December 31,2023	$	258,976
Net additions		954
Lease modifications		904
Principal payments of lease liabilities		(12,324)
Foreign currencytranslation adjustment		3,975
Net as of March 31,2024	$	252,485

The maturity of contractual undiscounted lease liabilities as at March 31, 2024 is as follows:

		Total
Within one year	$	59,479
One to two years		55,012
Two to three years		49,844
Three to four years		40,700
Thereafter		85,437
Total undiscounted lease liabilities at March 31, 2024	$	290,472
Interest on lease liabilities		(37,987)
Total present value of minimum lease payments	$	252,485
Currentportion		(49,385)
	$	203,100

10. INCOME TAXES

The components of income tax expense are as follows:

		Three months ended	Three months ended
		March 31, 2024	March 31, 2023
Current income tax expense	$	(16,384) $	(33,399)
Deferred income tax recovery		2,466	21,320
Total income tax expense	$	(13,918)$	(12,079)

11. CAPITAL STOCK

Common shares outstanding:	Number	Amount
Balance as of December 31, 2022 and March 31, 2023	80,387,095 $	663,646
Exercise of stock options	25,000	358
Repurchase of common shares under normal course issuer bid	(2,270,655)	(18,748)
Balance as of December 31, 2023	78,141,440 $	645,256
Repurchase of common shares under normal course issuer bid	(1,353,500)	(11,177)
Balance as of March 31, 2024	76,787,940 $	634,079

The Company is authorized to issue an unlimited number of common shares. The Company’s shares have no par value.

Page 12 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Repurchase of capital stock:

On March 29, 2023, the Toronto Stock Exchange (“TSX”) accepted a notice of intention of the Company to make a normal course issuer bid (“NCIB”) permitting the Company to purchase for cancellation up to 5 million common shares over a 12-month period ending on or about April 3, 2024.

During 2023, after the commencement of the NCIB, the Company purchased for cancellation an aggregate of 2,270,655 common shares for an aggregate purchase price of $29,069, resulting in a reduction to capital stock of $18,748 and a decrease to retained earnings of $10,321. The shares were purchased and cancelled directly under the NCIB.

During the first quarter of 2024, the Company purchased for cancellation an aggregate of 1,353,500 common shares for an aggregate purchase price of $15,910 resulting in a reduction to capital stock of $11,177 and a decrease to retained earnings of $4,733. The shares were purchased and cancelled directly under the NCIB.

Subsequent to March 31, 2024, on April 29, 2024, the Company renewed the NCIB receiving approval from the TSX to acquire for cancellation up to an additional 6,435,000 common shares of the Company. The renewed bid commences on May 2, 2024 and spans a 12-month period.

Stock options

The following is a summary of the activity of the outstanding share purchase options:

	Three months ended March 31, 2024 Three months ended March 31, 2023
	Number of options Weighted average exerciseprice Number of options Weighted average exerciseprice
Balance, beginning of period Cancelled duringtheperiod	2,328,500 $ 13.56 2,435,000 $ 13.50 - - (81,500) 12.53
Balance, end ofperiod	2,328,500 $ 13.56 2,353,500 $ 13.53
Options exercisable, end ofperiod	2,123,500 $ 13.50 1,834,500 $ 13.37

The following is a summary of the issued and outstanding common share purchase options as at March 31, 2024:

	Number
Range of exercisepriceper share	outstanding	Date ofgrant	Expiry
$10.00 - 12.99	608,500	2014 - 2022	2024 - 2032
$13.00 - 16.99	1,720,000	2015 - 2020	2025 - 2030
Total sharepurchase options	2,328,500

For the three months ended March 31, 2024, the Company expensed $42 (2023 - $110), to reflect stock-based compensation expense, as derived using the Black-Scholes-Merton option valuation model.

Deferred Share Unit (“DSU”) Plan

The following is a summary of the issued and outstanding DSUs as at March 31, 2024 and 2023:

	Three months ended	Three months ended
	March 31, 2024	March 31, 2023
Outstanding, beginning of period	836,505	625,148
Granted and reinvested dividends	23,850	29,643
Redeemed	-	-
Outstanding, end ofperiod	860,355	654,791

The DSUs granted during the three months ended March 31, 2024 and 2023 had a weighted average fair value per unit of $14.09 and $13.64, respectively, on the date of grant. For the three months ended March 31, 2024, DSU compensation expense/benefit reflected in the interim condensed consolidated statement of operations, including changes in fair value during the period, amounted to a benefit of $592 (2023 - an expense of $1,336), recorded in selling, general and administrative expense.

Unrecognized DSU compensation expense as at March 31, 2024 was $1,510 (March 31, 2023 - $1,801 and December 31, 2023 - $1,791) and will be recognized in profit or loss over the remaining vesting period.

Page 13 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Performance Restricted Share Unit (“PSU” and “RSU”) Plan

The following is a summary of the issued and outstanding RSUs and PSUs for the three months ended March 31, 2024 and 2023:

	RSUs	PSUs	Total
Outstanding, December 31, 2022	558,474	478,624	1,037,098
Granted and reinvested dividends	58,288	36,126	94,414
Redeemed	-	-	-
Cancelled	-	-	-
Outstanding, March 31, 2023	616,762	514,750	1,131,512
Granted and reinvested dividends	391,843	328,714	720,557
Redeemed	(192,725)	(191,966)	(384,691)
Cancelled	(6,690)	(7,303)	(13,993)
Outstanding, December 31, 2023	809,190	644,195	1,453,385
Granted and reinvested dividends	49,975	30,898	80,873
Redeemed	-	-	-
Cancelled	(1,338)	(1,195)	(2,533)
Outstanding, March 31, 2024	857,827	673,898	1,531,725

The RSUs and PSUs granted during the three months ended March 31, 2024 and 2023 had a weighted average fair value per unit of $15.11 and $15.02, respectively, on the date of grant. For the three months ended March 31, 2024, RSU and PSU compensation expense reflected in the interim condensed consolidated statement of operations, including changes in fair value during the period, amounted to $408 (2023 - $4,100), recorded in selling, general and administrative expense.

Unrecognized RSU and PSU compensation expense as at March 31, 2024 was $6,639 (March 31, 2023 - $7,180 and December 31, 2023 - $9,765) and will be recognized in profit or loss over the remaining vesting period.

The key assumptions, on a weighted average basis, used in the valuation of PSUs granted during the three months ended March 31, 2024 and 2023 are shown in the table below:

	Three months ended	Three months ended
	March 31, 2024	March 31, 2023
Expected life (years)	2.76	2.75
Risk free interest rate	4.30%	3.78%

12. EARNINGS PER SHARE

Details of the calculations of earnings per share are set out below:

	Three months ended	Three months ended	Three months ended	Three months ended	Three months ended
		March 31, 2024		March 31, 2023
	Weighted		Weighted
	average		average
	number of	Per common	number of		Per common
	shares	share amount	shares	share amount
Basic	77,899,614	$ 0.56	80,387,095	$	0.60
Effect of dilutive securities:
Stock options	60,175	-	57,516		-
Diluted	77,959,789	$ 0.56	80,444,611	$	0.60

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

For the three months ended March 31, 2024, 1,100,000 (2023 - 1,720,000) options were excluded from the diluted weighted average per share calculation as they were anti-dilutive.

Page 14 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

13. FINANCE EXPENSE AND OTHER FINANCE INCOME

		Three months ended	Three months ended	Three months ended
		March 31, 2024		March 31, 2023
Debt interest, gross	$	(21,052)	$	(20,763)
Interest on lease liabilities		(2,757)		(2,827)
Capitalized interest - at an average rate of 7.6%(2023 - 6.9%)		3,636		4,544
Finance expense	$	(20,173)	$	(19,046)
		Three months ended	Three months ended
		March 31, 2024		March 31, 2023
Net foreign exchange gain	$	4,930	$	70
Other income, net		513		154
Other finance income	$	5,443	$	224

14. OPERATING SEGMENTS

The Company is a diversified and global automotive supplier engaged in the design, development and manufacturing of highly engineered, value-added Lightweight Structures and Propulsion Systems. It conducts its operations through divisions, which function as autonomous business units, following a corporate policy of functional and operational decentralization. The Company’s offerings include a wide array of products, assemblies and systems for small and large cars, crossovers, pickups and sport utility vehicles.

The Company defines its operating segments as components of its business where separate financial information is available and routinely evaluated by management. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. Given the differences among the regions in which the Company operates, Martinrea’s operations are segmented on a geographic basis between North America, Europe and Rest of the World.

The accounting policies of the segments are the same as those described in the Company’s annual consolidated financial statements for the year ended December 31, 2023. The Company uses operating income as the basis for the CODM to evaluate the performance of each of the Company’s reportable segments.

The following is a summary of selected data for each of the Company’s operating segments:

			Three months ended March 31, 2024	Three months ended March 31, 2024
					Operating Income
		Production Sales	Tooling Sales	Total Sales	(Loss)
North America
Canada	$	145,792 $	10,017 $	155,809
USA		399,889	2,894	402,783
Mexico		454,680	15,204	469,884
Eliminations		(55,183)	(9,350)	(64,533)
	$	945,178 $	18,765 $	963,943 $	62,579
Europe
Germany		216,408	40,667	257,075
Spain		62,925	2	62,927
Slovakia		13,328	834	14,162
Eliminations		(154)	-	(154)
	$	292,507 $	41,503 $	334,010 $	12,995
Rest of the World		25,289	6,473	31,762	(2,642)
Eliminations		(5,471)	(331)	(5,802)	-
	$	1,257,503 $	66,410 $	1,323,913 $	72,932

Page 15 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

			Three months ended March 31, 2023	Three months ended March 31, 2023
					Operating Income
		Production Sales	Tooling Sales	Total Sales	(Loss)
North America
Canada	$	190,139 $	54,408 $	244,547
USA		341,710	13,662	355,372
Mexico		453,998	17,355	471,353
Eliminations		(63,642)	(33,638)	(97,280)
	$	922,205$	51,787$	973,992$	74,246
Europe
Germany		235,917	9,843	245,760
Spain		45,173	829	46,002
Slovakia		11,685	23	11,708
	$	292,775$	10,695$	303,470$	(989)
Rest of the World		31,620	2,262	33,882	1,920
Eliminations		(7,058)	(397)	(7,455)	-
	$	1,239,542$	64,347$	1,303,889$	75,177

15. FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, investments, trade and other payables, longterm debt, and foreign exchange forward contracts.

Fair Value

IFRS 13, Fair Value Measurement defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are required to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs. The first two levels are considered observable and the last unobservable. These levels are used to measure fair values as follows:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities, either directly or indirectly.

• Level 2 – Inputs, other than Level 1 inputs that are observable for assets and liabilities, either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table summarizes the fair value hierarchy under which the Company’s applicable financial instruments are valued:

	March 31, 2024
	Total Level 1 Level 2 Level 3
Cash and cash equivalents Investment in common shares of AlumaPower (note 6) Investment in common shares of Equispheres (note 6) Foreign exchange forward contracts not accounted for as hedges(note 2)	$ 173,694 $ 173,694 $ - $ - 4,036 - - 4,036 9,030 - - 9,030 796 - 796 -
	December 31, 2023
	Total Level 1 Level 2 Level 3
Cash and cash equivalents Investment in common shares and convertible debentures of AlumaPower (note 6) Investment in convertible debentures of Equispheres (note 6) Foreign exchange forward contracts not accounted for as hedges(note 2)	$ 186,804 $ 186,804 $ - $ - 4,036 - - 4,036 1,000 - - 1,000 3,937 - 3,937 -

Page 16 Martinrea International Inc.

Martinrea International Inc. Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the interim condensed consolidated balance sheets, are as follows:

					Fair value	Fair value	Financial
			Fair value	through other			assets at
		through profit		comprehensive			amortized	Amortized	Carrying
March 31, 2024			or loss		income		cost	cost	amount	Fair value
FINANCIAL ASSETS:
Trade and other receivables	$		-	$	-	$	826,084 $	- $	826,084 $	826,084
Investment in common shares of
AlumaPower			-		4,036		-	-	4,036	4,036
Investment in common shares of
Equispheres			-		9,030		-	-	9,030	9,030
Foreign exchange forward contracts not
accounted for as hedges			796		-		-	-	796	796
	$		796	$	13,066	$	826,084 $	- $	839,946 $	839,946
FINANCIAL LIABILITIES:
Trade and other payables			-		-		-	(1,211,451)	(1,211,451)	(1,211,451)
Long-term debt			-		-		-	(1,030,194)	(1,030,194)	(1,030,194)
	$		-	$	-	$	- $	(2,241,645)$	(2,241,645)$	(2,241,645)
Net financial assets(liabilities)	$		796	$	13,066	$	826,084 $	(2,241,645)$	(1,401,699)$	(1,401,699)
					Fair value		Financial
			Fair value		through other		assets at
			through profit	comprehensive			amortized	Amortized	Carrying
December 31, 2023			or loss		income		cost	cost	amount	Fair value
FINANCIAL ASSETS:
Trade and other receivables		$	-	$		- $	691,882 $	- $	691,882 $	691,882
Investment in common shares and
convertible debentures of AlumaPower			-		2,671		-	1,365	4,036	4,036
Investment in convertible debentures of
Equispheres			-			-	-	1,000	1,000	1,000
Foreign exchange forward contracts not
accounted for as hedges			3,937			-	-	-	3,937	3,937
		$	3,937	$	2,671 $		691,882 $	2,365 $	700,855 $	700,855
FINANCIAL LIABILITIES:
Trade and other payables			-			-	-	(1,176,579)	(1,176,579)	(1,176,579)
Long-term debt			-			-	-	(969,236)	(969,236)	(969,236)
		$	-	$		- $	- $	(2,145,815)$	(2,145,815)$	(2,145,815)
Net financial assets(liabilities)		$	3,937	$	2,671 $		691,882 $	(2,143,450)$	(1,444,960)$	(1,444,960)

The fair values of trade and other receivables and trade and other payables approximate their carrying amounts due to the short-term maturities of these instruments. The estimated fair value of long-term debt approximates its carrying amount since it is subject to terms and conditions similar to those available to the Company for instruments with comparable terms, and the interest rates are market-based.

Risk Management

The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, interest rate risk, and currency risk. These risks arise from exposures that occur in the normal course of business and are managed on a consolidated basis.

(a) Credit risk

Credit risk refers to the risk of losses due to failure of the Company’s customers or other counterparties to meet their payment obligations. Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, trade and other receivables, and foreign exchange forward contracts.

Credit risk associated with cash and cash equivalents is minimized by ensuring these financial assets are placed with financial institutions with high credit ratings.

Page 17 Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

Martinrea International Inc.

(in thousands of Canadian dollars, except per share amounts)

The credit risk associated with foreign exchange forward contracts arises from the possibility that the counterparty to one of these contracts fails to perform according to the terms of the contract. Credit risk associated with foreign exchange forward contracts is minimized by entering into such transactions with major Canadian and U.S. financial institutions.

In the normal course of business, the Company is exposed to credit risk from its customers. The Company has three customers whose sales were 27.0%, 22.5%, and 12.0% of its production sales for the three months ended March 31, 2024 (2023 - 26.4%, 17.4%, and 16.5%). A substantial portion of the Company’s trade receivables are with large customers in the automotive, truck and industrial sectors and are subject to normal industry credit risks. The level of trade receivables that were past due as at March 31, 2024 is within the normal payment pattern of the industry. The allowance for doubtful accounts is less than 1.0% of total trade receivables for all periods and movements in the period were minimal.

The aging of trade receivables at the reporting date was as follows:

		March 31, 2024	December 31, 2023
0-60 days	$	769,933 $	633,984
61-90 days		5,454	2,158
Greater than 90 days		8,498	7,817
	$	783,885 $	643,959

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company manages liquidity risk by monitoring sales volumes and collection efforts to ensure sufficient cash flows are generated from operations to meet its liabilities when they become due. Management monitors consolidated cash flows on a weekly basis covering a rolling 12-week period, quarterly through forecasting and annually through the Company’s budget process. At March 31, 2024, the Company had cash of $173,694 (December 31, 2023 - $186,804) and banking facilities available as discussed in note 8. All of the Company’s financial liabilities other than long-term debt have maturities of approximately 60 days.

A summary of contractual maturities of long-term debt is provided in note 8.

(c) Interest rate risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in the market interest rates. The Company is exposed to interest rate risk as a significant portion of the Company’s long-term debt bears interest at rates linked to the US prime, Canadian prime, SOFR or the CORRA rates. The interest on the bank facility fluctuates depending on the achievement of certain financial debt ratios.

The interest rate profile of the Company’s long-term debt was as follows:

	Carrying amount
	March 31, 2024 December 31, 2023
Variable rate instruments Fixed rate instruments	$ 1,003,445 $ 938,129 26,749 31,107
	$ 1,030,194 $ 969,236

Sensitivity analysis

An increase of 1.0% in all variable interest rate debt would, all else being equal, have an effect of $2,486 (2023 - $2,692) on the Company’s consolidated financial results for the three months ended March 31, 2024.

(d) Currency risk

Currency risk refers to the risk that the value of the financial instruments or cash flows associated with the instruments will fluctuate due to changes in foreign exchange rates. The Company undertakes revenue and purchase transactions in foreign currencies, and therefore is subject to gains and losses due to fluctuations in foreign currency exchange rates. The Company’s foreign exchange risk management includes the use of foreign currency forward contracts to fix the exchange rates on certain foreign currency exposures.

At March 31, 2024, the Company had committed to the following foreign exchange contracts:

Page 18 Martinrea International Inc.

Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

Foreign exchange forward contracts not accounted for as hedges and fair valued through profit or loss

				Weighted average
			Amount of U.S.	exchange rate of	Maximum period in
	Currency		dollars	U.S. dollars	months
BuyMexican Peso		$	62,806 $	16.7979	1

The aggregate value of these forward contracts as at March 31, 2024 was a pre-tax gain of $796 and was recorded in trade and other receivables (December 31, 2023 - pre-tax gain of $3,937 recorded in trade and other receivables).

The Company’s exposure to foreign currency risk reported in the foreign currency was as follows:

March 31, 2024		USD	EURO	PESO	BRL	CNY
Trade and other receivables	$	418,975 €	119,276 $	100,474 R$	37,412 ¥	130,637
Trade and other payables		(504,209)	(212,172)	(709,992)	(66,729)	(115,534)
Long-term debt		(441,000)	(7,991)	-	-	-
	$	(526,234)€	(100,887)$	(609,518)R$	(29,317)¥	15,103
December 31, 2023		USD	EURO	PESO	BRL	CNY
Trade and other receivables	$	355,463 €	95,758 $	94,082 R$	34,796 ¥	104,647
Trade and other payables		(491,150)	(215,929)	(570,269)	(71,276)	(111,242)
Long-term debt		(401,000)	(9,842)	-	-	-
	$	(536,687)€	(130,013)$	(476,187)R$	(36,480)¥	(6,595)

The following summary illustrates the fluctuations in the foreign exchange rates applied:

	Average rate Closing rate
	Three months ended March 31, 2024 Three months ended March 31, 2023 March 31, 2024 December 31, 2023
USD EURO PESO BRL CNY	1.3451 1.3476 1.3540 1.3204 1.4642 1.4388 1.4608 1.4598 0.0786 0.0708 0.0814 0.0781 0.2735 0.2587 0.2700 0.2729 0.1878 0.1956 0.1874 0.1859

Sensitivity analysis

The Company does not have significant foreign currency exposure based on each subsidiary’s functional currency. However, a 10% strengthening of the Canadian dollar against the following currencies at March 31 would give rise to a translation risk on net income and would have increased (decreased) equity, profit or loss and comprehensive income for the three months ended March 31, 2024 and 2023 by the amounts shown below, assuming all other variables remain constant:

		Three months ended	Three months ended	Three months ended
		March 31, 2024		March 31, 2023
USD	$	(5,181)	$	(5,910)
EURO		(948)		298
BRL		42		(70)
CNY		270		(78)
	$	(5,817)	$	(5,760)

A weakening of the Canadian dollar against the above currencies at March 31 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(e) Capital risk management

The Company's objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with complementary acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its equity, which is comprised of issued capital, contributed surplus, accumulated other comprehensive income and retained earnings, and debt.

Page 19 Martinrea International Inc.

Martinrea International Inc. Notes to the Interim Condensed Consolidated Financial Statements

(in thousands of Canadian dollars, except per share amounts)

The Company manages its capital structure and makes adjustments in light of general economic conditions, the risk characteristics of the underlying assets and the Company's working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue or repay long-term debt, issue shares, repurchase shares, or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as annual capital and operating budgets.

In addition to debt and equity, the Company may use leases as additional sources of financing. The Company monitors debt leverage ratios as part of the management of liquidity and shareholders’ return and to sustain future development of the business. The Company is not subject to externally imposed capital requirements and its overall strategy with respect to capital risk management remains unchanged from the prior year.

16. CONTINGENCIES

Contingencies

The Company has contingent liabilities relating to legal and tax proceedings arising in the normal course of its business. Known claims and litigation involving the Company or its subsidiaries were reviewed at the end of the reporting period. Based on the advice of legal counsel, all necessary provisions have been made to cover the related risks, however, there can be no assurance as to the final resolution of any claims and any resulting proceedings. If any claims and ensuing proceedings are determined adversely to the Company, the amounts the Company may be required to pay could be material and in excess of any amounts accrued. In addition, new proceedings may be initiated against the Company as a result of facts or circumstances unknown at the date of these interim condensed consolidated financial statements or for which the risk cannot yet be determined or quantified. Such proceedings could have a significant adverse impact on the Company’s financial results.

Tax contingencies

The Company is subject to tax audits in various jurisdictions. Reviews by tax authorities generally focus on, but are not limited to, the validity of the Company’s intra-company transactions, including financing and transfer pricing policies which may involve subjective areas of taxation and significant judgement, and value added tax (“VAT”) credits claimed on certain purchases.

The Company’s subsidiary in Brazil, Martinrea Honsel Brazil Fundicao e comercio de Pecas em Alumino Ltda., is currently being assessed by the State of Sao Paulo’s tax authorities for certain historical VAT credits claimed on aluminum purchases from certain local suppliers that occurred prior to the acquisition of the Brazil subsidiary in 2011. The taxation system and regulatory environment in Brazil is characterized by numerous indirect taxes and frequently changing legislation subject to various interpretations by the various Brazilian regulatory authorities who are empowered to impose significant fines, penalties and interest charges. The basis for the assessments stems from the classification of aluminum purchases, the registration status of the aluminum suppliers in question and the differing treatments between manufactured and unmanufactured aluminum for VAT purposes. The potential exposure under these assessments, based on the notices issued by the tax authorities and most recent developments surrounding the assessments, is approximately $43,855 (BRL $162,406) including interest and penalties to March 31, 2024 (December 31, 2023 - $42,539 or BRL $155,897). The Company has sought external legal advice and believes that it has complied, in all material respects, with the relevant legislation and will continue to vigorously defend against the assessments. The amounts of certain assessments have decreased due to successful challenges by the Company’s subsidiary at preliminary stages of the proceedings. The assessments are at various stages in the process. Three assessments totaling $25,694 (BRL $95,151) including interest and penalties as at March 31, 2024 have entered the judicial litigation process. The Company’s subsidiary may be required to present guarantees related to these assessments up to $24,433 (BRL $90,481) shortly through a pledge of assets, bank letter of credit or cash deposit. No provision has been recorded by the Company in connection with this contingency as, at this stage, the Company has concluded that it is not probable that a liability will result from the matter.

The Company’s subsidiary in Queretaro, Mexico, Martinrea Honsel Mexico, S.A. de C.V., is currently being assessed by the Mexican Federal Tax Authorities for tax deductions taken mainly in respect of certain intra-company transactions. The potential exposure under these assessments, based on the notices issued by the tax authorities, is approximately $96,306 (MXN $1,183,062) including interest and penalties to March 31, 2024 (December 31, 2023 - $91,423 or MXN $1,170,668). The Company has sought external legal advice and believes that it has complied, in all material respects, with the relevant legislation and will continue to vigorously defend against such assessments. No provision has been recorded by the Company in connection with this contingency as, at this stage, the Company has concluded that it is not probable that a liability will result from the matter.

17. GUARANTEES

The Company is a guarantor under a tooling financing program. The tooling financing program involves a third party that provides tooling suppliers with financing subject to a Company guarantee. Payments from the third party to the tooling supplier are approved by the Company prior to the funds being

Page 20 Martinrea International Inc.

Notes to the Interim Condensed Consolidated Financial Statements

Martinrea International Inc.

(in thousands of Canadian dollars, except per share amounts)

advanced. The amounts loaned to the tooling suppliers through this financing arrangement do not appear on the Company’s interim condensed consolidated balance sheet unless the sale on the corresponding tooling project has been recognized, at which point a tooling trade payable on the project is recorded. At March 31, 2024, the amount of the off-balance sheet program financing was $21,372 (December 31, 2023 - $16,457) representing the maximum amount of undiscounted future payments the Company could be required to make under the guarantee.

The Company would be required to perform under the guarantee in cases where a tooling supplier could not meet its obligations to the third party. Since the amount advanced to the tooling supplier is required to be repaid generally when the Company receives reimbursement from the final customer, and at this point the Company will in turn repay the tooling supplier, the Company views the likelihood of the tooling supplier default as remote. No such defaults occurred during 2023 or 2024. Moreover, if such an instance were to occur, the Company would obtain the tooling inventory. The term of the guarantee will vary from program to program, but typically range up to twenty-four months.

Page 21 Martinrea International Inc.