Martinrea International Inc. · TSX:MRE
Martinrea International — Shareholder Meeting (June 2024)
40 slides from Martinrea International's shareholder meeting presentation, Jun 12, 2024
Slide 1: 2024 Annual General Meeting
2024 ANNUAL GENERAL MEETING June 12, 2024 | 10:00 AM www.martinrea.com
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of applicable securities laws (“forward-looking statements”), including, but not limited to, statements relating to the Company’s beliefs or views or expectations of, improvements in, expansion of and
Slide 3: Agenda: Formal Business and Presentations
AGENDA FORMAL BUSINESS PRESENTATIONS • Chairman’s Opening Remarks and Call to Order – CEO’s Address – Appointment of Secretary and Scrutineer – President & CFO’s Address – Quorum and Constitution of Meeting – Chairman’s Address • Financial Statements – Question Period • Election of Directors • Appoi
Slide 4: Pat D'Eramo, Chief Executive Officer
PAT D’ERAMO CHIEF EXECUTIVE OFFICER www.martinrea.com
Slide 5: 2023 Highlights
2023 HIGHLIGHTS Record Adjusted EBITDA of Record sales of $5.34B Continued growth in $616.7M and record Free billion – a 12.2% increase Adjusted Operating Income Cash Flow of $195.4M from 2022 Margin (5.6% in 2023 vs. ($148.2M including IFRS 16 4.8% in 2022) lease payments) Deleveraging – Net Debt-
Slide 6: Sustainability Achievements
SUSTAINABILITY ACHIEVEMENTS Carbon Efficiency Energy Efficiency Renewable Energy Carbon intensity has Energy intensity has Approximately 36% of our reduced by 32% since reduced by 23% since electricity usage is obtained 2019 baseline 2019 baseline through renewable energy sources www.martinrea.com |
Slide 7: Sustainability Achievements
SUSTAINABILITY ACHIEVEMENTS 2035 Carbon Goal Employee Resource Groups CADIA Recognition Proceeding toward 2023 CADIA Impact Award Winner reducing carbon in two categories: emissions by 35% by - Systemic Change 2035 (vs. 2022) without - Leadership Commitment for the use of carbon credits advancing DE
Slide 8: Status of Operations
STATUS OF OPERATIONS Operationally, we continue to perform very well. Commercial activity to offset Industry headwinds inflationary cost pressures and continue to improve. volume shortfalls continues. Slow ramp-up in EV programs is NA production volumes resulting in underutilized assets rebounded in
Slide 9: NA EV Production Forecast
NA EV PRODUCTION FORECAST (MARCH 2024 VS. AUGUST 2023) NA BEV Production Volume EU BEV Production Volume 9.0 8.0 7.0 22% forecast reduction for 6.0 26% forecast 2026 In Millions of Units 18% forecast reduction for 5.0 reduction for 2025 2024 4.0 Further forecast cuts likely based on revised OEM prod
Slide 10: Current Customer Extension Plans
CURRENT CUSTOMER EXTENSION PLANS $1,800 Revenue From ICE/Hybrid Program Extensions $1,600 $1,400 (Millions of CAD) $1,200 $1,000 $800 $600 $400 $200 $0 2025 2026 2027 2028 Total Confirmed Under Study Potential www.martinrea.com | 10
Slide 11: A Closer Look at EV Transition
A CLOSER LOOK AT EV TRANSITION 80% of products are agnostic to 20% of products transitioning electrification with market change www.martinrea.com | 11
Slide 12: Martinrea Innovation Development (MiND)
MARTINREA INNOVATION DEVELOPMENT (MiND) •Incubate, develop and fund innovative PURPOSE technologies that are strategic to Martinrea’s portfolio • Manufacturing support PARTNERS • Product development • Supply chain management • Other functional disciplines MiND • NanoXplore – 22.7% equity interest IN
Slide 13: Effenco ultracapacitor systems
Effenco® designs, manufactures and markets ultracapacitor systems, • The Effenco® Hybrid electric system is focused on the which reduces: heavy-duty vocational truck market. • Effenco® is a Global Cleantech 100 company and a global technology leader in the innovative use of Greenhouse Gas Emissions
Slide 14: Progress Report: Effenco
PROGRESS REPORT Developed Hybrid-S version of the Effenco system utilizing Superbatteries, offering a step change in emission reductions Effenco’s answer to the industry is an evolution of its current product to create a Zero Emission Vehicle perfectly tailored for the heavy-duty vocational market H
Slide 15: Progress Report: Effenco agreements
PROGRESS REPORT Signed Customer Agreement with Derichebourg Large public company (ENXTPA:DBG), providing various services, including waste collection and recycling, in 13 countries. Signed Distribution Agreement with DLS Distributor of Allison Transmission product and Toyota fuel cells for the BENEL
Slide 16: MiNDCAN specialized software
• MiNDCAN provides specialized software that meets the unique needs of complex organizations. • MiNDCAN provides purpose-specific solutions that works for organizations. • MiNDCAN products are developed by users with a proven track record. www.martinrea.com | 16
Slide 17: Progress Report: MiNDCAN customers
PROGRESS REPORT 75 50 Lead Type Leads # # of Customers 35 Active* 19 Preliminary+ 54 20 * Demo Completed and Pricing proposal discussion in-progress 10 + Initial outreach, Demo scheduled/conducted 2024 2025 2026 2027 2028 www.martinrea.com | 17
Slide 18: Equispheres investment
Private company developing Equispheres’ powder enables Equispheres’ high-performance technologies for the production printing speeds up to nine times powders have the potential to of advanced materials, including faster than industry standards. enhance design flexibility, high-performance aluminum i
Slide 19: Fred Di Tosto, President and CFO
FRED DI TOSTO PRESIDENT AND CHIEF FINANCIAL OFFICER www.martinrea.com
Slide 20: Overview of 2023 Results
OVERVIEW OF 2023 RESULTS 2023 results were up sharply on higher sales and margins as supply chain and inflationary cost headwinds continued to ease. 2023 Free Cash Flow was a new record for the Company. In Canadian Dollars 2023 2022 Production Sales $4,909.7M $4,455.8M Tooling Sales $430.3M $301.8M
Slide 21: Q1 2024 Results – Compared to Q4 2023
Q1 2024 RESULTS – COMPARED TO Q4 2023 Q1 2024 was a good start to the year as we bounced back from disruptions related to the UAW strike and Tier 2 supplier issue that impacted the fourth quarter. In Canadian Dollars Q1 2024 Q4 2023 Production sales were up approximately 8%, as industry production v
Slide 22: Balance Sheet
BALANCE SHEET NET DEBT - Excluding IFRS-16 ($ Millions) $1,200.0 Q1 2024 net debt (excluding the impact of $1,000.0 IFRS-16) increased by approximately $74 $800.0 million compared to Q4 2023, reflecting $600.0 foreign exchange translation and: $908.7 $955.9 $937.4 $889.2 $400.0 $857.7 $782.4 $856.5
Slide 23: 2024 Outlook
2024 OUTLOOK 2024F 2023A TOTAL SALES $5.0-$5.3B $5.34B ADJUSTED OPERATING INCOME MARGIN 5.7%-6.2% 5.6% Approximately $340M CAPEX Approximating depreciation and amortization expense $295.3M for the year FREE CASH FLOW* $100M-$150M $195.4M (before IFRS 16 lease payments) * Note: Including IFRS 16 leas
Slide 24: Our Margins Are Among the Best in Our Peer Group
OUR MARGINS ARE AMONG THE BEST IN OUR PEER GROUP LTM Adjusted Operating Income / Adjusted EBIT Margin as of Q1 2024 8.0% 5.6% 5.3% 5.3% 6.0% 5.2% 4.9% 4.3% 3.9% 4.0% 3.2% 2.7% 2.0% 0.0% *TI Fluid Systems is based on 2023 figures, as the Company reports its financial results semi-annually www.martinr
Slide 25: Our Free Cash Flow Profile Is Industry-Leading
OUR FREE CASH FLOW PROFILE IS INDUSTRY-LEADING LTM Free Cash Flow (as a % of Sales) as of Q1 2024 6.0% 4.2% 4.0% 3.5% 2.7% 2.0% 0.9% 0.8% 0.5% 0.2% 0.0% -0.2% -2.0% -4.0% Martinrea American TI Fluid Dana Gestamp Magna Cooper Linamar Axle Systems* Standard *TI Fluid Systems is based on 2023 figures,
Slide 26: Our Leverage Ratio Is in the Lower Range of Peers
OUR LEVERAGE RATIO IS IN THE LOWER RANGE OF OUR INDUSTRY PEERS Net Debt / LTM EBITDA (excl. IFRS-16 lease liabilities) as of Q1 2024 6.00x 4.00x 2.00x 5.37x 3.17x 2.85x 2.63x 1.51x 1.51x 1.33x 1.22x 1.16x 0.00x *TI Fluid Systems is based on 2023 figures, as the Company reports its financial results
Slide 27: Rob Wildeboer, Executive Chairman
ROB WILDEBOER EXECUTIVE CHAIRMAN www.martinrea.com
Slide 28: Vision, Mission and Principles
VISION, MISSION AND PRINCIPLES Vision 10 Guiding Principles Making lives better by being the best supplier we can be Our success will be based on the execution of our guiding in the products we make and the services we provide. principles, applied with integrity, in all that we do: Mission We make p
Slide 29: Making Lives Better
MAKING LIVES BETTER www.martinrea.com | 29
Slide 30: Total Recordable Injury Frequency (TRIF)
SAFETY Martinrea achieved a Total Recordable Injury Frequency of 1.10 in 2023, less than half the industry average Martinrea's Company-Wide Safety Performance 9.0 (# OF RECORDABLE INJURIES PER MONTH X 200,000 / TOTAL TOTAL RECORDABLE INJURY FREQUENCY (TRIF) 8.0 8.48 7.0 HOURS WORKED IN EACH MONTH) 6
Slide 31: Employee Survey Results
EMPLOYEE SURVEY RESULTS I fully understand my job role Our location works to improve and responsibilities health and safety 95% 89% I feel a sense of personal accomplishment at the end of the workday I respect my plant General Manager 82% 95% Martinrea prioritizes and My direct supervisor treats me
Slide 32: 2023 Share Price Performance
2023 SHARE PRICE PERFORMANCE 2023 Share Price Return 115.7% 120% 100% 80% 60% 43.9% % Return 40% 27.4% 20% 13.9% 12.7% 5.2% 4.4% 2.3% 0% -2.9% -3.4% -20% -10.9% -40% -25.5% Source: S&P Capital IQ www.martinrea.com | 32
Slide 33: Five-Year Share Price Performance
FIVE-YEAR SHARE PRICE PERFORMANCE Five-Year Share Price Return (as of December 31, 2023) 80% 56.9% 60% 41.3% 40% 32.0% 30.0% 20% 14.9% 7.2% 3.2% % Return 0% -20% -12.7% -20.6% -40% -29.4% -60% -80% -68.5% -71.7% Source: S&P Capital IQ www.martinrea.com | 33
Slide 34: Sales
Tooling s a le s we re SALES e le va te d in 2023 a nd a re e xpe cte d to norma lize in 2024. 5,500 Assembly business changed to a 5,340 purcha s e d compone nt cons ignme nt Drive n by 5,000-5,300 mode l re s ulting in de cre a s e in 2017 COVID-19 pa nde mic 430 5,000 de s pite s a me le ve l of
Slide 35: Adjusted Operating Income Margin %
ADJUSTED OPERATING INCOME MARGIN Decrease due to the impact 9% of the UAW-GM s trike a nd Re cove ry of highe r tooling s a le s infla tiona ry cos t 8% impa ct through 7.8% comme rcia l 7.5% a ctivity ADJUSTED OPERATING INCOME MARGIN % 7% Drive n by COVID- 6.4% 19 pa nde mic a nd 6% re la te d s up
Slide 36: Adjusted Net Earnings Per Share
ADJUSTED NET EARNINGS PER SHARE EPS supported by share 250 EPS supported by share 2019, Decrease due to the impact $2.50 repurchases in 2018, repurchases in 2018, of the UAW-GM strike and 20232019, $2.22 $2.27 $2.22 and 2023 Driven by chip 200 $1.91 and other supply $2.00 shortages 193 $1.76 IN MILL
Slide 37: Reasons to Support Our Positive Long-Term Outlook
REASONS TO SUPPORT OUR POSITIVE LONG-TERM OUTLOOK INDUSTRY SPECIFIC U.S. Light Vehicle Sales (SAAR) • North American vehicle production 20 and sales volumes are solid. Millions of Units 15 10 5 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-2011 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-201
Slide 38: Reasons to Support Our Positive Long-Term Outlook: Industry
REASONS TO SUPPORT OUR POSITIVE LONG-TERM OUTLOOK INDUSTRY SPECIFIC • Demand is strong, particularly in the U.S. – Average vehicle age in the U.S. is at an all-time high of 12.6 years. – Population is increasing. • Interest rates are flattening and more likely to come down. • The U.S. economy is in
Slide 39: Reasons to Support Our Positive Long-Term Outlook: Company
REASONS TO SUPPORT OUR POSITIVE LONG-TERM OUTLOOK COMPANY SPECIFIC • Despite positive share price performance, our stock remains “cheap” based on standard valuation metrics. • Our financial metrics are solid. – Adjusted Operating Income Margin at or near the top of our peer group. – Industry-leading
Slide 40: Stay Connected
STAY CONNECTED Martinrea International Martinrea International @MartinreaInternationalInc @MartinreaInternational www.martinrea.com | 40
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