Martinrea International Inc. · TSX:MRE
Martinrea International — Q4 2023 Earnings Presentation
29 slides from Martinrea International's earnings presentation, February 2024
Slide 1: Empowering Innovation: Q4 2023 Results
EMPOW ERING INNOVATION Q4 2023 RESULTS
Slide 2: Agenda
AGENDA ROB W ILDEBOER EXECUTIVE CHAIRMAN PAT D’ERAMO C EO FRED DI TOS TO PRES IDENT AND C HIEF FINANC IAL OFFIC ER PAT D’ERAMO C EO Q& A www.martinrea.com | 2
Slide 3: Forward-Looking Statements
FORWARD- LOOK ING S TATEMENTS 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
Slide 4: Rob Wildeboer, Executive Chairman
ROB W ILDEBOER EXECUTIVE CHAIRMAN www.martinrea.com | 4
Slide 5: Safety: Total Recordable Injury Frequency (TRIF)
S AFETY Martinrea achieved a Total Recordable Injury Frequency of 1.10 in 2023, less than half the industry average Martinrea's Company-Wide Safety Performance 10.0 (# OF RECORDABLE INJURIES PER MONTH X 200,000 / TOTAL TOTAL RECORDABLE INJURY FREQUENCY (TRIF) 9.0 8.88 8.0 HOURS WORKED IN EACH MONTH)
Slide 6: Employee Survey Results
EMPLOY EE S URV EY RES ULTS I fully understand my job role Our location works to improve and responsibilities health and safety I feel a sense of personal accomplishment at the end of the workday I respect my plant General Manager Martinrea prioritizes and My direct supervisor treats me encourages d
Slide 7: Martinrea's Culture
MARTINREA’S C ULTURE www.martinrea.com | 7
Slide 8: 2023 Highlights
20 23 HIGHLIG HTS Record Adjusted EBITDA of Record revenues of $5.34 19,000 employees – up 3.3% $616.7 million, and Record billion – a 12.2% increase from from 2022 (on a 12.2% Free Cash Flow of $195.4 2022 increase in revenue) million Continued growth in Adjusted EPS of $2.22 – up Deleveraging – Ne
Slide 9: 2023 Highlights
20 23 HIGHLIG HTS Maintained $0.05 quarterly Repurchased approximately Won multiple quality awards dividend to shareholders 2.3 million shares under our Normal Course Issuer Bid at a cost of approximately $29.1 million While continuing to invest in Continued to invest in leading- Established MiNDCAN
Slide 10: Pat D'Eramo, CEO
PAT D’ERAMO CEO www.martinrea.com | 10
Slide 11: Q4 2023 Highlights
Q4 20 23 HIGHLIGHTS $1,296.1M $0.37 $140.1M TOTAL SALES ADJUSTED ADJUSTED EBITDA EPS (10.8% MARGIN) $56.6M $119.9M ADJUSTED FREE OPERATING INCOME (4.4% MARGIN) CASH FLOW $1,168.7M PRODUCTION SALES www.martinrea.com | 11
Slide 12: Status of Operations
S TATUS OF OPERATIONS Production volumes remain stable in North We are making steady progress operationally. America but weaker and below planned levels in Europe and China. Industry headwinds (e.g., supply We incurred $28 million in shortages, inflationary cost pressures, restructuring and impairme
Slide 13: New Business Awards
NEW BUS INES S AWARDS LIGHTWEIGHT STRUCTURES PROPULSION SYSTEMS $ 6 5 M In Annualized Sales $ 10 M In Annualized Sales 2 0 2 4 -2 0 2 6 Start of Production 2 0 2 4 -2 0 2 5 Start of Production TOTAL TOTAL OVER LAST FOUR QUARTERS $ 75 M In Annualized Sales $ 3 75 M In Annualized Sales In addition, we
Slide 14: Sustainability Achievements
S US TAINABILITY AC HIEV EMENTS Carbon Efficiency Energy Efficiency Renewable Energy Carbon intensity (carbon Energy intensity (energy Approximately 36% of our emissions relative to sales) consumption relative to electricity usage globally is has reduced by 32% since sales) has reduced by 23% obtain
Slide 15: Sustainability Achievements
S US TAINABILITY AC HIEV EMENTS 2035 Carbon Goal Employee Resource Groups CADIA Recognition On track to reduce carbon 2023 CADIA Impact Award emissions by 35% by 2035 Winner in two categories: (vs. 2022) – without the - Systemic Change use of carbon credits Women at Martinrea Minds Matter - Leadersh
Slide 16: Fred Di Tosto, President and CFO
FRED DI TOS TO PRESIDENT AND CHIEF FINANC IAL O FFIC ER www.martinrea.com | 16
Slide 17: Sequential Comparison to Q3 2023
S EQUENTIAL C OMPARS ION TO Q3 20 23 Q4 2023 results were impacted by lost sales due to the UAW strike, and a Tier 2 supplier disruption, both of which are now behind us. In Canadian Dollars Q4 2023 Q3 2023 Production sales declined approximately 7%, largely reflecting Production Sales $1,168.7M $1,
Slide 18: Year-over-Year Comparison
Y EAR- OV ER- Y EAR C OMPARS ION Adjusted Operating Income and Adjusted EBITDA declined year-over-year on sales that were about flat, due to a Tier 2 supplier disruption, and a less favourable geographic sales mix. In Canadian Dollars Q4 2023 Q4 2022 Production Sales $1,168.7M $1,173.6M Tooling Sale
Slide 19: Balance Sheet
BALANC E S HEET Q4 2023 net debt (excluding the impact of IFRS-16) declined by approximately $107 million compared NET DEBT - Excluding IFRS-16 ($ Millions) to Q3 2023, reflecting strong Free $1,200.0 Cash Flow generation. $1,000.0 $800.0 $600.0 Net-debt-to-Adjusted EBITDA ended $400.0 $662.6 $682.4
Slide 20: 2024 Outlook
20 24 OUTLOOK 2024F 2023A TOTAL SALES $5.0-$5.3B $5.34B ADJUSTED OPERATING 5.7%-6.2% 5.6% INCOME MARGIN Approximately $340M CAPEX Approximating depreciation and amortization expense for $295.3M the year FREE CASH FLOW $100M-$150M $195.4M www.martinrea.com | 20
Slide 21: Pat D'Eramo, CEO
PAT D’ERAMO CEO www.martinrea.com | 21
Slide 22: Capital Allocation Framework
C APITAL ALLOC ATION FRAMEW ORK Invest to Maintain and Maintain Strong Return Capital to Grow Our Business Balance Sheet Shareholders • Organic opportunities • Targeted Net Debt/Adjusted EBITDA • Repurchase shares with excess • Invest in R&D and product offering ratio of ~1.5x or better liquidity (a
Slide 23: Thank You / Q&A
THANK YOU Q&A www.martinrea.com | 23
Slide 24: Appendix
APPENDIX www.martinrea.com | 24
Slide 25: Q4 Sales
Q4 S ALES $1,400 $1,200 +0.1% YoY • Sales essentially flat (up 0.1% over Q4 2022): $1,000 – Production sales down 0.4% Sales ($ Millions) $800 – Tooling sales up 5.3% $1,294.6 $1,296.1 • Decrease in production sales due to: $600 $400 – UAW strike at General Motors, Ford, and Stellantis which impacte
Slide 26: Q4 Adjusted Operating Income Margin
Q4 ADJUS TED OPERATING INC OME MARGIN • Adjusted Operating Income Margin declined 110bps year-over- 6.0% year, reflecting: − Decremental margins on lost production sales due to the Adjusted Operating Income Margin (%) UAW strike. − A Tier 2 supplier disruption during the quarter. − A negative geogra
Slide 27: Q4 Adjusted Net Earnings per Share
Q4 ADJUS TED NET EARNINGS PER S HARE • Adjusted EPS of $0.37 declined year-over-year, reflecting: $0.60 – The factors impacting sales and margins described earlier. Adjusted Earnings Per Share ($) – Higher interest expense reflecting increased borrowing rates on the $0.40 Company’s revolving bank de
Slide 28: Q4 Free Cash Flow
Q4 FREE C AS H FLOW • Free Cash Flow improved year-over-year, and was a record for the Company, reflecting: $150 – An increase in cash provided by non-cash working capital. – Lower capex. Free Cash Flow ($ Millions) $100 $119.9 $50 $15.6 $0 Q4 2022 Q4 2023 www.martinrea.com | 28
Slide 29: Connect With Us
C ONNEC T W ITH US www.martinrea.com
Martinrea International — Q4 2023 Earnings Presentation on 6ix