Slide 1: 2023 Q2 Conference Call Presentation
2023 Q2 Conference Call Presentation Linda Hasenfratz, Executive Chair & CEO August 9, 2023 For Audio Only Dial in: North America: (888) 396-8049 International: (416) 764-8646 Conference ID: 73928638
Slide 2: Forward Looking Information, Risk and Uncertainties
Forward Looking Information, Risk and Uncertainties Certain information regarding Linamar set forth in this presentation and oral summary, including management’s assessment of the Company’s future plans and operations may constitute forward-looking statements. This information is based on current ex
Slide 3: Sales, Normalized Earnings and CPV
Sales, Normalized¹ Earnings and CPV 1 - The Company uses certain non-GAAP and other financial measures to provide useful information to both management, investors, and other stakeholders in assessing financial performance and financial condition of the Company. For more information refer to the sect
Slide 4: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings1, and Margins (in millions CAD) %Δ Q2 2023 The key impacts to the segments vs prior Q2 2023 Q2 2022 year are: Sales 2,552.8 1,981.6 28.8% The key factors impacting results in the Mobility quarter are: ▪ Markets up 16% Industrial Sales 777.3 504.6 54.0% ▪ Excellent performa
Slide 5: Automotive Sales & Content Per Vehicle (CPV)
Automotive Sales & Content Per Vehicle2 (CPV) CPV Q2 2023 CPV Q2 2022 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q2 2023 Sales Q2 2022 Sales % Change (CAD Millions) (CAD Millions) North America 234.25 236.14 (0.8%) 15.2% 993.0 870.2 14.1% Europe 104.76 99.7
Slide 6: Commercial & Industrial Sales (in millions CAD)
Commercial & Industrial Sales2 (in millions CAD) MacDon Q2 2023 Q2 2022 % Change ▪ Combine draper market up strongly in NA, Australia ▪ Global market share growth in combine drapers Sales 865.7 576.1 50.3% Salford ▪ Strong quarter well up from prior year is enhancing ag business growth Skyjack ▪ Glo
Slide 7: Capital Expenditures (in millions CAD)
Capital Expenditures (in millions CAD) Q2 2023 Q2 2022 ▪ Capex has trended back to our normal 6-8% of sales levels in 2023 as expected Capital Expenditures (Capex) 205.4 84.9 ▪ 6-8% of sales investment in capex drives double digit sales growth Capex as a % of Sales 8.0% 4.3% Capex Capex as a % of Sa
Slide 8: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1,300 1,200 ▪FCF1,2 positive on strong earnings despite heavier capex; 1,100 1,000 900 ▪Liquidity1 remains excellent with $1.8 800 700 billion of cash available at quarter end $ Millions 600 ▪ Note a portion of this is earmarked for 500 the Dura Shiloh acquis
Slide 9: Leverage (in millions CAD)
Leverage (in millions CAD) Q2 2023 Q1 2023 Q2 2022 ▪ Balance sheet has remained consistently strong and is in excellent shape at 0.42x Net Debt to EBITDA Net Debt1 492.9 475.5 337.4 ▪ Solid liquidity and balance sheet positions us well for Net Debt to EBITDA2 0.42x 0.43x 0.35x continued acquisition
Slide 10: Markets, Backlog and Sales Outlook
Markets, Backlog and Sales Outlook
Slide 11: Market Snapshot
Market Snapshot Commercial Commercial 2023 Light Vehicle Truck Agriculture Access 2024 Light Vehicle Truck Access North North America ▲8.2% ▲7.7% ▲5.0% ▲9.2% America ▲2.4% ▼13.4% ▲4.3% Europe Europe ▲10.1% ▲2.8% 0% ▲9.3% ▼0.9% ▲0.3% ▲5.1% Asia ▲3.3% ▲26.7% n/a ▲13.4% Asia ▲1.5% ▲8.4% ▲7.7% Rest of R
Slide 12: Industrial Segment - Access
Industrial Segment - Access Access Equipment Market Commentary Access Industry YTD Results & Forecast % Change vs. Prior Year ▪ Rental demand is strong as companies look to counter fleet aging experienced during COVID. 30% ▪ Stable end market demand activity with equipment utilization in 27% 26% lin
Slide 13: Industrial Segment - Agriculture
Industrial Segment - Agriculture North American Combine Retails 3,000 Agriculture Market Commentary 2,000 • Although still an issue, improvement in supply chains helping to 1,000 reduce delivery times and increase production • Inventory at Ag. equipment retailers remains below historical 0 levels wh
Slide 14: US Light Vehicle Inventory – Days' Supply
US Light Vehicle Inventory – Days’ Supply Inventory trending slowly upwards, but still well below industry norm of 60 days’ supply 180 160 140 120 100 80 60 40 20 76 69 95 119 61 59 55 52 50 59 55 48 61 54 39 33 25 27 24 25 24 26 24 25 26 24 27 25 25 28 27 29 32 35 37 36 39 37 36 35 33 36 34 0 Jan-2
Slide 15: Global Light Vehicle Market: Q2 2023, Q3 2023, and 2023
Global Light Vehicle Market: Q2 2023, Q3 2023, and 2023 Q2 2023 production increased by 0.5M units. Q3 2023 forecast increased by 0.4M units. 2023 full-year forecast increased by 1.2M. ▪ Q2 2023 production increased by 494,480 units on ▪ Q3 2023 forecast increased by 395,256 units ▪ 2023 full-year o
Slide 16: Strong EV Wins Dramatically Shifting Linamar Sales Mix
Strong EV Wins Dramatically Shifting Linamar Sales Mix Electrified Vehicle & Propulsion Agnostic Electrified Vehicle & Propulsion Agnostic New Sales Business Wins 60% % of Total Light Vehicle Sales % of Total Mobility NBWs 60% 55% 56% 58% 50% 50% 45% 40% 40% 30% 35% 20% 30% 25% 10% 20% 0% 2021 2022
Slide 17: Mobility Launches
Mobility Launches 4.00 Launching nearly $4.5 Billion of new work today 3.50 3.00 2.50 CAD (Billions) 2.00 1.50 1.00 0.50 0.00 2022 2023 2024 2025 2026 2027 Incremental Growth from Launches $700 to $800 Million in 2023 $800 to $900 Million in 2024 Updated: July 2023 © Linamar Corporation 17
Slide 18: Outlook
Outlook © Linamar Corporation 18
Slide 19: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q3 ‘23 Expectations Normalized EPS Growth 1 -4.1% Significant Double Digit Growth Double Digit Growth 1 ▪ Mobility Normalized Net Margin 7.0% - 9.0% 5.1% Exp
Slide 20: Operational Update
Operational Update © Linamar Corporation 20
Slide 21: Acquisition of Dura-Shiloh Battery Enclosures Facilities
Acquisition of 3 Dura-Shiloh Battery Enclosures Facilities Transaction Details Products Battery Enclosure Assemblies ▪ Deal signed May 30th, Closed August 3rd ▪ $325M USD Transaction Price ▪ Accelerates Linamar Electrification Strategy and portfolio expansion ▪ Highlights Linamar’s strategic focus o
Slide 22: Linamar Structures Group
Linamar Structures Group A Fully EV and Propulsion Agnostic Group – Already ~$1 Billion Sales at Peak and Growing HPDC Battery Enclosure Plants Mills River Dura Shiloh 3 Plants Giga Casting Plant Linamar 1 Plant ~$400 Million ~$600 Million © Linamar Corporation 22
Slide 23: New Business
New Business © Linamar Corporation 23
Slide 24: New Business Win
New Business Win $111M in wins for battery electric vehicle driveline components Average Annual Revenue SOP Year Peak Volume Year >$110 M / year 2023 2025 Production Location France Spain Germany United States Mexico Canada China © Linamar Corporation 24
Slide 25: New Business Win
New Business Win $30M in wins for commercial vehicle transmission and driveline components Average Annual Revenue SOP Year Peak Volume Year $30 M / year 2024 2025 Production Location France Spain Canada © Linamar Corporation 25
Slide 26: New Business Win
New Business Win Significant BEV structural component win for Europe based OEM Average Annual Volume SOP Year 80,000 / year 2024 Production Location UK © Linamar Corporation 26
Slide 27: Innovation
Innovation © Linamar Corporation 27
Slide 28: Innovation: Skyjack E Series Scissor Lifts
Innovation: Skyjack E Series Scissor Lifts Skyjack’s new electric drive scissor lifts are designed with an AC drive system that gives you more: • More runtime per charge • More profit from lower maintenance costs • More sustainability • More resale value • More return on investment © Linamar Corpora
Slide 29: Innovation: Battery Enclosures Systems
Innovation: Battery Enclosures Systems Product Features: ▪ Platform Modularity ▪ Multi-material construction ▪ Bonding / welding assembly ▪ Integrated Cooling Channels ▪ Highly automated / optimized & advanced manufacturing process © Linamar Corporation 29
Slide 30: Digitization with AI/ML – July 2023
Digitization with AI/ML – July 2023 69 Plants 5,288 3,665 1,098 Traceability Robots Marking Stations LMMS Data Collection Connections 2,616 3,256 RFID Stations 1,206 Connected Machines 2,831 6 Vision Systems Traceability Read Stations AGVs August - 2023 30
Slide 31: Financial Review
Financial Review Dale Schneider, CFO Linamar Corporation 31
Slide 32: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings1, and Margins (in millions CAD) %Δ Q2 2023 The key impacts to the segments vs prior Q2 2023 Q2 2022 year are: Sales 2,552.8 1,981.6 28.8% The key factors impacting results in the Mobility quarter are: ▪ Markets up 16% Industrial Sales 777.3 504.6 54.0% ▪ Excellent performa
Slide 33: Foreign Exchange Gain/Loss (in millions CAD)
Foreign Exchange Gain/Loss (in millions CAD) Q2 2023 Q2 2022 +/- ▪ Total FX Loss was $16.6 which resulted from a $16.7 FX Loss FX Gain/(Loss) – Operating1 (16.7) (5.4) (11.3) – Operating and a $0.1 FX Gain – Financing. FX Gain/(Loss) – Financing 0.1 (0.9) 1.0 ▪ FX Loss – Operating was comprised of a
Slide 34: Industrial Sales, Earnings, and Margins (in millions CAD)
Industrial Sales, Earnings, and Margins (in millions CAD) Industrial sales increased by 54.0% or $272.7 to $777.3. Q2 2023 Q2 2022 ▪ The sales were helped by: Finance ▪ higher in agricultural sales driven by growth in global markets and in core product Sales 777.3 504.6 market share; updating ▪ addi
Slide 35: Mobility Sales, Earnings, and Margins (in millions CAD)
Mobility Sales, Earnings, and Margins (in millions CAD) Mobility sales increased by 20.2% or $298.5 to $1,775.5. Q2 2023 Q2 2022 ▪ The sales were helped by: ▪ additional sales for launching programs; Sales 1,775.5 1,477.0 ▪ favourable impact on sales from the changes in FX rates from Q2 2022; and ▪
Slide 36: Operating Expenses (in millions CAD)
Operating Expenses (in millions CAD) Q2 2023 Q2 2022 +/- % ▪ Gross Margin was $361.9 in the quarter and was impacted by the same factors that impacted each business segment. (See the previous two slides) Sales 2,552.8 1,981.6 571.2 28.8% Cost of Goods Sold 2,190.9 1,731.7 459.2 26.5% ▪ Amortization
Slide 37: Finance Expenses & Income Tax (in millions CAD)
Finance Expenses & Income Tax (in millions CAD) ▪ Finance expenses increased by $10.5. Q2 2023 Q2 2022 +/- ▪ Finance expenses were hurt by: ▪ increase in interest costs due to change in the Bank of Canada overnight rate and United Finance Expense 15.4 4.9 10.5 States Federal Funds rate; ▪ increased
Slide 38: Leverage (in millions CAD)
Leverage (in millions CAD) Q2 2023 Q2 2022 ▪ Cash position at the end of the quarter was $1.4 billion. ▪ Linamar generated $260.9 in Cash from Operating Activities. Cash Position 1,375.8 877.5 ▪ Net Debt to EBITDA at 0.42x mainly due to acquisitions and share buybacks in 2022. Available Cash on Cred
Slide 39: Conclusion
Conclusion ▪ Sales growth with Mobility growing at 20% and Industrial growing at 54% ▪ Strong volumes in both Industrial and Mobility segments ▪ Continued improvements in supply chain issues helping to drive sale growth ▪ Further economic hardship recoveries achieved in 2023 ▪ Both Normalized Net Ea
Slide 40: Question and Answer
Question and Answer © Linamar Corporation 40
Slide 41: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q3 ‘23 Expectations Normalized EPS Growth 1 -4.1% Significant Double Digit Growth Double Digit Growth 1 ▪ Mobility Normalized Net Margin 7.0% - 9.0% 5.1% Exp
Slide 42: Key Messages
Key Messages Earnings Growth of 55% EV and Propulsion Agnostic ‘Linamar Structures Group’ Formed Acquisition of Battery Enclosures Business Completed © Linamar Corporation 42
Slide 43: Thank You
Thank You www.linamar.com © Linamar Corporation 43