Martinrea International Inc. · TSX:MRE
Martinrea International — Q1 2021 Earnings Presentation
26 slides from Martinrea International's earnings presentation, May 6, 2021
Slide 1: Q1 2021 Quarterly Results Presentation
Q1 2021 QUARTERLY RESULTS PRESENTATION MAY 6, 2021 ©2019 Martinrea International Inc.
Slide 2: Rob Wildeboer, Executive Chairman
ROB WILDEBOER EXECUTIVE CHAIRMAN www.martinrea.com | 2 ©2019 Martinrea International Inc. ©2020
Slide 3: Legal Disclaimer
LEGAL DISCLAIMER 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 growth or expectations of, improvements in, expansion of and/or guidance or outlook as to
Slide 4: Martinrea Culture, Vision, Mission and Principles
MARTINREA CULTURE, VISION, MISSION AND PRINCIPLES VISION 10 GUIDING PRINCIPLES Making lives better by being the best supplier we can be in Our success will be based on the execution of our guiding the products we make and the services we provide. principles, applied with integrity, in all that we do
Slide 5: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Invest to Maintain and Maintain Strong Return Capital Grow Our Business Balance Sheet to Shareholders • Organic opportunities • Targeted Net Debt/Adjusted • Repurchase shares with • Invest in R&D and product EBITDA ratio of ~1.5x excess liquidity offering • Maintain flex
Slide 6: 2019 Pre-Tax ROIC (Most Recent Pre-COVID Year)
2019 PRE-TAX ROIC (MOST RECENT PRE-COVID YEAR) 18% 17.1% 16% 14.8% 14% 12% 11.3% 10.9% 9.9% 10% 8% 6% 3.5% 4% 2% 0% Magna Martinrea Linamar Gestamp Nemak Cooper Standard * Pre-tax return on invested capital (ROIC) = EBIT / total invested capital www.martinrea.com | 6
Slide 7: Cash Flow
CASH FLOW Decrease driven by OPERATING CASH FLOW (Before changes in working capital) IN MILLIONS OF CANADIAN DOLLARS COVID-19 pandemic 500 400 $508 $461 300 $406 $348 $358 200 $308 $237 $259 100 $89 $142 $146 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAPEX Capex driving growth IN MILL
Slide 8: Pat D'Eramo, President and CEO
PAT D’ERAMO PRESIDENT AND CEO www.martinrea.com | 9 ©2019 Martinrea International Inc. ©2020
Slide 9: First Quarter Impacted by Temporary Headwinds; Longer-Term Outlook Positive
FIRST QUARTER IMPACTED BY TEMPORARY HEADWINDS; OVERALL, LONGER-TERM OUTLOOK REMAINS POSITIVE Adjusted Operating Production sales at Vehicle demand First-quarter Income Margin the low end of our remains robust; Adjusted EPS down year-over- guidance range, strong longer- within our year, impacted by i
Slide 10: Status of Operations
STATUS OF OPERATIONS North Europe Asia America • Vehicle demand remains strong • Sales growth driven by new • China is operating at high in the post-COVID shutdown business launches and positive demand levels, in line with pre- recovery. Vehicle inventories sales mix. Industry volumes COVID levels,
Slide 11: New Business Awards Since Our Last Call
NEW BUSINESS AWARDS SINCE OUR LAST CALL Product Group Customer Annualized Sales SOP Lightweight Structures $93M 2021-2023 (Various Body and Chassis Structures) Propulsion Systems $34M 2022 (Fluids Systems) Flexible Manufacturing Group $3M 2021 (Hood Kits) TOTAL = $130M www.martinrea.com | 12 ©2019 M
Slide 12: VoltaXplore – EV Battery Joint Venture
VOLTAXPLORE – EV BATTERY JOINT VENTURE www.martinrea.com | 13
Slide 13: VoltaXplore – EV Battery Joint Venture
VOLTAXPLORE – EV BATTERY JOINT VENTURE • 50/50 joint venture between Martinrea and NanoXplore to develop Li-Ion battery cells for electric vehicles – VoltaXplore will initially build a 1 MWh demonstration facility in Montreal, Quebec • Martinrea and NanoXplore will each contribute $4 million in init
Slide 14: VoltaXplore – Benefits of Graphene-Enhanced Batteries
VOLTAXPLORE – BENEFITS OF GRAPHENE-ENHANCED BATTERIES • Enables rapid charging without losing capacity – High conductivity of graphene improves charging time – Graphene enables the use of silicon in anodes (which is 10x more efficient than graphite), improving energy density and driving range • Impr
Slide 15: Addressable Content Per Vehicle
ADDRESSABLE CONTENT PER VEHICLE Transition will not require a material increase in capital or tooling as the majority of our equipment is flexible and adaptable www.martinrea.com | 16
Slide 16: A Closer Look at EV Transition
A CLOSER LOOK AT EV TRANSITION Internal Combustion Hybrid Electric Vehicle (EV) Engine (ICE) 80% of products are agnostic to electrification 20% of products transitioning with market change www.martinrea.com | 17
Slide 17: Fred Di Tosto, Chief Financial Officer
FRED DI TOSTO CHIEF FINANCIAL OFFICER www.martinrea.com | 18 ©2019 Martinrea International Inc. ©2020
Slide 18: Overview of Q1 2021 Results
OVERVIEW OF Q1 2021 RESULTS In Canadian Dollars Q1 2021 Q1 2020 Production Sales $924.1M $822.5M Tooling Sales $73.1M $50.2M Sales up 14.3% (5.3% excluding MRE Total Sales $997.2M $872.7M Metalsa sales) Adjusted Operating Income $48.5M $50.8M Adjusted Operating Income similar to last year Adjusted O
Slide 19: Q1 2021 Results - Sales
Q1 2021 RESULTS - SALES $1,050 $1,000 $997.2 • Sales up 14.3% year-over-year (up 5.3% excluding $78M in sales growth from MRE +14.3% YoY Sales ($ Millions) $950 $900 $872.7 Metalsa) $850 – Production sales up 12.4% – Tooling sales up 45.4% $800 $750 Q1 2020 Q1 2021 • Positive impact from – New busin
Slide 20: Q1 2021 Results - Adjusted Operating Income
Q1 2021 RESULTS - ADJUSTED OPERATING INCOME • Adjusted Operating Income similar to last year • Margins impacted by: Adjusted Operating Income $50 10.0% Adjusted Operating Income – Temporary lag in offsetting higher aluminum raw $45 8.0% material cost through contractual price increases ($ Millions)
Slide 21: Q1 2021 Results – Adjusted Net Earnings Per Share
Q1 2021 RESULTS – ADJUSTED NET EARNINGS PER SHARE $0.45 • Adjusted EPS higher year-over year Adjusted Earnings Per Share • Q1 result includes a $0.04 net foreign $0.41 $0.40 $0.38 exchange gain ($) $0.35 • Q1 result excludes an $0.08 gain on dilution of our investment in NanoXplore $0.30 Q1 2020 Q1
Slide 22: Q1 2021 Results - Free Cash Flow
Q1 2021 RESULTS - FREE CASH FLOW • Free Cash Flow decreased year-over-year $20 $9.4 Free Cash Flow ($ Millions) $10 $0 mainly due to ($10) – An increase in non-cash working capital – Higher cash capex ($20) ($30) ($40) ($38.7) • 2021E Free Cash Flow targeted to be ($50) Q1 2020 Q1 2021 approximately
Slide 23: Our Balance Sheet Is Strong
OUR BALANCE SHEET IS STRONG NET DEBT - Excluding IFRS-16 ($ Millions) $800.0 $750.0 $776.4 Net Debt increased in the first $728.0 $700.0 $714.7 quarter compared to Q4 2020 $650.0 $674.3 $682.4 $662.6 $600.0 2019 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Our Net Debt to Adjusted EBITDA ratio ended the quarter at
Slide 24: Q2 2021 Guidance
Q2 2021 GUIDANCE Q2 2021F Q2 2020A Q2 PRODUCTION SALES $850M - $950M $418.8M GUIDANCE ADJUSTED FD EPS $0.36 - $0.46 ($0.91) KEY ASSUMPTIONS • Semiconductor shortage will continue to impact production in the near term – Q2 2021 impact expected to be similar to Q1 2021 – Production expected to recover
Slide 25: 2023 Outlook
2023 OUTLOOK 2023F TOTAL SALES $4.6-$4.8B ADJUSTED OPERATING INCOME MARGIN >8% FREE CASH FLOW >$200M LIGHT VEHICLE PRODUCTION VOLUME ASSUMPTION (CURRENT IHS FORECAST) 16.7M - NORTH AMERICA 20.6M - EUROPE KEY ASSUMPTIONS • 90% of sales in 2023 represent booked business • Capex expected to normalize o
Slide 26: Questions?
QUESTIONS? www.martinrea.com | 27
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