Martinrea International Inc. · TSX:MRE

Martinrea International — Investor Presentation (November 2020)

65 slides from Martinrea International's investor presentation, November 2020

Slide 1: Investor Presentation November 2020
INVESTOR PRESENTATION NOVEMBER 2020 ©2019 Martinrea International Inc. ©2020
Slide 3: Positive Back-to-Work Story Continues
POSITIVE BACK-TO-WORK STORY CONTINUES Adjusted Production has Strong results Record third operating margin recovered more anticipated to quarter, ahead of up year-over-year quickly than continue guidance in Q3 2020 (>9% expected excluding operations acquired from Metalsa), driven by strength in Nort
Slide 4: Status of Operations
STATUS OF OPERATIONS • Production volumes currently • Production volumes currently • Facilities in China are now strong, at or near pre-COVID recovering at a slower pace, as operating based on OEM levels in some cases. Trucks, compared to North America production schedules, at or near SUVs and CUVs
Slide 5: COVID-19 Safety Protocol Highlights
COVID-19 SAFETY PROTOCOL HIGHLIGHTS • Use of personal protection equipment • Restricting the number of workers present on premises to no more than is necessary to perform critical functions • Limiting visitors to facilities to those that are absolutely necessary to allow us to continue critical func
Slide 6: Community Outreach
COMMUNITY OUTREACH GM / Ventec Ventilator Project • Martinrea key supplier • Will produce nearly 30,000 ventilator stands Martinrea Spain • Produced face shields and aerosol boxes for hospitals and local law enforcement www.martinrea.com | 6 ©2019 Martinrea International Inc. ©2020
Slide 8: US Light Vehicle Sales (SAAR)
©2020 ©2019 Martinrea International Inc. Millions of Units 5 10 15 20 25 Jan-2005 Source: MarkLines Co. Jul-2005 Jan-2006 Jul-2006 Jan-2007 Jul-2007 Jan-2008 Jul-2008 Jan-2009 Jul-2009 Jan-2010 Jul-2010 Jan-2011 Jul-2011 US LIGHT VEHICLE SALES (SAAR) Jan-2012 Jul-2012 Jan-2013 Jul-2013 Jan-2014 Jul-
Slide 9: US Light Vehicle Inventory Days
US LIGHT VEHICLE INVENTORY DAYS • US inventories are well below pre-COVID levels despite recent production surge, particularly for light trucks US Inventory Days January, 2020 October Outstanding (pre-pandemic) 2020 Passenger Cars 95 86 CUVs/SUVs 90 69 Light Trucks 100 56 Source: MarkLines Co. “We’v
Slide 11: Martinrea Overview
MARTINREA OVERVIEW Leading Tier One automotive supplier in lightweight structures and propulsion systems One of the fastest growing automotive parts suppliers since 2001 Operating in 57 locations (including sales and engineering centers) in 10 countries: Canada, United States, Mexico, Brazil, German
Slide 12: Martinrea Culture, Vision, Mission and Principles
MARTINREA CULTURE, VISION, MISSION AND PRINCIPLES VISION 10 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: • We m
Slide 13: Martinrea Vision – Making Lives Better
MARTINREA VISION – MAKING LIVES BETTER www.martinrea.com | 13 ©2019 Martinrea International Inc. ©2020
Slide 14: Martinrea's Global Presence
MARTINREA’S GLOBAL PRESENCE www.martinrea.com | 14 ©2019 Martinrea International Inc. ©2020
Slide 16: Acquisition of Metalsa Structural Components Business
ACQUISITION OF STRUCTURAL COMPONENTS FOR PASSENGER CARS BUSINESS OF METALSA S.A. DE C.V. (THE “METALSA ACQUISITION”) Overview • Leading manufacturer of lightweight body and chassis structures • State-of-the-art production facilities located in Germany, Mexico, United States, China (2) and South Afri
Slide 17: Why We Acquired the Metalsa Assets
WHY WE ACQUIRED THE METALSA ASSETS 01 02 Diversifies customer Transforms steel metal base adding significant forming group from a revenues with two key North American player customers to a global player 05 03 Establishes capacity in needed areas Adds strong, reputable engineering capabilities in the
Slide 18: Update on Metalsa Integration
UPDATE ON METALSA INTEGRATION • The Metalsa integration is going well – COVID delayed activity in Germany, but this is now back on track – Other operations are progressing as expected – Preparation for Daimler EVA II program at Tuscaloosa is going well Daimler - EVA2 — Underbody — Roof Assembly — Re
Slide 19: Martinrea Products and Capabilities
MARTINREA PRODUCTS AND CAPABILITIES Assembly Powertrain Body-in-White and Chassis Fluids Industrial www.martinrea.com | 19 ©2019 Martinrea International Inc. ©2020
Slide 20: Competitive Landscape
COMPETITIVE LANDSCAPE STEEL METAL FORMING FLUID MANAGEMENT SYSTEMS ALUMINUM COMPONENTS PRIMARY OTHER www.martinrea.com | 20 ©2019 Martinrea International Inc. ©2020
Slide 22: Company Business Unit Deployment Plans
Martinrea 2.0 is the framework to be a great company… diverse people and groups working together toward a single vision. • Fostering principles-based leadership • Promoting positive behaviours • Creating a strong lean culture • Implementing best practices COMPANY BUSINESS UNIT PLANT DEPLOYMENT PLANS
Slide 23: Martinrea's Manufacturing System
MARTINREA’S MANUFACTURING SYSTEM • The way we think – Learn to unlearn – attack waste • Pride kills continuous improvement – Pride for your people not for your practice – Be humble, there is always a better way • Engaging our people at all levels – Developing and respecting our people – Learning by
Slide 24: Report Card
REPORT CARD • Martinrea 2.0 framework has proven to be effective • Results from 2014 to 2019 speak for themselves: – 72% improvement in safety – 34% improvement in quality – Doubling of adjusted operating income margin* from ~4% to north of 8% (excluding the impact of the UAW GM strike and higher to
Slide 27: Martinrea Flexible Build Process
MARTINREA FLEXIBLE BUILD PROCESS Past 40% Less Capital Demand 18% Less Labour Up 20% Less Space Flexes With Volume Demand Down Flex Labour with Volume: No Flex labour with Volume: Yes Lifespan: 6 Years Lifespan: 12+ Years Tooling change-over: 4 weeks Tooling change-over: 30 Minutes Service part Capa
Slide 29: We Are a Lightweighting Company
WE ARE A LIGHTWEIGHTING COMPANY Continuously developing and evolving core products in Lightweight Structures and Propulsion Systems (high-strength steel, aluminum, assemblies, etc.) to reduce vehicle weight and CO2 emissions, improving overall vehicle efficiency (MPG) www.martinrea.com | 29 ©2019 Ma
Slide 30: Global Regulations Drive the Demand for Lightweighting
GLOBAL REGULATIONS DRIVE THE DEMAND FOR LIGHTWEIGHTING www.martinrea.com | 30 ©2019 Martinrea International Inc. ©2020
Slide 31: Martinrea's Product Portfolio
MARTINREA'S PRODUCT PORTFOLIO www.martinrea.com | 31 ©2019 Martinrea International Inc. ©2020
Slide 32: Lightweight Structures
LIGHTWEIGHT STRUCTURES Steel ASSEMBLED ALUMINUM SUBFRAME Mild Steel, HSS, AHSS, GEN 3 Steel, Hot Stamping Aluminum ALUMINUM EXTRUSION + HOLLOW CAST 33.2 lbs STEEL ALUMINUM – Stamped, Aluminum Casted 41.2 lbs SOLID and Extruded 34.0 lbs MULTI-MATERIAL LAUNCH 2020 Multi-Material ALUMINUM – HOLLOW 27.3
Slide 33: Propulsion Systems / Expansion of Portfolio
PROPULSION SYSTEMS/EXPANSION OF PORTFOLIO Growing the Portfolio www.martinrea.com | 33 ©2019 Martinrea International Inc. ©2020
Slide 34: Recent Awards
RECENT AWARDS • 2020 Jaguar Land Rover Performance Excellence Award • 2019 Ford Gold Supplier Performance Award • 2019 General Motors Excellence and Gold Award • 2019 General Motors Focused Recognition Award • 2019 General Motors Quality Supplier Excellence Award • 2019 General Supplier Quality Exce
Slide 35: Product Innovation
PRODUCT INNOVATION • Grow revenue and margins by providing engineered systems solutions and products with higher value-added content to our customers by combining our various technologies • Create long-term deep partnerships with our customers Existing Component Offerings New System Offerings www.ma
Slide 36: Growing Technology and Innovation
GROWING TECHNOLOGY AND INNOVATION IDEA RESEARCH DEVELOP TESTING ANALYSIS INTRO MARTINREA TECH CENTER www.martinrea.com | 36 ©2019 Martinrea International Inc. ©2020
Slide 37: Electric Vehicle Opportunities
ELECTRIC VEHICLE OPPORTUNITIES www.martinrea.com | 37 ©2019 Martinrea International Inc. ©2020
Slide 38: Martinrea Book of Business Evolving with Market
MARTINREA BOOK OF BUSINESS EVOLVING WITH MARKET (NEW EV PROGRAMS) Daimler - EVA2 Underbody Roof Assembly Rear Floor Other BIW assemblies Full Electric SOP: 2022 Ford - Mach E Front and Rear Subframes Full Electric SOP: 2020 Geely - PMA 1 Rear Subframe Full Electric SOP: 2021 www.martinrea.com | 38 ©
Slide 39: Whatever the Future Holds, Martinrea Will Be a Leader
WHATEVER THE FUTURE HOLDS, MARTINREA WILL BE A LEADER www.martinrea.com | 39 ©2019 Martinrea International Inc. ©2020
Slide 40: New Product Introduction - Graphene and Nylon Coated Brake Lines
NEW PRODUCT INTRODUCTION - GRAPHENE AND NYLON COATED BRAKE LINES We expect to be producing a new graphene-enhanced brake line product for one of our largest customers in 2021 www.martinrea.com | 40 ©2019 Martinrea International Inc. ©2020
Slide 41: Spotlight on Graphene
Extremely SPOTLIGHT ON GRAPHENE strong (200x Lightweight stronger than steel) Unique A high-performance material with Higher thermal electromagnetic properties game-changing potential and electrical conductivities compared to Silver and Noise Copper reducing Extremely properties impermeable Almost c
Slide 42: Spotlight on Graphene: Potential Applications
SPOTLIGHT ON GRAPHENE • Some Potential Applications – Automotive – Transportation – Renewable Energy – Industrial – Agricultural – Batteries (including Li ion for EV applications) – Recycled Plastics – Paints • We are excited about the technology that graphene provides and its opportunities through
Slide 44: What Sustainability Means to Martinrea
WHAT SUSTAINABILITY MEANS TO MARTINREA We build a sustainable business through making people’s lives better by: • Providing meaningful opportunity, job satisfaction and job security for our people • Delivering outstanding quality products and services that contribute to the safety, lightweighting, a
Slide 45: Environmental
ENVIRONMENTAL • Lightweighting strategy helps to improve fuel efficiency (or in the case of electric vehicles, driving range per charge) and lower CO2 emissions • LEAN manufacturing practices minimize waste (e.g., energy efficiency, reduction of water consumption and waste generation) • Environmenta
Slide 46: Social
SOCIAL • Treating people the way they want to be treated, with dignity and respect (Golden Rule) • Employee Bill of Rights in place • Workplace health and safety is a key priority • Belief in open, honest two-way communication supported by visible, responsible action • Open Door Policy 72% Improveme
Slide 47: Social (Continued)
SOCIAL (CONTINUED) Diversity and Inclusion • Gender diversity – women at senior executive and Board level • Culturally diverse workforce • Supplier Diversity Program • Promoting women in automotive careers, leadership, STEM and trades www.martinrea.com | 47 ©2019 Martinrea International Inc. ©2020
Slide 48: Social (Continued)
SOCIAL (CONTINUED) Community Involvement • “Making People’s Lives Better” – global charitable giving program • Sponsorship of University co-op programs and STEM programs such as First Robotics • Partnered with Givesome to support global outreach through volunteer time, service, and donations www.mar
Slide 49: Social (Continued)
SOCIAL (CONTINUED) Supplier Quality Guidelines and Assessments • Product Safety and Quality Assurance • Social Responsibility • Environmental Sustainability • Code of Conduct and Ethics • Diversity and Inclusion www.martinrea.com | 49 ©2019 Martinrea International Inc. ©2020
Slide 50: Governance
GOVERNANCE • Independent Board (6 of 8 members); 100% of committee members are independent • “Pay for Performance” – significant portion of total compensation is variable, based on performance (i.e., bonus based on pre-tax income, equity-based compensation) • Business ethics a top priority • Whistle
Slide 52: Sales
Assembly business changed to a purchased SALES component consignment model resulting in decrease in 2017 despite same level of production 3,968 4,000 3,867 3,864 253 162 253 3,690 3,599 162 211 3,663 405 211 245245 3,500 269 3,222 In Millions (CAD) 203203 3,479 3,000 2,901 3,715 195 195 3,705 3,354
Slide 53: 2019 North American Platform Portfolio
2019 NORTH AMERICAN PLATFORM PORTFOLIO 1. GM Pickups/SUVs 6. GM Malibu 2. GM Equinox/Terrain 7. Ford Pickups 3. Ford Escape 8. Chrysler 300/Challenger/Charger 4. Ford Edge/Fusion 9. GM Acadia/Traverse/Blazer 5. RAM Pickups 10. Ford Transit www.martinrea.com | 53 ©2019 Martinrea International Inc. ©2
Slide 54: Highlights of Recent New Business Awards
HIGHLIGHTS OF RECENT NEW BUSINESS AWARDS APPROX. ANNUALIZED SOP RANGE APPROX. ANNUALIZED SOP RANGE SALES AT PEAK VOLUME SALES AT PEAK VOLUME $360 M 2018 – 2023 $37 M 2020 – 2021 $300 M 2018 – 2024 $35 M 2021 – 2023 $270 M 2021 $20 M 2021 $190 M 2021 – 2022 $15 M 2021 $180 M 2021 $15 M 2022 – 2023 $1
Slide 55: Adjusted Operating Income Margin %
ADJUSTED OPERATING INCOME MARGIN Decrease due to the impact of the UAW- 9% GM strike and higher tooling sales 8% 7.8% 7.5% 7% ADJUSTED OPERATING INCOME MARGIN % 6.4% 6% 5% 5.0% 4.6% 4% 4.1% 3% 2% 2014 2015 2016 2017 2018 2019 *Note: Operating income margins presented have been adjusted for unusual a
Slide 56: Drivers of Margin Expansion
DRIVERS OF MARGIN EXPANSION OPERATIONAL EXCELLENCE EVOLUTION OF BOOK OF BUSINESS Lean transformation Lower margin work rolling off and being replaced with higher margin work Lean, efficient, always improving Scale up by sharing (read across) Strict adherence to Martinrea 2.0 investment hurdle rates
Slide 57: Adjusted Net Earnings per Share
Decrease due ADJUSTED NET EARNINGS PER SHARE to the impact of the UAW- GM strike FULL YEAR FINANCIALS $250.00 $2.50 EPS supported by share repurchases in 2018 and 2019 $2.27 $2.22 $200.00 $1.91 $2.00 193 IN MILLIONS OF CANADIAN DOLLARS 184 $1.50 166 $150.00 $1.38 $1.50 130 $0.98 119 $0.97 $100.00 $0
Slide 58: Cash Flow
CASH FLOW OPERATING CASH FLOW (Before changes in working capital) IN MILLIONS OF CANADIAN DOLLARS 500 400 $508 $461 300 $406 $348 200 $308 $237 $259 100 $89 $142 $146 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 The Company generated $75 M in Free Cash Flow* during the CAPEX nine months ended
Slide 59: 2020 Year-to-Date Financial Highlights
2020 YEAR-TO-DATE FINANCIAL HIGHLIGHTS (AS OF SEPTEMBER 30) YTD TOTAL SALES YTD ADJ. OPERATING YTD ADJ. FD EPS $3,500 INCOME MARGIN $2.00 $1.85 Year-to-date $3,000 $2,946 10.0% results were $2,500 $2,304 8.0% $1.50 $ Millions 8.0% negatively $2,000 6.0% $1.00 $1,500 impacted by the $1,000 4.0% 2.5%
Slide 60: Our Balance Sheet Is Strong
OUR BALANCE SHEET IS STRONG NET DEBT - Excluding IFRS-16 ($ Millions)* Strong free cash flow* generation allowed us to reduce net debt* by >$100M during the third quarter Our net debt* to adjusted EBITDA* ratio ended the third NET DEBT TO LTM ADJUSTED EBITDA* quarter at 2.21x, and ~1.70x for bank co
Slide 61: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK • Targeted Net Debt*/adjusted EBITDA* Maintain Strong Balance Sheet ratio of ~1.5x • Maintain flexibility to invest for growth • Organic opportunities • Invest in R&D and product offering Invest for Growth • Acquisitions that fit product strategy • Priorities dictated by
Slide 62: Biographies
BIOGRAPHIES Pat D’Eramo joined Martinrea International Inc. as President and Chief Executive Officer in November 2014 and was elected to the Board of Directors in June 2015. D’Eramo has a long and successful career in the automotive business, with extensive metalforming and parts manufacturing exper
Slide 63: Biographies
BIOGRAPHIES Rob Wildeboer is the Executive Chairman and co-founder of Martinrea International Inc. He brings a deep and intricate knowledge of the Company’s culture, key personnel, strategy, history and development, and relationships with key constituencies such as capital providers and governments,
Slide 64: Biographies
BIOGRAPHIES Fred Di Tosto joined Martinrea International Inc. as Vice President of Finance in June of 2010 and then became the Company’s Chief Financial Officer in March of 2011. Di Tosto’s scope of authority includes executive guidance and direction in the following areas: Corporate and Operational
Slide 65: 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 investment in capital and programs, growth in and investment in and development of products an

Martinrea International — Investor Presentation (November 2020) on 6ix

Martinrea International — Investor Presentation (November 2020)

Slide 1: Investor Presentation November 2020

Slide 2: Operations Update

Slide 3: Positive Back-to-Work Story Continues

Slide 4: Status of Operations

Slide 5: COVID-19 Safety Protocol Highlights

Slide 6: Community Outreach

Slide 7: Industry Overview

Slide 8: US Light Vehicle Sales (SAAR)

Slide 9: US Light Vehicle Inventory Days

Slide 10: Business Overview

Slide 11: Martinrea Overview

Slide 12: Martinrea Culture, Vision, Mission and Principles

Slide 13: Martinrea Vision – Making Lives Better

Slide 14: Martinrea's Global Presence

Slide 15: Our Journey

Slide 16: Acquisition of Metalsa Structural Components Business

Slide 17: Why We Acquired the Metalsa Assets

Slide 18: Update on Metalsa Integration

Slide 19: Martinrea Products and Capabilities

Slide 20: Competitive Landscape

Slide 21: ©2019 Martinrea International Inc.

Slide 22: Company Business Unit Deployment Plans

Slide 23: Martinrea's Manufacturing System

Slide 24: Report Card

Slide 25: Process Innovation

Slide 26: The Way We Produce

Slide 27: Martinrea Flexible Build Process

Slide 28: Product Innovation

Slide 29: We Are a Lightweighting Company

Slide 30: Global Regulations Drive the Demand for Lightweighting

Slide 31: Martinrea's Product Portfolio

Slide 32: Lightweight Structures

Slide 33: Propulsion Systems / Expansion of Portfolio

Slide 34: Recent Awards

Slide 35: Product Innovation

Slide 36: Growing Technology and Innovation

Slide 37: Electric Vehicle Opportunities

Slide 38: Martinrea Book of Business Evolving with Market

Slide 39: Whatever the Future Holds, Martinrea Will Be a Leader

Slide 40: New Product Introduction - Graphene and Nylon Coated Brake Lines

Slide 41: Spotlight on Graphene

Slide 42: Spotlight on Graphene: Potential Applications

Slide 43: ©2019 Martinrea International Inc.

Slide 44: What Sustainability Means to Martinrea

Slide 45: Environmental

Slide 46: Social

Slide 47: Social (Continued)

Slide 48: Social (Continued)

Slide 49: Social (Continued)

Slide 50: Governance

Slide 51: Financials

Slide 52: Sales

Slide 53: 2019 North American Platform Portfolio

Slide 54: Highlights of Recent New Business Awards

Slide 55: Adjusted Operating Income Margin %

Slide 56: Drivers of Margin Expansion

Slide 57: Adjusted Net Earnings per Share

Slide 58: Cash Flow

Slide 59: 2020 Year-to-Date Financial Highlights

Slide 60: Our Balance Sheet Is Strong

Slide 61: Capital Allocation Framework

Slide 62: Biographies

Slide 63: Biographies

Slide 64: Biographies

Slide 65: Legal Disclaimer