Linamar Corporation · TSX:LNR
Linamar — Q1 2023 Earnings Presentation
44 slides from Linamar's earnings presentation, May 10, 2023
Slide 1: 2023 Q1 Conference Call Presentation
For Audio Only Dial in: North America: (888) 396-8049 International: (416) 764-8646 Conference ID: 04628605 2023 Q1 Conference Call Presentation Linda Hasenfratz, Executive Chair & CEO May 10, 2023
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 Q1 2023 The key impacts to the segments vs prior Q1 2023 Q1 2022 year are: Sales 2,292.7 1,778.1 28.9% The key factors impacting results in the Mobility quarter are: ▪ Markets up 9.8% in NA , 17.4% in EU, Industrial Sales 585.0 368.2 58.9
Slide 5: Automotive Sales & Content Per Vehicle (CPV)
Automotive Sales & Content Per Vehicle2 (CPV) CPV Q1 2023 CPV Q1 2022 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q1 2023 Sales Q1 2022 Sales % Change (CAD Millions) (CAD Millions) North America 244.44 208.73 17.1% 9.8% 985.6 767.0 28.5% Europe 93.53 99.20 (
Slide 6: Commercial & Industrial Sales (in millions CAD)
Commercial & Industrial Sales2 (in millions CAD) MacDon Q1 2023 Q1 2022 % Change ▪ Global combine draper market up in double digits, North America up triple digits Sales 675.8 440.7 53.3% ▪ Global market share growth in all products Salford ▪ Strong quarter well up from prior year is enhancing ag bu
Slide 7: Capital Expenditures (in millions CAD)
Capital Expenditures (in millions CAD) Q1 2023 Q1 2022 ▪ Capex trending back to our normal 6-8% of sales levels in 2023 as expected Capital Expenditures (Capex) 162.7 88.0 ▪ 6-8% of sales investment in capex drives double digit sales growth Capex as a % of Sales 7.1% 4.9% Capex Capex as a % of Sales
Slide 8: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1,300.0 50 ▪FCF1 positive on strong earnings 1,170.0 45 despite heavier capex; 1,040.0 40 ▪Liquidity1 remains excellent with $1.3 billion of cash available at quarter end. 910.0 35 780.0 30 $ Millions $ Millions 650.0 25 19.4 520.0 20 390.0 15 260.0 10 130.0
Slide 9: Leverage (in millions CAD)
Leverage (in millions CAD) Q1 2023 Q4 2022 Q1 2022 ▪ Balance sheet has remained consistently strong and is in excellent shape at 0.43x Net Debt to EBITDA Net Debt1 475.5 447.9 (110.3) ▪ Solid liquidity and balance sheet positions us well for Net Debt to EBITDA2 0.43x 0.42x (0.12)x continued acquisit
Slide 10: Challenges
Challenges © Linamar Corporation 10
Slide 11: Supply and Cost Challenges
Supply and Cost Challenges Spiking Energy Supply Chain Spiking Commodity Labour Challenges Semi Conductor Major Increases in Costs Shortages Prices Chip Shortages Freight Costs Starting to See Some Slow Improved from Seeing Some Improving Each Asia Back to Pre Improvements in Improvements 2022 Highs
Slide 12: Markets, Backlog and Sales Outlook
Markets, Backlog and Sales Outlook
Slide 13: Market Snapshot
Market Snapshot Commercial Commercial 2023 Light Vehicle Truck Agriculture Access 2024 Light Vehicle Truck Access North North America ▲5.2% ▼-1.5% ▲5% ▲9.6% America ▲3.4% ▲3.3% ▲4.3% Europe Europe ▲7.0% ▼-1.7% 0% ▲9.3% ▲3.7% ▲4.9% ▲5.1% Asia ▲2.3% ▲22.5% n/a ▲13.3% Asia ▲2.6% ▲17.1% ▲7.7% Rest of Re
Slide 14: Industrial Segment - Access
Industrial Segment - Access Access Equipment Market Commentary Access Industry YTD Results & Forecast % Change vs. Prior Year ▪ Supply chain shortages and higher commodity prices are continuing to limit production and shipments as well as negatively impact costs. ▪ Rental demand is strong as compani
Slide 15: Industrial Segment - Agriculture
Industrial Segment - Agriculture North American Combine Retails Agriculture Market Commentary 3,000 • Supply chain issues continue to persist, and although moderating to some 2,000 degree, they continue to impact customer deliveries 1,000 • Inventory remains lean within Ag. equipment retailers which
Slide 16: US Light Vehicle Inventory – Days' Supply
US Light Vehicle Inventory – Days’ Supply Inventory still well below industry norm of 60 days’ supply 180 160 140 120 100 80 60 40 20 88 77 68 76 64 67 66 61 66 73 67 57 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 0 Jan-19
Slide 17: Global Light Vehicle Market: Q1 2023, Q2 2023, and 2023
Global Light Vehicle Market: Q1 2023, Q2 2023, and 2023 Q1 2023 production increased by 0.7M units. Q2 2023 forecast increased by 0.1M units. 2023 full-year forecast increased by 0.4M. ▪ Q1 2023 production increased by 661,000 units ▪ Q2 2023 forecast relatively unchanged versus ▪ 2023 full-year out
Slide 18: Strong EV Wins Shifting Linamar Sales Mix Dramatically in Future
Strong EV Wins Shifting Linamar Sales Mix Dramatically in Future Electrified Vehicle & Propulsion Agnostic Sales Electrified Vehicle & Propulsion Agnostic New % of Total Light Vehicle Sales Business Wins % of Total Mobility NBWs 60% 80% 70% 50% 60% 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% 2021 2022
Slide 19: Mobility Launches
Mobility Launches $4.0 Launching nearly $4.2 Billion of new work today $3.5 $3.0 $2.5 CAD (Billions) $2.0 $1.5 $1.0 $0.5 $0.0 2022 2023 2024 2025 2026 2027 Incremental Growth from Launches $750 to $850 Million in 2023 $800 to $900 Million in 2024 Updated: April 2023 © Linamar Corporation 19
Slide 20: Outlook
Outlook © Linamar Corporation 20
Slide 21: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q2 23 Expectations Normalized EPS Growth 1 -4.1% Significant Double Digit Growth Double Digit Growth ▪ Mobility Normalized Net Margin 1 7.0% - 9.0% 5.1% Expa
Slide 22: Operational Update
Operational Update
Slide 23: GIGA Structural Component Facility
GIGA Structural Component Facility Linamar First Supplier to Invest in Giga Casting Technology in NA or Europe Giga Casting Key to Lightweighting Electrified Vehicles Key Facts ▪ Location Welland, Ontario ▪ Construction begins immediately ▪ 3 x 6100 ton giga HPDC machines ▪ SOP Feb 2025 © Linamar Co
Slide 24: New Business
New Business © Linamar Corporation 24
Slide 25: New Business Win
New Business Win $110M in wins for structural components for next gen BEVs Average Annual Revenue SOP Year $110M / year 2024 Production Location Spain USA © Linamar Corporation 25
Slide 26: New Business Win
New Business Win Significant win for plug-in hybrid battery enclosure Average Volume SOP Year 46,000 / year 2024 Production Location France © Linamar Corporation 26
Slide 27: New Business Win
New Business Win $111M in electrified vehicle component wins Average Annual Revenue SOP Year $111M / year 2023 Production Location Canada USA UK Mexico Spain Germany China © Linamar Corporation 27
Slide 28: Innovation
Innovation © Linamar Corporation 28
Slide 29: Innovation: R&D Milestone
Innovation: R&D Milestone BEV Technology Demonstrator Truck Demonstrator Truck Details: ▪ Fully functioning retro fitted 2500 Pickup Series BEV ▪ 2022 / 2023 R&D Project by the eLIN Product Solutions Group ▪ Showcases performance capabilities of eLIN eUD10 Beam eAxle design (x2, front & rear) ▪ Equi
Slide 30: Innovation: Showcased at Advanced Clean Transportation (ACT) Expo
Innovation: Showcased at Advanced Clean Transportation (ACT) Expo May 1st – 4th, 2023 Latest eMatrix Battery Pack (pouch cell) system FlexForm Conformable Hydrogen Storage Tank Refrigerated trailer project Utility Duty Beam eAxle Medium Duty Beam eAxle 10,000 Nn peak output torque 15,000 Nn peak out
Slide 31: Our Digitization Journey – May 2023
Our Digitization Journey – May 2023 66 Plants 5,234 3,603 1,078 Traceability Robots Marking Stations LMMS Data Collection Connections 2,328 3,106 RFID Stations 1,201 Connected Machines 2,797 6 Vision Systems Traceability Read Stations AGVs May- 2023 31
Slide 32: Financial Review
Financial Review Dale Schneider, CFO Linamar Corporation 32
Slide 33: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings1, and Margins (in millions CAD) %Δ Q1 2023 The key impacts to the segments vs prior Q1 2023 Q1 2022 year are: Sales 2,292.7 1,778.1 28.9% The key factors impacting results in the Mobility quarter are: ▪ Markets up 9.8% in NA , 17.4% in EU, Industrial Sales 585.0 368.2 58.9
Slide 34: Foreign Exchange Gain/Loss (in millions CAD)
Foreign Exchange Gain/Loss (in millions CAD) Q1 2023 Q1 2022 +/- ▪ Total FX Gain was $5.8 which resulted from a $6.0 FX Gain – FX Gain/(Loss) – Operating1 6.0 5.5 0.5 Operating and a $0.2 FX Loss – Financing. FX Gain/(Loss) – Financing (0.2) 0.4 (0.6) ▪ FX Gain – Operating was comprised of a $7.4 ga
Slide 35: Industrial Sales, Earnings, and Margins (in millions CAD)
Industrial Sales, Earnings, and Margins (in millions CAD) Industrial sales increased by 58.9% or $216.8 to $585.0. Q1 2023 Q1 2022 ▪ The sales were helped by: Finance ▪ higher in agricultural sales driven by growth in global markets; Sales 585.0 368.2 ▪ increased sales related to the acquisition of
Slide 36: Mobility Sales, Earnings, and Margins (in millions CAD)
Mobility Sales, Earnings, and Margins (in millions CAD) Mobility sales increased by 21.1% or $297.8 to $1,707.7. Q1 2023 Q1 2022 ▪ The sales were helped by: ▪ additional sales for launching programs and increased volumes for certain programs that the Company has significant business with; Sales 1,70
Slide 37: Operating Expenses (in millions CAD)
Operating Expenses (in millions CAD) Q1 2023 Q1 2022 +/- % ▪ Gross Margin was $300.5 in the quarter and was impacted by the same factors that impacted each business segment. (See the previous two slides) Sales 2,292.7 1,778.1 514.6 28.9% Cost of Goods Sold 1,992.2 1,579.9 412.3 26.1% ▪ Amortization
Slide 38: Finance Expenses & Income Tax (in millions CAD)
Finance Expenses & Income Tax (in millions CAD) ▪ Finance expenses increased by $12.7. Q1 2023 Q1 2022 +/- ▪ Finance expenses were hurt by: ▪ increase in interest costs due to change in the Bank of Canada overnight rate and Finance Expense 13.2 0.5 12.7 United States Federal Funds rate; and ▪ increa
Slide 39: Leverage (in millions CAD)
Leverage (in millions CAD) Q1 2023 Q1 2022 ▪ Cash position at the end of the quarter was $890.7. ▪ Linamar generated $181.7 in Cash from Operating Activities. Cash Position 890.7 903.9 ▪ Net Debt to EBITDA at 0.43x mainly due to acquisitions and share buybacks in 2022. Available Cash on Credit Facil
Slide 40: Conclusion
Conclusion ▪ Sales growth with Mobility growing at 21% and Industrial growing at 59% ▪ Market share growth in both Segments for certain targeted regions and products ▪ Continued improvements in supply chain issues helping to drive sale growth ▪ Further Economic hardship recoveries achieved in 2023 ▪
Slide 41: Question and Answer
Question and Answer © Linamar Corporation 41
Slide 42: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q2 23 Expectations Normalized EPS Growth 1 -4.1% Significant Double Digit Growth Double Digit Growth ▪ Mobility Normalized Net Margin 1 7.0% - 9.0% 5.1% Expa
Slide 43: Key Messages
Key Messages Earnings Nearly Double Prior Year New Leading Edge Giga Structural Component Facility Gives Linamar Technical Advantage Supply Chain, Energy and Labour Issues Improving and Driving Better Results © Linamar Corporation 43
Slide 44: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation