Martinrea International Inc. · TSX:MRE
Martinrea International — Q3 2020 Earnings Presentation
31 slides from Martinrea International's earnings presentation, Nov 11, 2020
Slide 1: Q3 2020 Quarterly Results Presentation
Q3 2020 QUARTERLY RESULTS PRESENTATION NOVEMBER 11, 2020 ©2019 Martinrea International Inc. ©2020
Slide 2: 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 3: Rob Wildeboer, Executive Chairman
ROB WILDEBOER EXECUTIVE CHAIRMAN www.martinrea.com | 3 ©2019 Martinrea International Inc. ©2020
Slide 4: 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 5: 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 6: Pat D'Eramo, President and CEO
PAT D’ERAMO PRESIDENT AND CEO www.martinrea.com | 6 ©2019 Martinrea International Inc. ©2020
Slide 7: Positive Back-to-Work Story Continues
POSITIVE BACK-TO-WORK STORY CONTINUES Adjusted Production has Strong Q4 2020 Record third operating margin recovered more results quarter, ahead of up year-over-year quickly than anticipated guidance (>9% excluding expected operations acquired from Metalsa), driven by strength in North America www.m
Slide 8: Q4 2020 Guidance and Status of Operations
Q4 2020 GUIDANCE AND STATUS OF OPERATIONS Q4 2020F Q4 2019A PRODUCTION SALES $900M - $1,000M $787M Q4 GUIDANCE ADJUSTED FD EPS $0.46 - $0.54 $0.42 • Production volumes • Production volumes • Facilities in China are now currently strong, in currently recovering at a operating based on OEM particular
Slide 9: Update on MRE Metalsa Integration
UPDATE ON MRE 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
Slide 10: 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 11: New Business Awards During the Quarter
NEW BUSINESS AWARDS DURING THE QUARTER Product Group Customer Annualized Sales SOP Propulsion Systems $45M 2021-2024 (Fluid Management Systems and Transmission Housing) Lightweight Structures $10M 2022-2023 (EV Platforms) Industrial $15M 2024 (Battery Box for Heavy Duty Truck) TOTAL = $70M www.marti
Slide 12: 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 | 12 ©2019 Martinrea International Inc. ©2020
Slide 13: 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 14: 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 15: Parting Thoughts
PARTING THOUGHTS The restart has Volumes have Safety protocols Our team has gone as smoothly come back nicely have been done a as we could have effective tremendous job hoped for ramping up production and meeting aggressive volume requirements www.martinrea.com | 15 ©2019 Martinrea International Inc
Slide 16: Fred Di Tosto, Chief Financial Officer
FRED DI TOSTO CHIEF FINANCIAL OFFICER www.martinrea.com | 16 ©2019 Martinrea International Inc. ©2020
Slide 17: Overview of Q3 2020 Results
OVERVIEW OF Q3 2020 RESULTS • Sharp improvement over Q2 as production restarted In Canadian Dollars Q3 2020 Q3 2019 Production Sales $933.3M $846.6M Tooling Sales $37.8M $127.8M Flat YoY sales (down 11% excluding MRE Metalsa sales, due mainly to Total Sales $971.1M $974.4M lower tooling sales). Reca
Slide 18: Q3 2020 Results - Sales
Q3 2020 RESULTS - SALES $1,000 $974.4 $971.1 $950 Sales ($ Millions) -0.3% YoY $900 $850 • Sales virtually flat year-over-year $800 (down 11% excluding $105M in sales from MRE $750 Metalsa, due mainly to lower tooling sales) Q3 2019 Q3 2020 – Production sales up 10% – Tooling sales down 70% • Sharp
Slide 19: Q3 2020 Results - Adjusted Operating Income Margin
Q3 2020 RESULTS - ADJUSTED OPERATING INCOME MARGIN* 9.0% • Significant improvement over Q2 loss and up year-over- year Adjusted Operating Income 7.8% 8.0% • Excluding the MRE Metalsa Group, overall adjusted operating income margin* exceeded 9% Margin (%) 7.1% 7.0% • Margins driven by strength in Nor
Slide 20: Q3 2020 Results - Adjusted Earnings Per Share
Q3 2020 RESULTS – ADJUSTED EARNINGS PER SHARE* $0.60 • Record third quarter Adjusted Earnings Per Share $0.57 $0.55 • Adjusted EPS* was driven by strong margin $0.53 performance ($) $0.50 • Q4 shaping up to be another strong quarter $0.45 Q3 2019 Q3 2020 * As defined and described in our Q3 2020 MD&
Slide 21: Q3 2020 Results - Free Cash Flow
Q3 2020 RESULTS - FREE CASH FLOW* $120 $102.5 • Free cash flow* generation was very strong Free Cash Flow ($ Millions) $100 $80 during the quarter $60 • We generated meaningful cash from working $40 $36.9 capital; a portion is timing-related $20 • We are on track to deliver on our expectation $0 of
Slide 22: Our Balance Sheet Is Strong
OUR BALANCE SHEET IS STRONG NET DEBT - Excluding IFRS-16 ($ Millions)* Strong free cash flow* generation allowed us to reduce net debt* by >$100M during the quarter Our net debt* to adjusted EBITDA* ratio ended the quarter NET DEBT TO LTM ADJUSTED EBITDA* at 2.21x, and ~1.70x for bank covenant purpo
Slide 23: 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 24: Rob Wildeboer, Executive Chairman
ROB WILDEBOER EXECUTIVE CHAIRMAN www.martinrea.com | 24 ©2019 Martinrea International Inc. ©2020
Slide 25: NanoXplore Is Not a Passive Investment
NANOXPLORE IS NOT A PASSIVE INVESTMENT • NanoXplore is an integral component of our R&D, product development and corporate development (M&A) strategies • Our businesses are interconnected – Our Executive Chairman is Chairman of NanoXplore – NanoXplore’s Chief Operating Officer was previously VP of M
Slide 26: State-of-Art Graphene Facility
STATE-OF-ART-GRAPHENE FACILITY www.martinrea.com | 26 ©2019 Martinrea International Inc. ©2020
Slide 27: A Successful Investment So Far
A SUCCESSFUL INVESTMENT SO FAR Total Cost of Investment in NanoXplore $37.5 million Current Market Value of our position in NanoXplore $90.2 million (34 million shares x current share price of $2.65) as of November 5, 2020) Total Return 140% www.martinrea.com | 27 ©2019 Martinrea International Inc.
Slide 28: 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 29: Martinrea Vision - Making Lives Better
MARTINREA VISION – MAKING LIVES BETTER www.martinrea.com | 29 ©2019 Martinrea International Inc. ©2020
Slide 30: GM Oshawa Announcement
GM OSHAWA ANNOUNCEMENT General Motors Corp. will reopen its vehicle assembly plant in Oshawa, Ont., spending $1.3-billion to retool the plant that closed last year, the Unifor union said Thursday morning. “Today is an incredible victory for all of us,” said Jerry Dias, national president of Unifor,
Slide 31: Questions?
QUESTIONS? www.martinrea.com | 31 ©2019 Martinrea International Inc. ©2020
Martinrea International — Q3 2020 Earnings Presentation on 6ix