Linamar Corporation · TSX:LNR
Linamar — Q3 2023 Earnings Presentation
58 slides from Linamar's earnings presentation, November 2023
Slide 1: Investor Presentation November 2023
Investor Presentation November, 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: Company Overview
Company Overview
Slide 4: Companies Who Will Win In Challenging Times
Companies Who Will Win In Challenging Times Technically Financially Flexible and Strong and Strong to Invest Commercially Nimble Devoted to in Capital, R&D Astute Innovation and Automation © Linamar Corporation 4
Slide 5: Linamar - A Leading Global Advanced Manufacturing Company
Linamar - A Leading Global Advanced Manufacturing Company © Linamar Corporation 5
Slide 6: Market Focus Addresses Key Global Trends
Market Focus Addresses Key Global Trends Rapid Technology Growing Intensity to Aging Global Growing Global Address Environmental Urbanization Evolution Population Population Concerns © Linamar Corporation 6
Slide 7: Diverse Key Products
Diverse Key Products © Linamar Corporation 7
Slide 8: Linamar's Unique Value Creation Model
Linamar’s Unique Value Creation Model Deeply Interconnected Businesses Driving Value Across Multiple Vectors © Linamar Corporation 8
Slide 9: Key Drivers of Market Opportunity
Key Drivers of Market Opportunity 9
Slide 10: Market Concentration Balance
Market Concentration Balance Industrial Mobility Sales Sales Mobile Industrial Equipment | Fabricated Assemblies Engine | Transmission | Driveline | Body 28% 72% ACCESS AGRICULTURAL AUTOMOTIVE OFF HIGHWAY COMMERCIAL 14.4 13.6 66.5 1.6 3.9 These Market Concentration Balances are Q3 2023 YTD supplemen
Slide 11: Key Business Strategies
Key Business Strategies ▪ Mobility Increase electrified content Skyjack ▪ Growth in China to accelerate ▪ Expand product lineup ▪Linamar MedTech Focus on contract manufacturing for ▪ Power Generation market penetration precision medical components and ▪ Energy Storage ▪ Focus on tillage, ▪ Expansion
Slide 12: Diverse Core Manufacturing Capabilities
Diverse Core Manufacturing Capabilities Metal Forming Machining & Assembly Robotic Welding Advanced Automation & Robotics Laser cutting CNC Expertise Metal Forming Complex Assemblies Stamping Hydroforming Painting Heat Treatment Assembly Forging Light Metal Casting Hatebur High Speed Hot Horizontal
Slide 13: Global Footprint
Global Footprint © Linamar Corporation 13
Slide 14: ESG is a Long-held Priority
ESG is a Long-held Priority Environment Social Governance ▪ Diversity Drives Results Initiative ▪ Green technology is a key growth strategy driving product ▪ Detailed review of every governance policy conducted ▪ 18% female leaders vs 19% female workforce innovation in all business yearly with Board
Slide 15: Linamar Long Term Sustainability Roadmap & Goals
Linamar Long Term Sustainability Roadmap & Goals We commit to being a net zero emissions organization inclusive of the operation of our facilities, our supply base and the products we supply to by 2050. Our Goal: Our Commitment: Net Zero Facilities Net Zero Supply Chain Net Zero Customer Products Ne
Slide 16: Quarter Highlights
Quarter Highlights © Linamar Corporation 16
Slide 17: Q3 2023: Performance Highlights
Q3 2023: Performance Highlights Focus on Customers Focus on Employees Focus on Financial 2023 Theme: 2023 Theme: 2023 Theme: Growth Evolution Building the Bench Sustainable Efficiency ▪ Industrial segment once again delivered strong sales and ▪ Macro labour shortage situation seeing improvements ▪ A
Slide 18: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings1, and Margins (in millions CAD) %Δ Q3 2023 The key impacts to the segments vs prior Q3 2023 Q3 2022 year are: Sales 2,434.2 2,098.1 16.0% The key factors impacting results in the Mobility quarter are: ▪ Markets up 4% Industrial Sales 676.6 533.4 26.8% ▪ Strong performance
Slide 19: Market Snapshot
Market Snapshot Commercial Commercial 2023 Light Vehicle Truck Agriculture Access 2024 Light Vehicle Truck Access North North America ▲6.3% ▲6.2% ▲5.0% ▲9.2% America ▲7.2% ▼12.6% ▲4.3% Europe Europe ▲11.9% ▲9.3% ▬ 0% ▲9.3% ▬ 1.5% ▼3.9% ▲5.1% Asia ▲6.9% ▲28.2% n/a ▲13.5% Asia ▬ 0.7% ▲5.8% ▲8.1% Rest
Slide 20: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q4 2023 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% Ex
Slide 21: Infrastructure
Infrastructure © Linamar Corporation 21
Slide 22: Skyjack access and material handling solutions
Skyjack focuses on maximizing customer utilization and return on investment by proudly providing them quality-engineered, simple and reliable access & material handling solutions on a global basis. © Linamar Corporation 22
Slide 23: Global Manufacturing Expansion Underway
Global Manufacturing Expansion Underway Hungary: Increased production capacity at the OROS site. China: Launching Electric DC Scissor lift models initially in existing Linamar Tianjin facility, to be followed by new Mexico: Greenfield site constructed. A North America capacity expansion with a new s
Slide 24: Industrial Segment - Access
Industrial Segment - Access Access Equipment Market Commentary Access Industry YTD Results & Forecast % Change vs. Prior Year ▪ Rental remains positive as companies look to counter fleet aging experienced during COVID. 20% ▪ Stable end market demand activity with equipment utilization 18% 17.3% well
Slide 25: Access & Material Handling Equipment market size
Access & Material Handling Equipment MOBILE EQUIPMENT MARKET PRODUCT MIX MOBILE EQUIPMENT MARKET GEOGRAPHIC MIX $10,000 $25,000 $10,000 $25,000 $9,000 $9,000 SEGMENT MARKET SIZE $Millions (USD) - LINES SEGMENT MARKET SIZE $Millions (USD) - LINES TOTAL MARKET SIZE $Millions (USD) - BARS TOTAL MARKET
Slide 26: Skyjack Market Share
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Source: Skyjack Internal, Oct 2023 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Skyjack Market Share Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Boom Market Share (North America) Q3
Slide 27: Skyjack's Innovation Strategy
Skyjack’s Innovation Strategy QR Code Info Access Next Generation Alternative Power Mobile Apps Digital Products Innovation Smart machines Secondary Battery Management System Guarding © Linamar Corporation 27
Slide 28: Food & Agriculture
Food & Agriculture © Linamar Corporation 28
Slide 29: Building our agriculture brand portfolio
Building our agriculture brand portfolio Short: line Products with: MacDon OnOS Performance and productivity advantage. * Strong Brand affinity. * Defensible IP. 2 Distribution overlap VY * Compliment OEM equipment. ¢ OEM complimentary VY * Avoid the “Big-4”. 2 cum ° (nhs sence amy | Sales and Suppo
Slide 30: MacDon harvesting equipment
MacDon is the world leader in technology, innovation, and manufacturing of high- performance harvesting equipment. © Linamar Corporation 30
Slide 31: Salford Group tillage and application equipment
Salford Group manufactures high-quality tillage and application equipment with a performance advantage. Salford strives to create outstanding customer experiences and maintain product leadership through innovation. © Linamar Corporation 31
Slide 32: Industrial Segment - Agriculture
Industrial Segment - Agriculture North American Combine Retails 3,000 Agriculture Market Commentary 2,000 ▪ Inventory at Ag equipment retailers is normalizing but 1,000 still lower in historical terms ▪ Dealer sentiment remains positive, noting current hot 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct N
Slide 33: MacDon Combine Draper Global Market Share Continues to Build
MacDon Combine Draper Global Market Share Continues to Build Combine Draper Market Share (Europe) Q1 2022 Q2 2022 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q3 2022 Q4 2022 Q1 2023 Q2
Slide 34: Mobility
Mobility © Linamar Corporation 34
Slide 35: Addressable Market (Billions CAD)
Key Market Strategies - Flexible & Opportunistic 120 Actual IHS Markit Forecast Advanced Consensus Projection Pure Battery EV penetration 100 reaches 50% of the market by 2040 80 Millions 60 40 20 - Mobility 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 36: Adding to our Electrified & Propulsion Agnostic Portfolio
Strategy Adding to our Electrified & Propulsion Agnostic Portfolio Acquire eLIN Maximize Pathways ❖ Acquisition accelerates ❖ Enhance, Expand & Market ❖ Diverse Products Current Capabilities ❖ Scalable Solutions timeframe to diversify ❖ Propulsion Systems ❖ Diverse & Growing ❖ Structural & Chassis C
Slide 37: 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 38: Acquisition of Mobex Global's US Assets
Acquisition of Mobex Global’s US Assets Transaction Details Products ▪ Deal signed September 21st, and closed on October 31st ▪ $64M USD Final Transaction Price ▪ ~C$450 million sales Knuckles Control Arms Subframes ▪ Aligns to the ‘Linamar Structures’ Strategy, increases propulsion agnostic content
Slide 39: 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 40: Construction Started on new GIGA Structural Component Facility
Construction Started on new GIGA Structural Component Facility Continued Execution of Structural & Chassis High Pressure Die Casting Strategy Linamar First Supplier to Invest in Giga Casting Technology in NA or Europe Giga Casting Key to Lightweighting Electrified Vehicles Key Facts ▪ Location Wella
Slide 41: Mobility Products Portfolio
Mobility Products Portfolio © Linamar Corporation 41
Slide 42: Innovation: eLIN eAxle Product Family
Innovation: eLIN eAxle Product Family Light Duty Light Duty Beam Utility Duty Beam Medium Duty Beam Independent eAxle eAxle eAxle eAxle Vehicle Class Vehicle Class Vehicle Class Vehicle Class 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 ▪ Linamar’s eLIN Product Solutions Group fin
Slide 43: Structural & Chassis Portfolio Expanding
Structural & Chassis Portfolio Expanding Knuckles Control Arms Structural Opportunities in Light Metals Crossmembers Subframe Sidemembers Subframe Components ▪ Increasing opportunities in Electrified and Propulsion Agnostic product, mitigating potential risk of ICE exposure in a transitioning Mobili
Slide 44: Linamar Structures Group
Linamar Structures Group A Fully EV/Propulsion Agnostic Powerhouse Projected to reach $1.5 Billion in Sales HPDC Battery Enclosure Business Mobex – Suspension & Mills River Former Dura-Shiloh 3 Plants Chassis Welland Giga Casting Plant Linamar 1 Plant LPDC & Machining ~$400 Million ~$600 Million ~$4
Slide 45: Casting Technologies comparison
Filling direction Cooling Casting Technologies comparison Casting part Solidification gradient Gravity Die Casting Low Pressure Die Casting High Pressure 1 to 2 kg/sec filling 1kg/sec filling Die Casting less than 1sec filling Sleeve and piston SGDC (static) TGDC (titled) LPDC VRC/PRC CPC HPDC ✓
Slide 46: Strong EV Wins Shifting Linamar Sales Mix
Strong EV Wins Shifting Linamar Sales Mix Electrified Vehicle & Propulsion Agnostic Electrified Vehicle & Propulsion Agnostic New Sales Business Wins % of Total Light Vehicle Sales 56% 57% 100% % of Total Mobility NBWs 60% 52% 90% 50% 46% 80% 74% 70% 40% 35% 60% 53% 28% 50% 30% 23% 40% 20% 30% 18% 1
Slide 47: Content Per Vehicle (CPV)
Electrified Vehicles Key Growth Opportunity for Linamar $120 $100 $80 Content Per Vehicle (CPV) $60 $40 $20 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Electric Hybrid ICE Updated: October 23, 2023. Estimates based on current projections and EV applications in market. Light vehicle onl
Slide 48: Flexible Manufacturing Strategy
Flexible Manufacturing Strategy ▪ Capital assets currently employed in Linamar’s operations can be adapted to manufacture electrified components at little to no incremental CAPEX ▪ For instance, the same gear grinding equipment can produce gears for eAxles and ICE powertrains alike ▪ This advantage
Slide 49: Financial Review
Financial Review
Slide 50: Automotive Sales & Content Per Vehicle (CPV)
Automotive Sales & Content Per Vehicle2 (CPV) CPV Q3 2023 CPV Q3 2022 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q3 2023 Sales Q3 2022 Sales % Change (CAD Millions) (CAD Millions) North America 244.54 240.24 1.8% 8.9% 1,011.2 912.6 10.8% Europe 119.01 105.0
Slide 51: Mobility Launches
Mobility Launches 4.00 Launching nearly $3.7 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: October 2023 © Linamar Corporation 51
Slide 52: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1300 1200 1100 ▪FCF1,2 negative in the quarter due to 1000 higher draw on working capital and 900 800 higher Capex in quarter; 700 ▪Liquidity1 remains excellent with $1.4 $ Millions 600 500 billion of cash available at quarter end. 400 300 200 100 93.7 2… 166
Slide 53: Annual Sales
CAGR Annual Sales 9,000.0 10 Year 30 Year 9.4% 13.6% 8,000.0 7,279.7 7,000.0 5,857.9 6,000.0 $ Millions 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 7,620.6 7,416.6 5,815.6 6,536.6 7,917.9 2,098.1 2,434.2 - 2018 2019 2020 2021 2022 Q3 YTD Q3 YTD 2022 2023 Annual Results YTD Current Quarter © Linamar Corp
Slide 54: Net Earnings - Normalized
Net Earnings - Normalized1 600 12.0% 500 10.0% 418.8 400 8.0% 7.7% $ Millions 301.2 300 6.6% 6.0% 6.3% 5.8% 5.4% 5.6% 5.1% 200 4.0% 100 2.0% 583.8 464.4 314.6 428.4 400.5 121.0 136.3 - 0.0% 2018 2019 2020 2021 2022 Q3 YTD Q3 YTD 2022 2023 Annual Results YTD Current Quarter Normalized NE as a % of QT
Slide 55: Operational Capital Expenditures
Operational Capital Expenditures 600 18.0% 568.0 500 15.0% 400 12.0% $ Millions 300 7.8% 9.0% 256.3 200 6.0% 7.1% 7.1% 5.2% 4.4% 100 4.5% 3.7% 3.0% 537.3 525.4 264.3 243.1 410.6 83.4 199.9 - 0.0% 2018 2019 2020 2021 2022 Q3 YTD Q3 YTD 2022 2023 Annual Results YTD Current Quarter Capex as a % of YTD
Slide 56: Net Debt to EBITDA
Net Debt to EBITDA1 2.50x 2.00x 1.50x 1.00x 0.79x 0.46x 0.50x 0.42x 1.68x 1.50x 0.50x 0.00x -0.13x -0.50x 2018 2019 2020 2021 2022 Q3 2022 Q3 2023 Current Quarter Net Debt x EBITDA Target 1 - EBITDA, as used in Net Debt to EBITDA, includes trailing twelve months EBITDA on acquisitions, when applicab
Slide 57: Companies Who Will Win In Challenging Times
Companies Who Will Win In Challenging Times Technically Financially Flexible and Strong and Strong to Invest Commercially Nimble Devoted to in Capital, R&D Astute Innovation and Automation © Linamar Corporation 57
Slide 58: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation