Linamar Corporation · TSX:LNR
Linamar — Q4 2016 Earnings Presentation
44 slides from Linamar's earnings presentation, March 2017
Slide 1: Q4 2016 Investor Presentation
Q4 2016 Investor Presentation Linamar Corporation March 2017
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 managements assessment of the Company’s future plans and operations may constitute forward-looking statements. This information is based on current exp
Slide 3: Company Overview
Company Overview
Slide 4: Linamar – A Global Powerhouse in Diversified Manufacturing
Linamar – A Global Powerhouse in Diversified Manufacturing 2015 SALES: $5,162.4M ↑ 23.8% 2016 SALES: $6,005.6M ↑ 16.3% NE: $436.7M (8.5%) ↑ 36.2% NE - ATS: $522.1M (8.7%) ↑ 19.6% Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives 24,500 EMPLOYEES 57 MANUFACTURING FACILITIE
Slide 5: Core Capabilities
Core Capabilities MACHINING & LIGHT METAL FORGING METAL FORMING ASSEMBLY CASTING • CNC Expertise • Hatebur High Speed Hot • Gravity & Low Pressure • Metal Forming • Complex Assemblies Horizontal Forging Aluminum Die Casting • Stamping • Advanced Automation • Conventional Vertical Forging • High Pres
Slide 6: Key Products
Key Products © Linamar Corporation 6
Slide 7: Scope of Operations & Market Concentration
Scope of Operations & Market Concentration Q4 2016 YTD SECTOR PRODUCTS MARKETS TOTAL PRECISION PRODUCTS 85.0% Precision Metallic Components, Modules & Systems Engine 76.2% Automotive Transmission 2.7% Off Road Vehicles Hybrid Electric Systems 3.9% Commercial Truck Driveline 0.7% Recreational Axle Tr
Slide 8: Global Presence
Global Presence UNITED KINGDOM FRANCE GERMANY HUNGARY BULGARIA CANADA Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Facilities (1) Facilities (4) Facilities (7) Facilities (4) Facilities (1) Facilities (23) SPAIN 49 Facilities with TS16949 Manufacturing 13 Facil
Slide 9: Key Investment Themes
Key Investment Themes
Slide 10: Key Investment Themes
Key Investment Themes Consistent Performance • Sales & earnings growth consistent & well above market • Q4 2016 our 22nd consecutive quarter of double digit operating earnings growth Market Share Growth Key Growth Driver • We will continue to grow through “Peak Auto” Double Digit Growth in Sight Thr
Slide 11: Consistent Performance
Consistent Performance
Slide 12: Performance Highlights
Performance Highlights Q4 2016 Competitiveness NBW and quote level continues to build Launch book at nearly $4.8 Billion 2016 NBW 26% higher than 2015 – great market momentum Hit rate trending up Significant wins this quarter in 9 and 10 speed transmission components ($250 million), tran
Slide 13: Yearly Sales Growth 2012 - 2016
Yearly Sales Growth 2012 - 2016 6,500 6,005.6 6,000 5,500 5,162.4 5,000 4,500 4,000 $ Millions 3,500 3,000 2,500 2,000 1,500 1,000 500 3,221.9 3,595.5 4,171.6 5,162.4 6,005.6 1,243.0 1,374.8 0 2012 2013 2014 2015 2016 Q4 YTD Q4 YTD 2015 2016 Annual Results Current Quarter © Linamar Corporation 13
Slide 14: Net Earnings Attributable to Shareholders 2012 - 2016
Net Earnings Attributable to Shareholders 2012 - 2016 600 30.0% 522.1 500 25.0% 436.7 400 20.0% $ Millions 300 15.0% 200 8.5% 8.7% 8.5% 8.7% 10.0% 7.7% 6.4% 4.5% 100 5.0% 146.1 229.8 320.6 436.7 522.1 95.3 116.1 0 0.0% 2012 2013 2014 2015 2016 Q4 YTD Q4 YTD 2015 2016 Annual Results Current Quarter N
Slide 15: Market Share Growth
Market Share Growth
Slide 16: New Business Driving Strong Market Share Growth Globally
New Business Driving Strong Market Share Growth Globally Content per Vehicle 2012 – 2016 Europe $70 $60 $50 $40 $30 $20 North America $10 $165 12.24 14.45 19.84 39.47 63.60 $0 $155 2012 2013 2014 2015 2016 $145 $135 $125 Asia $115 $9.00 $105 $8.00 $95 $7.00 $85 121.35 125.15 130.57 150.37 153.82 $6.
Slide 17: Skyjack Market Share Penetration – A Case Study
Skyjack Market Share Penetration – A Case Study Telehandler NA Market Share Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Tele (NA only) © Linamar Corporation 17
Slide 18: Significant Business Launching
Significant Business Launching Securing Continued Growth
Slide 19: Launch Review – Q4 2016
Launch Review – Q4 2016 Launching nearly $4.8 billion of new work today Sales in Millions Sales in Millions Transmission Engine Driveline Other - 500 1,000 1,500 2,000 2,500 3,000 2015 2016 2017 Mature © Linamar Corporation 19
Slide 20: Launch Review – Q4 2016
Launch Review – Q4 2016 Launching nearly $4.8 billion of new work today Sales in Millions North America Europe Asia Pacific - 500 1,000 1,500 2,000 2,500 3,000 3,500 2015 2016 2017 Mature © Linamar Corporation 20
Slide 21: Launch Review – Q4 2016
Launch Review – Q4 2016 Sales in Millions 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 - 2015 2016 2017 2018 2019 2020 2021 Driveline Other Engine Transmission Launches will add $600 to $700 Million in 2017 • Offsetting launching sales is business leaving each year of 5-10%
Slide 22: Outlook Strong for the Future
Outlook Strong for the Future Q4 2016 Sales by Region 10,000 9,000 Target 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - 2011 2016 2021 Actual Actual Estimate North America Europe Asia Target - Business to be Booked © Linamar Corporation 22
Slide 23: Massive Opportunity in Outsourcing in all Propulsion Types
Massive Opportunity in Outsourcing in all Propulsion Types
Slide 24: Massive Opportunity in Outsourcing in all Propulsion Types
Massive Opportunity in Outsourcing in all Propulsion Types Significant content potential in both EV and ICE 70% of content of powertrain captive but slowly being outsourced $500 Billion global market, addressable portion growing each year Linamar technology leader in light weighting, noise r
Slide 25: Powertrain Target Markets Significant and Growing
Powertrain | Target Markets Significant and Growing TOTAL GLOBAL POWERTRAIN & DRIVETRAIN MARKET MARKET 2013 2016 2019 AUTOMOTIVE $319B $373B $407B ICE $142B $170B $201B TOTAL GLOBAL MARKET $461B $543B $608B Segmentation by System Assumptions: Drivers of Outsourcing: 36% 43% - Includes total system v
Slide 26: Outsourcing Evolution – A Case Study
Outsourcing Evolution – A Case Study 4 Speed 6 Speed 9 & 10 Speed Linamar produced single, build-to- Initial outsourcing to Linamar of Complex Rear Drive Clutch print, transmission shafts which the Full Clutch Module Assembly by an Module Assembly OEM assembled into a module OEM Outsourced b
Slide 27: Industry Imperative
INDUSTRY IMPERATIVE Reduce Emissions Improve Fuel Economy Short Term Medium Term Long Term Improve ICE Hybrid Battery Electric Vehicle (BEV) 30x less emissions in ICE today vs. 30 Good utilization of balance of power on Challenge today re energy years ago board means best overall infrastructure mean
Slide 28: Primarily ICE, Growing Hybrid
NA Vehicle Propulsion Through 2023 Primarily ICE, Growing Hybrid 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Hybrid Electric ICE Source: IHS, February 2017 © Linamar
Slide 29: Content Today on Electrified Vehicles Growing Quickly
Content Today on Electrified Vehicles Growing Quickly NA CPV By Propulsion Type – Q4 2016 $180.00 $160.00 $140.00 $120.00 $100.00 Hybrid $80.00 ICE $60.00 $40.00 $20.00 $0.00 2015 2016 2017 2018 2019 © Linamar Corporation 29
Slide 30: BEV – Why Not Faster?
BEV – Why Not Faster? Technical & Infrastructure Challenges Energy Infrastructure Must Change for EV to Make Meaningful Environmental Improvement Projected 2030 Vehicle WtW GHG Emissions and Petroleum Fuel Consumption Over Combined, Adjusted HWFET/FTP Drive Cycle 300 10.00 Gap Diesel ICE to Battery
Slide 31: Still Primarily ICE, BEV Becoming More Prevalent
Vehicle Propulsion 2050 Still Primarily ICE, BEV Becoming More Prevalent Source: Bloomberg New Energy Finance - February 25, 2016 © Linamar Corporation 31
Slide 32: Addressable Market -- Gradual EV Growth
Addressable Market -- Gradual EV Growth Total Addressable Market -- Gradual EV Growth $400,000,000,000 $350,000,000,000 $300,000,000,000 $250,000,000,000 $200,000,000,000 $150,000,000,000 $100,000,000,000 $50,000,000,000 Key driver of growing addressable market is increase in % outsourced $- * Based
Slide 33: Addressable Market – Hypothetical Accelerated EV Growth Model
Addressable Market – Hypothetical Accelerated EV Growth Model Propulsion Type 120,000,000 100,000,000 80,000,000 Units of Vehicles 60,000,000 40,000,000 20,000,000 - CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY CY 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 34: Addressable Market – Hypothetical Accelerated EV Growth Model
Addressable Market – Hypothetical Accelerated EV Growth Model Total Addressable Market -- Hypothetical Accelerated EV Growth $350,000,000,000 $300,000,000,000 $250,000,000,000 $200,000,000,000 $150,000,000,000 $100,000,000,000 Faster EV growth overtakes ICE potential while outsourcing % still low fo
Slide 35: Linamar Positioned for Superior Growth
Linamar Positioned for Superior Growth Technical Leadership & Vertically Integrated Global Footprint Scale & Financial Capacity to Invest © Linamar Corporation 35
Slide 36: Vertical Integration Strategy – Key To Innovation Agenda & Competitiveness
Vertical Integration Strategy – Key To Innovation Agenda & Competitiveness Optimize light weight solutions for customers through collaborative design Offer one stop shopping for customers to optimize cost, quality and technology Create additional revenue streams and open doors to new customers Grow
Slide 37: Technical Leadership
Technical Leadership Product Innovation Leader in AWD systems Leader in Vehicle Electrification with E-Axle product Motorless PTU Disconnect System PTU V2V AWD Communication Process Innovation Asphalt Hydroformed camshafts, reduce weight 60% Material Development RDU Cast aluminum s
Slide 38: Massive Growth Outsourcing at Skyjack
Massive Growth Outsourcing at Skyjack
Slide 39: Access – Target Markets Large with Limited Competition
Access – Target Markets Large with Limited Competition Skyjack Target US $1Billion by 2020 2016 Global Market Est $7.5 Billion MANITOU Haulotte JLG SKYJACK GENIE Skyjack Internal Estimates © Linamar Corporation 39
Slide 40: Skyjack Growth Strategy
Skyjack Growth Strategy Overview Maintain and Defend Scissor Share…. 98% coverage by product type by 2020 Grow Boom Products… 95% coverage by product type by 2020 Competitive Telehandler Offering… 94% coverage in NA by 2020 © Linamar Corporation 40
Slide 41: Innovation Priorities: Safe, Simple, Reliable
Innovation Priorities Safe Simple Reliable © Linamar Corporation 41
Slide 42: Key Themes for Long Term Growth
Key Themes for Long Term Growth Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives Manufacturing and Materials (Supporting Power Transportation Food Theme for all Trends) Global Addressable Markets: Global Addressable Markets: Global Addressable Market: Electrical products
Slide 43: Innovative Thinking Driving Performance Today and Tomorrow
Innovative Thinking Driving Performance Today and Tomorrow A Global Manufacturing Powerhouse: Forging, casting, machining, fabrication & assembly expertise Strong R&D capabilities Diversified markets with global footprint Solid markets with limited competition Sound Strategy: Leverage exis
Slide 44: Thank You
Thank You @linamarcorp @linamarcorp Linamar Corporation www.linamar.com Linamar Corporation