Linamar Corporation · TSX:LNR
Linamar — Q3 2021 Earnings Presentation
73 slides from Linamar's earnings presentation, November 2021
Slide 1: Linamar Corporation Investor Presentation
Linamar Corporation Investor Presentation A Global Powerhouse in Diversified Advanced Manufacturing November 2021
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: COVID-19 Update
COVID-19 Update © Linamar Corporation 3
Slide 4: Current Focus
Current Focus WFH Analysis Overall Workforce Q3 2021 1% ▪ Safe Workplace 0% ▪ Ensure we continue to maintain a safe work environment ▪ Start easing protocols in line with regional bylaws ▪ Vaccinations 98% ▪ Continue to encourage employees to get fully At Work At Home Hybrid vaccinated WFH Analysis
Slide 5: Company Overview
Company Overview © Linamar Corporation 5
Slide 6: Linamar - A Leading Global Advanced Manufacturing Company
Linamar - A Leading Global Advanced Manufacturing Company © Linamar Corporation 6
Slide 7: Market Focus Addresses Key Global Trends
Market Focus Addresses Key Global Trends Mobility Infrastructure Food MedTech Power Water Rapid Technology Growing Intensity Urbanization Aging Global Growing Global Evolution to Address Population Population Environmental Concerns 7
Slide 8: Core Brands and Diverse Markets
Core Brands and Diverse Markets Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives Infrastructure Mobility Food © Linamar Corporation 8
Slide 9: Linamar's Unique Value Creation Model
Linamar’s Unique Value Creation Model Deeply Interconnected Businesses Driving Value Across Multiple Vectors Global Footprint Independent Businesses Purchasing Value Connected © Linamar Corporation 9
Slide 10: Key Drivers of Market Opportunity
Key Drivers of Market Opportunity 10
Slide 11: Key Business Strategies
Key Business Strategies Mobility Skyjack MacDon MedTech ▪ Increase electrified content ▪ Expand product lineup ▪ Focus on contract • Laser focus on growth in China ▪ Power Generation manufacturing for medical • Globalize and expand product lineup in ▪ Focus on crop protection and ▪ Energy Storage im
Slide 12: Market Concentration Balance
Market Concentration Balance Industrial Mobility Sales Sales Mobile Industrial Equipment | Fabricated Assemblies Engine | Transmission | Driveline | Body 24% 76% ACCESS AGRICULTURAL AUTOMOTIVE OFF HIGHWAY COMMERCIAL 12.3 11.3 70.8 2.1 3.5 Q3 YTD 2021 - Industry figures are a percentage of sales © Li
Slide 13: Diverse Core Capabilities
Diverse Core 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 Forging Gravit
Slide 14: Strong Global Footprint
Strong Global Footprint CANADA 24 UNITED KINGDOM 1 GERMANY 7 HUNGARY 5 CHINA 5 Global Headcount 25,000 Manufacturing Facilities (60) Sales Offices (25) R&D Centres (12) Support Facilities (5) USA 5 MEXICO 5 SPAIN 1 FRANCE 4 BULGARIA 1 INDIA 2 57 Facilities with IATF 16949 12 Facilities with ISO 9001
Slide 15: ESG is a Long Held Priority
ESG is a Long Held Priority Environment Social Governance • Green technology is a key growth strategy driving product • Diversity Drives Results Initiative • Detailed review of every governance policy conducted innovation in all business • 18% female leaders vs 19% female workforce yearly with Board
Slide 16: 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 Net Zero Customer Pr
Slide 17: Diversity – 4 Key Principles
Diversity – 4 KEY Principles OPPORTUNITY FOR PROPORTIONATE ADVANCE ON MERIT REPRESENTATION NO QUOTAS EVERYONE Leadership should reflect the principle of Everyone, regardless of race, Advancement will always proportionate representation; We don’t believe quotas gender or ethnic origin, will be propor
Slide 18: Women in STEM Calendar
Women in STEM Calendar We have distributed 50,000 calendars in the past 3 years, & nearly 10,000 of our (just released) 4th edition; 2022 calendars! https://www.seeitbeitstemit.com/about-the-calendars
Slide 19: Innovation
Innovation Driving the Advanced Manufacturing Agenda © Linamar Corporation 19
Slide 20: Broad Innovation Strategy
Broad Innovation Strategy Product Development Manufacturing Partnerships Digitization through AI/ML Innovation Compete and Win Tangential Innovation Innovation Material Innovation has many facets – to succeed we Development need to tap into innovation in all its forms Lighter, Stronger Process Devel
Slide 21: Innovation Driving Green Technologies, Digitization & Operational Efficiency
Innovation Driving Green Technologies, Digitization & Operational Efficiency Underpinning Strategy in Each Business Green Technologies Digitization Operational Efficiency © Linamar Corporation 21
Slide 22: Business Strategies Impact Product Design & Facility Function
Business Strategies Impact Product Design & Facility Function Mobility Medical Green Technologies PRODUCT Electrification & Compact & Energy Electrification Precision Agriculture Emission Reduction Efficient FACILITY Technology Investments to Reduce Facility Carbon Footprint Digitization & Operation
Slide 23: Joint Technology Development Initiatives and Manufacturing Partnerships
Joint Technology Development Initiatives and Manufacturing Partnerships Who Focus Technology Equity Green Technologies Ballard Fuel Cell Electrification “Plug & Play” FCEV Powertrain Rolling Joint Development & Selling Pass Car Chassis Solutions Class 1 and 2 Truck Gear Box & Inverter E-axle Solutio
Slide 24: Linamar's AI Roadmap
Linamar’s AI Roadmap Improve quality of production, Reduce cycle times, improve Eliminate routine tasks to enable focus on enhance product life and functionality uptime to lower costs, improve more interesting work driving career and to improve performance, make more productivity, drive faster wage
Slide 25: AI/ML Driving Innovation & Efficiencies
AI/ML Driving Innovation & Efficiencies ADVANCED ROBOTICS DATA COLLECTION VISION SYSTEMS ADDITIVE PREDICTION & MANUFACTURING ANALYSIS Development of advanced 1. Improve equipment uptime & Evolving vision systems to collaborative robots to drive tool life & reduce cycle times more accurately gauge &
Slide 26: Digitization with AI/ML and Our Digitization Journey
Digitization with AI/ML and Our Digitization Journey October 2021 61 60 Plants Plants 4,592 3,448 Robots LMMS Data Collection Connections 2,572 Connected 2,033 1,162 Machines RFID Stations Vision Systems 2,431 6 958 Traceability AGVs Marking Stations Traceability Read Stations 26
Slide 27: Quarter Highlights
Quarter Highlights © Linamar Corporation 27
Slide 28: Q3 2021: Performance Highlights
Q3 2021: Performance Highlights Focus on Customers Focus on Employees Focus on Financial 2021 Theme: 2021 Theme: 2021 Theme: Creativity Talent Efficiency to Drive Growth to Drive Growth to Drive Growth ▪ Strong market demand in all businesses ▪ 98% of employees back on site and working ▪ Sales up sl
Slide 29: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings, and Margins (in millions CAD) Q3 2021 The key impacts to the segments vs prior Q3 2021 Q3 2020 %Δ The key factors impacting results in year are: the quarter are: Mobility Sales 1,645.0 1,637.4 0.5% ▪ Strong market demand in all ▪ Global light vehicle markets down 20% offs
Slide 30: Market Snapshot
Market Snapshot Commercial Combine Commercial 2021 Light Vehicle Truck Heads Access 2022 Light Vehicle Truck Access North North America ▼-0.2% ▲32.9% ▲20.0% ▲30.9% America ▲17.2% ▲8.7% ▲25.0% Europe Europe ▼-3.3% ▲24.6% ▲10.0% ▲37.4% ▲16.1% ▲2.3% ▲18.1% Asia ▲0.7% ▼-17.1% n/a ▲147.1% Asia ▲6.3% ▼-26
Slide 31: Outlook
Outlook Consolidated Normal Ranges 2020 Actuals Expectations 2021 Expectations 2022 Q4 Expectations Sales Growth (21.6%) Double Digit Growth Double Digit Growth Normalized EPS Growth (32%) Double Digit Growth Double Digit Growth ▪ Mobility Normalized Net Margin 7.0% - 9.0% 5.4% Expansion Nearing Nor
Slide 32: Infrastructure
Infrastructure © Linamar Corporation 32
Slide 33: Skyjack focuses on maximizing customer utilization and return on investment
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 33
Slide 34: Industrial Segment Impacts - Skyjack
Industrial Segment Impacts - Skyjack Access Equipment Market Commentary 2021 Access Industry YTD Results & Forecast ▪ Supply chain disruptions including shipping container shortages and higher commodity % Change vs. Prior Year prices are continuing to negatively impact production, shipments and cost
Slide 35: Access & Material Handling Equipment
Access & Material Handling Equipment MOBILE EQUIPMENT MARKET PRODUCT MIX MOBILE EQUIPMENT MARKET GEOGRAPHIC MIX $10,000 $20,000 $10,000 $20,000 $9,000 $18,000 $9,000 $18,000 REGIONAL MARKET SIZE $Millions (USD) - LINES SEGMENT MARKET SIZE $Millions (USD) - LINES $8,000 $16,000 GLOBAL MARKET SIZE $Mi
Slide 36: Skyjack Market Share
Q1 2013 Q1 2014 Q2 2014 Q3 2013 Q3 2014 Q4 2014 Q1 2014 Q1 2015 Q3 2014 Q2 2015 Q3 2015 Q1 2015 Q4 2015 Source: Skyjack Internal, October 2021. Q1 2016 Q3 2015 Q2 2016 Q3 2016 Q1 2016 Q4 2016 Q3 2016 Q1 2017 Q2 2017 Q1 2017 Q3 2017 Q4 2017 Q3 2017 Q1 2018 Q2 2018 Q1 2018 Q3 2018 Q3 2018 Skyjack Mark
Slide 37: Innovation in Product Accessories: The X-Step
▪ Innovation in Product Accessories: The X-Step ▪ Safe Access to extra height in confined spaces ▪ A better solution to access extra height safely in and around confined spaces ▪ Optional attachment to maximize fleet utilization ▪ Modular system sold as an option or field kit for new and previous ge
Slide 38: 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 38
Slide 39: Food & Agriculture
Food & Agriculture © Linamar Corporation 39
Slide 40: MacDon is the world leader in harvesting equipment
MacDon is the world leader in technology, innovation, and manufacturing of high- performance harvesting equipment. © Linamar Corporation 40
Slide 41: Agricultural Market
Agricultural Market Agriculture Market Commentary North American Combine Retails ▪ Supply chain disruptions including shipping container shortages and higher commodity prices are continuing to negatively impact production, shipments and costs in 2021. ▪ Agriculture Retailers are seeing very lean inv
Slide 42: Key Market Strategies and Growth
Key Market Strategies and Growth Farming income, cash receipts, and combine retails indicate a positive outlook for 2021 farming equipment orders. Food $3,500 $3,000 Global Market Combine Heads ($CAD) ▪ Build on MacDon acquisition as the foundation from $2,500 which to expand global ag business over
Slide 43: M1170NT
M1170NT Narrow Transport Windrower. The all-new M1170NT5 allows the windrower to shift into a narrow transport mode ideal for narrow European roads, further boosting productivity.
Slide 44: More Capacity. More Speed. More Flex.
More Capacity. More Speed. More Flex. The all-new FD2 gives you more of everything you need for harvesting performance from the company that brought you the Original FlexDraper®.
Slide 45: MacDon Strategy
MacDon Strategy Portfolio Expansion | Advanced Technologies | Geographic Expansion | World-class Product Support | Laser Focused Operations © Linamar Corporation 45
Slide 46: Mobility
Mobility © Linamar Corporation 46
Slide 47: Key Market Strategies - Flexible & Opportunistic
Key Market Strategies - Flexible & Opportunistic Actual IHS Markit Forecast Advanced Consensus Projection 140 Pure Battery EV penetration 120 reaches 50% of the market by 2040 100 80 Millions 60 40 20 Mobility - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 201
Slide 48: Light Vehicle Sales
Light Vehicle Sales Pent up demand increasing as global semiconductor shortage continues to have negative impact on vehicle inventories and sales levels. US Light Vehicle Sales China Light Vehicle Sales Europe Light Vehicle Sales % Change YOY % Change YOY % Change YOY 100% 388% 100% 100% 251% 77% 80
Slide 49: Semiconductor Chip Shortage – Light Vehicle Production Impact
Semiconductor Chip Shortage – Light Vehicle Production Impact Total forecasted 2021 volume loss of 11.5M units. Announced volume loss of 9.2M units YTD. Supply disruption expected to continue in 2022. Estimated Volume Loss by Quarter Estimated Volume Loss by Region 5.0 5.0 4.53 4.00 4.0 3.46 4.0 3.3
Slide 50: US Light Vehicle Inventory – Days' Supply
US Light Vehicle Inventory – Days’ Supply Will Take Years To Replenish Inventory Levels Regardless of Demand… Change vs Same Period Last Year 180 Overall -33 160 140 GM -22 120 Ford -34 100 Stellantis -27 80 60 Toyota -28 40 Honda -60 20 84 74 68 72 64 68 65 68 65 75 72 61 88 77 68 76 64 67 66 61 66
Slide 51: Global Light Vehicle Market: Q3 2021, Q4 2021 and 2021
Global Light Vehicle Market: Q3 2021, Q4 2021 and 2021 Q3 2021 production decreased by 3.4M units. Q4 2021 forecast reduced by 3.8M units. 2021 full-year forecast reduced by 7.2M. ▪ Q3 2021 light vehicle production lower than ▪ Q4 2021 forecast reduced by 3.8M due to ▪ 2021 full-year outlook reduced
Slide 52: Technology Leadership Key to Growth
Technology Leadership Key to Growth ▪ Using unique manufacturing processes, materials, and Innovation in Design, Development, designs to produce lightweighting solutions that Lightweighting achieve fuel efficiency & CO2 reduction 45% Weight and Manufacturing ▪ Ex. High pressure die-casting for Solut
Slide 53: Electrification Product Solutions
Electrification Product Solutions Develop new electrification product solutions leveraging existing resources Leverage Electrification Support All Support Existing Existing Customers Strategies eLIN Groups & Resources Globally Develop electrification strategies Plants Win New Business Win new busine
Slide 54: Strategy: Maximize Electrification Opportunities
Strategy Maximize Electrification Opportunities Diverse Products 1 ▪ Propulsion System ▪ Structural and Chassis ▪ Power Generation ▪ Power Storage Diverse Vehicle Types 5 Scalable Solutions ▪ Pass car, CUV/SUV, Light truck ▪ Commercial vehicles ▪ Individual components ▪ Trucks Class 1-8 ▪ Sub-assemb
Slide 55: Capturing Innovation
Capturing Innovation Patented eBrick™ Modular Battery Design Competitive Advantage ▪ 3-Dimensional Structure ▪ Flexible, modular system ▪ No-weld contact ▪ Lower cost ▪ Optimized airflow cooling ▪ More efficient ▪ Simple eBrick-to-eBrick connection ▪ Simple and affordable mounting to enclosure ▪ min
Slide 56: Strategic Alliance with Ballard Power Systems
Strategic Alliance with Ballard Power Systems A Partnership to Develop Fuel Cell Solutions for Light-Duty Vehicles ▪ Framework Agreement to initially co-develop a fuel cell powertrain solution demonstration platform ▪ In a secondary phase, the parties will move towards a formal Joint Venture focused
Slide 57: Content Per Vehicle (CPV)
Electrified Vehicles Key Growth Opportunity for Linamar $75 $65 $55 Content Per Vehicle (CPV) $45 $35 $25 $15 $5 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Electric Hybrid ICE Updated: July 27, 2021. Estimates based on current projections and EV applications in market. © Linamar Corporation 5
Slide 58: 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 59: Linamar 2100: MedTech
Linamar 2100: MedTech © Linamar Corporation 59
Slide 60: Strategy & Recent Developments
Strategy & Recent Developments ▪ As a global diversified manufacturer, Linamar’s 2100-year plan identifies Age Management & Medial Devices as a long-term strategic market of which to enter into ▪ In December of 2019, made an initial small equity investment in Synaptive Medical, an innovative medical
Slide 61: Synaptive Medical Manufacturing Partnership
Synaptive Medical Manufacturing Partnership Modus V™ Evry™ ▪ Automated Robotic digital microscopy ▪ Magnetic Resonance Imaging (“MRI”) with excellent imagery, minimal infrastructure & lower operating cost ▪ 3D capability for ideal surgical visualization ▪ Low magnetic field and small footprint ▪ Imp
Slide 62: Financial Review
Financial Review © Linamar Corporation 62
Slide 63: Annual Sales
Annual Sales 9,000.0 CAGR 10 Year 10.1% 8,000.0 30 Year 13.5% 7,000.0 6,000.0 5,002.1 $ Millions 5,000.0 4,110.7 4,000.0 3,000.0 2,000.0 1,000.0 6,005.6 6,546.5 7,620.6 7,416.6 5,815.6 1,637.4 1,645.0 - 2016 2017 2018 2019 2020 Q3 YTD Q3 YTD 2020 2021 Annual Results YTD Current Quarter © Linamar Cor
Slide 64: Normalized Net Earnings
Normalized Net Earnings1 CAGR 10 Year 13.8% 600 12.0% 30 Year 16.5% 500 10.0% 8.4% 8.4% 8.6% 7.7% 400 8.0% 6.3% 6.4% $ Millions 300 5.4% 6.0% 200 4.0% 185.6 370.0 100 2.0% 504.0 551.5 583.8 464.4 314.6 140.5 104.8 - 0.0% 2016 2017 2018 2019 2020 Q3 YTD Q3 YTD 2020 2021 Annual Results YTD Current Qua
Slide 65: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1,300 45% ▪FCF1 in Q3 $224 million. 1,200 1,100 40% ▪ 14th consecutive quarter of positive FCF. 1,000 35% ▪FCF Yield has been consistently >20% since 2019. 900 30% 800 762.7 ▪Liquidity1 excellent with $1.8 billion of $ Millions 700 25% 600 500 527.8 20% cash
Slide 66: Operational Capital Expenditures
Operational Capital Expenditures 600 18.0% 500 15.0% 400 12.0% $ Millions 300 9.0% 200 7.1% 7.1% 6.0% 6.3% 4.6% 5.7% 3.4% 4.5% 100 188.5 3.0% 169.0 343.3 410.1 537.3 525.4 264.3 73.9 58.6 - 0.0% 2016 2017 2018 2019 2020 Q3 YTD Q3 YTD 2020 2021 Annual Results YTD Current Quarter Capex as a % of YTD S
Slide 67: Net Debt to EBITDA
Net Debt to EBITDA 2.50x 2.00x 1.50x 1.00x 0.50x 0.96x 0.83x 1.68x 1.50x 0.50x 1.11x -0.01x 0.00x 2016¹ 2017 2018¹ 2019 2020² Q3 2020² Q3 2021 -0.50x Current Quarter Net Debt x EBITDA Target 1 - EBITDA includes last 12 month rolling EBITDA on acquisitions. 2 - 2020 EBITDA restated in Q1 2021. Please
Slide 68: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation
Slide 69: Appendix
Appendix © Linamar Corporation 69
Slide 70: Diverse Key Products
Diverse Key Products Industrial Mobility New Energy Powertrain Body & Chassis Systems Engine Driveline Transmission © Linamar Corporation 70
Slide 71: Skyjack Products
Skyjack Products Vertical Mast Lifts DC Scissor Lifts RT Scissor Lifts Vertical mast lifts with platform heights from DC and micro scissor lifts with platform heights Rough terrain scissor lifts with platform heights 12’ (3.6m) up to 20’ (5.9m) from 13’ (3.9m) to 40’ (12m) from 26’ (7.92m) to 64’ (1
Slide 72: MacDon Products
MacDon Products R2 Series Rotary Disc Header C Series Corn Headers D1 & FD1 Series Pick-Up Headers R1 Series Pull-Type M1 Series Windrower © Linamar Corporation 72
Slide 73: Today & In Future: Linamar well positioned to provide content on ICE, Hybrid and EV platforms
Today & In Future: Linamar well positioned to Engine Camshafts Cast and Cubed / Fully Lower Engine Connecting Turbo Camshaft / Cylinder Head Balance Shaft Machined Cylinder Crankcase Assembly Rods Charger Cover Module Modules Blocks & Heads Assemblies provide content on ICE, Hybrid and EV platforms