Linamar Corporation · TSX:LNR
Linamar — Q4 2023 Earnings Presentation
62 slides from Linamar's earnings presentation, March 2024
Slide 1: Investor Presentation March 2024
Investor Presentation March, 2024
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: Linamar - A Leading Global Advanced Manufacturing Company
Linamar - A Leading Global Advanced Manufacturing Company © Linamar Corporation 4
Slide 5: 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 5
Slide 6: Diverse Key Products
Diverse Key Products © Linamar Corporation 6
Slide 7: Linamar's Unique Value Creation Model
Linamar’s Unique Value Creation Model Deeply Interconnected Businesses Driving Value Across Multiple Vectors © Linamar Corporation 7
Slide 8: Market Concentration Balance
Market Concentration Balance Industrial Mobility Sales Sales Mobile Industrial Equipment | Fabricated Assemblies eLIN | Structures & Chassis | Advanced Driveline Engine | Propulsion 27% 73% ACCESS AGRICULTURAL AUTOMOTIVE OFF HIGHWAY COMMERCIAL 13.9 13.3 67.6 1.5 3.7 These Market Concentration Balanc
Slide 9: Key Business Strategies
Key Business Strategies Flexible Capital to transition ▪ Mobility Skyjack between ICE and EV dependent ▪ Customer Focused Technologies ▪ Successfully Integrate newest ▪Linamar MedTech Focus on contract manufacturing for upon market demand ▪ Growth in China to accelerate acquisition link & leverage g
Slide 10: 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 11: Global Footprint
Global Footprint © Linamar Corporation 11
Slide 12: 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 13: 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 14: Quarter Highlights
Quarter Highlights © Linamar Corporation 14
Slide 15: Q4 2023: Performance Highlights
Q4 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 ▪ Delivered a strong quarter despite market challenges related to ▪ Macro labour shortage situation seeing improveme
Slide 16: Sales, Normalized Earnings, and Margins
Sales, Normalized Earnings1, and Margins (in millions CAD) %Δ Q4 2023 The key impacts to the segments vs prior Q4 2023 Q4 2022 year are: Sales 2,453.9 2,060.0 19.1% The key factors impacting results in the Mobility quarter are: ▪ Markets up 4% Industrial Sales 607.4 507.1 19.8% ▪ Strong performance
Slide 17: Financial Highlights
Financial Highlights Income Statement Q4 2023 Q4 2022 %Δ 2023 2022 %Δ Q4 2023 The key factors impacting results in the quarter are: Sales 2,453.9 2,060.0 19.1% 9,733.5 7,917.9 22.9% 1) An unusually strong quarter for the industrial segment (best Q4 in history for MacDon); NE – Normalized1 122.2 99.5
Slide 18: Market Snapshot
Mobility: Market Snapshot • Q1 2024 Global LV Production expected to be essentially flat over Q1 2023 • US Day’s Supply of Inventory is back to more normalized levels • Strong launch book continues to support mobility segment double digit revenue growth for 2024 Access • Industry experts are predict
Slide 19: Outlook
Outlook Consolidated Normal Ranges 2023 Actuals Expectations 2024 Sales Growth 22.9% Double Digit Growth Q1 2024 Expectations 1 Normalized EPS Growth 40.3% Double Digit Growth ▪ Mobility 1 Normalized Net Margin 7.0% - 9.0% 5.6% Expansion ▪ Expect double digit sales growth to prior year, mid single d
Slide 20: Infrastructure
Infrastructure © Linamar Corporation 20
Slide 21: 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 21
Slide 22: Global Manufacturing Expansion Plan
Global Manufacturing Expansion Plan Hungary: Increased production capacity at the OROS site. China: Launched Electric DC Scissor lift models in Tianjin Mexico: A North America capacity expansion with a new site in Saltillo area In Market, For the Market ▪ Increased regional Competitiveness ▪ Streaml
Slide 23: Access & Material Handling Equipment
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 24: Skyjack Market Share
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Source: Skyjack Internal, Feb. 2024 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Skyjack Market Share Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Boom Market Share (North America) Q
Slide 25: 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 25
Slide 26: Food & Agriculture
Food & Agriculture © Linamar Corporation 26
Slide 27: MacDon harvesting equipment
MacDon is the world leader in technology, innovation, and manufacturing of high- performance harvesting equipment. © Linamar Corporation 27
Slide 28: 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 28
Slide 29: Bourgault seeding systems
Bourgault is an Industry-leading short-line agricultural equipment manufacturer specializing in seeding systems such as air seeders and air carts.
Slide 30: New Acquisition of Seeding Technology Leader Bourgault
New Acquisition of Seeding Technology Leader Bourgault Transaction Details Products ▪ Deal announced on December 20th, 2023, Closed February 1st, 2024 ▪ $640M CAD Transaction Price Air Carts Air Seeder Drills Highline Brand of Feed ▪ New operating company within the Linamar Industrial Handling/Proce
Slide 31: Agriculture Growth Strategic Criteria
Agriculture Growth Strategic Criteria SHORT-LINE OEM DIFFERENTIATED CUSTOMER CONNECTION ▪ Distribution synergies ▪ Innovative & Differentiated Offering ▪ Brand Recognition means end users ▪ OEM Complementary ▪ Strong Intellectual Property who pull demand through channels ▪ Additional Value ▪ Configu
Slide 32: The Ag Strategy Now Addresses the entire Crop Production Cycle
The Ag Strategy Now Addresses the entire Crop Production Cycle Linamar has become a leader in premium short-line agriculture equipment and now with the acquisition of Bourgault provides a full suite of product offerings addressing all segments of the broad acre crop production cycle © Linamar Corpor
Slide 33: Mobility
Mobility © Linamar Corporation 33
Slide 34: Addressable Market (Billions CAD)
Key Market Strategies - Flexible & Opportunistic 120 Actual S&P Forecast Advanced Consensus Projection Pure Battery EV penetration 100 reaches 50% of the market by 2040 80 60 Millions 40 20 - Mobility 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 35: Strategy
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 36: Flexible & Nimble: Manufacturing Strategy
Flexible & Nimble: Manufacturing Strategy ▪ ICE Capital asset profile can be adapted to manufacture EV components at little to no incremental CAPEX © Linamar Corporation 36
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 on a new GIGA Structural Component Facility
Construction on a 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 Welland, On
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: Structures and Chassis Portfolio
Structures and Chassis Portfolio 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 Mobility marke
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 & PA Wins Shifting Linamar Sales Mix
Strong EV & PA Wins Shifting Linamar Sales Mix Electrified Vehicle & Propulsion Electrified & Propulsion Agnostic Wins Agnostic Sales 80% as % of Total Mobility Wins 80% % of Total Light Vehicle Sales 68% 70% 70% 58% 60% 60% 55% 56% 53% 51% 50% 44% 50% 40% 34% 40% 28% 30% 23% 30% 21% 18% 20% 20% 14%
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: Feb. 15, 2024. Estimates based on current projections and EV applications in market. Light vehicle only.
Slide 48: Financial Review
Financial Review
Slide 49: Automotive Sales & Content Per Vehicle (CPV)
Automotive Sales & Content Per Vehicle2 (CPV) CPV Q4 2023 CPV Q4 2022 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q4 2023 Sales Q4 2022 Sales % Change (CAD Millions) (CAD Millions) North America 275.28 237.63 15.8% 4.9% 1,064.7 876.0 21.5% Europe 99.25 90.70
Slide 50: 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 Incremental Growth from Launches $700 Million Launched in 2023 $700 to $900 Million Launching in 2024 Updated: February 2024 © Linamar Corporation 50
Slide 51: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1300 ▪FCF1,2 positive on strong earnings 1200 1100 despite heavier capex; 1000 900 ▪Liquidity1 remains excellent with $1.3 800 billion of cash available at quarter end. $ Millions 700 600 500 400 300 200 100 34.6 703.6 1,185.0 672.6 93.7 68.1 83.1 0 2019 2020
Slide 52: Annual Sales
CAGR Annual Sales 10 Year 30 Year 10.5% 14.4% 12,000.0 9,733.5 10,000.0 7,917.9 8,000.0 $ Millions 6,000.0 4,000.0 2,000.0 7,416.6 5,815.6 6,536.6 7,917.9 9,733.5 2,060.0 2,453.9 - 2019 2020 2021 2022 2023 Q4 YTD Q4 YTD 2022 2023 Sales YTD Current Quarter © Linamar Corporation 52
Slide 53: Yearly Sales Growth
Yearly Sales Growth CAGR 2014 - 2023 10 Year 10.5% 30 Year 14.4% 10,000.0 9,000.0 8,000.0 7,000.0 6,000.0 $ Millions 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 53
Slide 54: Net Earnings - Normalized
Net Earnings - Normalized1 600 12.0% 541.1 500 10.0% 400.5 400 8.0% 6.3% 6.6% $ Millions 5.4% 5.6% 300 5.1% 5.0% 6.0% 4.8% 200 4.0% 100 2.0% 464.4 314.6 428.4 400.5 541.1 99.5 122.2 0 0.0% 2019 2020 2021 2022 2023 Q4 YTD Q4 YTD 2022 2023 Annual Results YTD Current Quarter Normalized NE as a % of QTR
Slide 55: Annual Net Earnings - Normalized
Annual Net Earnings - Normalized1 2014 - 2023 600.0 18.0% 16.0% 500.0 14.0% 400.0 12.0% $ Millions 10.0% 300.0 8.0% 200.0 6.0% 4.0% 100.0 2.0% - 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Annual Results Normalized NE as a % of YTD Sales 1 - Net Earnings - Normalized is a non-GAAP financi
Slide 56: Operational Capital Expenditures
Operational Capital Expenditures 800 762.7 18.0% 700 16.0% 600 14.0% 12.0% $ Millions 500 410.6 10.0% 400 8.0% 300 7.8% 7.8% 6.0% 7.1% 200 4.0% 5.2% 5.2% 4.5% 100 3.7% 2.0% 525.4 264.3 243.1 410.6 762.7 154.3 194.7 0 0.0% 2019 2020 2021 2022 2023 Q4 Q4 YTD YTD 2022 2023 Annual Results YTD Current Qu
Slide 57: Net Debt to EBITDA
Net Debt to EBITDA1 2.00x 1.50x 1.00x 0.50x 1.50x 0.50x 0.42x 0.85x 0.00x -0.13x -0.50x 2019 2020 2021 2022 2023 Net Debt x EBITDA Target 1 - EBITDA, as used in Net Debt to EBITDA, includes trailing twelve months EBITDA on acquisitions, when applicable. © Linamar Corporation 57
Slide 58: The Linamar Advantage
The Linamar Advantage © Linamar Corporation 58
Slide 59: Linamar's Powerful Synergistic Diversification Model
Linamar’s Powerful Synergistic Diversification Model Cash for Brand Continued Management Investment MOBILITY The Power of a Balanced & Diversified Business Model SEGMENT INDUSTRIAL Consistent Strong, Sustainable Strong SEGMENT Profit Free Cash Flow Stable Balance Consistent Growth Margins Sheet Supp
Slide 60: Synergistic Diversification Model Key Driver of Long-Term Performance
Synergistic Diversification Model Key Driver of Our Long-Term Consistent Strong Performance Percentage of years, out of the last 14 years, when Linamar has delivered upon each metric 1 - Free Cash Flow (FCF) and Net Earnings (NE) – Normalized are Non-GAAP Financial Measures. Please refer to “Non-GAA
Slide 61: 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 61
Slide 62: Thank You
me 6b: @ LINAMAR® Thank You. ~ www.linamar.com