Linamar Corporation · TSX:LNR
Linamar — Q2 2023 Earnings Presentation
76 slides from Linamar's earnings presentation, August 2023
Slide 1: Investor Presentation August 2023
Investor Presentation August 2023 A Diversified Global Powerhouse in Advanced Manufacturing
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: 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 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 14.2 13.9 66.1 1.8 4.0 These Market Concentration Balances are Q2 2023 YTD supplemen
Slide 11: Key Business Strategies
Key Business Strategies ▪ Mobility Increase electrified content through the eLIN ▪ Skyjack Growth in China to accelerate ▪ Expand product lineup ▪Linamar MedTech Focus on contract manufacturing for strategy: market penetration precision medical components and ▪ Power Generation ▪ Focus on tillage, c
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 ▪ 18% female leaders vs 19% female workforce ▪ Detailed review of every governance policy conducted innovation in all business ▪ Strong ethnic d
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: 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. Why? 1. What we do today determines the future of our planet 2. The future of our planet matters
Slide 17: Diversity: Key Principles
Diversity: 4 Key Principles Opportunity for Everyone Proportionate Representation Advance on Merit No Quotas Why? Maximizes Talent Pool Logical Optimizes Performance 17
Slide 18: Women in STEM Calendar
Women in STEM Calendar We have distributed 70,000 calendars in the past 4 years, & over 17,000 of our 5th edition; 2023 calendars!
Slide 19: Innovation
Innovation Driving the Advanced Manufacturing Agenda
Slide 20: Innovation
Innovation Driving the Advanced Manufacturing Agenda © Linamar Corporation 20
Slide 21: 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 Development succeed we need to tap into Lighter, innovation in all its forms Stronger Process Devel
Slide 22: 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 22
Slide 23: Business Strategies Impact Product Design & Facility Function
Business Strategies Impact Product Design & Facility Function Mobility Green Technologies PRODUCT Electrification & Compact & Energy Electrification Precision Agriculture Emission Reduction Efficient FACILITY Technology Investments to Reduce Facility Carbon Footprint Digitization & Operational Effic
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 – July 2023
Digitization with AI/ML – July 2023 69 Plants 5,288 3,665 1,098 Traceability Robots Marking Stations LMMS Data Collection Connections 2,616 3,256 RFID Stations 1,206 Connected Machines 2,831 6 Vision Systems Traceability Read Stations AGVs July - 2023 27
Slide 27: Quarter Highlights
Quarter Highlights © Linamar Corporation 28
Slide 28: Q2 2023: Performance Highlights
Q2 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 delivered strong sales and earnings in the ▪ Focus on increasing management depth (Bench) asd ▪
Slide 29: Sales, Normalized Earnings, and Margins
Sales, Normalized Earnings1, and Margins (in millions CAD) Q2 2023 Q2 2022 %Δ Q2 2023 The key impacts to the segments vs prior year are: Sales 2,552.8 1,981.6 28.8% The key factors impacting results in the Mobility quarter are: ▪ Markets up 16% Industrial Sales 777.3 504.6 54.0% ▪ Excellent performa
Slide 30: Market Snapshot
Market Snapshot Commercial Commercial 2023 Light Vehicle Truck Agriculture Access 2024 Light Vehicle Truck Access North North America ▲8.2% ▲7.7% ▲5% ▲9.2% America ▲2.4% ▼13.4% ▲4.3% Europe Europe ▲10.1% ▲2.8% 0% ▲9.3% ▼0.9% ▲0.3% ▲5.1% Asia ▲3.3% ▲26.7% n/a ▲13.4% Asia ▲1.5% ▲8.4% ▲7.7% Rest of Res
Slide 31: Outlook
Outlook Consolidated Sales Growth Normal Ranges 2022 Actuals 21.1% Expectations 2023 Double Digit Growth Expectations 2024 Double Digit Growth Q3 ‘23 Expectations Normalized EPS Growth 1 -4.1% Significant Double Digit Growth Double Digit Growth 1 ▪ Mobility Normalized Net Margin 7.0% - 9.0% 5.1% Exp
Slide 32: Infrastructure
Infrastructure © Linamar Corporation 33
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 34
Slide 34: 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 35: Industrial Segment - Access
Industrial Segment - Access Access Equipment Market Commentary Access Industry YTD Results & Forecast % Change vs. Prior Year ▪ Rental demand is strong as companies look to counter fleet aging experienced during COVID. 30% ▪ Stable end market demand activity with equipment utilization in 27% 26% lin
Slide 36: Access & Material Handling Equipment Segment 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 37: Skyjack Market Share
Q1 2014 Q1 2014 Q2 2014 Q2 2014 Q3 2014 Q3 2014 Q4 2014 Q4 2014 Q1 2015 Q1 2015 Q2 2015 Q2 2015 Q3 2015 Q3 2015 Source: Skyjack Internal, July 2023 Q4 2015 Q4 2015 Q1 2016 Q1 2016 Q2 2016 Q2 2016 Q3 2016 Q3 2016 Q4 2016 Q4 2016 Q1 2017 Q1 2017 Q2 2017 Q2 2017 Q3 2017 Q3 2017 Q4 2017 Q4 2017 Q1 2018
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 39
Slide 39: Food & Agriculture
Food & Agriculture © Linamar Corporation 40
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 41
Slide 41: Industrial Segment - Agriculture
Industrial Segment - Agriculture North American Combine Retails 3,000 Agriculture Market Commentary 2,000 • Although still an issue, improvement in supply chains helping to 1,000 reduce delivery times and increase production • Inventory at Ag. equipment retailers remains below historical 0 levels wh
Slide 42: Key Market Strategies and Growth
Key Market Strategies and Growth Farming income, cash receipts, and combine retails indicate a positive outlook for 2022 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: MacDon Strategy
MacDon Strategy Portfolio Expansion | Advanced Technologies | Geographic Expansion | World-class Product Support | Laser Focused Operations © Linamar Corporation 44
Slide 44: Salford Group manufactures 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 45
Slide 45: Acquisition of Salford Group to Expand Agricultural Portfolio
Acquisition of Salford Group to Expand Agricultural Portfolio ▪ June 2022 acquisition of the Salford Group of companies, a global leader in crop nutrition application and tillage products ▪ This acquisition expands Linamar’s agriculture portfolio as an excellent compliment to MacDon Industries in th
Slide 46: Mobility
Mobility © Linamar Corporation 47
Slide 47: Mobility Products Portfolio
Mobility Products Portfolio © Linamar Corporation 48
Slide 48: Key Market Strategies - Flexible & Opportunistic
Key Market Strategies - Flexible & Opportunistic Actual IHS Markit Forecast Advanced Consensus Projection 120 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 49: US Light Vehicle Inventory – Days' Supply
US Light Vehicle Inventory – Days’ Supply Inventory trending slowly upwards, but still well below industry norm of 60 days’ supply 180 160 140 120 100 80 60 40 20 76 69 95 119 61 59 55 52 50 59 55 48 61 54 39 33 25 27 24 25 24 26 24 25 26 24 27 25 25 28 27 29 32 35 37 36 39 37 36 35 33 36 34 0 Jan-2
Slide 50: Global Light Vehicle Market: Q2 2023, Q3 2023, and 2023
Global Light Vehicle Market: Q2 2023, Q3 2023, and 2023 Q2 2023 production increased by 0.5M units. Q3 2023 forecast increased by 0.4M units. 2023 full-year forecast increased by 1.2M. ▪ Q2 2023 production increased by 494,480 units on ▪ Q3 2023 forecast increased by 395,256 units ▪ 2023 full-year o
Slide 51: 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 52: 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 53: 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 54: Diverse Electrification Strategy Maximizes Potential
Diverse Electrification Strategy Maximizes Potential 1 Diverse Products ▪ Propulsion System ▪ Structural and Chassis ▪ Power Generation ▪ Power Storage Diverse Vehicle Types ▪ Pass car, CUV/SUV, Light truck ▪ Commercial vehicles ▪ Trucks Class 1-8 ▪ Off road vehicles 2 5 Scalable Solutions ▪ Individ
Slide 55: 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 56: 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 57: 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 58: Linamar Structures Group Created
Linamar Structures Group Created A Fully EV and Propulsion Agnostic Group – Already ~$1 Billion Sales at Peak and Growing HPDC Battery Enclosure Plants Mills River Dura Shiloh 3 Plants Giga Casting Plant Linamar 1 Plant ~$400 Million ~$600 Million © Linamar Corporation 59
Slide 59: Content Per Vehicle (CPV)
Electrified Vehicles Key Growth Opportunity for Linamar $140 $120 $100 Content Per Vehicle (CPV) $80 $60 $40 $20 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Electric Hybrid ICE Updated: July 21, 2023. Estimates based on current projections and EV applications in market. Light vehicle o
Slide 60: 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 61: Linamar 2100: MedTech
Linamar 2100: MedTech © Linamar Corporation 62
Slide 62: Strategy & Recent Developments
Strategy & Recent Developments ▪ As a global diversified manufacturer, Linamar’s 2100-year plan identifies MedTech as a long-term strategic market of which to enter ▪ In 2022 the formation of the Linamar MedTech Group was Precision Medical formally announced Components Devices ▪ Business Development
Slide 63: Financial Review
Financial Review
Slide 64: Automotive Sales & Content Per Vehicle (CPV)
Automotive Sales & Content Per Vehicle2 (CPV) CPV Q2 2023 CPV Q2 2022 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q2 2023 Sales Q2 2022 Sales % Change (CAD Millions) (CAD Millions) North America 234.25 236.14 (0.8%) 15.2% 993.0 870.2 14.1% Europe 104.76 99.7
Slide 65: Mobility Launches
Mobility Launches 4.00 Launching nearly $4.5 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: July 2023 © Linamar Corporation 66
Slide 66: Strong EV Wins Shifting Linamar Sales Mix
Strong EV Wins Shifting Linamar Sales Mix Electrified Vehicle & Propulsion Agnostic Sales Electrified Vehicle & Propulsion Agnostic New % of Total Light Vehicle Sales Business Wins 60% 80% % of Total Mobility NBWs 70% 50% 60% 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% 2021 2022 2023 2024 2025 2026 20
Slide 67: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1,300 1,200 1,100 ▪FCF1,2 positive on strong earnings 1,000 despite heavier capex; ▪Liquidity1 remains excellent with $1.8 900 800 700 billion of cash available at quarter end. $ Millions 600 500 400 300 200 YTD -11.0 75.5 100 166.9 703.6 1,185.0 672.6 93.7 -
Slide 68: Annual Sales
Annual Sales 9,000.0 CAGR 10 Year 9.4% 8,000.0 30 Year 13.6% 7,000.0 6,000.0 4,845.5 $ Millions 5,000.0 4,000.0 3,759.7 3,000.0 2,000.0 1,000.0 7,620.6 7,416.6 5,815.6 6,536.6 7,917.9 1,981.6 2,552.8 - 2018 2019 2020 2021 2022 Q2 YTD Q2 YTD 2022 2023 Annual Results YTD Current Quarter © Linamar Corp
Slide 69: Net Earnings - Normalized
Net Earnings - Normalized1 600 12.0% 500 10.0% 400 8.0% 7.7% $ Millions 6.3% 300 6.6% 5.5% 282.5 6.0% 6.3% 5.4% 5.1% 200 180.2 4.0% 100 2.0% 583.8 464.4 314.6 428.4 400.5 109.3 160.8 - 0.0% 2018 2019 2020 2021 2022 Q2 YTD Q2 YTD 2022 2023 Annual Results YTD Current Quarter Normalized NE as a % of QT
Slide 70: Operational Capital Expenditures
Operational Capital Expenditures 600 18.0% 500 15.0% 400 368.2 12.0% $ Millions 300 9.0% 7.6% 200 6.0% 7.1% 7.1% 172.8 5.2% 4.6% 100 4.5% 3.7% 3.0% 537.3 525.4 264.3 243.1 410.6 84.9 205.4 - 0.0% 2018 2019 2020 2021 2022 Q2 YTD Q2 YTD 2022 2023 Annual Results YTD Current Quarter Capex as a % of YTD
Slide 71: Net Debt to EBITDA
Net Debt to EBITDA1 2.50x 2.00x 1.50x 1.00x 0.50x 0.42x 0.35x 0.42x 1.68x 1.50x 0.50x 0.00x -0.13x -0.50x 2018 2019 2020 2021 2022 Q2 2022 Q2 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 72: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation
Slide 73: Appendix
Appendix Linamar Corporation 74
Slide 74: 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 75: MacDon Products
MacDon Products D & FD Series C Series Corn Headers M1 Series Windrower Pick-Up Headers R1 Series Pull-Type R2 Series Rotary Disc Header © Linamar Corporation 76
Slide 76: Salford Products
Salford Products TILLAGE INDEPENDENT SERIES 5200 ENFORCER HALO FIELD CULTIVATORS AerWay APPLICATION SPINNER SPREADERS AIR BOOM APPLICATORS GRANULAR APPLICATORS CHASSIS/TRUCK MOUNT CHASSIS MOUNT AIR SPINNER SPREADERS BOOM APPLICATORS © Linamar Corporation 77