Linamar Corporation · TSX:LNR
Linamar — Investor Presentation (November 2022)
71 slides from Linamar's investor presentation, November 2022
Slide 1: Investor Presentation
Investor Presentation November 2022 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 © Linamar Corporation 3
Slide 4: Linamar - A Leading Global Advanced Manufacturing Company
Linamar - A Leading Global Advanced Manufacturing Company © Linamar Corporation 4
Slide 5: Linamar 2100: Market Focus Addresses Key Global Trends
Linamar 2100: Market Focus Addresses Key Global Trends Mobility Infrastructure Food MedTech Power Water © Linamar Corporation 5 Rapid Technology Growing Intensity Urbanization Aging Global Growing Global Evolution to Address Population Population Environmental Concerns 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 Global Footprint Machining & Assembly Light Metal Casting Forging Independent Businesses Purchasing Value Connected © Linamar Corporation 8
Slide 9: Key Drivers of Market Opportunity
Key Drivers of Market Opportunity 9
Slide 10: Key Business Strategies
Key Business Strategies Mobility Skyjack MacDon & Salford Linamar MedTech ▪ Increase electrified content through the ▪ Globalize operations and production ▪ Maintain leading market position in ▪ Focus on contract manufacturing for eLIN strategy: capacity Harvesting precision medical components and ▪
Slide 11: 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 12.9 11.1 70.6 2.0 3.4 These Market Concentration Balances are Q3 2022 YTD supplemen
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: Strong Global Footprint
Strong Global Footprint CANADA 27 UNITED KINGDOM 1 GERMANY 7 HUNGARY 5 CHINA 5 Global Headcount 27,619 Manufacturing Facilities (65) Sales Offices (28) R&D Centres (14) Support Facilities (5) USA 7 MEXICO 5 SPAIN 1 FRANCE 4 BULGARIA 1 INDIA 2 57 Facilities with IATF 16949 12 Facilities with ISO 9001
Slide 14: ESG is a Long-held Priority
ESG is a Long-held Priority Environment Social Governance ▪ Green technology is a key growth strategy driving ▪ Diversity Drives Results Initiative ▪ Detailed review of every governance policy conducted product innovation in all business ▪ 18% female leaders vs 19% female workforce 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: 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 Website and Calendar
Women in STEM Website and Calendar We are featuring nearly 300 female role models in STEM on our Website We have distributed nearly 70,000 calendars in the past 4 years 2023 Launch Event recently held 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 Development succeed we need to tap into Lighter, innovation in all its forms 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 Green Technologies PRODUCT Electrification & Compact & Energy Electrification Precision Agriculture Emission Reduction Efficient FACILITY Technology Investments to Reduce Facility Carbon Footprint Digitization & Operational Effic
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 – November 2022
Digitization with AI/ML – November 2022 65 Plants 5,268 3,467 1,036 Traceability Robots Marking Stations LMMS Data Collection Connections 2,051 2,975 RFID Stations 1,202 Connected Machines 2,704 6 Vision Systems Traceability Read Stations AGVs November- 2022 26
Slide 27: Quarter Highlights
Quarter Highlights © Linamar Corporation 27
Slide 28: Q3 2022: Performance Highlights
Q3 2022: Performance Highlights Focus on Customers Focus on Employees Focus on Financial 2022 Theme: 2022 Theme: 2022 Theme: Sustainable Growth Diversity AI Adoption ▪ Continuation of the strong underlying market demand in all ▪ Key initiatives launched from Diversity Council ▪ Double digit top and
Slide 29: Sales, Normalized Earnings, and Margins
Sales, Normalized Earnings1, and Margins (in millions CAD) Q3 2022 Q3 2021 %Δ Q3 2022 The key impacts to the segments vs prior The key factors impacting results in the year are: Sales 2,098.1 1,645.0 27.5% quarter are: Mobility Industrial Sales 533.4 433.9 22.9% ▪ Growth in both segments, amplified
Slide 30: Market Snapshot
Market Snapshot Commercial Commercial 2022 Light Vehicle Truck Agriculture Access 2023 Light Vehicle Truck Access North North America ▲10.9% ▲9.7% ▲5-10% ▲20.3% America ▲ 6.4% ▲1.3% ▲9.7% Europe Europe ▼-1.6% ▼-5.9% 0% ▲35.0% ▲6.5% ▲5.3% ▲9.3% Asia ▲6.8% ▼-34.6% n/a ▲10.5% Asia ▲2.9% ▲11.5% ▲12.9% R
Slide 31: Outlook
Outlook Consolidated Normal Ranges 2021 Actuals Expectations 2022 Expectations 2023 Q4 2022 Expectations Sales Growth 12.4% Double Digit Growth Double Digit Growth ▪ Mobility 1 Normalized EPS Growth 35.8% Flat Double Digit Growth ▪ Sales at best flat to Q3 2022 but meaningfully up from 1 Normalized
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: 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 2022 Access Industry YTD Results & Forecast % Change vs. Prior Year ▪ Supply chain shortages and higher commodity prices are continuing to limit production and shipments as well as negatively impact costs in 2022 45% ▪ Energy surcharges
Slide 36: Access & Material Handling Equipment Market Size
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 SEGMENT MARKET SIZE $Millions (USD) - LINES SEGMENT MARKET SIZE $Millions (USD) - LINES TOTAL MARKET SIZE $Millions (USD) - BA
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 Q4 2015 Source: Skyjack Internal, October 2022. 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 2
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: Industrial Segment - Agriculture
Industrial Segment - Agriculture North American Combine Retails Agriculture Market Commentary 1,500 • Supply chain issues continue to persist, and although moderating to some 1,000 degree, they continue to act as a ceiling to market upside 500 • Commodity pricing and higher input costs pressures con
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 43
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 44
Slide 45: Acquisition of Salford Group to Expand Agricultural Portfolio
Acquisition of Salford Group to Expand Agricultural Portfolio ▪ June 2022, Linamar closed the acquisition of the Salford Group of companies for $260M CAD ▪ Salford is a global leader in crop nutrition application and tillage products ▪ This acquisition expands Linamar’s agriculture portfolio as an e
Slide 46: Mobility
Mobility © Linamar Corporation 46
Slide 47: Mobility Products Portfolio
Mobility Products Portfolio © Linamar Corporation 47
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: Semiconductor Chip Shortage – Light Vehicle Production Impact
Semiconductor Chip Shortage – Light Vehicle Production Impact Announced volume loss of 2.6M units 2022 YTD. Supply disruption expected to continue into 2023. Announced Volume Loss by Quarter Announced Volume Loss by Region 4.0 5.31 3.48 6.0 3.5 3.0 2.60 3.17 2.5 4.0 3.05 2.06 Millions Millions 2.0 1
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 180 160 Overall 8 140 GM 19 120 Ford 18 100 80 Stellantis 19 60 Toyota 4 40 Honda 5 20 85747276687269706471716184746872646865686575726188776876646766616673675
Slide 51: Global Light Vehicle Market: Q3 2022, Q4 2022, and 2022
Global Light Vehicle Market: Q3 2022, Q4 2022, and 2022 Q3 2022 production increased by 1.1M units. Q4 2022 forecast decreased by 400,000 units. 2022 full-year forecast increased by 1M. ▪ Q3 2022 production increased by 1.1M on faster ▪ Q4 2022 decreased by 400,000, mostly due to ▪ 2022 full-year ou
Slide 52: 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 53: 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 54: Innovation: Rolling Chassis Demonstrator
Innovation: Rolling Chassis Demonstrator ▪ A significant showcase of Linamar’s Electrified Mobility Capabilities on displayed at the ACT Expo in California, May 2022 ▪ Continuing promotion at EV events and shows in Detroit, Germany, etc throughout Q3 ▪ Linamar’s eLIN Product Solutions Group exhibiti
Slide 55: 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 56: 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 19, 2022. Estimates based on current projections and EV applications in market. 56
Slide 57: 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 58: Structural Portfolio Expanding
Structural Portfolio Expanding ▪ 1 of the 4 Key Pillars of the eLIN Electrification Strategy ▪ Acquired 100% of High Pressure Die Casting (HDPC) Light Metals operation from prior JV partner in Q2 2022 Crossmembers Subframe ▪ Conversion of existing Low Pressure Die Casting Light Metals capabilities f
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 ▪ In Q2 2022 the formation of the Linamar MedTech Group was formally announced ▪ Business Development & Strateg
Slide 61: Financial Review
Financial Review © Linamar Corporation 61
Slide 62: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority ▪FCF1 positive on strong earnings; ▪Liquidity1 remains excellent with $1.3 billion of cash available at quarter end. 2 1 - Free Cash Flow and Liquidity are non-GAAP financial measures. Please refer to “Non-GAAP and Other Financial Measures” in the separately
Slide 63: Annual Sales
Annual Sales CAGR 10 Year 8.6% 30 Year 9,000.0 14.0% 8,000.0 7,000.0 5,857.9 6,000.0 5,002.1 $ Millions 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 6,546.5 7,620.6 7,416.6 5,815.6 6,536.6 1,645.0 2,098.1 - 2017 2018 2019 2020 2021 Q3 YTD Q3 YTD 2021 2022 Annual Results YTD Current Quarter © Linamar Corp
Slide 64: Net Earnings - Normalized
Net Earnings - Normalized1 600 12.0% 500 10.0% 400 370.0 8.0% 8.4% 7.7% $ Millions 301.2 300 6.6% 6.0% 6.3% 6.4% 5.8% 5.4% 200 4.0% 100 2.0% 551.5 583.8 464.4 314.6 428.4 104.8 121.0 - 0.0% 2017 2018 2019 2020 2021 Q3 YTD Q3 YTD 2021 2022 Annual Results YTD Current Quarter Normalized NE as a % of QT
Slide 65: Operational Capital Expenditures
Operational Capital Expenditures 600 18.0% 500 15.0% 400 12.0% $ Millions 300 9.0% 256.3 200 6.0% 6.3% 7.1% 7.1% 169.0 4.5% 4.4% 100 3.7% 3.0% 3.4% 410.1 537.3 525.4 264.3 243.1 58.6 83.4 - 0.0% 2017 2018 2019 2020 2021 Q3 YTD Q3 YTD 2021 2022 Annual Results YTD Current Quarter Capex as a % of YTD S
Slide 66: Net Debt to EBITDA
Net Debt to EBITDA1 2.50x 2.00x 1.50x 1.00x 0.50x 0.46x 0.83x 1.68x 1.50x 0.50x 0.00x -0.13x -0.01x -0.50x 2017 2018 2019 2020 2021 Q3 2021 Q3 2022 Current Quarter Net Debt x EBITDA Target Emphasis on a strong balance sheet with the Corporations' debt target set at 1.5x, currently well below that th
Slide 67: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation
Slide 68: Appendix
Appendix © Linamar Corporation 68
Slide 69: 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 70: 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 70
Slide 71: 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 71