Linamar Corporation · TSX:LNR
Linamar — Q2 2022 Earnings Presentation
69 slides from Linamar's earnings presentation, August 2022
Slide 1: Investor Presentation
Investor Presentation August 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: 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 7
Slide 8: Key Drivers of Market Opportunity
Key Drivers of Market Opportunity 8
Slide 9: 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 10: Market Concentration Balance
Market Concentration Balance Industrial Mobility Sales Sales Mobile Industrial Equipment | Fabricated Assemblies Engine | Transmission | Driveline | Body 23% 77% ACCESS AGRICULTURAL AUTOMOTIVE OFF HIGHWAY COMMERCIAL 13.4 9.8 71.2 2.1 3.5 These Market Concentration Balances are Q2 2022 YTD supplement
Slide 11: 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 12: Strong Global Footprint
Strong Global Footprint CANADA 27 UNITED KINGDOM 1 GERMANY 7 HUNGARY 5 CHINA 5 Global Headcount 26,796 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 13: 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 14: 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 15: Diversity: Key Principles
Diversity: 4 Key Principles Opportunity for Everyone Proportionate Representation Advance on Merit No Quotas Why? Maximizes Talent Pool Logical Optimizes Performance 15
Slide 16: 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 https://www.seeitbeitstemit.com/about-the-calendars
Slide 17: Innovation
Innovation Driving the Advanced Manufacturing Agenda © Linamar Corporation 17
Slide 18: 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 19: 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 19
Slide 20: 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 21: 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 22: 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 23: 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 24: Digitization with AI/ML – July 2022
Digitization with AI/ML – July 2022 65 5,225 3,463 Plants Plants Robots LMMS Data Collection Connections 2,925 Connected 1,991 1,207 Machines RFID Stations Vision Systems 2,690 6 1,030 Traceability AGVs Marking Stations Traceability Read Stations © Linamar Corporation 24
Slide 25: Quarter Highlights
Quarter Highlights © Linamar Corporation 25
Slide 26: Q2 2022: Performance Highlights
Q2 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 Sales Gr
Slide 27: Sales, Normalized Earnings, and Margins
Sales, Normalized Earnings1, and Margins (in millions CAD) Q2 2022 Q2 2021 %Δ Q2 2022 The key impacts to the segments vs prior The key factors impacting results in the year are: Sales 1,981.6 1,575.3 25.8% quarter are: Mobility Industrial Sales 504.6 393.5 28.2% ▪ Growth in all businesses amplified
Slide 28: Market Snapshot
Market Snapshot Commercial Combine Commercial 2022 Light Vehicle Truck Heads Access 2023 Light Vehicle Truck Access North North America ▲12.7% ▲11.4% ▲10.0% ▲12.0% America ▲ 11.6% ▼-0.7% ▲9.8% Europe Europe ▲2.8% ▼-13.6% ▲5.0% ▲13.7% ▲10.1% ▲9.4% ▲9.3% Asia ▲2.7% ▼-22.9% n/a ▲9.9% Asia ▲6.1% ▼-4.1%
Slide 29: Outlook
Outlook Consolidated Normal Ranges 2021 Actuals Expectations 2022 Expectations 2023 Sales Growth 12.4% Double Digit Growth Double Digit Growth Q3 2022 Expectations Normalized EPS Growth 1 35.8% High Single Digit Growth Double Digit Growth 1 ▪ Mobility Normalized Net Margin 7.0% - 9.0% 6.6% Modest Co
Slide 30: Infrastructure
Infrastructure © Linamar Corporation 30
Slide 31: 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 31
Slide 32: 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 33: Industrial Segment Impacts - Skyjack
Industrial Segment Impacts - Skyjack 2022 Access Industry YTD Results & Forecast Access Equipment Market Commentary % Change vs. Prior Year ▪ Supply chain disruptions including shipping container shortages and higher commodity prices are continuing to negatively impact production, shipments and cost
Slide 34: Access & Material Handling Equipment Segment 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 35: 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 Source: Skyjack Internal, July 2022. Q3 2015 Q3 2015 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 36: 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 36
Slide 37: Food & Agriculture
Food & Agriculture © Linamar Corporation 37
Slide 38: 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
Slide 39: 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 39
Slide 40: Agricultural Market
Agricultural Market Agriculture Market Commentary North American Combine Retails ▪ Supply chain disruptions including shipping container shortages and higher commodity 1,600 prices are continuing to negatively impact production, shipments and costs in 2022. ▪ Agriculture retailers are seeing very le
Slide 41: 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 $4,000 $3,500 Global Market Combine Heads ($CAD) ▪ Build on MacDon acquisition as the foundation from $3,000 $2,500 which to expand global ag busine
Slide 42: MacDon Strategy
MacDon Strategy Portfolio Expansion | Advanced Technologies | Geographic Expansion | World-class Product Support | Laser Focused Operations © Linamar Corporation 42
Slide 43: Mobility
Mobility © Linamar Corporation 43
Slide 44: 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 45: Semiconductor Chip Shortage – Light Vehicle Production Impact
Semiconductor Chip Shortage – Light Vehicle Production Impact Announced volume loss of 2.1M units 2022 YTD. Supply disruption expected to continue into 2023. Announced Volume Loss by Quarter Announced Volume Loss by Region 4.0 3.48 6.0 5.06 3.5 3.0 2.60 2.5 4.0 3.06 2.06 2.91 Millions Millions 2.0 1
Slide 46: 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 3 140 GM 17 120 Ford 5 100 80 Stellantis 10 60 Toyota -2 40 Honda -3 20 8574727668726970647171618474687264686568657572618877687664676661667367
Slide 47: Global Light Vehicle Market: Q2 2022, Q3 2022, and 2022
Global Light Vehicle Market: Q2 2022, Q3 2022, and 2022 Q2 2022 production forecast decreased by 0.37M units. Q3 2022 forecast increased by 0.1M units. 2022 full-year forecast increased by 0.2M. ▪ Q2 2022 production decreased by 0.37M ▪ Q3 2022 forecast increased by 0.1M ▪ 2022 full-year outlook inc
Slide 48: 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 49: 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 50: 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 51: 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 52: Content Per Vehicle (CPV)
Electrified Vehicles Key Growth Opportunity for Linamar $100 $90 $80 $70 Content Per Vehicle (CPV) $60 $50 $40 $30 $20 $10 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Electric Hybrid ICE Updated: July 19, 2022. Estimates based on current projections and EV applications in market. 52
Slide 53: 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 54: Innovation in Process Development for Light Metal Castings
Innovation in Process Development for Light Metal Castings ▪ Lightweight aluminum casting capabilities are evolving to increase the Structural and Chassis portfolio Structural & Chassis Products EV Motor Housings & Electric Drive Units (EDUs) Cases © Linamar Corporation 54
Slide 55: Acquired Casting Assets Strengthen Growth Platform for Structural Content
Acquired Casting Assets Strengthen Growth Platform for Structural Content ▪ Linamar Acquireed Partner’s Interest in GF Linamar April 1, 2022 ▪ Strengthens growth platform in Structural content, a key part of Future of Mobility strategy and 1 of the 4 key pillars of the eLIN Product Solutions Group S
Slide 56: Linamar 2100: MedTech
Linamar 2100: MedTech © Linamar Corporation 56
Slide 57: 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 the formation of the Linamar MedTech Group was formally announced ▪ Business Development & Strategy tea
Slide 58: Financial Review
Financial Review © Linamar Corporation 58
Slide 59: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority 1,300 30% ▪FCF1 slightly negative in the quarter 1,200 1,100 25% thanks mainly to an increase in 1,000 noncash working capital 900 800 20% ▪Liquidity1 remains excellent with $1.4 700 billion of cash available at quarter end $ Millions 600 15% 500 400 304.0 10
Slide 60: Annual Sales
Annual Sales CAGR 10 Year 8.6% 9,000.0 30 Year 14.0% 8,000.0 7,000.0 6,000.0 $ Millions 5,000.0 4,000.0 3,759.7 3,357.1 3,000.0 2,000.0 1,000.0 6,546.5 7,620.6 7,416.6 5,815.6 6,536.6 1,575.3 1,981.6 - 2017 2018 2019 2020 2021 Q2 YTD Q2 YTD 2021 2022 Annual Results YTD Current Quarter © Linamar Corp
Slide 61: Net Earnings - Normalized
Net Earnings - Normalized1 600 12.0% 500 10.0% 8.4% 7.7% 400 8.0% 6.8% 6.6% 6.3% $ Millions 300 5.4% 5.5% 6.0% 265.2 200 180.2 4.0% 100 2.0% 551.5 583.8 464.4 314.6 428.4 106.9 109.3 - 0.0% 2017 2018 2019 2020 2021 Q2 YTD Q2 YTD 2021 2022 Annual Results YTD Current Quarter Normalized NE as a % of QT
Slide 62: Operational Capital Expenditures
Operational Capital Expenditures 600 18.0% 500 15.0% 400 12.0% $ Millions 300 9.0% 200 6.0% 7.1% 7.1% 172.8 6.3% 110.3 4.5% 4.6% 100 3.7% 3.0% 3.3% 410.1 537.3 525.4 264.3 243.1 50.8 84.9 - 0.0% 2017 2018 2019 2020 2021 Q2 YTD Q2 YTD 2021 2022 Annual Results YTD Current Quarter Capex as a % of YTD S
Slide 63: Net Debt to EBITDA
Net Debt to EBITDA1 2.50x 2.00x 1.50x 1.00x 0.50x 0.36x 0.17x 0.83x 1.68x 1.50x 0.50x 0.00x -0.13x -0.50x 2017 2018 2019 2020 2021 Q2 2021 Q2 2022 Current Quarter Net Debt x EBITDA Target 1 - EBITDA includes trailing twelve months EBITDA on acquisitions, when applicable. 2020 Net Debt to EBITDA was
Slide 64: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation
Slide 65: Appendix
Appendix © Linamar Corporation 65
Slide 66: Diverse Key Products
Diverse Key Products Industrial Mobility New Energy Powertrain Body & Chassis Systems Engine Driveline Transmission © Linamar Corporation 66
Slide 67: 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 68: 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 68
Slide 69: Today & In Future: Linamar well positioned on ICE, Hybrid and EV
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