Linamar Corporation · TSX:LNR
Linamar — Q2 2021 Earnings Presentation
75 slides from Linamar's earnings presentation, September 2021
Slide 1: Linamar Corporation Investor Presentation
Linamar Corporation Investor Presentation A Global Powerhouse in Diversified Advanced Manufacturing September 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: Pandemic Crisis Management
Pandemic Crisis Management Assemble Team Gather Data COVID-19 Task Force Make a Plan & Execute Communicate Employees Investors Customer Employees Financially Customers Community © Linamar Corporation 4
Slide 5: Current Focus
Current Focus ▪ Safe Workplace ▪ Ensure we continue to maintain a safe work environment ▪ As vaccination rates continue to climb we are looking at implementing new protocols to reflect our ability to interact more together safely ▪ Testing ▪ Testing running on a regular basis for Linamar employees i
Slide 6: Community Support
Community Support © Linamar Corporation 6
Slide 7: Manufacturing Flexibility Supports our Communities
Manufacturing Flexibility Supports our Communities Rapid Shift to Ventilator Production Saved Lives Thornhill Medical MOVES ▪ In March 2020, Linamar was awarded 5 production contracts on fully assembled SLC Full Integrated ICU Ventilator ventilators, ventilator subassemblies or individual ventilator
Slide 8: Linamar Vaccination Clinic Wraps Up
Linamar Vaccination Clinic Wraps Up ▪ Clinic launched early March ▪ >57,000 Shots Administered ▪ Playbook posted on Linamar website to assist any company in launching their own clinic quickly
Slide 9: Company Overview
Company Overview © Linamar Corporation 9
Slide 10: Linamar - A Leading Global Advanced Manufacturing Company
Linamar - A Leading Global Advanced Manufacturing Company © Linamar Corporation 10
Slide 11: Linamar 2100: Market Focus Addresses Key Global Trends
Linamar 2100: Market Focus Addresses Key Global Trends Mobility Infrastructure Food Power Water Age Rapid Technology Growing Intensity Urbanization Growing Global Aging Global Evolution to Address Population Population Environmental Concerns © Linamar Corporation 11
Slide 12: 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 12
Slide 13: 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 13
Slide 14: Key Drivers of Market Opportunity
Key Drivers of Market Opportunity 14
Slide 15: Key Market Strategies
Key Market Strategies Mobility Skyjack MacDon Age/Medical ▪ Increase & balance CPV in BEV, ▪ Globalize and expand product lineup ▪ Global growth ▪ Successful launch and learn from HEV, FCV in all 3 regions ▪ Expand product lineup Synaptive ▪ Mine opportunistic ICE market as ▪ Focus on growth in Chin
Slide 16: Market Concentration Balance
Market Concentration Balance Industrial Transportation Sales Sales Mobile Industrial Equipment | Fabricated Assemblies Engine | Transmission | Driveline | Body 22% 78% ACCESS AGRICULTURAL AUTOMOTIVE OFF HIGHWAY COMMERCIAL 11.7 10.4 72.1 2.1 3.7 Q2 YTD 2021 - Industry figures are a percentage of sale
Slide 17: 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 18: Strong Global Footprint
Strong Global Footprint CANADA 24 UNITED KINGDOM 1 GERMANY 7 HUNGARY 5 CHINA 5 Global Headcount 26,000 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 19: 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 20: 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 21: Diversity Drives Results
Diversity Drives Results Measure Diversity Council Initiatives ▪ Creating metrics to track progress ▪ Diverse group, M/F, ethnic diversity etc ▪ Unconscious bias training ▪ Measure a variety of areas ie ▪ Track progress ▪ Gender Leadership, Discipline, Students, ▪ Suggest ideas to improve diversity
Slide 22: Innovation
Innovation Driving the Advanced Manufacturing Agenda © Linamar Corporation 22
Slide 23: Broad Innovation Strategy
Broad Innovation Strategy Material Manufacturing Product Process Development Partnerships with Digitization Tangential Development Development Lighter, Stronger Tech Startups through AI/ML Innovation © Linamar Corporation 23
Slide 24: 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 24
Slide 25: 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 26: Joint Technology Development Initiatives and Manufacturing Partnerships
Joint Technology Development Initiatives and Manufacturing Partnerships Who Focus Technology Equity Ballard Fuel Cell Electrification “Plug & Play” FCEV Green Technologies Joint Development & Pass Car Powertrain Rolling Chassis Selling Class 1 and 2 Truck Solutions Gear Box & Inverter E-axle Solutio
Slide 27: 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 28: 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 29: Digitization with AI/ML and Our Digitization Journey
Digitization with AI/ML and Our Digitization Journey July 2021 61 60 Plants Plants 4,559 3,476 5000 4500 Category Counts by Quarter 16000 Robots 4000 14000 Connected Digital Asset Counts by Category LMMS Data Collection Connections 3500 12000 Total Connected Digital Assets 3000 2,527 10000 2,004 1,1
Slide 30: Quarter Highlights
Quarter Highlights © Linamar Corporation 30
Slide 31: Q2 2021: Performance Highlights
Q2 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 ▪ Pandemic control proceeding well ▪ Normalized net earni
Slide 32: Sales, Normalized Earnings, and Margins (in millions CAD)
Sales, Normalized Earnings, and Margins (in millions CAD) Q2 2021 The key impacts to the segments vs prior Q2 2021 Q2 2020 %Δ The key factors impacting results in year are: Sales 1,575.3 923.6 70.6% the quarter are: Mobility ▪ Strong market demand in all ▪ Global light vehicle markets up 45%; EBITDA
Slide 33: Market Snapshot
Market Snapshot Commercial Combine Commercial 2021 Light Vehicle Truck Heads Access 2022 Light Vehicle Truck Access North North America ▲12.3% ▲29.4% ▲20.0% ▲30.9% America ▲16.4% ▲5.7% ▲25.0% Europe Europe ▲8.9% ▲17.3% ▲10.0% ▲37.4% ▲12.4% ▲6.6% ▲18.1% Asia ▲8.5% ▼23.3% n/a ▲147.1% Asia ▲7.6% ▼22.0%
Slide 34: Outlook
Consolidated Normal Ranges 2020 Actuals Expectations 2021 Expectations 2022 Outlook Sales Growth Normalized Earnings Growth (21.6%) Double Digit Growth Continued Double Digit Growth Q3 Expectations EPS EBITDA (32%) (15%) Strong Double Digit Growth Continued Double Digit Growth ▪ Auto Normalized Net
Slide 35: Infrastructure
Infrastructure © Linamar Corporation 35
Slide 36: 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 36
Slide 37: Industrial Segment Impacts - Skyjack
Industrial Segment Impacts - Skyjack Access Equipment Market Commentary 2021 Access Industry YTD Results & Forecast ▪ Continued recovery of Aerial Work Platform (AWP) market in Q2 2021. All regions saw % Change vs. Prior Year triple-digit increase versus Q2 2020 (low prior year comparison due to pan
Slide 38: 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 39: Skyjack Market Share
Skyjack Market Share Telehandler Market Share (NA Only) 2020 Global Market of $8.5B Market Share (12-month rolling) Boom Market Share (EMEA) Q1 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 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 Q4 2018 Q1 2019
Slide 40: Innovation in Aerial Work Platforms
Innovation in Aerial Work Platforms SJ20 Vertical Mast Lift ▪ Began shipments to the rental market in early spring 2021 ▪ Offers 20’ working platform height, full electric drive, improved duty cycle and battery life ▪ Received 2021 Editor’s Choice Award from Rental Magazine © Linamar Corporation 40
Slide 41: 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 41
Slide 42: Food & Agriculture
Food & Agriculture © Linamar Corporation 42
Slide 43: 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 43
Slide 44: Agricultural Market
Agricultural Market Agriculture Market Commentary North American Combine Retails ▪ Ag. retailers seeing lean inventory indicating retail demand is high ▪ Commodity price rally, improved farm net income outlook continuing to boost retails 1,200 ▪ Continuing to see challenges with global supply chain
Slide 45: 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 $3,000 Global Market Combine Heads ($CAD) $2,500 ▪ Build on MacDon acquisition as the foundation from $2,000 which to expand global ag business over
Slide 46: Innovation in Harvesting Equipment
Innovation in Harvesting Equipment New MacDon FD2 Series Announced ▪ The new 2 Series FlexDraperTM launched to the market as a 2022 Model Year ▪ More crop capacity, enables faster cutting speeds, and more flex for better ground following ▪ Begins production Spring 2022 © Linamar Corporation 46
Slide 47: MacDon Strategy
MacDon Strategy Portfolio Expansion | Advanced Technologies | Geographic Expansion | World-class Product Support | Laser Focused Operations © Linamar Corporation 47
Slide 48: Mobility
Mobility © Linamar Corporation 48
Slide 49: Key Market Strategies - Flexible & Opportunistic
Key Market Strategies - Flexible & Opportunistic 140 Actual IHS Markit Forecast Advanced Consensus Projection 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 50: Light Vehicle Sales
Light Vehicle Sales Demand Staying Well Above 2020 For the Most Part Despite Lack of Vehicles to Purchase re Chip Issues, Deterioration Starting to Hit in July / August China Light Vehicle Sales Europe Light Vehicle Sales US Light Vehicle Sales % Change YOY % Change YOY % Change YOY 100% 388% 100% 1
Slide 51: Semiconductor Chip Shortage – Light Vehicle Production Impact
Semiconductor Chip Shortage – Light Vehicle Production Impact Total estimated 2021 volume loss of 7.6M units. Supply disruption expected to continue into 2022. Estimated Volume Loss by Quarter Estimated Volume Loss by Region 3.5 3.24 4.0 3.0 2.60 3.27 2.5 3.0 2.17 2.0 Millions Millions 1.44 2.0 1.79
Slide 52: 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 -32 160 140 GM -36 120 Ford -39 100 Stellantis -23 80 60 Toyota -24 40 Honda -38 20 88 77 68 76 64 67 66 61 66 73 67 57 76 69 95 119 61 59 55 52 5
Slide 53: Global Light Vehicle Market: Q2 2021, Q3 2021 and 2021
Global Light Vehicle Market: Q2 2021, Q3 2021 and 2021 Q3 2021 production decreased by 900,000 units. Q4 2021 forecast reduced by 320,000 units. 2021 full-year forecast reduced by 1.23M. ▪ Q3 2021 forecast reduced by 900,000 due ▪ Q4 2021 forecast reduced by 320,000 due ▪ 2021 full-year outlook redu
Slide 54: Global Light Vehicle Production
Global Light Vehicle Production 2017-2020 peak to trough reduction of 20.5M units, much greater than 2008/9 financial crisis. Pent-up demand expected to drive recovery, leading to long, sustainable period of growth: 2021 production expected to grow by 8%, 2022 expected to grow by 13%, average annual
Slide 55: 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 56: Diverse Electrification Strategy Maximizes Potential
Diverse Electrification Strategy Maximizes Potential Diverse Products 1 ▪ Propulsion System ▪ Structural and Chassis ▪ Power Generation ▪ Power Storage Diverse Vehicle Types ▪ Pass car, CUV/SUV, Light truck ▪ Commercial vehicles ▪ Trucks Class 1-8 5 ▪ Off road vehicles Scalable Solutions ▪ Individua
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: 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 59: 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 60: eLIN is Driving Electrification at Linamar
eLIN is Driving Electrification at Linamar Strategy The announcement of Linamar’s eLIN strategic business unit in September 2021 is a demonstration of the significant focus and resources being directed toward an Electrified Mobility future. 4 Key Product Solution Categories ▪ Power Generation ▪ Powe
Slide 61: Linamar 2100: Medical & Age
Linamar 2100: Medical & Age © Linamar Corporation 61
Slide 62: 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 63: 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 64: Financial Review
Financial Review © Linamar Corporation 64
Slide 65: Cash Flow Continues to be a Key Priority
Cash Flow Continues to be a Key Priority ▪FCF1 in Q2 $138 million 1,300 40% 1,200 1,100 35% ▪ 13th consecutive quarter of positive FCF 1,000 30% ▪FCF Yield has been consistently >20% 900 800 25% since 2019 ▪Liquidity1 excellent with $1.7 billion of $ Millions 700 20% 600 500 cash available at quarte
Slide 66: 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 $ Millions 5,000.0 4,000.0 3,357.1 3,000.0 2,473.3 2,000.0 1,000.0 6,005.6 6,546.5 7,620.6 7,416.6 5,815.6 923.6 1,575.3 - 2016 2017 2018 2019 2020 Q2 YTD Q2 YTD 2020 2021 Annual Results YTD Current Quarter © Linamar Corpo
Slide 67: Normalized Net Earnings
Normalized Net Earnings1 CAGR 600 20.0% 10 Year 10.1% 30 Year 13.5% 500 16.0% 400 12.0% 8.4% 8.4% 7.7% 300 6.8% 8.0% $ Millions 6.3% 5.4% 200 265.2 4.0% 100 0.0% -2.4% 504.0 551.5 583.8 464.4 314.6 45.0 106.9 - -4.0% (22.0) -100 -8.0% 2016 2017 2018 2019 2020 Q2 YTD Q2 YTD 2020 2021 Annual Results Y
Slide 68: 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% 4.5% 3.3% 100 114.7 3.0% 110.3 343.3 410.1 537.3 525.4 264.3 24.0 50.8 - 0.0% 2016 2017 2018 2019 2020 Q2 YTD Q2 YTD 2020 2021 Annual Results YTD Current Quarter Capex as a % of YTD S
Slide 69: Net Debt to EBITDA
Net Debt to EBITDA 2.50x 2.00x 1.50x 1.00x 0.50x 1.80x 0.17x 0.96x 0.83x 1.68x 1.50x 0.50x 0.00x 2016¹ 2017 2018¹ 2019 2020² Q2 2020² Q2 2021 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 refer t
Slide 70: Thank You
Thank You www.linamar.com @linamarcorp Linamar Corporation
Slide 71: Appendix
Appendix © Linamar Corporation 71
Slide 72: Diverse Key Products
Diverse Key Products Industrial Mobility New Energy Powertrain Body & Chassis Systems Engine Driveline Transmission © Linamar Corporation 72
Slide 73: 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 74: 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 74
Slide 75: Today & In Future: Linamar well positioned to provide content 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