Linamar Corporation · TSX:LNR

Linamar — Q2 2022 Earnings Presentation

51 slides from Linamar's earnings presentation, Aug 10, 2022

  1. Slide 1: 2022 Q2 Conference Call Presentation

    For Audio Only Dial in: North America: (888) 886-7786 International: (416) 764-8658 Conference ID: 14490656 2022 Q2 Conference Call Presentation Linda Hasenfratz, Executive Chair & CEO August 10, 2022

  2. 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

  3. Slide 3: Sales, Normalized Earnings and CPV

    Sales, Normalized¹ Earnings and CPV 1 - The Company uses certain non-GAAP and other financial measures to provide useful information to both management, investors, and other stakeholders in assessing financial performance and financial condition of the Company. For more information refer to the sect

  4. Slide 4: 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

  5. Slide 5: Automotive Sales & Content Per Vehicle

    Automotive Sales & Content Per Vehicle2 (CPV) CPV Q2 2022 CPV Q2 2021 CPV % Change Vehicle Production Automotive Automotive Automotive Units % Change Sales Q2 2022 Sales Q2 2021 Sales % Change (CAD Millions) (CAD Millions) North America 235.70 178.85 31.8% 11.8% 870.6 591.0 47.3% Europe 100.47 80.18

  6. Slide 6: Commercial & Industrial Sales

    Commercial & Industrial Sales2 (in millions CAD)  Skyjack  Global markets up near double digits Q2 2022 Q2 2021 % Change  Growth enhanced by global market share growth in scissors  NA market share growth in booms  MacDon Sales 576.1 468.7 22.9%  Supply chain issues starting to improve allowing

  7. Slide 7: Capital Expenditures

    Capital Expenditures (in millions CAD) Q2 2022 Q2 2021  Capex continuing to climb back to higher levels to support launching business Capital Expenditures (Capex) 84.9 50.8  We will be back in our normal spending range of 6-8% of sales in 2022 and 2023 Capex as a % of Sales 4.3% 3.2% Capex Capex a

  8. Slide 8: 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 thanks mainly to an increase in 25% 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

  9. Slide 9: Leverage

    Leverage (in millions CAD) Q2 2022 Q1 2022 Q2 2021  Balance sheet is in excellent shape at 0.35x Net Debt to EBITDA despite very active NCIB and 2 acquisitions in Net Debt1 337.4 (110.3) 198.7 the quarter Net Debt to EBITDA2 0.35x (0.12)x 0.17x  1.3 million shares purchased in the quarter under ou

  10. Slide 10: Challenges

    Challenges © Linamar Corporation 10

  11. Slide 11: Supply and Cost Challenges

    Supply and Cost Challenges Spiking Energy Supply Chain Spiking Commodity Labour Challenges Semi Conductor Major Increases in Costs Shortages Prices Chip Shortages Freight Costs Unlikely to Slow Generally Continued Predictability of Trending Down Improve Anytime Improvements declining, some Challenge

  12. Slide 12: 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 4.0 3.06 2.5 2.06 2.91 Millions Millions 2.0 1

  13. Slide 13: Commodity Prices Improving

    Commodity Prices Improving 1,500.00 Steel Plate (CDN) - per metric ton $1.80 Aluminum (USD) - per lb $1.60 1,300.00 $1.40 1,100.00 $1.20 900.00 $1.00 700.00 $0.80 500.00 $0.60 $0.40 300.00 $0.20 100.00 $- -100.00 $140.00 Crude Oil, WTI (USD) - per barrel $800.00 Scrap Steel No. 1 Busheling N. Americ

  14. Slide 14: MacDon Supply Disruption Situation Improving

    MacDon Supply Disruption Situation Improving… Assembly Line Shortages: Completed Header Production All released Projects, All Lines, by SKU including partials 140 120 120 100 100 80 80 60 60 40 40 20 20 0 03-18-2022 03-25-2022 04-01-2022 04-08-2022 04-15-2022 04-22-2022 04-29-2022 05-06-2022 05-13-2

  15. Slide 15: But Skyjack Improving More Slowly, Still Feeling Disruptions

    …But Skyjack Improving More Slowly, Still Feeling Disruptions Line Down - Weekly Total 140 130 117 120 110 103 100 99 96 96 100 91 93 87 87 85 86 87 83 81 83 75 77 80 73 70 71 69 64 59 59 60 52 51 42 43 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Weekl

  16. Slide 16: Ocean Freight -- Europe Leveled Off, Asia Trending Down

    Ocean Freight -- Europe Leveled Off, Asia Trending Down… Ocean Lane Increases Ocean Lane Increases Europe Asia & SA $18,500 $27,500 $16,500 $14,500 $22,500 $12,500 $17,500 $10,500 $8,500 $12,500 $6,500 $4,500 $7,500 $2,500 $2,500 Germany 20' Germany 40' India 40' S.Korea 20' SJK from China 20' Switz

  17. Slide 17: Energy Prices

    Energy Prices Updated Jun 2022 Source: World Bank. © Linamar Corporation 17

  18. Slide 18: Top Issue on People Side: The Availability of People

    Top Issue on People Side: The Availability of People AVAILABILITY  Workforce Availability has Shrunk Significantly  Acceleration of Baby Boomer Retirement  Insufficient Immigration  COVID Impact © Linamar Corporation 18

  19. Slide 19: Market Outlook

    Market Outlook © Linamar Corporation 19

  20. Slide 20: 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%

  21. Slide 21: 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

  22. Slide 22: 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

  23. Slide 23: 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

  24. Slide 24: Agricultural Market

    Agricultural Market Agriculture Market Commentary North American Combine Retails  Supply chain disruptions including shipping container shortages and higher 1,600 commodity prices are continuing to negatively impact production, shipments and costs in 2022. 1,400  Agriculture retailers are seeing v

  25. Slide 25: Growth Update and Outlook

    Growth Update and Outlook © Linamar Corporation 25

  26. Slide 26: Strong EV Wins Shifting Linamar Sales Mix Dramatically in Future

    Strong EV Wins Shifting Linamar Sales Mix Dramatically in Future Non-ICE Powertrain Sales Electrified New Business Wins % of Total Light Vehicle Sales $800 50% $700 45% $600 40% $500 Millions $400 35% $300 30% $200 25% $100 20% $0 2021 2022 2023 2024 2025 2026 2019 2020 2021 2022 Source: Linamar Int

  27. Slide 27: Launches

    Launches Launching nearly $4.9 billion of new work today 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 - 2021 2022 2023 2024 2025 2026 Incremental Growth from Launches $500 to $600 Million in 2022 $800 to $900 Million in 2023 Updated: July 2022 © Linamar Corporation

  28. Slide 28: 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

  29. Slide 29: Strategy Updates: Recent Developments

    Strategy Updates: Recent Developments © Linamar Corporation 29

  30. Slide 30: Global Manufacturing Expansion

    Global Manufacturing Expansion © Linamar Corporation 30

  31. Slide 31: New Business

    New Business © Linamar Corporation 31

  32. Slide 32: New Business Win $40M / year

    New Business Win $40M in cylinder head wins for hybrid electric vehicles Average Annual Revenue SOP Year $40M / year 2023 Production Location Bulgaria Germany © Linamar Corporation 32

  33. Slide 33: New Business Win 5,000 / year

    New Business Win First commercial vehicle eAxle win. To be used in electric delivery trucks. Average Annual Volume SOP Year 5,000 / year 2023 Production Location Canada © Linamar Corporation 33

  34. Slide 34: New Business Win $90M / year

    New Business Win $90 million in wins for BEV body, chassis and eAxle components Average Annual Revenue SOP Year $90M / year 2023, 2024 Production Location Canada Mexico France Germany © Linamar Corporation 34

  35. Slide 35: Innovation

    Innovation © Linamar Corporation 35

  36. Slide 36: Innovation: Salford HALO VRT

    Innovation: Salford HALO VRT  ‘VRT’ refers to Variable Rate Tillage  New Tillage product designed for precision farming  On-the-go settings that can be adjusted for soil movement, soil leveling and tillage depth,  Enabling a savings of time, fuel and the unnecessary disruption of soil in areas w

  37. Slide 37: Innovation in Aerial Work Platforms

    Innovation in Aerial Work Platforms SJ45AJ European Specification  RE-VISUALIZED. RE-POWERED. RETURN.  The SJ45 AJ CE has been redesigned to improve customer return by using SMARTORQUETM technology and data-driven design.  Launching in 2022 for Europe from Linamar’s manufacturing site in Hungary.

  38. Slide 38: Digitization with AI/ML

    Digitization with AI/ML 65 Plants 5,225 3,463 1,030 Traceability Robots Marking Stations LMMS Data Collection Connections 1,991 2,925 RFID Stations 1,207 Connected Machines 2,690 6 Vision Systems Traceability Read Stations AGVs July- 2022 38

  39. Slide 39: Financial Review

    Financial Review Dale Schneider, CFO © Linamar Corporation 39

  40. Slide 40: 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

  41. Slide 41: Foreign Exchange Gain/Loss

    Foreign Exchange Gain/Loss (in millions CAD) Q2 2022 Q2 2021 +/-  Total FX Loss was $6.3 which resulted from a $5.4 FX Loss – FX Gain/(Loss) – Operating1 (5.4) 1.5 (6.9) Operating and a $0.9 FX Loss – Financing. FX Gain/(Loss) – Financing (0.9) - (0.9)  FX Loss – Operating was comprised of a $9.7

  42. Slide 42: Industrial Sales, Earnings, and Margins

    Industrial Sales, Earnings, and Margins (in millions CAD)  Industrial sales increased by 28.2% or $111.1 to $504.6. Q2 2022 Q2 2021  The sales were helped by: Finance  an increase in agricultural sales from market growth further improved by global Sales 504.6 393.5 market share growth in all core

  43. Slide 43: Mobility Sales, Earnings, and Margins

    Mobility Sales, Earnings, and Margins (in millions CAD)  Mobility sales increased by 25.0% or $295.2 to $1,477.0. Q2 2022 Q2 2021  The sales were helped by:  a sales increase primarily due to improvements supply related issues experienced Sales 1,477.0 1,181.8 by our customers compared to Q2 2021

  44. Slide 44: Operating Expenses

    Operating Expenses (in millions CAD) Q2 2022 Q2 2021 +/- %  Gross Margin was $249.9 in the quarter and was impacted by the same factors that impacted each business segment. (See the previous two slides) Sales 1.981.6 1,575.3 406.3 25.8% Cost of Goods Sold 1,731.7 1,346.8 384.9 28.6%  Amortization

  45. Slide 45: Finance Expenses & Income Tax

    Finance Expenses & Income Tax (in millions CAD)  Finance expenses increased by $4.2. Q2 2022 Q2 2021 +/-  Finance expenses were hurt by:  lower interest earned due to the decreasing long-term receivable balances; Finance Expense 4.9 0.7 4.2  increase in interest costs due to change in the Bank o

  46. Slide 46: Leverage

    Leverage (in millions CAD) Q2 2022 Q2 2021  Cash position at the end of the quarter was $877.5.  Linamar generated $66.4 in Cash from Operating Activities. Cash Position 877.5 731.6  Net Debt to EBITDA was increased to 0.35x due acquisitions and share buybacks. Available Cash on Credit Facilities

  47. Slide 47: Conclusion

    Conclusion  Sales growth in both Mobility and Industrial.  Market share growth in Mobility, Skyjack and MacDon.  Economic hardship recoveries achieved in Mobility.  Available Liquidity1 remains strong at $1.4 billion.  Very active in the share buyback program (NCIBs).  Completed two acquisitio

  48. Slide 48: Question and Answer

    Question and Answer

  49. Slide 49: 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

  50. Slide 50: Key Messages

    Key Messages Market Dynamics Improving 74% YTD NBW EV, First Commercial Vehicle eAxle Returning $$ to Shareholders © Linamar Corporation 50

  51. Slide 51: Thank You

    Thank You www.linamar.com @linamarcorp Linamar Corporation

Linamar — Q2 2022 Earnings Presentation on 6ix