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Linamar Corporation Q4 2016 Investor Presentation March 2017
Linamar Corporation
Q4 2016
Investor Presentation
March 2017
2 © Linamar Corporation 2
Forward Looking Information, Risk and Uncertainties
Certain information regarding Linamar set forth in this presentation and oral summary, including
managements assessment of the Company’s future plans and operations may constitute
forward-looking statements. This information is based on current expectations that are subject to
significant risks and uncertainties that are difficult to predict. Actual results may differ materially
from these anticipated in the forward-looking statements due to factors such as customer
demand and timing of buying decisions, product mix, competitive products and pricing pressure.
In addition, uncertainties and difficulties in domestic and foreign financial markets and economies
could adversely affect demand from customers. These factors, as well as general economic and
political conditions, may in turn have a material adverse effect on the Company’s financial
results. The Company assumes no obligation to update the forward-looking statements, or to
update the reasons why actual results could differ from those reflected in the forward-looking
statements. Content is protected by copyright and may not be reproduced or repurposed without
express written consent by the Company.
Company
Overview
© Linamar Corporation 4
Linamar – A Global Powerhouse in Diversified Manufacturing
24,500 EMPLOYEES 57 MANUFACTURING FACILITIES 17 COUNTRIES
Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives
2015 SALES: $5,162.4M ↑ 23.8% 2016 SALES: $6,005.6M ↑ 16.3%
NE: $436.7M (8.5%) ↑ 36.2% NE - ATS: $522.1M (8.7%) ↑ 19.6%
Transportation
Infrastructure
Power
Food
Water
Age
© Linamar Corporation 5
Core Capabilities
• CNC Expertise
• Complex Assemblies
• Advanced Automation
& Robotics
• Hydroforming
• Heat Treatment
• Hatebur High Speed Hot
Horizontal Forging
• Conventional Vertical Forging
• Cold Forming
• Ring Rolling
• Gravity & Low Pressure
Aluminum Die Casting
• High Pressure Aluminum &
Magnesium Die Casting
• Metal Forming
• Stamping
• Painting
• Robotic Welding
MACHINING &
ASSEMBLY FORGING
LIGHT METAL
CASTING METAL FORMING
© Linamar Corporation 6
Key Products
© Linamar Corporation 7
Scope of Operations & Market Concentration Q4 2016 YTD
SECTOR PRODUCTS MARKETS TOTAL
PRECISION PRODUCTS 85.0%
Precision Metallic Components, Modules & Systems
Engine 76.2% Automotive
Transmission 2.7% Off Road Vehicles
Hybrid Electric Systems 3.9% Commercial Truck
Driveline 0.7% Recreational
Axle
Transfer Case 1.5% Energy, Heavy Machining & Military
PTU
SECTOR PRODUCTS MARKETS TOTAL
MOBILE PRODUCTS 15.0%
Fabricated Assemblies and Vehicles
Mobile Industrial Equipment 13.8% Access
Fabrications 1.2% Agricultural, Industrial
© Linamar Corporation 8
49 Facilities with TS16949
13 Facilities with ISO9001
51 Facilities with ISO14001
41 Facilities with OHSAS 18001
CANADA
Manufacturing
Facilities (23)
FRANCE
Manufacturing
Facilities (4)
GERMANY
Manufacturing
Facilities (7)
HUNGARY
Manufacturing
Facilities (4)
MEXICO
Manufacturing Facilities (5)
USA
Manufacturing Facilities (5)
CHINA
Manufacturing Facilities (3)
INDIA
Manufacturing Facilities (3)
Manufacturing (57) Sales Representation (15) Development Centres (6) Support Facilities (4)
UNITED KINGDOM
Manufacturing
Facilities (1)
SPAIN Manufacturing
Facilities (1)
BULGARIA
Manufacturing
Facilities (1)
Global Presence
March 2017
Key Investment Themes
© Linamar Corporation 10
Key Investment Themes
• Sales & earnings growth consistent & well above market
• Q4 2016 our 22nd consecutive quarter of double digit operating earnings growth
Consistent Performance
• We will continue to grow through “Peak Auto”
Market Share Growth Key Growth Driver
• $7.5 - $8 billion sales secured for 2020
Double Digit Growth in Sight Through 2020
• Significant content potential in both EV and ICE
• Only 30% of powertrain outsourced – huge opportunity for extended time frame of growth
Massive Opportunity in Outsourcing in all Propulsion Types
• $10 Billion market, few players
Massive Opportunity for Growth in our Access Business – Skyjack
Consistent
Performance
© Linamar Corporation 12
Performance Highlights Q4 2016 Competitiveness
NBW and quote level continues to build
Launch book at nearly $4.8 Billion
2016 NBW 26% higher than 2015 – great market momentum
Hit rate trending up
Significant wins this quarter in 9 and 10 speed transmission components ($250 million), transmission case HPDC casting for GF JV
CPV growth in all of NA, Europe and Asia for 2016 -- key driver of growth
Continued market share growth in telehandlers and scissors at Skyjack for 2016
Global Bench Great employee feedback to 50th celebrations over past year
LEAP scouting – solid process, 3 great new candidates
Montupet team integration a success
Great momentum on global mobility
>600 apprentices globally
Simplify Another quarter of double digit sales and earnings growth
22nd consecutive quarter of double digit operating earnings growth
2016 Return on Equity > 20% goal
Outlook strong for record year again in 2017
Balance sheet strong, great de-levering from peak after Montupet acquisition to <1x EBITDA
Dividend increased 20%
© Linamar Corporation 13
Yearly Sales Growth 2012 - 2016
3,221.9 3,595.5 4,171.6 5,162.4 6,005.6 1,243.0 1,374.8
5,162.4
6,005.6
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
2012 2013 2014 2015 2016 Q4 YTD2015
Q4 YTD2016
$ M
illio
ns
Annual Results Current Quarter
© Linamar Corporation 14
Net Earnings Attributable to Shareholders 2012 - 2016
Net Earnings as % of Sales – Normal Range 5-7% Net Margin Expectations 2016: 8.0% - 8.5%
146.1 229.8 320.6 436.7 522.1 95.3 116.1
436.7
522.1
4.5%6.4%
7.7%8.5% 8.7% 8.5% 8.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 Q4 YTD2015
Q4 YTD2016
$ M
illion
s
Annual Results Current Quarter NE as a % of Sales
Q3 2016 represents 21st consecutive quarter of double digit earnings growth delivered
Market Share
Growth
© Linamar Corporation 16
New Business Driving Strong Market Share Growth Globally
Content per Vehicle 2012 – 2016
12.24 14.45 19.84 39.47 63.60 $0
$10
$20
$30
$40
$50
$60
$70
2012 2013 2014 2015 2016
Europe
121.35 125.15 130.57 150.37 153.82 $75
$85
$95
$105
$115
$125
$135
$145
$155
$165
2012 2013 2014 2015 2016
North America
4.16 5.40 6.36 6.70 8.32 $0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
2012 2013 2014 2015 2016
Asia
© Linamar Corporation 17
Skyjack Market Share Penetration – A Case Study
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Telehandler NA Market Share
Tele (NA only)
Significant
Business
Launching
Securing
Continued
Growth
© Linamar Corporation 19
Launch Review – Q4 2016
Sales in Millions Launching nearly $4.8 billion of new work today
Sales in Millions
- 500 1,000 1,500 2,000 2,500 3,000
Other
Driveline
Engine
Transmission
2015 2016 2017 Mature
© Linamar Corporation 20
Launch Review – Q4 2016
Sales in Millions
Launching nearly $4.8 billion of new work today
- 500 1,000 1,500 2,000 2,500 3,000 3,500
Asia Pacific
Europe
North America
2015 2016 2017 Mature
© Linamar Corporation 21
Launch Review – Q4 2016
• Offsetting launching sales is business leaving each year of 5-10% of overall sales
Sales in Millions
Launches will add $600 to $700 Million in 2017
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
2015 2016 2017 2018 2019 2020 2021
Driveline Other Engine Transmission
© Linamar Corporation 22
Outlook Strong for the Future Q4 2016
Target
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2011Actual
2016Actual
2021Estimate
Sales by Region
North America Europe Asia Target - Business to be Booked
Massive Opportunity in Outsourcing in all Propulsion Types
© Linamar Corporation 24
Massive Opportunity in Outsourcing in all Propulsion Types
Significant content potential in both EV and ICE
70% of content of powertrain captive but slowly being outsourced
$500 Billion global market, addressable portion growing each year
Linamar technology leader in light weighting, noise reduction, design
optimization
Linamar is a leader in vehicle electrification initiatives on driveline side
© Linamar Corporation 25
Powertrain | Target Markets Significant and Growing
TOTAL GLOBAL POWERTRAIN & DRIVETRAIN MARKET
MARKET 2013 2016 2019
AUTOMOTIVE $319B $373B $407B
ICE $142B $170B $201B
TOTAL GLOBAL MARKET $461B $543B $608B
36%
21%
43%
Segmentation by System
ENGINE TRANSMISSION DRIVETRAIN
- Includes total system value for
engines, transmissions and drivetrain
- Includes all material, VA component
machining and assembly
- Includes all light vehicle system
production
- ICE market size includes value for
systems >50 HP
Assumptions:
- Key competitors OEM’s themselves
- Handful of competitors with technical
expertise in these products, fewer still
with financial capacity
Competition:
- Increases variability of cost base for
OEM
- Machining and assembly highly
capital intensive – saves OEM
capital
- Outsourcing to an expert in that
process/product should result in
better technology, quality and price
Drivers of Outsourcing:
© Linamar Corporation 26
Outsourcing Evolution – A Case Study
$12 - $15 ea $45 - $60 ea $150 - $200 ea
4 Speed 6 Speed 9 & 10 Speed
Linamar produced single, build-to-
print, transmission shafts which the
OEM assembled into a module
prior to transmission assembly
Initial outsourcing to Linamar of
Full Clutch Module Assembly by an
OEM
Increased Transmission Content
Required design input &
testing/validation capabilities
Complex Rear Drive Clutch
Module Assembly
Outsourced by multiple OEMs to
Linamar
Significantly increased
Transmission Content
Requires design input &
testing/validation capabilities
© Linamar Corporation 27
INDUSTRY IMPERATIVE
Reduce Emissions
Improve Fuel Economy
Short Term
Improve ICE
30x less emissions in ICE today vs. 30
years ago
Lots of runway for continued
improvement
Medium Term
Hybrid
Good utilization of balance of power on
board means best overall
environmental impact today
Solves technical issues of BEV on
range, charge, time etc.
Long Term
Battery Electric Vehicle (BEV)
Challenge today re energy
infrastructure means little
environmental impact
Technical challenge re range, charge
time, battery degradation, will take time
to fix
LINAMAR Strategy
Light Weighting | Noise Reduction | Design
Enhancement
e-Axle Drive Line Systems
Multi Speed Gear Box
Structural Components
Product/Process Design Enhancement
Vertical Integration
Parallel Parallel
PHEV BEV
Mass (kg)PHEV = 56
BEV = TBD59.1 61.9
Power (kW)PHEV = 80
BEV = 80 94 98
Inertia (kg*m2) TBD 2.515 2.388
Gearbox Ratio NA 13.6 : 1 12.0 : 1
Motor Rotor Size
(mm) (Diameter-
Length)
NA 166-125 166-150
Peak Output Torque
(Nm)
PHEV 1700 < x < 2000
BEV = 23002004 2358
Wheel speed @
Torque
Requirement (rpm)
PHEV = 382
BEV = 300388 357
Peak Output Speed
(rpm)
PHEV = 1100
BEV = 15001103 1500
PSA/Linamar eAxle Configurations
PSA RFQ
5/4/2015CPV Potential
$3,500 - $4,000 $3,500 - $4,000 ~ $2,000
© Linamar Corporation 28
NA Vehicle Propulsion Through 2023 Primarily ICE, Growing Hybrid
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Hybrid Electric ICE
Source: IHS, February 2017
© Linamar Corporation 29
Content Today on Electrified Vehicles Growing Quickly
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
2015 2016 2017 2018 2019
NA CPV By Propulsion Type – Q4 2016
Hybrid
ICE
© Linamar Corporation 30
BEV – Why Not Faster? Technical & Infrastructure Challenges
Energy Infrastructure Must Change for EV to Make Meaningful Environmental Improvement
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
0
50
100
150
200
250
300
2006 NA-SIBaseline
2030 NA-SI Turbo Diesel HEV PHEV-10 PHEV-30 PHEV-60 BEV FCV
Fu
el C
on
sum
pti
on
in L
/100
km, g
aso
line
equ
ival
ent
Gre
enh
ou
se g
as E
mis
sio
ns
in g
CO
2/km
Well-to-Tank GHG Tank-to-Wheel GHG Petroleum Fuel Consumption
Electric Propulsion Systems
Gap Diesel ICE to Battery EV not meaningful
Projected 2030 Vehicle WtW GHG Emissions and Petroleum Fuel Consumption Over Combined, Adjusted HWFET/FTP Drive Cycle
Source: Kromer and Heywood, SAE 2008-02-0459
© Linamar Corporation 31
Vehicle Propulsion 2050 Still Primarily ICE, BEV Becoming More Prevalent
Source: Bloomberg New Energy Finance - February 25, 2016
© Linamar Corporation 32
Addressable Market -- Gradual EV Growth
* Based on Bloomberg report speculating 35% EV by 2040, estimated outsourcing by 2040 is 80% (vs 30% in 2016) on ICE/Hybrid, 100%
addressable on EV by 2020
$-
$50,000,000,000
$100,000,000,000
$150,000,000,000
$200,000,000,000
$250,000,000,000
$300,000,000,000
$350,000,000,000
$400,000,000,000
Total Addressable Market -- Gradual EV Growth
Key driver of growing addressable market is increase in % outsourced
© Linamar Corporation 33
Addressable Market – Hypothetical Accelerated EV Growth Model
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
CY2013
CY2014
CY2015
CY2016
CY2017
CY2018
CY2019
CY2020
CY2021
CY2022
CY2023
CY2024
CY2025
CY2026
CY2027
CY2028
CY2029
CY2030
CY2031
CY2032
CY2033
CY2034
CY2035
CY2036
CY2037
CY2038
CY2039
CY2040
Un
its
of
Veh
icle
s
Propulsion Type
Electric Fuel Cell Hybrid-Full Hybrid-Mild ICE Total
Though not the prevailing expectation among industry experts, the above hypothetical model can help understand what the impact would be of an
accelerated EV market growth scenario to Linamar’s addressable market.
That impact of this hypothetical volumes conversion of ICE over to EV is illustrated on the following slide.
© Linamar Corporation 34
$-
$50,000,000,000
$100,000,000,000
$150,000,000,000
$200,000,000,000
$250,000,000,000
$300,000,000,000
$350,000,000,000
Total Addressable Market -- Hypothetical Accelerated EV Growth
Faster EV growth overtakes ICE potential while outsourcing % still low for
continued overall addressable market growth
* Estimated outsourcing by 2040 is 80% (vs 30% in 2016) on ICE/Hybrid, 100% addressable on EV by 2020
Addressable Market – Hypothetical Accelerated EV Growth Model
© Linamar Corporation 35
Scale & Financial Capacity to Invest
Global Footprint
Technical Leadership & Vertically Integrated
Linamar Positioned for Superior Growth
© Linamar Corporation 36
Optimize light weight solutions for customers through collaborative design
Offer one stop shopping for customers to
optimize cost, quality and technology
Create additional revenue streams and open doors to new customers
Grow market share in priority 1
products
Vertical Integration Strategy – Key To Innovation Agenda & Competitiveness
© Linamar Corporation 37
Technical Leadership
Product Innovation
Leader in AWD systems
Leader in Vehicle Electrification with E-Axle product
Motorless PTU Disconnect System
V2V AWD Communication
Process Innovation
Hydroformed camshafts, reduce weight 60%
Material Development
Cast aluminum structural parts replacing stamped steel assemblies in vehicle,
reduce weight 45%
PTU
RDU
E-Axle
Asphalt
Massive Growth Outsourcing at Skyjack
© Linamar Corporation 39
Access – Target Markets Large with Limited Competition Skyjack Target US $1Billion by 2020
Skyjack Internal Estimates
JLG
GENIE
SKYJACK
Haulotte
MANITOU
2016 Global Market Est $7.5 Billion
© Linamar Corporation 40
Overview Maintain and Defend Scissor Share….
98% coverage by product type by 2020
Grow Boom Products…
95% coverage by product type by 2020
Competitive Telehandler Offering…
94% coverage in NA by 2020
Skyjack Growth Strategy
© Linamar Corporation 41
Innovation Priorities
Reliable
Simple
Safe
© Linamar Corporation 42
Manufacturing and
Materials (Supporting
Theme for all Trends)
Key Themes for Long Term Growth
Oil & Gas Solar Wind
Fusion Generation
Energy Storage
Automobiles Rail/Subway
On Highway Trucks
Marine Personal
Transportation
Harvesting
Increasing Yield
Medical Devices
Assistance i.e. “Home Skyjack”
Developing Sources
Cleaning
Access
Off Highway Work Assistance
(Skyjack)
Mining
Power Transportation Food
Age Water Infrastructure
Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives
Global Addressable Markets:
Electrical products, systems and services
Energy Market
Global Addressable Market:
Ag. Equipment
Global Addressable Market:
Medical Devices
Healthcare & Mobility
Home Care Technology
Wearable Technology
Global Addressable Markets:
Irrigation Market
Water infrastructure
Global Addressable Markets:
Scissors, Booms, Telehandlers
Hydraulics
Global Addressable Markets:
Auto Parts & Accessories
Auto. Engine & Parts Manufacturing
Advanced
Manufacturing
Material
Development
© Linamar Corporation 43
A Global Manufacturing Powerhouse: Forging, casting, machining, fabrication & assembly expertise
Strong R&D capabilities
Diversified markets with global footprint
Solid markets with limited competition
Sound Strategy: Leverage existing expertise for new markets and diversify vertically in
targeted areas
Expansion into global growth regions
Develop future focused technologies
Focus on developing the people we need to execute on growth
Solid Financials: Strong historical performance
Solid outlook for continued earnings growth and improved returns driving
from solid launch book in short term, large and growing markets in
longer term
Strong Culture: LEAN & focused on operational excellence
Foundation of common core values & leadership behaviors
Balanced approach to the business for all stakeholders
Innovative Thinking Driving Performance Today and Tomorrow
www.linamar.com Thank You Linamar Corporation
@linamarcorp
Linamar Corporation
@linamarcorp
