Linamar Corporation

Good afternoon, ladies and gentlemen, and welcome to the Linnemar Q3 2025 earnings call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 12th, 2025. I would now like to turn the conference over to Linda Hasenfratz, the Executive Chair. Please go ahead.

Thanks very much. Good afternoon, everyone, and welcome to our third quarter conference call. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast. Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President, and Dale Schneider, our CFO, both of whom will be addressing the call formally. Also available for questions are Mark Stoddard and some other members of our corporate IR marketing financial legal team. I'll start us off with some highlights of the quarter. A good place to start is a quick reminder of the key value drivers that make Lindemar such a great investment and how they played out this quarter. First, Lindemar has a long track record of consistent, sustainable results driving out of our diverse business. Q3 was another good example with exceptional earnings growth in our mobility business, going a long way to offset very soft markets in our agricultural businesses. Being invested in both businesses has trimmed big swings up and down in individual markets and leaves us with a more consistent, sustainable level of performance. Strong mobility performance this year will carry us to a bottom line growth for the year, despite a tough year for industrial just like two years ago when industrial took us to a profit, to a growth for the year, profit growth for the year despite a tough year in mobility. The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment that can be used on a large variety of types of products across vehicle platforms and types of propulsion. The flexibility is allowing us to reallocate equipment from programs running under capacity to new launches, helping keep our capital bill down, as you saw again this quarter, down 30% over last year without restricting our ability to grow. Third, we've always run a prudent conservative balance sheet. We target keeping net debt to EBITDA under 1.5, and Q3 saw net debt to EBITDA actually at 0.76, so under one, an excellent level to be at, given Great opportunities in the market today. Lastly, returning the cash to shareholders is a key value creation driver at Linnemar as well. You saw that play out this quarter with the renewal of our NCIB program for another 10% of outstanding shares. Okay, turning to highlights for this quarter, I would identify these as our most relevant accomplishments. First, we announced two exciting acquisitions for us with Aludine Aluminum Crafting Technologies in the U.S. and the GF Leipzig Ductile Iron Casting Facility for commercial vehicle components in Germany. In aggregate, they represent more than $1 billion in sales and will contribute in our normal operating earnings range. Aludyn is a company that was in distress, but with excellent technologies and a solid team, and we're excited to bring them into the Linnemar family. GS Livestream, similarly, has unique capabilities for very large stockpile and crafting, well-suited for growth opportunities in Europe. Again, it's a great team, and we look forward to welcoming them to Linnemar. Both acquisitions will feed our existing plants in North America and Europe with machining business, which creates exciting new growth opportunities. Jim will describe the acquisitions in more detail shortly. Secondly, we were thrilled with the excellent growth in our mobility segment earnings, up 88%, and growing margins to the top end of our normal range. The impact of launches and operational efficiencies is having a big impact on the segment. And third, wow, what a great quarter in free cash flow, hitting over $320 million in the quarter, thanks to that careful management of that capacity. And finally, we continue to be modestly impacted by the period of U.S. tariffs in place and, in fact, are using the situation as an opportunity to chase new business with our automotive customers looking to onshore products from Asia and Europe and to chase acquisition opportunities with distressed suppliers. I'll come back to the tariff situation in just a moment. Turning to the numbers, we saw sales at $2.5 billion. down 3.6% over last year on tough industrial markets. Sales were down 26% in our industrial businesses, largely the agricultural business, down in markets that are dramatically down. Sales were actually up 7% in the mobility segment, with the launching business adding to market growth of 4.6%. Normalized net earnings were $150.1 million, or 5.9% of sales. Normalized EPS was $2.51, up 6.8% over last year on the backs of a very strong mobility segment. I'd summarize our results this quarter as being most impacted by first, higher sales earnings in the mobility segment on that launching business and strong value on key platforms. Secondly, operational improvements and cost reductions that are happening actually in both segments. as well as fixed and overhead cost reductions, and that being offset by those steep declines in the agricultural market. Cash flow strong at $321 million, as noted. We expect to continue to generate free cash flow in 2025 for another strongly positive result for the year. Finally, let's have a look at an update on the tariff slide. Despite the myriad of tariffs put in place over the last couple of months, Windermere continues to have a manageable level of bottom-line impact. New in the quarter were tariffs announced on 2-3-2 metal product derivatives. So far, more than 900 categories of parts containing metal have been identified that are subject to 50% tariffs on the non-U.S. metal content of those products. This is having some impact to certain industrial segment products, not automotive. We are developing strategies to mitigate these costs as best possible, or I would say they are manageable and not impacting our bottom line materially. The balance of the tariffs are having no or minimal impact. And I think there's really three key reasons for this. One, we have long followed a strategy of producing products in the same content as our customers and not chasing low-cost labor around the world. As a result, we're not making products in Asia or Europe a shift to the U.S. and would trigger tariffs. Secondly, for product produced in Canada and Mexico, our products are USMCA compliant for virtually everything we ship into the U.S., meaning no tariffs for our customers on the mobility side, where they are the importer of record, or for us on our industrial products, where we are the importer of record, unless caught by those 232 derivatives tariffs that I just discussed. Our largest business is our automotive business, where our customers are the importer of record, and I think that's the third key element. And therefore, those customers would be responsible for paying tariffs in the event any gives become applicable, although happily none are as yet. I do worry about the growing impact of tariffs on our automaker customers as they continue to build up, whether it be for metal tariffs, for vehicle tariffs or parts tariffs for their offshore purchases outside of North America. The cost for our customers, as we've seen, are in the billions, and I am concerned about potential impacts to vehicle pricing and therefore demand long-term. On the positive side, we are seeing customers looking at onshore parts and systems. They are currently buying from Asia or Europe. We're building up a good list of new business opportunities and business winds, for our North American plants in all of Canada, the U.S., and Mexico. The U.S. is still respecting the USMCA agreement, meaning these parts can be supplied from any of the three countries, tariff-free, as long as they are USMCA compliant. Where the job goes really depends on where we have capacity, experience, and teams available to take on the work, as well, of course, as customers reference. The tariff situation is also adding to stress in an already stressed supply base, notably in the U.S. and Europe, and this is leading to acquisition opportunities for us, as you saw us acting on in the quarter. Finally, I'd like to emphasize that our strong results and positive outlook is very much of a result of what I think is an excellent and unique business culture at Linimer. Our culture has been finely tuned, over nearly 60 years to be opportunistic, entrepreneurial, and find something positive and actionable to grow our business, regardless of circumstances. We're naturally responsive, we're nimble, we move fast, we're innovative, we're creative in deal-making and mitigating challenging situations, and we get things done. Those are the critical elements to not just survive, but thrive in a challenging time. So with that, I'm going to turn it over to our CEO, Jim Gerald, to report. industry and operations updates in more detail.

Thank you, Linda, and great to be with everyone listening here tonight. As I've emphasized over the past few quarters, the theme you see on the screen remains our guiding focus at Linamar in 2025 and certainly will continue for the foreseeable future. Our commitment to growing revenue, profits, and growing our team is fundamental to our long-term success. We've certainly been saying the time we're in is a business person's nightmare, but an entrepreneur's dream. Volatility, limited visibility, macroeconomic headwinds are testing companies everywhere. Tariffs, shifting consumer demands, disruptive technologies, cost pressures, talent shortages, and regulatory changes are all part of that puzzle. But from our side, tough times don't last, tough teams do, and certainly Linnemar is one tough team. And what sets us apart is our entrepreneurial mindset. We don't just react, we attack every challenge and opportunity with purpose, We stay true to our long-term vision, operate with lean discipline, and make agile, decisive moves. So with that, let me do an update on the quarter, covering our two reporting segments and the markets we operate in. Let's start with the auto industry. Global production grew this quarter. North America up 4.1%, Europe 1%, and Asia-Pacific leading with 5.8% growth. Forecasts for 2025 have improved, not just to easing tariffs, but also because OEMs now have a clearer understanding and stronger plan for vehicle types and propulsion systems across global markets. North America is projected to be down just 2% versus 3.9% last quarter, Europe down 1.8% versus 2.5%, and Asia up 4.4% versus 2.5%, and that's driven by China's strength and tariff de-escalation. That would bring a global production up 2% for the year. Looking ahead to 2026, North America is expected to be down 2.6%, Europe and Asia relatively flat, resulting in a modest 0.5% global decline. Turning to Linnemar's CPV performance for the quarter, we saw growth across all three key regions. North America grew 1.3%, Europe 1.2%, and Asia delivered exceptional growth of 21% year-over-year, really driven by program launches Linda mentioned and increased volumes on key platforms where Linamar has strong business. With growth in every region, global CPV rose 1.6% year over year, reinforcing the strength and consistency of our global footprint. In Q3, our commercial teams continued to deliver on our core goal, keep winning business. We secured $457 million in new business wins, with $195 million in body and chassis components, significantly expanding our position in key structural parts like cross members and knuckles. Linnemar's longstanding strength in structural components, supported by recent acquisitions, position us well for continued growth. A major highlight, mobility new business wins now total over $1.8 billion in annualized value over the last 12 months. By staying focused, executing with discipline, and seizing opportunities in these times, we're reinforcing our position as a leading supplier. The biggest news that Linda highlighted is the mobility. Two transformative acquisitions, Aludine North America and Dior Fisher's LightSick facility. Aludine North America has 13 facilities, 2,400 employees, and advanced casting technologies like squeeze casting and magnesium high-pressure die cast. a strong portfolio of structural components knuckles shock towers subframes and rear axle housing this acquisition boosts our content per vehicle and strengthens our leadership in light weighting life sick brings exceptional capabilities in large single piece casting including one of the largest box sizes in western europe for production supported by 3d sand printing and high automation It offers 350-plus products across nine end markets and 40-plus customers, expanding our reach in the off-highway and industrial segments. Why these acquisitions? Simple. They fit perfectly. Aludyne and Leipzig bring advanced casting technologies. Both companies offer full-service design and engineering, giving Linamar full-value chain coverage from design to validation to manufacturing. a major differentiator in a competitive market. Aludine has reputational excellence and is a category killer in aluminum knuckles with leading market share in North America. Leipzig is a technology leader in Europe, known for high-quality ductile iron castings and innovation in off-highway applications. Together, they provide significant growth opportunities and bring over $1 billion in annualized revenue expand our CPV with key customers, accrete of day one, and operate within our target 7% to 10% OE margin range. Their strategic footprint, Aludine in the U.S. and Lysic near our European plants, enhance our ability to support OEMs locally and scale globally. These acquisitions were entrepreneurial, opportunistic, and were driven by innovation, reputation, and long-term growth. We're proud to welcome these teams to Linnemar and excited to deliver even greater value to our customers. Turning to our industrial segment, starting with SkyJack and the aerial work platform market. While the market continues to face headwinds from interest rates, tariff pressures, and delayed infrastructure projects, signs of recovery are emerging. Despite these challenges, SkyJack delivered an outstanding Q3. growing unit volumes by 46% in a market that was down 9.3% globally. Year-to-date, Skyjack is up 11.3%, outperforming a market that's down 23.3%. The success is driven by exceptional market share gains, especially in scissor lifts globally and booms in Europe. It's a clear signal that Skyjack is winning with our innovation and customer connectivity. It's important to note that volume growth doesn't always translate directly to revenue, as product mix plays a key role, with booms, telehandlers commanding higher prices than scissors. Dale will touch upon that again, but the real story here is Skyjack's ability to gain, share, and strengthen its position in a tough market. On the innovation front, Skyjack was awarded the 2025 Rental Editor's Choice Award in Micro X-Step Scissor Lifts designed for maximum productivity in tight spaces. They also launched the E-Drive Scissor Lift, offering the highest working height in their range with zero emissions and lower operating costs, a win for customers and sustainability. In this time frame we're in, Skyjack is not just navigating the storm, it's leading the way forward. Turning to agriculture, while the market remains challenged, Linnemar continues to perform and innovate. As the 2025 growing season wraps up, North American harvests are strong, but low commodity prices and trade issues are limiting exports and farmer profitability. Still, U.S. farmer sentiment is resilient, and federal payments are expected to drive demand into 2026. Dealer inventories and credit lines are easing, though still elevated, which is holding back hold good stocking. In Europe, wheat crops are strong, corn yields are down due to drought and heat stress, and in northern Russia, we are seeing their best crops in three years. In Australia, soil moisture is solid in key regions, and China presents a major canola opportunity as Canada faces tariffs. Despite high inventories and macro pressures like interest rates and stimulus uncertainty, The 25 outlook remains unchanged. North America down 30%, Europe down 5%, and the rest of the world flat. Our Linnemar Ag divisions, MacDon, Salford, and Borgo are tracking with the market, down 29% in volume, but gaining share in key products and regions. Timing of deliveries and inventory pull ahead impacts MIPS, but our teams continue to outperform. On the innovation front, Salford launched the AB230 air boom, engineered for the case tried and dry high-flow equipment. It delivers faster speeds, higher rates, great coverage, and less compaction, driving maximum productivity and nutrient accuracy. While market cycles are beyond our control, our focus on innovation, execution, and customer value keeps us ahead. We're building strength today to lead tomorrow. With that, I'll turn it over to Dale for a deeper dive into our financials.