Linamar Corporation

Good afternoon, ladies and gentlemen, and welcome to the Linnemar Q4 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, March 4th, 2026. I would now like to turn the conference over to Linda Hasenfrat, Executive Chair. Please go ahead.

Thank you, and good afternoon, everyone, and welcome to our fourth quarter conference call. Before we 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 shortly. Also available for questions are Mark Stoddard and other members of our Corporate IR Marketing Finance Committee. Okay, I'll start us off with some highlights of the quarter. I think a good place to start is always a quick reminder of the key value drivers that make Linnemar's Touch a great investment and how they've played out over this past year. First, Windermere has a long track record of consistent, sustainable results driving out of our diverse business. Q4 and 2025 was another great example with exceptional earnings growth in our mobility business more than offsetting stock markets in our agricultural business. Being invested in both businesses helps train big swings up and down in individual markets and leaves us with a more consistent, sustainable, level of performance. 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 different vehicle platforms as well as types of propulsion. This flexibility is allowing us to reallocate equipment from programs running under capacity to new launches, helping to keep our capital bill down, as you saw again in 2025 with CapEx down 24%. despite the significant backlog of launches that we are actively investing in. Third, we have always run a prudent, conservative balance sheet, which has been keeping net debt to EBITDA under 1.5 times. 2025 saw net debt to EBITDA at 0.77, despite significant investment in new businesses, such as the Aluban acquisition, as well as CapEx for new programs. Our peers are much more heavily indebted, with net debt to EBITDA more than two and a half times. This creates financial stress and risk for them in tons of stock markets and limits their flexibility, limits which Linnemeyer is not restrictified. This gives us a huge advantage in the market. Lastly, returning cash to shareholders is a key value creation driver at Linnemeyer as well. You saw that play out this quarter with our continued repurchase of shares in the market, which we have been steadily doing since November of 2024. Okay, turning to highlights for the quarter and 2025, I would say it has been a really strong year. I feel like it really well represents Linamar as an entrepreneurial, opportunistic, technology-driven business. that is delivering growth for today and for tomorrow. We saw another record year of record earnings, despite every market being down, and a world devolved into a minefield of tariffs, an environment defined by uncertainty, volatility, and profound structural change across the global economy. Those record earnings included outstanding growth for our mobility segment earnings, which were up 47% in the quarter and 34% for the year. We saw great success in growing our technology portfolio with strategically important acquisitions, such as the Aludine Aluminum Casting Technology business, as well as the GF LifeBank Duct Out Iron Casting facility. These businesses are bringing great new process capabilities to us that are already resulting in significant new business wins and cooling opportunities. Having more products and processes to sell, notably proprietary technologies that our customers are looking for, absolutely expands the pathways with most potential for us significantly. Not only is our team delivering on earnings growth again for the 13th year out of the last 16, that's 81% of the years, by the way, but also are delivering excellent free cash flow, almost $1 billion worth in 2025. Careful cash management is absolutely key in challenging economies, keeping us strong and flexible to jump on those opportunities out there. And finally, we are managing that tariff minefield very well indeed with a manageable level of tariffs that we are actively mitigating the impact of. I'll review the tariff situation in more detail in just a minute. Turning to the numbers, we saw sales at $2.5 billion, up 5.9% over last year, despite tough industrial markets. Sales were down 13% in our industrial business, but both ag and access sales impacted. Sales, on the other hand, were up 13% in our much larger mobility segment, with 1.5 months in Aludine and launching business offsetting stocked markets that we saw in both North America and Europe. Normalized net earnings were $136.4 million, or 5.4% of sales, up 22% over last year. And normalized earnings per share was $2.28, up 25.3% over last year, on the back of a very strong mobility segment performance. I would summarize our results this quarter as being most impacted by launches and strong production sales on the mobility side, of course, our allodyne acquisition, and that being partially offset by those weak industrial markets. Cash flow was very strong at $362 million. For the full year, our results were very strong as well. We saw sales at $10.2 billion, moderately softer than 2024 on those industrial segments declined. But despite such, we delivered record earnings at $622.1 million, or 6.1% of sales, another year of earnings growth and margin growth at Leonard Martin. EPS hit $10.36, up 5.6% over prior year, driving out a strong mobility segment performance. And as noted, nearly $1 billion of pre-cash flows of finance growth opportunities. Finally, let's have a look at an update on tariffs. 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. The 232 metal derivative tariffs continue to be the only area of any, you know, reasonable impact to us, and almost all that impact is for our industrial businesses. But the level is manageable, and we're actively working to mitigate the impact with good success. New in the quarter, we're Section 122 and 3 of the Paris established to replace the IEFA tariffs deemed illegal. The good news is these tariffs have little to no impact on us. So, there's three key reasons for all of this. Number one, we followed for a long time a strategy of producing products in the same continent as our customers. not chasing low-cost labor around the world. As a result, we're not making products in Asia or Europe that ship to the U.S., which would have triggered tariffs. For products that we're producing in Canada and Mexico and shipping to the U.S., our products are USMCA compliant for virtually everything that we're shipping in, meaning no tariffs for our customers on the mobility side, where, of course, they are the important record, or us. on our industrial products where we are the importer of record ourselves and less caught, of course, by the 232 derivative tariffs that I just mentioned. Our largest business is our automotive business where our customers, as noted, are the importer of record and would therefore be responsible for paying tariffs in the event any can become applicable. I do worry about the growing impact of tariffs On our automaker customers, however, as they continue to build up, whether they be, you know, metal tariffs, vehicle tariffs, price tariffs for offshore purchases, the cost to our customers, as we have seen, are in the billions. And there is concern about potential impact to vehicle pricing and, therefore, demand longer term. A reality, unfortunately, we are already seeing play out. On the positive side, we are seeing customers looking at onshoring parts and systems. There are currently buying from Asia or Europe in this uncertain environment. We're building up a significant list of new business opportunities and business wins for our North American plants in all of Canada, the U.S., and Mexico. New business win and quoting activity is quite strong, actually, in all of those regions. The U.S. is still respecting the USMCA agreement, meaning these parts can be supplied from the U.S., Canada, or Mexico. They're free, as long as they're USMCA compliant. Where the job goes will depend on where we have capacity, where we have experience and teams available to take on the work, as well, of course, as customer service. We're seeing great opportunities for our US plants, particularly our newest acquisition, Alibank. And we also saw a very strong year in 2025 for new business plans for our Canadian plants. We won more dollars of new business in 2025 for our Canadian mobility plants than we've seen in three years. And we are at a five-year high in terms of Canadian plant wins as a percentage of global mobility business wins. Our strong, highly capable Canadian plants are really punching above their weight in terms of wins compared to their slice of our global footprint, which is great to see. I think it's key to note as well that our portfolio expansion notably into additional structural components as a result of our acquisition is dramatically increasing RMQ activity. This strategy has really played out positively for us. The current situation is also adding stress to an already stressed supply base, notably in the U.S. and Europe. This is leading to acquisition opportunities for us as you've seen us act on. and the pipeline of distressed companies seems to just continue to grow. Finally, I want to emphasize that our strong results and positive outlook is very much a result of what I think is an excellent and unique business culture at Linnemar. It's a culture that we've fine-tuned over nearly 60 years to be opportunistic, to be entrepreneurial, find something positive and actionable to grow our business regardless of circumstances. We are naturally responsive, we're nimble, we're fast, we're innovative, we're creative in deal-making and mitigating challenging situations, and we get things done. These are critical elements to not just survive, but to thrive in a challenging time. So, with that, I'm going to turn it over to our CEO, Jim Gerald, to review industry and operations updates in more detail.

Over to you, Jim. Great. Thank you, Linda, and great to be with everyone listening tonight. First, we are proud of our performance in 2025. As Linda mentioned, we generated excellent free cash flow, record normalized EPS, and saw another year of strong mobility margin expansion, all while positioning the business for the future expansion. These results reflect discipline, execution, a very challenging environment. There's a great saying, people often forget what you say, what you do, but we'll never forget how you make them feel. In 2025, we made our employees, our customers, and our shareholders feel valued, respected, and supported, which to achieve our mission to be supplier, employer, and investment of choice. So I want to personally thank our employees across the organization for their grit, which stands for using our guts, resilience, integrity, and teamwork to grow, grow our revenue, grow our income, and grow our team. This was our focus in 2025 and remains our focus in 2026. Continued volatility, limited visibility, and macroeconomic headwinds are testing companies globally. Ever-changing tariffs, shifting consumer demands, disruptive technologies, cost pressures, talent shortages, and regulatory changes are all part of the puzzle. But tough times don't last. Tough teams do. And of course, Linamar is one tough team. What sets us apart is our entrepreneurial mindset. We just don't react. We attack every challenge and opportunity with purpose. We save true to our long-term vision, operate with lean discipline, and make agile, decisive moves. And I think we all witnessed last year a great example of this in Linnemar, two exciting and strategic acquisitions. Both Aludine and Leipzig had over a billion dollars of growth to Linnemar. These businesses not only strengthen our technology base, but also expand our CPD, enhance our ability to serve global customers in key markets. So let's move over to our operating segments. Let's start with the auto industry. When we first started the year, lots of uncertainty surrounded our automotive business. Consistent changes to tariffs cast a fog over our industry and led to significant negative assumptions. If I look back to market expectations for the year in terms of production, North America was expected to be down 9.3% for the full year, but ended up only down 1%. Similarly, Europe was much stronger than expected in 25, being down only 1.2 versus the original expectation of 3.1. In Asia Pacific, originally expected to be up only 0.7, ended up 6.9, a region where Linamar is growing at an exceptional pace. Overall global production was up 3.7 versus the original expectation being down almost 2%, a great resilient year across the auto sector. Looking at the most recent forecast for 26, North America is expected to be down 2.2% on fears of increased pricing pressure. Europe is expected to be down 0.4% as domestic demand is expected to grow, but will be offset by increased imports from greater China and the Asia Pacific is expected to be flat as industry experts' growth will slow as aggressive pricing and domestic market is met with marginal increase in end customer demand. Globally, this leads to a slight decline of 0.4% versus the prior 2% projected increase. Turning to Linamar's CPV performance for the quarter, once again, we saw growth in all three of our regions. North America's CPV was up 19.2% to $329. Europe was up 5.9%. to 92.82, and Asia continues to see growth with an increase of 0.4 year to $10.43. Globally for the year, our CPV remained flat over 24, totaling close to $80. In Q4 and through the whole year, our commercial teams continue to deliver on our core goal, keep winning business. We secured a grand total of $1.5 billion Again, $1.5 billion in new mobility business wins. One of our key internal sales programs was coined, MCMAGA, Make Canada, Mexico, and America Great Again sales program. Pictured, you will see our most recent on-shoring successes with structural and engine components and two other key wins with Asian OEMs. As I've said through the past few slides, Linnemar's Asian operations chase with key OEMs overseas has been a great success through 25 and will continue through 26. Linnemar's long-standing strength and structural components supported by recent acquisitions positions as well for continued growth. Turning to our industrial segments, starting with SkyJack and AWP market, 25 was a market-facing strong headwinds, sticky interest rates, tariff pressures, and delayed infrastructure projects. there were many elements stacked against our SkyJack business. Despite these challenges, SkyJack delivered an outstanding Q4, growing unit volumes by 15.9% in a market that was down 1.5 globally. If we look at the full year, SkyJack demonstrated its grit and exceptional product quality with total unit volumes up 12.1 versus a market that was down 19% globally. An exceptional year of performance amid negative environments. This success was driven by exceptional market share gains, especially in scissor lists globally and booms in Europe. 25 was a clear signal that Skyjack is winning with our innovation and customer connectivity. As I mentioned last quarter, it's important to note that volume growth doesn't always equate directly to revenue, as product mix plays a key role with booms and telehandlers commanding higher prices than scissors. The real story, though, is Skyjack's ability to to gain the market share and strengthen its position in a tough market. Looking at the expectations for this year, North America and Europe are expected to start to rebound with a growth of about 1.4% and 1% respectively, and a sign that some of the recovery is coming when comparing to our Q3 outlook. Asia Pacific and the rest of the world is expected to be softer in 26 with a decrease of 5.3 and an overall pretty well flat market outlook globally. For 25, our SkyJack team was recognized by the largest rental player, United, as the supplier of the year recipient. This is a huge accomplishment, and I would like to congratulate our SkyJack team for demonstrating its exceptional performance, consistent quality delivery, reliability, and partnership. On the innovation side, we're very excited to say that our new SJ28 all-electric telescopic boom has been launched. specifically designed for China and Southeast Asia markets. Turning to the ag business, 25 was a challenging year globally due to a multitude of factors. In North America, markets were pressured due to trade issues surrounding U.S. soybeans and Canadian granola, which has recently eased as China is now buying both again. Dealer inventories and credit lines have receded, though they are still elevated. There is a reluctance to stock whole goods, and dealers are still remaining cautious about their inventory levels, given farmer buying intentions. This is impacted by the large federal stimulus package, which was expected in 2025 that did not materialize. It was announced very late in 2025, but will only begin to flow now in early spring of 2026. And the benefits of that is expected really only to help the working capital and operating lines required to support spring crop inputs. Our little bar ag divisions, MACDON, Salford, Borgo, all track largely in line with the North American market at 25, being down 27%, although for the year we saw market share improvement in key segments like combine, drapers in the U.S. and Europe. tillage market share in the U.S., and air cedar market share also in the U.S. With a view to the coming year and the ag cycle overall, some peers have stated that 25 was a trough, while others are saying later 26, before the industry turns positive again in 27. We will continue to monitor global trade tensions, government bridge payments, and channel inventories to react to those market signals. As always, our focus at Linnemar Agriculture will be on maintain market leading position, solution that drives technology, productivity improvements, and global growth. Turning to some industry recognition, what an accomplishment by each of our brands. All of them, yes, all of them received the 2026 AE50 awards for top innovative ag products released to the market in the past year. This is an incredible feat. And again, congratulate each and every one of our employees from these groups. We continue to deliver innovation across all of our groups, and I know our teams will continue to build and offer exceptional products to our end customers. Before I hand this over to Dale, I want to put our diversification in perspective. Lidamar is not just an automotive or even a mobility company. We're an advanced manufacturing and product development company participating in a multiple global mega market you see here on the screen. That distinction matters. It gives us access to a much larger opportunity set than a traditional auto supplier and allows us to apply our capabilities, scale, precision, quality, and execution where the world is going next. Diversification is not a side strategy for it. It is a growth multiplier, and it positions Linamar to win across industries that matter for the future. 26 is shaping up to be an exciting year for Linnemar as we take diversification to another level to build the next chapters of our growth story. A few areas in particular, defense, robotics, and power energy are becoming more relevant platforms for our future. Defense is not new to Linnemar. It's a return to our roots with today's global environment and NATO commitments, Our ability to deliver is a powerful advantage. We have made many inroads with prime manufacturers who are seeking Canadian and global partners to help safeguard the world. At the same time, our robotics business is gaining momentum. By leveraging our strength in precision metallic parts, electromechanical assembly, actuators, and smart manufacturing systems, We have engaged global partners to position Linamar at the center of automation, collaborative robots, and humanoid platforms. The technology foundation is out there, and the opportunity is real. It's up to us to figure out how to capitalize on it. We're also expanding into some power energy, highlighted by our new strategic partnership with Regen Resource Recovery to commercialize battery-grade graphite and strengthen the domestic supply chain. Another example of Linamar is moving with purpose in the growth future-focused market. The takeaway here is simple. Linnemar is not defined by one industry. Automotive is proof of our capabilities, not the limits of them. We're a global advanced manufacturing and product development technology partner. So with that, I'll turn it over to Dale to walk you through the financial overview for the quarter and outlook for the year.