Martinrea International (MRE) investor relations material

Executive summary

• Q2 2025 sales were $1,275.5M, down 2% year-over-year, with production sales declining 5% and tooling sales up 100%.

• Adjusted operating income margin improved to 6.8%, up 50 bps year-over-year, with adjusted net EPS rising to $0.66.

• Free cash flow before IFRS 16 lease payments was $72M, up nearly 40% year-over-year, driven by working capital and lower interest.

• Net debt (ex-IFRS 16) decreased by $73M to $792M, with net debt to adjusted EBITDA at 1.5x, meeting the target.

• AI and machine learning initiatives, operational improvements, and cost reductions drove margin gains and efficiency.

Financial highlights

• Adjusted operating income for Q2 was $86.1M, with a 6.8% margin, up 50 bps year-over-year.

• Adjusted net earnings per share rose to $0.66 from $0.58, reflecting improved margins and lower finance expense.

• Free cash flow after IFRS-16 lease payments was $57.9M, up from $38.3M year-over-year.

• Adjusted EBITDA was $165.4M (13.0% margin), up from 12.8% year-over-year.

• Gross margin for Q2 2025 was $184.5M (14.5% of sales), up 0.4 percentage points year-over-year.

Outlook and guidance

• 2025 outlook maintained: total sales of $4.8B–$5.1B, adjusted operating income margin of 5.3%–5.8%, and free cash flow of $125M–$175M.

• Free cash flow expected at the high end of the range, supported by capex reduction and working capital optimization.

• Expect lower production sales and margins in H2 due to seasonal shutdowns, with potential upside from tariff recoveries not yet included.

• Outlook excludes impacts of tariffs and government policy changes, and anticipates $55M in cash restructuring costs for 2025.

• $50M SG&A cost reduction program on track, with full benefits expected by mid-2026.