Linamar (LNR) Q2 2024 earnings summary

Executive summary

• Achieved double-digit top and bottom-line growth in Q2 2024, with sales up 11.6% year-over-year to CAD 2.85 billion and normalized EPS up 17% to CAD 3.06.

• Mobility segment earnings grew 59% with margin expansion to 6.4%; Industrial segment sales rose 14.1%.

• Achieved CAD 10 billion annualized sales, marking a major milestone and CEO succession with Jim Jarrell promoted to CEO, signaling a new era of growth and value creation.

• Market share gains across all business segments and regions, including strong performance at Skyjack and MacDon.

• Strategic focus on flexible manufacturing, risk mitigation, and capital allocation to navigate market volatility and shifting demand between EV and ICE vehicles.

Financial highlights

• Q2 2024 sales reached CAD 2.85 billion, up 11.6% year-over-year; normalized EPS was CAD 3.06, up 17%.

• Normalized net earnings for Q2 2024 were CAD 188.4 million, up 17.2% year-over-year; normalized diluted EPS was CAD 3.06, up from CAD 2.61.

• Gross margin increased to CAD 424.8 million (14.9% of sales), up 17.4% year-over-year.

• Free cash flow positive at CAD 67 million for Q2; cash position at quarter-end was CAD 759.9 million.

• CapEx for Q2 was CAD 174 million (6.1% of sales), at the low end of the target range.

Outlook and guidance

• Expect continued double-digit consolidated sales and EPS growth for 2024, driven by both Mobility and Industrial segments.

• 2025 outlook calls for modest growth in Mobility and flat to modest growth in Industrial, with continued margin expansion.

• CapEx expected at the low end of the 6%-8% range for 2024 and 2025, supporting strong free cash flow.

• Free cash flow expected to remain strongly positive in 2024 and 2025.

• Q3 2024: Mobility and Industrial segments to see double-digit growth year-over-year, but with seasonal decline from Q2 levels.