AI assistant
Linamar Corporation — Earnings Release 2025
May 7, 2025
42610_rns_2025-05-07_9c6464d3-3494-4ea7-b695-09365f190bdc.pdf
Earnings Release
Open in viewerOpens in your device viewer
Linamar Corporation
LINAMAR
Power to Perform
Linamar Delivers Earnings Growth and Continued Free Cash Flow in Challenging Market
May 7, 2025, Guelph, Ontario, Canada (TSX: LNR)
Strong Quarterly Financial Performance
- Normalized Operating Earnings¹ up 3.4%;
- Normalized Operating Margins up to 10.0%;
- Normalized Diluted Earnings per Share¹ up 6.6%; and
- Normalized Net Margins expand to 6.6%.
Continued Free Cash Flow
- $76.4 million of Free Cash Flow¹ generated in Q1 2025, up $115.7 million from the prior year due to careful cash management; and
- Liquidity¹ is strong at $1.8 billion, up $512.5 million or 39.1% from Q1 2024.
Returning Cash to Shareholders
- Linamar repurchased 1.0 million shares in the quarter as part of its normal course issuer bid;
- Linamar has repurchased 1.8 million shares since the start of the NCIB program in November 2024; and
- Linamar increased its dividend to shareholders to $0.29 per share quarterly.
Mobility Segment Normalized Earnings Growth Continues
- Normalized Operating Earnings increased 1.5% to $125.4 million; and
- Normalized Operating Earnings margins expanded to 6.6%, approaching normal range.
Industrial Segment Normalized Earnings Growth Continues
- Normalized Operating Earnings increased 5.3% to $126.6 million; and
- Normalized Operating Earnings margins of 20.0% up from 16.5% in Q1 2024.
No Material Impacts from Tariffs
- Linamar's product continues to be USMCA compliant.
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| (in millions of dollars, except per share figures) | $ | $ |
| Sales | 2,532.1 | 2,721.9 |
| Operating Earnings (Loss) | ||
| Industrial | 142.9 | 139.7 |
| Mobility | 123.4 | 129.5 |
| Operating Earnings (Loss) | 266.3 | 269.2 |
| Net Earnings (Loss) | 177.7 | 178.5 |
| Net Earnings (Loss) per Share – Diluted | 2.94 | 2.90 |
| Operating Earnings (Loss) – Normalized¹ | ||
| Industrial | 126.6 | 120.2 |
| Mobility | 125.4 | 123.6 |
| Operating Earnings (Loss) – Normalized | 252.0 | 243.8 |
| Net Earnings (Loss) – Normalized¹ | 167.2 | 159.6 |
| Net Earnings (Loss) per Share – Diluted – Normalized¹ | 2.76 | 2.59 |
"2025 has certainly started off with its fair share of challenges but the Linamar team has stepped up and again delivered solid results, growing earnings on strong operational efficiencies and growing market share", said Executive Chair Linda Hasenfratz. "We are managing a tricky tariff minefield carefully, seeing minimal negative impact to date and in fact finding real time opportunities. We will continue to work to mitigate risks and find ways to grow in this challenging timeframe."
"In these exceptional times, our focus has not changed – we remain committed to driving revenue growth, enhancing margins, and expanding our team", stated CEO and President Jim Jarrell. "While these times are challenging for everyone, at Linamar, they represent
¹ Operating Earnings (Loss) – Normalized, Net Earnings (Loss) – Normalized, Net Earnings (Loss) per Share – Diluted – Normalized, Free Cash Flow, and Liquidity are non-GAAP financial measures. Please see “Non-GAAP and Other Financial Measures” section of this press release and separately released MD&A.
Page 1 of 26
Linamar Corporation
LINAMAR
Power to Perform
extraordinary potential. Over the past 100 days, Linamar has been recognized for our innovation and performance, and we are seizing the abundant global opportunities provided by our customers during these unprecedented times."
DIVIDENDS
The Board of Directors today declared an eligible dividend in respect to the quarter ended March 31, 2025, of CDN$0.29 per share on the common shares of the company, payable on or after June 6, 2025 to shareholders of record on May 26, 2025.
NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses certain non-GAAP and other financial measures to provide useful information to both management, investors, and other stakeholders in assessing the financial performance and financial condition of the Company.
Certain expenses and income that must be recognized under GAAP are not necessarily reflective of the Company's underlying operational performance. For this reason, management uses certain non-GAAP and other financial measures when analyzing operational performance on a consistent basis.
These Non-GAAP and other financial measures do not have a standardized meaning prescribed by GAAP and therefore they are unlikely to be comparable to similarly titled measures presented by other publicly traded companies, and they should not be construed as an alternative to other financial measures determined in accordance with GAAP. Please see the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for further information.
All normalized non-GAAP financial measures areas reconciled as follows:
| Three Months Ended | ||||
|---|---|---|---|---|
| 2025 | 2024 | March 31 | +/- | |
| (in millions of dollars, except per share figures) | $ | $ | % | % |
| Operating Earnings (Loss) – Normalized | ||||
| Operating Earnings (Loss) | 266.3 | 269.2 | (2.9) | (1.1%) |
| Foreign exchange (gain) loss | (14.3) | (25.4) | 11.1 | |
| Other items | - | - | - | |
| Operating Earnings (Loss) – Normalized | 252.0 | 243.8 | 8.2 | 3.4% |
| Net Earnings (Loss) – Normalized | ||||
| Net Earnings (Loss) | 177.7 | 178.5 | (0.8) | (0.4%) |
| Foreign exchange (gain) loss | (14.3) | (25.4) | 11.1 | |
| Foreign exchange (gain) loss on debt and derivatives | - | 0.5 | (0.5) | |
| Other items | - | - | - | |
| Tax impact including Other Items | 3.8 | 6.0 | (2.2) | |
| Net Earnings (Loss) – Normalized | 167.2 | 159.6 | 7.6 | 4.8% |
| Net Earnings (Loss) per Share – Diluted – Normalized | ||||
| Net Earnings (Loss) per Share – Diluted | 2.94 | 2.90 | 0.04 | 1.4% |
| Foreign exchange (gain) loss | (0.24) | (0.41) | 0.17 | |
| Foreign exchange (gain) loss on debt and derivatives | - | 0.01 | (0.01) | |
| Other items | - | - | - | |
| Tax impact including Other Items | 0.06 | 0.09 | (0.03) | |
| Net Earnings (Loss) per Share – Diluted – Normalized | 2.76 | 2.59 | 0.17 | 6.6% |
Linamar Corporation
LINAMAR
Power to Perform
All normalized non-GAAP financial measures areas impacting segments reconciled as follows:
| (in millions of dollars) | Industrial | Mobility | Three Months Ended March 31 2025 Linamar |
|---|---|---|---|
| $ | $ | $ | |
| Operating Earnings (Loss) – Normalized | |||
| Operating Earnings (Loss) | 142.9 | 123.4 | 266.3 |
| Foreign exchange (gain) loss | (16.3) | 2.0 | (14.3) |
| Other items | - | - | - |
| Operating Earnings (Loss) – Normalized | 126.6 | 125.4 | 252.0 |
| (in millions of dollars) | Industrial | Mobility | Three Months Ended March 31 2024 Linamar |
| $ | $ | $ | |
| Operating Earnings (Loss) – Normalized | |||
| Operating Earnings (Loss) | 139.7 | 129.5 | 269.2 |
| Foreign exchange (gain) loss | (19.5) | (5.9) | (25.4) |
| Other items | - | - | - |
| Operating Earnings (Loss) – Normalized | 120.2 | 123.6 | 243.8 |
Other Non-GAAP Financial Measures
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's ability to generate cash. Free Cash Flow is calculated as Cash from Operating Activities, the most directly comparable measure as presented in the Company's consolidated statements of cash flows, adjusted for payments for purchase of property, plant and equipment, and proceeds on disposal of property, plant and equipment.
Liquidity
Liquidity is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's ability to satisfy its financial obligations as they come due. Liquidity is calculated as Cash, the most directly comparable measure as presented in the Company's consolidated statements of financial position, adjusted for the Company's available credit.
Other non-GAAP financial measures are reconciled as follows:
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| (in millions of dollars) | $ | $ |
| Free Cash Flow | ||
| Cash generated from (used in) operating activities | 164.3 | 150.1 |
| Payments for purchase of property, plant and equipment | (88.8) | (189.8) |
| Proceeds on disposal of property, plant and equipment | 0.9 | 0.4 |
| Free Cash Flow | 76.4 | (39.3) |
| Liquidity | ||
| Cash and cash equivalents | 909.2 | 787.2 |
| Available credit | 913.4 | 522.9 |
| Liquidity | 1,822.6 | 1,310.1 |
FORWARD LOOKING INFORMATION, RISK AND UNCERTAINTIES
Certain information provided by Linamar in this press release, MD&A, the consolidated financial statements and other documents published throughout the year which are not recitation of historical facts may constitute forward-looking statements. The words "may", "would", "could", "will", "likely", "estimate", "believe", "expect", "plan", "forecast" and similar expressions are intended to identify forward-looking statements. Readers are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.
Page 3 of 26
Linamar Corporation
LINAMAR Power to Perform
Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar. Some of the factors and risks and uncertainties that cause results to differ from current expectations include, but are not limited to, international trade policies including tariffs; changes in the competitive environment in which Linamar operates, OEM outsourcing and insourcing; sources and availability of raw materials; labour markets and dependence on key personnel; dependence on certain customers and product programs; technological change in the sectors in which the Company operates and by Linamar's competitors; delays in or operational issues with product launches; foreign currency risk; long-term contracts that are not guaranteed; acquisition and expansion risk; foreign business risk; public health threats; cyclicality and seasonality; legal proceedings and insurance coverage; credit risk; weather; emission standards; capital and liquidity risk; tax laws; securities laws compliance and corporate governance standards; fluctuations in interest rates; environmental emissions and safety regulations; trade and labour disruptions; world political events; pricing concessions to customers; and governmental, environmental and regulatory policies.
The foregoing is not an exhaustive list of the factors that may affect Linamar's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on Linamar's forward-looking statements. Linamar 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.
CONFERENCE CALL INFORMATION
Q1 2025 Release Information
Linamar will hold a webcast call on May 7, 2025 at 5:00 p.m. ET to discuss its first-quarter results. The event will be simulcast and can be accessed at the following https://www.linamar.com/event/q1-2025-earnings-call/ and can also be navigated to on the Company's website. For those who wish to listen to an audio-only call-in option, the numbers for this call are (+1) 800 549 8228 (North America) or (+1) 289 819 1520 (International) Conference ID 94232, with a call-in required 15 minutes prior to the start of the webcast. The conference call will be chaired by Linda Hasenfratz, Linamar's Executive Chair. A copy of the Company's quarterly financial statements, including the Management's Discussion & Analysis, will be available on the Company's website after 4:00 p.m. ET on May 7, 2025, and at www.sedar.com by the start of business May 8, 2025. The webcast replay will be available at https://www.linamar.com/event/q1-2025-earnings-call/ after the call. A taped replay of the conference call will also be made available starting at 8:00 p.m. ET on May 7, 2025, for seven days. The number for the replay is (+1) 888 660 6264 or (+1) 289 819 1325, Passcode: 94232#. In addition, a recording of the call will be posted at https://www.linamar.com/event/q1-2025-earnings-call/.
Q2 2025 Release Information
Linamar will hold a webcast call on August 13, 2025, at 5:00 p.m. ET to discuss its second-quarter results. The event will be simulcast and can be accessed at the following https://www.linamar.com/event/q2-2025-earnings-call/ and can also be navigated to on the Company's website. For those who wish to listen to an audio-only call-in option, the numbers for this call are (+1) 800 549 8228 (North America) or (+1) 289 819 1520 (International) Conference ID 79703, with a call-in required 15 minutes prior to the start of the webcast. The conference call will be chaired by Linda Hasenfratz, Linamar's Executive Chair. A copy of the Company's quarterly financial statements, including the Management's Discussion & Analysis, will be available on the Company's website after 4:00 p.m. ET on August 13, 2025, and at www.sedar.com by the start of business on August 14, 2025. The webcast replay will be available at https://www.linamar.com/event/q2-2025-earnings-call/ after the call. A taped replay of the conference call will also be made available starting at 8:00 p.m. ET on August 13, 2025, for seven days. The number for the replay is (+1) 888 660 6264 or (+1) 289 819 1325, Passcode: 79703#. In addition, a recording of the call will be posted at https://www.linamar.com/event/q2-2025-earnings-call/.
Linamar Corporation (TSX:LNR) is a diversified advanced manufacturing company where the intersection of leading-edge technology and deep manufacturing expertise is creating solutions that power vehicles, motion, work and lives for the future. The Company is made up of two operating segments – the Industrial segment and the Mobility segment, both global leaders in manufacturing solutions and world-class developers of highly engineered products. The Industrial segment is comprised of Skyjack and the newly formed Linamar Agriculture operating group which consists of the MacDon, Salford and Bourgault brands. Skyjack manufactures scissors, boom and telehandler lifts for the aerial work platform industry. Within the Agriculture portfolio MacDon manufactures combine draper headers and self-propelled windrowers for harvesting, Salford supplies farm tillage and crop fertilizer application equipment while Bourgault is a leader in air seeding technology. The Mobility segment is focused on propulsion systems, structural and chassis systems, energy storage and power generation for both the global electrified and traditionally powered vehicle markets. Operationally, Mobility is organized into three regional groups North America, Europe, Asia Pacific and the new Linamar Structures product group. The Regional Mobility groups are vertically integrated operations combining expertise in light metal casting, forging, machining and assembly. The Linamar Structures Group offers competitive lightweight innovations for safety-critical components and systems for the global mobility market. Design, development, and testing services for the Mobility segment are provided by McLaren Engineering. Linamar's medical solutions group, Linamar MedTech, focuses on manufacturing solutions for medical devices and precision medical components. Linamar has over 32,000 employees in 75 manufacturing
Page 4 of 26
Linamar Corporation
LINAMAR
Power to Perform
locations, 16 R&D centres and 31 sales offices in 19 countries in North and South America, Europe and Asia, which generated sales of $10.6 billion in 2024. For more information about Linamar Corporation and its industry-leading products and services, visit www.linamar.com or follow us on our social media channels.
For further information regarding this release please contact Linda Hasenfratz at (519) 836-7550.
Guelph, Ontario
May 7, 2025
Page 5 of 26
Page 6 of 26
LINAMAR CORPORATION
Management's Discussion and Analysis
For the Quarter Ended March 31, 2025
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of Linamar Corporation ("Linamar" or the "Company") should be read in conjunction with its consolidated financial statements for the quarter ended March 31, 2025. This MD&A has been prepared as at May 7, 2025. The financial information presented herein has been prepared on the basis of IFRS® Accounting Standards. References to the term generally accepted accounting principles ("GAAP") refer to information contained herein being prepared under IFRS Accounting Standards as adopted. All amounts in this MD&A are in millions of Canadian dollars, unless otherwise noted.
Additional information regarding Linamar, including copies of its continuous disclosure materials such as its annual information form, is available on its website at www.linamar.com or through the SEDAR website at www.sedar.com.
OVERALL CORPORATE PERFORMANCE
Overview of the Business
Linamar Corporation (TSX:LNR) is a diversified advanced manufacturing company where the intersection of leading-edge technology and deep manufacturing expertise is creating solutions that power vehicles, motion, work and lives for the future. The Company is made up of two operating segments – the Industrial segment and the Mobility segment, both global leaders in manufacturing solutions and world-class developers of highly engineered products. The Industrial segment is comprised of Skyjack and the newly formed Linamar Agriculture operating group which consists of the MacDon, Salford and Bourgault brands. Skyjack manufactures scissors, boom and telehandler lifts for the aerial work platform industry. Within the Agriculture portfolio MacDon manufactures combine draper headers and self-propelled windrowers for harvesting, Salford supplies farm tillage and crop fertilizer application equipment while Bourgault is a leader in air seeding technology. The Mobility segment is focused on propulsion systems, structural and chassis systems, energy storage and power generation for both the global electrified and traditionally powered vehicle markets. Operationally, Mobility is organized into three regional groups North America, Europe, Asia Pacific and the new Linamar Structures product group. The Regional Mobility groups are vertically integrated operations combining expertise in light metal casting, forging, machining and assembly. The Linamar Structures Group offers competitive lightweight innovations for safety-critical components and systems for the global mobility market. Design, development, and testing services for the Mobility segment are provided by McLaren Engineering. Linamar's medical solutions group, Linamar MedTech, focuses on manufacturing solutions for medical devices and precision medical components. Linamar has over 32,000 employees in 75 manufacturing locations, 16 R&D centres and 31 sales offices in 19 countries in North and South America, Europe and Asia, which generated sales of $10.6 billion in 2024. For more information about Linamar Corporation and its industry-leading products and services, visit www.linamar.com or follow us on our social media channels.
Overall Corporate Results
The following table sets out certain highlights of the Company's performance in the first quarter of 2025 ("Q1 2025") and 2024 ("Q1 2024"):
| (in millions of dollars, except per share figures) | 2025 | 2024 | +/- | +/- |
|---|---|---|---|---|
| $ | $ | $ | % | |
| Sales | 2,532.1 | 2,721.9 | (189.8) | (7.0%) |
| Gross Margin | 402.4 | 393.2 | 9.2 | 2.3% |
| Operating Earnings (Loss) | 266.3 | 269.2 | (2.9) | (1.1%) |
| Net Earnings (Loss) | 177.7 | 178.5 | (0.8) | (0.4%) |
| Net Earnings (Loss) per Share - Diluted | 2.94 | 2.90 | 0.04 | 1.4% |
| Earnings before interest, taxes and amortization ("EBITDA")¹ | 425.7 | 411.7 | 14.0 | 3.4% |
| Operating Earnings (Loss) - Normalized¹ | 252.0 | 243.8 | 8.2 | 3.4% |
| Net Earnings (Loss) - Normalized¹ | 167.2 | 159.6 | 7.6 | 4.8% |
| Net Earnings (Loss) per Share - Diluted - Normalized¹ | 2.76 | 2.59 | 0.17 | 6.6% |
| EBITDA – Normalized¹ | 410.6 | 386.9 | 23.7 | 6.1% |
The changes in these financial highlights are discussed in detail in the following sections of this analysis.
¹ Operating Earnings (Loss) – Normalized, Net Earnings (Loss) – Normalized, Net Earnings (Loss) per Share – Diluted – Normalized, EBITDA and EBITDA – Normalized are non-GAAP financial measures. Please see “Non-GAAP and Other Financial Measures” section of this MD&A.
BUSINESS SEGMENT REVIEW
The Company reports its results of operations in two business segments: Industrial and Mobility. The segments are differentiated by the products that each produces and reflects how the chief operating decision makers of the Company manage the business. The following should be read in conjunction with the Company's consolidated financial statements for the quarter ended March 31, 2025.
| (in millions of dollars) | Three Months Ended March 31 | ||
|---|---|---|---|
| Industrial $ | Mobility $ | 2025 Linamar $ | |
| Sales | 633.4 | 1,898.7 | 2,532.1 |
| Operating Earnings (Loss) | 142.9 | 123.4 | 266.3 |
| EBITDA | 166.5 | 259.2 | 425.7 |
| Operating Earnings (Loss) – Normalized | 126.6 | 125.4 | 252.0 |
| EBITDA – Normalized | 150.2 | 260.4 | 410.6 |
| (in millions of dollars) | Three Months Ended March 31 | ||
| Industrial $ | Mobility $ | 2024 Linamar $ | |
| Sales | 728.6 | 1,993.3 | 2,721.9 |
| Operating Earnings (Loss) | 139.7 | 129.5 | 269.2 |
| EBITDA | 159.1 | 252.6 | 411.7 |
| Operating Earnings (Loss) – Normalized | 120.2 | 123.6 | 243.8 |
| EBITDA – Normalized | 140.1 | 246.8 | 386.9 |
Industrial Highlights
| (in millions of dollars) | 2025 | 2024 | +/- | +/- |
|---|---|---|---|---|
| $ | $ | $ | % | |
| Sales | 633.4 | 728.6 | (95.2) | (13.1%) |
| Operating Earnings (Loss) | 142.9 | 139.7 | 3.2 | 2.3% |
| EBITDA | 166.5 | 159.1 | 7.4 | 4.7% |
| Operating Earnings (Loss) – Normalized | 126.6 | 120.2 | 6.4 | 5.3% |
| EBITDA – Normalized | 150.2 | 140.1 | 10.1 | 7.2% |
The Industrial segment ("Industrial") product sales decreased 13.1%, or $95.2 million, to $633.4 million in Q1 2025 from Q1 2024. The sales decrease was due to:
- lower access equipment sales in a market that was down significantly, partially mitigated by market share growth for scissors globally and booms in Europe and Asia; and
- lower agricultural sales in a market that was down significantly, despite exceptional global market share growth for combine drapers, seeding and tillage products; partially offset by
- increased sales related to the acquisition of Bourgault Industries Ltd. and its subsidiaries ("Bourgault") in Q1 2024; and
- a favourable impact on sales from the changes in foreign exchange rates from Q1 2024.
Industrial segment normalized operating earnings in Q1 2025 increased $6.4 million, or 5.3%, from Q1 2024. The Industrial normalized operating earnings results were predominantly driven by:
- agricultural improvements driven from cost reductions and operational efficiencies;
- a favourable impact from the changes in foreign exchange rates from Q1 2024; and
- improved earnings related to the acquisition of Bourgault in Q1 2024; partially offset by
- reduced volumes due to lower market demand for access equipment.
Page 7 of 26
Page 8 of 26
Mobility Highlights
| (in millions of dollars) | 2025 | 2024 | Three Months Ended March 31 | |
|---|---|---|---|---|
| $ | $ | +/- | +/- | |
| Sales | 1,898.7 | 1,993.3 | (94.6) | (4.7%) |
| Operating Earnings (Loss) | 123.4 | 129.5 | (6.1) | (4.7%) |
| EBITDA | 259.2 | 252.6 | 6.6 | 2.6% |
| Operating Earnings (Loss) – Normalized | 125.4 | 123.6 | 1.8 | 1.5% |
| EBITDA – Normalized | 260.4 | 246.8 | 13.6 | 5.5% |
Sales for the Mobility segment ("Mobility") decreased by $94.6 million, or 4.7%, in Q1 2025 compared with Q1 2024. The sales in Q1 2025 were impacted by:
- a sales decline from significant automotive market declines notably in Europe and North America;
- lower production for certain ending programs; and
- lower volumes primarily on electric vehicle ("EV") programs that the Company has significant business with; partially offset by
- a favourable impact on sales from the changes in foreign exchange rates from Q1 2024.
Q1 2025 normalized operating earnings for Mobility increased by $1.8 million, or 1.5%, compared to Q1 2024. The Mobility segment's earnings were impacted by the following:
- improvements driven from cost reductions, operational efficiencies, reduction in launch costs and customer cost recoveries; and
- a modestly favourable impact from the changes in foreign exchange rates from Q1 2024; partially offset by
- a sales decline from significant automotive market declines notably in Europe and North America, lower production for certain ending programs, and lower volumes on programs the Company has significant business with.
Automotive Sales and Content Per Vehicle¹
Automotive sales by region in the following discussion are determined by the final vehicle production location and, as such, there are differences between these figures and those reported under the geographic segment disclosure, which are based primarily on the Company's location of manufacturing and include both automotive and non-automotive sales. These differences are the result of products being sold directly to one region, and the final vehicle being assembled on another region. It is necessary to show the sales based on the vehicle build location to provide accurate comparisons to the vehicle production units² for each region.
In addition to automotive Original Equipment Manufacturers ("OEMs"), the Company sells powertrain parts to a mix of automotive and non-automotive manufacturers that service various industries such as power generation, construction equipment, marine and automotive. The final application of some parts sold to these manufacturers is not always clear; however, the Company estimates the automotive portion of the sales for inclusion in its content per vehicle ("CPV") calculations. The allocation of sales to regions is based on vehicle production volume estimates from industry sources, published closest to the quarter end date. As these estimates are updated, the Company's sales classifications can be impacted.
¹ Content per Vehicle is a supplementary financial measure. Please see "Non-GAAP and Other Financial Measures" section of this MD&A. Automotive Sales are measured as the amount of the Company's automotive sales dollars per vehicle, not including tooling sales. CPV does not have a standardized meaning and therefore is unlikely to be comparable to similar measures presented by other issuers. CPV is an indicator of the Company's market share for the automotive markets that it operates in.
² Vehicle production units are derived from industry sources and are shown in millions of units. North American vehicle production units used by the Company for the determination of the Company's CPV include medium and heavy truck volumes. European and Asia Pacific vehicle production units exclude medium and heavy trucks. All vehicle production volume information is as regularly reported by industry sources. Industry sources release vehicle production volume estimates based on the latest information from the Automotive Manufacturers and update these estimates as more accurate information is obtained. The Company will, on a quarterly basis, update CPV for the current fiscal year in its MD&A as these volume estimates are revised by the industry sources. The CPV figures in this MD&A reflect the volume estimates that were published closest to the quarter end date by the industry sources. These updates to vehicle production units have no effect on the Company's financial statements for those periods.
Page 9 of 26
Three Months Ended
March 31
| North America | 2025 | 2024 | +/- | % |
|---|---|---|---|---|
| Vehicle Production Units | 3.90 | 4.13 | (0.23) | (5.6%) |
| Automotive Sales | $ 1,171.9 | $ 1,223.7 | $ (51.8) | (4.2%) |
| Content Per Vehicle | $ 300.79 | $ 296.52 | $ 4.27 | 1.4% |
| Europe | ||||
| Vehicle Production Units | 4.30 | 4.61 | (0.31) | (6.7%) |
| Automotive Sales | $ 426.2 | $ 480.9 | $ (54.7) | (11.4%) |
| Content Per Vehicle | $ 99.06 | $ 104.28 | $ (5.22) | (5.0%) |
| Asia Pacific | ||||
| Vehicle Production Units | 12.52 | 11.66 | 0.86 | 7.4% |
| Automotive Sales | $ 147.3 | $ 127.0 | $ 20.3 | 16.0% |
| Content Per Vehicle | $ 11.76 | $ 10.89 | $ 0.87 | 8.0% |
North American automotive sales for Q1 2025 decreased 4.2% from Q1 2024 in a market that saw a decrease of 5.6% in production volumes for the same period. As a result, content per vehicle in Q1 2025 increased 1.4% from $296.52 to $300.79. The increase in North American content per vehicle was mainly driven by foreign exchange and higher volumes on programs that the Company has significant business with, partially offset by lower production for certain ending programs and market declines on EV programs.
European automotive sales for Q1 2025 decreased 11.4% from Q1 2024 in a market that saw a decrease of 6.7% in production volumes for the same period. As a result, content per vehicle in Q1 2025 decreased 5.0% from $104.28 to $99.06. The decrease in European content per vehicle was mainly driven by lower production for certain programs and notably EV programs, partially offset by launching programs.
Asia Pacific automotive sales for Q1 2025 increased 16.0% from Q1 2024 in a market that saw an increase of 7.4% in production volumes for the same period. As a result, content per vehicle in Q1 2025 increased 8.0% from $10.89 to $11.76. The increase in Asian content per vehicle was mainly driven by higher volumes on programs that the Company has significant business with and launching programs.
RESULTS OF OPERATIONS
Gross Margin
| (in millions of dollars) | Three Months Ended March 31 | |
|---|---|---|
| 2025 | 2024 | |
| Sales | $ 2,532.1 | $ 2,721.9 |
| Cost of Sales before amortization | 1,975.6 | 2,189.5 |
| Amortization | 154.1 | 139.2 |
| Cost of Sales | 2,129.7 | 2,328.7 |
| Gross Margin | $ 402.4 | $ 393.2 |
| Gross Margin percentage | 15.9% | 14.4% |
Gross margin percentage increased in Q1 2025 to 15.9% compared to 14.4% in Q1 2024. Cost of sales before amortization as a percentage of sales decreased in Q1 2025 to 78.0% compared to 80.4% for the same quarter as last year. In dollar terms, gross margin increased $9.2 million in Q1 2025 compared with Q1 2024 as a result of the items discussed earlier in this analysis such as:
- improvements driven from cost reductions, operational efficiencies, reduction in launch costs and customer cost recoveries;
- a favourable impact from the changes in foreign exchange rates from Q1 2024; and
- increased earnings related to the acquisition of Bourgault in Q1 2024; partially offset by
- reduced volumes due to lower market demand for access equipment; and
- a sales decline from significant automotive market declines.
Amortization as a percentage of sales increased to 6.1% of sales compared to 5.1% for the same quarter as last year. In dollar terms, Q1 2025 amortization increased as a result of:
- additional amortization from launching programs and facilities; and
- additional amortization related to the acquisition of Bourgault in Q1 2024.
Selling, General and Administration
| (in millions of dollars) | Three Months Ended March 31 | |
|---|---|---|
| 2025 | 2024 | |
| Selling, general and administrative | $ 152.1 | $ 151.7 |
| SG&A percentage | 6.0% | 5.6% |
Selling, general and administrative ("SG&A") costs were $152.1 million in Q1 2025, consistent with the same quarter last year.
Finance Expense and Income Taxes
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| (in millions of dollars) | $ | $ |
| Operating Earnings (Loss) | 266.3 | 269.2 |
| Finance Income and (Expenses) | (24.7) | (32.9) |
| Provision for (Recovery of) Income Taxes | 63.9 | 57.8 |
| Net Earnings (Loss) | 177.7 | 178.5 |
Finance Expenses
Finance expenses decreased $8.2 million to $24.7 million in Q1 2025 from $32.9 million in Q1 2024 due to:
- lower outstanding bank debt;
- higher interest income resulting from increased average daily cash balances; and
- reduced interest costs due to a decline in the Bank of Canada's overnight rate.
The consolidated effective interest rate for Q1 2025 decreased to 4.4%, compared to 5.2% in Q1 2024. This decline was mainly driven by the reduction in the Bank of Canada's overnight rate and a decrease in debt balances.
Income Taxes
The effective tax rate for Q1 2025 was 26.4%, an increase from 24.4% in the same quarter of 2024. The increase was primarily due to:
- a less favourable mix of foreign tax rates, including the impact of the global minimum tax rules ("Pillar 2"); partially offset by
- the recognition of previously unrecognized tax loss carry-forwards during the quarter.
TOTAL EQUITY AND OUTSTANDING SHARE DATA
During the quarter no options expired unexercised, no options were forfeited, and no options were issued.
The Company is authorized to issue an unlimited number of common shares, of which 59,809,587 common shares were outstanding as of May 7, 2025. The Company's common shares constitute its only class of voting securities. As of May 7, 2025, there were 1,300,000 options to acquire common shares outstanding and 3,150,000 options still available to be granted under the Company's share option plan.
SELECTED FINANCIAL INFORMATION
Quarterly Results
The following table sets forth unaudited information for each of the eight quarters ended June 30, 2023 through March 31, 2025. This information has been derived from the Company's unaudited consolidated interim financial statements which, in the opinion of management, have been prepared on a basis consistent with the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation of the financial position and results of operations for those periods.
| Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | |
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | |
| (in millions of dollars, except per share figures) | $ | $ | $ | $ | $ | $ | $ | $ |
| Sales | 2,532.1 | 2,375.7 | 2,635.7 | 2,848.7 | 2,721.9 | 2,453.9 | 2,434.2 | 2,552.8 |
| Net Earnings (Loss) | 177.7 | (232.3) | 138.0 | 174.1 | 178.5 | 104.4 | 146.7 | 135.0 |
| Net Earnings (Loss) per Share | ||||||||
| Basic | 2.94 | (3.79) | 2.24 | 2.83 | 2.90 | 1.70 | 2.38 | 2.19 |
| Diluted | 2.94 | (3.78) | 2.24 | 2.82 | 2.90 | 1.69 | 2.38 | 2.19 |
The quarterly results of the Company are impacted by the seasonality of certain operational units. Historically, earnings in the second and third quarter for the Industrial segment are positively impacted by the high selling season for both the access equipment and agricultural businesses. For the Mobility segment, vehicle production is typically at its lowest level during the third and fourth quarters due to lower
Page 10 of 26
OEM production schedules resulting from shutdowns related to summer and winter maintenance and model changeovers. The Company takes advantage of summer and winter shutdowns for maintenance activities that would otherwise disrupt normal production schedules. During Q4 2024, within the Linamar Mobility Europe group as a result of continued European economic challenges, including a significant decline in automotive production, the Company recorded a non-cash impairment charge of $385.5 million. Additionally, the prolonged supply chain disruptions and cost pressures continued to have adverse impacts on 2023.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| (in millions of dollars) | $ | $ |
| Cash generated from (used in): | ||
| Operating Activities | 164.3 | 150.1 |
| Financing Activities | (224.6) | 792.5 |
| Investing Activities | (94.0) | (813.7) |
| Effect of translation adjustment on cash | 8.9 | 5.0 |
| Increase (decrease) in cash and cash equivalents | (145.4) | 133.9 |
| Cash and cash equivalents – Beginning of Period | 1,054.6 | 653.3 |
| Cash and cash equivalents – End of Period | 909.2 | 787.2 |
| Comprised of: | ||
| Cash in bank | 600.4 | 497.3 |
| Short-term deposits | 309.8 | 293.0 |
| Unpresented cheques | (1.0) | (3.1) |
| 909.2 | 787.2 |
The Company's cash and cash equivalents (net of unpresented cheques) at March 31, 2025 were $909.2 million, an increase of $122.0 million, or 15.5%, compared to March 31, 2024.
Cash generated from operating activities was $164.3 million, an increase of $14.2 million from Q1 2024, primarily due to increased adjustments to earnings.
Financing activities used $224.6 million of cash compared to $792.5 million generated in Q1 2024. The use of cash in Q1 2025 was primarily driven by the repayment of long-term debt and the repurchase of shares under the Company's 2024 normal course issuer bid ("NCIB") program. This compared to proceeds generated from the new term credit agreement in Q1 2024.
Investing activities used $94.0 million in Q1 2025 compared to $813.7 million used in Q1 2024. The purchases of property, plant, and equipment utilized cash in both periods in addition to the prior year use of cash primarily driven by the Bourgault acquisition.
Operating Activities
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| (in millions of dollars) | $ | $ |
| Net Earnings (Loss) for the period | 177.7 | 178.5 |
| Adjustments to earnings | 191.4 | 146.5 |
| 369.1 | 325.0 | |
| Changes in operating assets and liabilities | (204.8) | (174.9) |
| Cash generated from (used in) operating activities | 164.3 | 150.1 |
Cash generated by operations before the effect of changes in operating assets and liabilities increased $44.1 million, or 13.6%, in Q1 2025 to $369.1 million, compared to $325.0 million in Q1 2024 primarily due to increased adjustments to earnings.
Changes in operating assets and liabilities for Q1 2025 used cash of $204.8 million compared to $174.9 million in Q1 2024, primarily due to increases in accounts receivables and inventories, partially offset by an increase in accounts payable required to support sales.
Page 11 of 26
Page 12 of 26
Financing Activities
| (in millions of dollars) | Three Months Ended March 31 | |
|---|---|---|
| 2025 | 2024 | |
| Proceeds from (repayments of) long-term debt | (137.5) | 129.7 |
| Proceeds from term credit agreement | - | 700.0 |
| Repurchase of shares | (53.5) | - |
| Finance income received (expenses paid) | (33.6) | (37.2) |
| Cash generated from (used in) financing activities | (224.6) | 792.5 |
Cash used by financing activities for Q1 2025 was $224.6 million compared to $792.5 million generated in Q1 2024. Financing activities in Q1 2025 were driven by the repayment of long-term debt and funds used for the Company's 2024 NCIB program. This compared to the Q1 2024 proceeds from the new term credit agreement partially used for the acquisition of Bourgault.
Investing Activities
| (in millions of dollars) | Three Months Ended March 31 | |
|---|---|---|
| 2025 | 2024 | |
| Payments for purchase of property, plant and equipment | (88.8) | (189.8) |
| Proceeds on disposal of property, plant and equipment | 0.9 | 0.4 |
| Payments for purchase of intangible assets | (5.8) | (6.9) |
| Business acquisitions, net of cash acquired | - | (617.3) |
| Other | (0.3) | (0.1) |
| Cash generated from (used in) investing activities | (94.0) | (813.7) |
Cash used for investing activities for Q1 2025 was $94.0 million compared to Q1 2024 at $813.7 million. In addition to the Company's ongoing purchase of property, plant and equipment, the primary use of cash in Q1 2024 was for the acquisition of Bourgault.
Liquidity and Capital Resources
The Company's financial condition is solid given its strong balance sheet, which can be attributed to the Company's low-cost structure, low level of debt, strong cash position, prospects for growth and significant new program launches. Management expects that all future operating capital expenditures will be financed by cash flow from operations or utilization of existing financing facilities.
At March 31, 2025, cash and cash equivalents, including short-term deposits was $909.2 million and the Company's credit facilities had available credit of $913.4 million. Combined, the Company believes this liquidity¹ of $1.8 billion at March 31, 2025 is sufficient to meet cash flow needs. Free cash flow¹ was $76.4 million for Q1 2025 primarily due to cash generated from operating activities.
Commitments and Contingencies
Please see the Company's December 31, 2024 annual MD&A for a table summarizing the contractual obligations by category. Also, certain guarantees and legal claims are described in the notes to the Company's consolidated financial statements for the year ended December 31, 2024.
Financial Instruments
The Company's strategy, risks and presentation of its financial instruments remain substantially unchanged during the quarter ended March 31, 2025. For more information, please see the Company's December 31, 2024 annual MD&A and the Company's consolidated financial statements for the year ended December 31, 2024.
CURRENT AND PROPOSED TRANSACTIONS
There are no current and proposed transactions for the quarter ended March 31, 2025.
RISK MANAGEMENT
The Company is exposed to a number of risks in the normal course of business that have the potential to affect its operating results. These include, but are not limited to International Trade Policies; Competition, Outsourcing and Insourcing; Sources and Availability of Raw Materials; Labour Markets and Dependence on Key Personnel; Dependence on Certain Customers; Technological Change and Product
¹ Liquidity and Free Cash Flow are non-GAAP financial measures. Please see "Non-GAAP and Other Financial Measures" section of this MD&A.
Launches; Public Health Threats; Foreign Business Risk; Foreign Currency Risk; Long-term Contracts; Acquisition and Expansion Risk; Cyclicality and Seasonality; Legal Proceedings and Insurance Coverage; Credit Risk; Climate Change; Weather; Emission Standards; Capital and Liquidity Risk; Tax Laws; Securities Laws Compliance and Corporate Governance Standards; and Environmental Matters. These risk factors remain substantially unchanged during the quarter ended March 31, 2025. These risk factors, as well as the other information contained in this MD&A, the Company's December 31, 2024 annual MD&A, and the Company's December 31, 2024 Annual Information Form, should be considered carefully. These risk factors could materially and adversely affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements related to the Company.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in the Company's internal control over financial reporting during the quarter ended March 31, 2025, which have materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS Accounting Standards requires management to make estimates and judgements about the future. Estimates and judgements are continually evaluated and are based on the historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions or conditions. Management's most critical estimates and assumptions in determining the value of assets and liabilities and most critical judgements in applying accounting policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year have been set out in the Company's consolidated financial statements for the year ended December 31, 2024.
RECENT ACCOUNTING CHANGES AND EFFECTIVE DATES
For information pertaining to accounting changes effective in 2024 and for future fiscal years please see the Company's consolidated financial statements for the year ended December 31, 2024, and the consolidated interim financial statements for the quarter ended March 31, 2025.
NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses certain non-GAAP and other financial measures to provide useful information to both management, investors, and other stakeholders in assessing the financial performance and financial condition of the Company.
Certain expenses and income that must be recognized under GAAP are not necessarily reflective of the Company's underlying operational performance. For this reason, management uses certain non-GAAP and other financial measures when analyzing operational performance on a consistent basis.
These Non-GAAP and other financial measures do not have a standardized meaning prescribed by GAAP and therefore they are unlikely to be comparable to similarly titled measures presented by other publicly traded companies, and they should not be construed as an alternative to other financial measures determined in accordance with GAAP.
Normalized Non-GAAP Financial Measures and Ratios
All Non-GAAP financial measures denoted with 'Normalized' as presented by the Company are adjusted for foreign exchange gain (loss), foreign exchange gain (loss) on debt and derivatives, and other items.
Operating Earnings (Loss) – Normalized
Operating Earnings (Loss) – Normalized is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's underlying operational performance and in making decisions regarding the ongoing operations of the business. Operating Earnings (Loss) – Normalized is calculated as Operating Earnings (Loss), the most directly comparable measure as presented in the Company's consolidated statement of earnings, adjusted for foreign exchange gain (loss), and any other items, if applicable, that are considered not to be indicative of underlying operational performance.
Net Earnings (Loss) – Normalized
Net Earnings (Loss) – Normalized is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's underlying operational performance and in making decisions regarding the ongoing operations of the business. Net Earnings (Loss) – Normalized is calculated as Net Earnings (Loss), the most directly comparable measure as presented in the Company's consolidated statement of earnings, adjusted for foreign exchange gain (loss), foreign exchange gain (loss) on debt and derivatives, and any other items, if applicable, that are considered not to be indicative of underlying operational performance.
Page 13 of 26
Net Earnings (Loss) per Share – Diluted – Normalized
Net Earnings (Loss) per Share – Diluted – Normalized is a non-GAAP financial ratio and the Company believes it is useful in assessing the Company's underlying operational performance and in making decisions regarding the ongoing operations of the business. Net Earnings (Loss) per Share – Diluted – Normalized is calculated as Net Earnings (Loss) – Normalized (as defined above) divided by the fully diluted number of shares outstanding as at the period end date.
EBITDA and EBITDA – Normalized
EBITDA is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's underlying operational performance of cash flow and profitability, the effective use and allocation of resources, and to provide more meaningful comparisons of operating results. EBITDA is calculated as Net Earnings (Loss) before income taxes, the most directly comparable measure as presented in the Company's consolidated statement of earnings, adjusted for amortization of property, plant and equipment, amortization of other intangible assets, interest expense, and other interest.
EBITDA – Normalized is a non-GAAP financial measure and the Company believes EBITDA – Normalized is useful in assessing the Company's underlying operational performance of cash flow and profitability, the effective use and allocation of resources, and to provide more meaningful comparisons of operating results. EBITDA – Normalized is calculated as EBITDA (as defined above) adjusted for foreign exchange gain (loss), foreign exchange gain (loss) on debt and derivatives, non-cash asset impairments and any other items, if applicable, that are considered not to be indicative of underlying operational performance.
All these other items contained in these non-GAAP financial measures are summarized as follows:
| Three Months Ended March 31 | ||
|---|---|---|
| 2025 | 2024 | |
| (in millions of dollars) | $ | $ |
| Asset impairments, net of reversals impacting EBITDA – Normalized | (0.8) | 0.1 |
Normalizing items for asset impairment provisions, net of reversals adjusted EBITDA and impacted the Mobility segment by ($0.8) million for Q1 2025 ($0.1 million for Q1 2024).
All normalized non-GAAP financial measures areas reconciled as follows:
| Three Months Ended March 31 | ||||
|---|---|---|---|---|
| 2025 | 2024 | +/- | +/- | |
| (in millions of dollars, except per share figures) | $ | $ | $ | % |
| Operating Earnings (Loss) – Normalized | ||||
| Operating Earnings (Loss) | 266.3 | 269.2 | (2.9) | (1.1%) |
| Foreign exchange (gain) loss | (14.3) | (25.4) | 11.1 | |
| Other items | - | - | - | |
| Operating Earnings (Loss) – Normalized | 252.0 | 243.8 | 8.2 | 3.4% |
| Net Earnings (Loss) – Normalized | ||||
| Net Earnings (Loss) | 177.7 | 178.5 | (0.8) | (0.4%) |
| Foreign exchange (gain) loss | (14.3) | (25.4) | 11.1 | |
| Foreign exchange (gain) loss on debt and derivatives | - | 0.5 | (0.5) | |
| Other items | - | - | - | |
| Tax impact including Other Items | 3.8 | 6.0 | (2.2) | |
| Net Earnings (Loss) – Normalized | 167.2 | 159.6 | 7.6 | 4.8% |
Page 14 of 26
Page 15 of 26
| (in millions of dollars, except per share figures) | 2025 | 2024 | +/- | Three Months Ended March 31 | |
|---|---|---|---|---|---|
| $ | $ | $ | $ | % | |
| Net Earnings (Loss) per Share – Diluted – Normalized | |||||
| Net Earnings (Loss) per Share – Diluted | 2.94 | 2.90 | 0.04 | 1.4% | |
| Foreign exchange (gain) loss | (0.24) | (0.41) | 0.17 | ||
| Foreign exchange (gain) loss on debt and derivatives | - | 0.01 | (0.01) | ||
| Other items | - | - | - | ||
| Tax impact including Other Items | 0.06 | 0.09 | (0.03) | ||
| Net Earnings (Loss) per Share – Diluted – Normalized | 2.76 | 2.59 | 0.17 | 6.6% | |
| EBITDA and EBITDA – Normalized | |||||
| Net Earnings (Loss) before income taxes | 241.6 | 236.3 | 5.3 | 2.2% | |
| Amortization of property, plant and equipment | 135.0 | 122.6 | 12.4 | ||
| Amortization of other intangible assets | 20.0 | 17.6 | 2.4 | ||
| Interest expense | 24.5 | 30.0 | (5.5) | ||
| Other interest | 4.6 | 5.2 | (0.6) | ||
| EBITDA | 425.7 | 411.7 | 14.0 | 3.4% | |
| Foreign exchange (gain) loss | (14.3) | (25.4) | 11.1 | ||
| Foreign exchange (gain) loss on debt and derivatives | - | 0.5 | (0.5) | ||
| Asset impairment provision, net of reversals | (0.8) | 0.1 | (0.9) | ||
| Other items | - | - | - | ||
| EBITDA – Normalized | 410.6 | 386.9 | 23.7 | 6.1% |
All normalized non-GAAP financial measures areas impacting segments reconciled as follows:
| (in millions of dollars) | Industrial | Mobility | Three Months Ended March 31 2025 Linamar |
|---|---|---|---|
| $ | $ | $ | |
| Operating Earnings (Loss) – Normalized | |||
| Operating Earnings (Loss) | 142.9 | 123.4 | 266.3 |
| Foreign exchange (gain) loss | (16.3) | 2.0 | (14.3) |
| Other items | - | - | - |
| Operating Earnings (Loss) – Normalized | 126.6 | 125.4 | 252.0 |
| EBITDA – Normalized | |||
| EBITDA | 166.5 | 259.2 | 425.7 |
| Foreign exchange (gain) loss | (16.3) | 2.0 | (14.3) |
| Foreign exchange (gain) loss on debt and derivatives | - | - | - |
| Asset impairment provision, net of reversals | - | (0.8) | (0.8) |
| Other items | - | - | - |
| EBITDA – Normalized | 150.2 | 260.4 | 410.6 |
Page 16 of 26
| (in millions of dollars) | Industrial | Mobility | Three Months Ended March 31 2024 Linamar |
|---|---|---|---|
| $ | $ | $ | |
| Operating Earnings (Loss) – Normalized | |||
| Operating Earnings (Loss) | 139.7 | 129.5 | 269.2 |
| Foreign exchange (gain) loss | (19.5) | (5.9) | (25.4) |
| Other items | - | - | - |
| Operating Earnings (Loss) – Normalized | 120.2 | 123.6 | 243.8 |
| EBITDA – Normalized | |||
| EBITDA | 159.1 | 252.6 | 411.7 |
| Foreign exchange (gain) loss | (19.5) | (5.9) | (25.4) |
| Foreign exchange (gain) loss on debt and derivatives | 0.5 | - | 0.5 |
| Asset impairment provision, net of reversals | - | 0.1 | 0.1 |
| Other items | - | - | - |
| EBITDA – Normalized | 140.1 | 246.8 | 386.9 |
Other Non-GAAP Financial Measures
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's ability to generate cash. Free Cash Flow is calculated as Cash from Operating Activities, the most directly comparable measure as presented in the Company's consolidated statements of cash flows, adjusted for payments for purchase of property, plant and equipment, and proceeds on disposal of property, plant and equipment.
Liquidity
Liquidity is a non-GAAP financial measure and the Company believes it is useful in assessing the Company's ability to satisfy its financial obligations as they come due. Liquidity is calculated as Cash, the most directly comparable measure as presented in the Company's consolidated statements of financial position, adjusted for the Company's available credit.
All other non-GAAP financial measures are reconciled as follows:
| Three Months Ended March 31 | ||
|---|---|---|
| (in millions of dollars) | 2025 | 2024 |
| $ | $ | |
| Free Cash Flow | ||
| Cash generated from (used in) operating activities | 164.3 | 150.1 |
| Payments for purchase of property, plant and equipment | (88.8) | (189.8) |
| Proceeds on disposal of property, plant and equipment | 0.9 | 0.4 |
| Free Cash Flow | 76.4 | (39.3) |
| Liquidity | ||
| Cash and cash equivalents | 909.2 | 787.2 |
| Available credit | 913.4 | 522.9 |
| Liquidity | 1,822.6 | 1,310.1 |
Supplementary Financial Measures
Content per Vehicle
Content per Vehicle is a supplementary financial measure and is calculated within the Mobility segment for the region indicated as automotive sales less tooling sales divided by vehicle production units.
FORWARD LOOKING INFORMATION
Certain information provided by Linamar in this MD&A, the consolidated financial statements and other documents published throughout the year which are not recitation of historical facts may constitute forward-looking statements. The words "may", "would", "could", "will", "likely", "estimate", "believe", "expect", "plan", "forecast" and similar expressions are intended to identify forward-looking statements. Readers are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such
forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.
Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar. Some of the factors and risks and uncertainties that cause results to differ from current expectations include, but are not limited to, international trade policies including tariffs; changes in the competitive environment in which Linamar operates, OEM outsourcing and insourcing; sources and availability of raw materials; labour markets and dependence on key personnel; dependence on certain customers and product programs; technological change in the sectors in which the Company operates and by Linamar's competitors; delays in or operational issues with product launches; foreign currency risk; long-term contracts that are not guaranteed; acquisition and expansion risk; foreign business risk; public health threats; cyclicality and seasonality; legal proceedings and insurance coverage; credit risk; weather; emission standards; capital and liquidity risk; tax laws; securities laws compliance and corporate governance standards; fluctuations in interest rates; environmental emissions and safety regulations; trade and labour disruptions; world political events; pricing concessions to customers; and governmental, environmental and regulatory policies.
The foregoing is not an exhaustive list of the factors that may affect Linamar's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on Linamar's forward-looking statements. Linamar 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.
Page 17 of 26
Page 18 of 26
LINAMAR CORPORATION
Consolidated Interim Statements of Financial Position
As at March 31, 2025 with comparatives as at December 31, 2024 (Unaudited)
(in thousands of Canadian dollars)
| | March 31
2025
$ | December 31
2024
$ |
| --- | --- | --- |
| ASSETS | | |
| Cash and cash equivalents | 909,234 | 1,054,598 |
| Accounts and other receivables | 1,564,127 | 1,312,281 |
| Inventories | 2,129,241 | 2,062,358 |
| Income taxes recoverable | 91,315 | 76,612 |
| Current portion of long-term receivables (Note 12) | 22,953 | 21,656 |
| Current portion of derivative financial instruments (Note 12) | 1,072 | - |
| Prepaid expenses and other current assets | 61,967 | 78,062 |
| Current Assets | 4,779,909 | 4,605,567 |
| Long-term receivables (Note 12) | 33,724 | 32,023 |
| Derivative financial instruments (Note 12) | 575 | - |
| Property, plant and equipment | 3,692,268 | 3,642,618 |
| Investments | 1,785 | 1,419 |
| Deferred tax assets | 213,911 | 250,601 |
| Intangible assets | 1,127,390 | 1,135,042 |
| Goodwill | 838,231 | 832,572 |
| Assets | 10,687,793 | 10,499,842 |
| LIABILITIES | | |
| Accounts payable and accrued liabilities | 2,394,175 | 2,247,695 |
| Provisions | 67,288 | 74,925 |
| Income taxes payable | 46,069 | 54,633 |
| Current portion of long-term debt (Notes 6, 12) | 273,448 | 45,658 |
| Current portion of derivative financial instruments (Note 12) | 45,392 | 64,125 |
| Current Liabilities | 2,826,372 | 2,487,036 |
| Long-term debt (Notes 6, 12) | 1,924,964 | 2,246,861 |
| Derivative financial instruments (Note 12) | 3,775 | 9,020 |
| Deferred tax liabilities | 285,762 | 328,979 |
| Liabilities | 5,040,873 | 5,071,896 |
| EQUITY | | |
| Capital stock | 138,221 | 140,521 |
| Retained earnings | 5,327,271 | 5,201,851 |
| Contributed surplus | 38,444 | 37,669 |
| Accumulated other comprehensive earnings (loss) | 142,984 | 47,905 |
| Equity | 5,646,920 | 5,427,946 |
| Liabilities and Equity | 10,687,793 | 10,499,842 |
The accompanying notes are an integral part of these consolidated interim financial statements.
On behalf of the Board of Directors:
(Signed) "Linda Hasenfratz"
(Signed) "Jim Jarrell"
Linda Hasenfratz
Director
Jim Jarrell
Director
Page 19 of 26
LINAMAR CORPORATION
Consolidated Interim Statements of Earnings
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars, except per share figures)
| Three Months Ended | ||
|---|---|---|
| March 31 | March 31 | |
| 2025 | 2024 | |
| $ | $ | |
| Sales | 2,532,077 | 2,721,896 |
| Cost of sales | 2,129,632 | 2,328,704 |
| Gross Margin | 402,445 | 393,192 |
| Selling, general and administrative | 152,077 | 151,722 |
| Other income and (expenses) (Note 7) | 15,929 | 27,755 |
| Operating Earnings (Loss) | 266,297 | 269,225 |
| Finance income and (expenses) (Note 8) | (24,733) | (32,944) |
| Net Earnings (Loss) before Income Taxes | 241,564 | 236,281 |
| Provision for (recovery of) income taxes | 63,865 | 57,769 |
| Net Earnings (Loss) for the Period | 177,699 | 178,512 |
| Net Earnings (Loss) per Share: | ||
| Basic | 2.94 | 2.90 |
| Diluted | 2.94 | 2.90 |
The accompanying notes are an integral part of these consolidated interim financial statements.
Page 20 of 26
LINAMAR CORPORATION
Consolidated Interim Statements of Comprehensive Earnings
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars)
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| $ | $ | |
| Net Earnings (Loss) for the Period | 177,699 | 178,512 |
| Items that may be reclassified subsequently to net income | ||
| Unrealized gains (losses) on translating financial statements of foreign operations | 98,825 | 8,126 |
| Change in unrealized gains (losses) on net investment hedges | (20,896) | 320 |
| Change in unrealized gains (losses) on cash flow hedges | 2,727 | (17,523) |
| Change in cost of hedging | (528) | 1,609 |
| Reclassification to earnings of gains (losses) on cash flow hedges | 20,668 | (5,844) |
| Tax impact of above | (5,717) | 5,440 |
| Other Comprehensive Earnings (Loss) | 95,079 | (7,872) |
| Comprehensive Earnings (Loss) for the Period | 272,778 | 170,640 |
The accompanying notes are an integral part of these consolidated interim financial statements.
Page 21 of 26
LINAMAR CORPORATION
Consolidated Interim Statements of Changes in Equity
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars)
| Capital stock $ | Retained earnings $ | Contributed surplus $ | Cumulative translation adjustment $ | Hedging reserves $ | Total Equity $ | |
|---|---|---|---|---|---|---|
| Balance at January 1, 2024 | 142,100 | 5,046,422 | 34,177 | 82,446 | 16,958 | 5,322,103 |
| Net Earnings (Loss) | - | 178,512 | - | - | - | 178,512 |
| Other comprehensive earnings (loss) | - | - | - | 8,447 | (16,319) | (7,872) |
| Comprehensive Earnings (Loss) | - | 178,512 | - | 8,447 | (16,319) | 170,640 |
| Share-based compensation | - | - | 776 | - | - | 776 |
| Balance at March 31, 2024 | 142,100 | 5,224,934 | 34,953 | 90,893 | 639 | 5,493,519 |
| Capital stock $ | Retained earnings $ | Contributed surplus $ | Cumulative translation adjustment $ | Hedging reserves $ | Total Equity $ | |
| --- | --- | --- | --- | --- | --- | --- |
| Balance at January 1, 2025 | 140,521 | 5,201,851 | 37,669 | 99,245 | (51,340) | 5,427,946 |
| Net Earnings (Loss) | - | 177,699 | - | - | - | 177,699 |
| Other comprehensive earnings (loss) | - | - | - | 77,929 | 17,150 | 95,079 |
| Comprehensive Earnings (Loss) | - | 177,699 | - | 77,929 | 17,150 | 272,778 |
| Share-based compensation | - | - | 775 | - | - | 775 |
| Common shares repurchased and cancelled | (2,300) | (52,279) | - | - | - | (54,579) |
| Balance at March 31, 2025 | 138,221 | 5,327,271 | 38,444 | 177,174 | (34,190) | 5,646,920 |
The accompanying notes are an integral part of these consolidated interim financial statements.
Page 22 of 26
LINAMAR CORPORATION
Consolidated Interim Statements of Cash Flows
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars)
| Three Months Ended March 31 | ||
|---|---|---|
| 2025 | 2024 | |
| $ | $ | |
| Cash generated from (used in) | ||
| Operating Activities | ||
| Net Earnings (Loss) for the Period | 177,699 | 178,512 |
| Adjustments for: | ||
| Amortization of property, plant and equipment | 135,035 | 122,637 |
| Amortization of other intangible assets | 19,994 | 17,563 |
| Deferred income taxes | (8,121) | (16,373) |
| Asset impairment provision, net of reversals | (920) | 157 |
| Share-based compensation | 775 | 776 |
| Finance (income) and expenses | 24,733 | 32,944 |
| Other | 19,897 | (11,169) |
| 369,092 | 325,047 | |
| Changes in operating assets and liabilities | ||
| (Increase) decrease in accounts and other receivables | (244,546) | (184,647) |
| (Increase) decrease in inventories | (38,065) | (109,396) |
| (Increase) decrease in prepaid expenses and other current assets | 17,026 | (3,059) |
| (Increase) decrease in long-term receivables | (1,746) | 5,847 |
| Increase (decrease) in income taxes | (24,680) | (46,019) |
| Increase (decrease) in accounts payable and accrued liabilities | 93,751 | 162,383 |
| Increase (decrease) in provisions | (6,532) | (89) |
| (204,792) | (174,980) | |
| Cash generated from (used in) operating activities | 164,300 | 150,067 |
| Financing Activities | ||
| Proceeds from (repayments of) long-term debt | (137,495) | 129,662 |
| Proceeds from term credit agreement | - | 700,000 |
| Repurchase of shares (Note 13) | (53,512) | - |
| Finance income received (expenses paid) | (33,626) | (37,156) |
| Cash generated from (used in) financing activities | (224,633) | 792,506 |
| Investing Activities | ||
| Payments for purchase of property, plant and equipment | (88,765) | (189,842) |
| Proceeds on disposal of property, plant and equipment | 851 | 460 |
| Payments for purchase of intangible assets | (5,830) | (6,894) |
| Business acquisition, net of cash acquired | - | (617,301) |
| Other | (238) | (80) |
| Cash generated from (used in) investing activities | (93,982) | (813,657) |
| (154,315) | 128,916 | |
| Effect of translation adjustment on cash | 8,951 | 4,946 |
| Increase (decrease) in cash and cash equivalents | (145,364) | 133,862 |
| Cash and cash equivalents - Beginning of Period | 1,054,598 | 653,327 |
| Cash and cash equivalents - End of Period | 909,234 | 787,189 |
| Comprised of: | ||
| Cash in bank | 600,428 | 497,284 |
| Short-term deposits | 309,820 | 292,994 |
| Unpresented cheques | (1,014) | (3,089) |
| 909,234 | 787,189 |
The accompanying notes are an integral part of these consolidated interim financial statements.
Page 23 of 26
LINAMAR CORPORATION
Notes to Consolidated Interim Financial Statements
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars, except where otherwise noted)
1 General Information
Linamar Corporation and its subsidiaries, including jointly controlled entities, (together, the "Company") is a diversified global manufacturing company of highly engineered products. The Company is incorporated in Ontario, Canada with common shares listed on the Toronto Stock Exchange ("TSX"). The Company is domiciled in Canada and its registered office is 287 Speedvale Avenue West, Guelph, Ontario, Canada.
The consolidated interim financial statements of the Company for the period ended March 31, 2025 were authorized for issue in accordance with a resolution of the Company's Board of Directors on May 7, 2025.
2 Basis of Preparation and Material Accounting Policies
The Company has prepared its consolidated interim financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS® Accounting Standards") and with interpretations of the International Financial Reporting Issues Committee.
These interim financial statements have been prepared in accordance with IFRS Accounting Standards applicable to the preparation of interim financial statements, including International Accounting Standards ("IAS") 34, Interim Financial Reporting. Accordingly, certain information and footnotes as required in the annual financial statements have been omitted or condensed and as such these interim financial statements should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2024. These interim financial statements and the notes thereto have not been reviewed by the Company's external auditors pursuant to a review engagement applying review standards set out in the Canadian Chartered Professional Accountants handbook.
The Company has prepared these unaudited consolidated interim financial statements using the same accounting policies and methods as those used in the Company's audited consolidated annual financial statements for the year ended December 31, 2024. These policies have been consistently applied to all periods presented, unless otherwise stated.
3 Changes in Accounting Policies
New Standards and Amendments Adopted
Certain new standards and amendments became effective during the current period; however the adoption of these new standards and amendments did not significantly impact the Company's net earnings or financial position.
New Standards and Interpretations Not Yet Adopted
All pronouncements will be adopted in the Company's accounting policies after the effective date of the pronouncement. At the date of authorization of these interim financial statements, there were no new standards, amendments and interpretations to existing standards that were relevant nor would significantly impact the Company's net earnings or financial position.
4 Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS Accounting Standards requires management to make estimates and judgements about the future. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions or conditions. Management's most critical estimates and assumptions in determining the value of assets and liabilities and most critical judgements in applying accounting policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year have been set out in the Company's annual financial statements for the year ended December 31, 2024.
5 Seasonality
Historically, earnings in the second and third quarter for the Industrial segment are positively impacted by the high selling season for both the access equipment and agricultural businesses. For the Mobility segment, vehicle production is typically at its lowest level during the third and fourth quarters due to lower original equipment manufacturers' production schedules resulting from shutdowns related to summer and winter maintenance and model changeovers. The Company takes advantage of summer and winter shutdowns for maintenance activities that would otherwise disrupt normal production schedules.
Page 24 of 26
LINAMAR CORPORATION
Notes to Consolidated Interim Financial Statements
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars, except where otherwise noted)
6 Long-Term Debt
| | March 31
2025
$ | December 31
2024
$ |
| --- | --- | --- |
| Private placement notes | 1,045,224 | 1,024,245 |
| Bank borrowings | 859,907 | 979,628 |
| Lease liabilities | 220,966 | 209,477 |
| Government borrowings | 72,315 | 79,169 |
| | 2,198,412 | 2,292,519 |
| Less: current portion | 273,448 | 45,658 |
| | 1,924,964 | 2,246,861 |
As of March 31, 2025, $913,411 was available under the Company's credit facility.
7 Other Income and (Expenses)
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| $ | $ | |
| Foreign exchange gain (loss) | 14,303 | 25,432 |
| Other income (expense) | 1,626 | 2,323 |
| 15,929 | 27,755 |
8 Finance Income and (Expenses)
| Three Months Ended | ||
|---|---|---|
| March 31 | ||
| 2025 | 2024 | |
| $ | $ | |
| Interest expense | (24,486) | (30,061) |
| Foreign exchange gain (loss) on debt and derivatives | (38) | (458) |
| Interest earned | 5,724 | 4,131 |
| Other | (5,933) | (6,556) |
| (24,733) | (32,944) |
9 Commitments
As at March 31, 2025, outstanding commitments for capital expenditures under purchase orders and contracts amounted to $152,337 (March 31, 2024 - $377,564). Of this amount $148,493 (March 31, 2024 - $331,533) relates to the purchase of manufacturing equipment and $3,844 (March 31, 2024 - $46,031) relates to general contracting and construction costs in respect of plant construction. Of the commitments for plant construction, $515 (March 31, 2024 - $37,416) were commitments to a related party, a company owned by the spouse of an officer and director. The majority of these commitments are due within the next twelve months.
10 Related Party Transactions
Building additions made by a related party, a company owned by the spouse of an officer and director, were $6,022 for the three months ended March 31, 2025 ($17,977 for the three months ended March 31, 2024).
Page 25 of 26
LINAMAR CORPORATION
Notes to Consolidated Interim Financial Statements
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars, except where otherwise noted)
11 Segmented Information
Management has determined the operating segments based on the reports reviewed by senior management that are used to make strategic decisions.
Mobility: The Mobility segment derives revenues from the collaborative design, development and manufacture of propulsion systems, structural and chassis systems, energy storage and power generation for both the global electrified and traditionally powered markets.
Industrial: The Industrial segment is a world leader in the design and production of innovative industrial equipment, notably its class-leading aerial work platforms, telehandlers, and agricultural equipment.
The segments are differentiated by the products that each produces and reflects how senior management manages the business. Corporate headquarters and other small operating entities are allocated to the Mobility and Industrial operating segments accordingly.
The Company accounts for inter-segment sales and transfers as arm's length transactions at current market rates. The Company ensures that the measurement and policies are consistently followed among the Company's reportable segments for sales, operating earnings, net earnings and assets.
The Company derives revenue from the transfer of goods and services at a point in time and over time in the following operating segments. These segments best depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows.
| | Sales to external customers $ | Three Months Ended March 31, 2025
Inter-segment sales $ | Operating earnings (loss) $ |
| --- | --- | --- | --- |
| Mobility | 1,898,726 | 11,648 | 123,408 |
| Industrial | 633,351 | 4,064 | 142,889 |
| Total | 2,532,077 | 15,712 | 266,297 |
| | Sales to external customers $ | Three Months Ended March 31, 2024
Inter-segment sales $ | Operating earnings (loss) $ |
| --- | --- | --- | --- |
| Mobility | 1,993,294 | 13,525 | 129,491 |
| Industrial | 728,602 | 3,126 | 139,734 |
| Total | 2,721,896 | 16,651 | 269,225 |
The Company operates in four geographic segments. The sales to external customers in Canada, Rest of North America, Asia Pacific and Europe are as follows:
| Three Months Ended | ||
|---|---|---|
| 2025 | March 31 | |
| $ | 2024 | |
| Canada | 1,286,563 | 1,438,961 |
| Rest of North America | 489,028 | 529,064 |
| Asia Pacific | 165,847 | 132,893 |
| Europe | 590,639 | 620,978 |
| Total | 2,532,077 | 2,721,896 |
Page 26 of 26
LINAMAR CORPORATION
Notes to Consolidated Interim Financial Statements
For the three months ended March 31, 2025 and March 31, 2024 (Unaudited)
(in thousands of Canadian dollars, except where otherwise noted)
12 Composition of Financial Instruments
The comparison of fair values to carrying amounts of financial assets and financial liabilities along with their fair value hierarchy for financial assets and financial liabilities carried at fair value on a recurring basis is as follows:
| Subsequent Measurement | March 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|---|
| Carrying Value Asset (Liability) $ | Fair Value $ | Carrying Value Asset (Liability) $ | Fair Value $ | ||
| Long-term receivables | Amortized cost (Level 2) | 56,677 | 58,170 | 53,679 | 52,425 |
| Derivative financial instruments (hedge relationships) | |||||
| USD sales forwards – CAD functional entities | Fair value (Level 2) | (39,054) | (39,054) | (52,043) | (52,043) |
| USD sales forwards – MXN functional entities | Fair value (Level 2) | (7,548) | (7,548) | (19,657) | (19,657) |
| USD sales forwards – CNY functional entities | Fair value (Level 2) | (918) | (918) | (1,445) | (1,445) |
| Investment designated at fair value through other comprehensive income | Fair value (Level 3) | 1,785 | 1,785 | 1,419 | 1,419 |
| Long-term debt, excluding lease liabilities | Amortized cost (Level 2) | (1,977,446) | (1,898,038) | (2,083,042) | (1,994,979) |
13 Capital Stock
In November 2024, the Company announced Toronto Stock Exchange approval to commence a normal course issuer bid. This bid permitted the Company to acquire for cancellation up to 4,021,282 common shares between November 15, 2024 and November 14, 2025. This bid is subject to daily limits. For the three months ended March 31, 2025, the Company repurchased and cancelled 996,939 common shares under its bid for a total of $53,512.
14 Subsequent Event
In 2025, the United States ("U.S.") administration announced certain tariffs, and although some have now been implemented, the amounts imposed and effective dates on others continue to change. The effect of these tariffs and potential tariffs on our business and financial condition is influenced by several unknown factors, including the effective dates and durations of tariffs, their scope and nature, the amount imposed, and any retaliatory measures by the target countries.
Given these uncertainties, the Company cannot assure that any mitigating actions available to us, such as passing along some or all of the tariff costs to our customers, will be successful. Any further escalation of trade tensions, additional tariffs, retaliatory measures, or shifts in Canadian or international trade policies could adversely impact our business. The United States-Mexico-Canada Agreement (USMCA) is up for renewal in 2026, and there is no assurance that renegotiated terms will not adversely affect our business. It remains unclear what specific actions the current U.S. administration may take to address trade-related issues, and the U.S. and other governments could impose additional sanctions or export controls that might restrict our ability to conduct business directly or indirectly with certain countries or parties.