Earnings call transcript: Linamar Q2 2025 earnings beat boosts stock

Linamar Corporation reported its second-quarter 2025 earnings, surpassing expectations with an EPS of $2.81 against a forecast of $2.76. The company’s revenue reached $2.6 billion, although it marked a 7% decline year-over-year. Following the announcement, Linamar’s stock rose by 4.52%, closing at $73.28. According to InvestingPro analysis, the company maintains an impressive financial health score of 3.22 out of 5, labeled as "GREAT," with particularly strong marks in relative value and price momentum. This positive market reaction reflects investor confidence in the company’s strategic initiatives and resilience in a challenging market environment.

Key Takeaways

• Linamar’s EPS of $2.81 exceeded forecasts by $0.05.
• Stock price surged 4.52% post-earnings announcement.
• New business wins amounted to $3.28 billion.
• Industrial sales saw a significant decline of 22.4%.
• Strong cash position with $1 billion as of June 30.

Company Performance

Linamar demonstrated resilience in Q2 2025, managing to exceed earnings expectations despite a challenging market. The company’s strategic focus on innovation and efficiency helped mitigate the impact of a 7% year-over-year sales decline. Linamar’s mobility segment, in particular, maintained its content per vehicle, contributing to the positive earnings surprise.

Financial Highlights

• Revenue: $2.6 billion, down 7% year-over-year.
• Earnings per share: $2.81, slightly down from the previous year but above expectations.
• Free cash flow: $178 million.
• Net debt to EBITDA ratio: 1.02x.
• Cash position: $1 billion as of June 30.

Earnings vs. Forecast

Linamar’s EPS of $2.81 exceeded the forecasted $2.76, marking a 1.81% positive surprise. This performance underscores the company’s ability to navigate industry challenges effectively, maintaining its track record of meeting or slightly exceeding market expectations.

Market Reaction

Following the earnings release, Linamar’s stock rose by 4.52%, closing at $73.28. This increase positions the stock near its 52-week high of $73.62, reflecting strong investor sentiment. The positive stock movement contrasts with broader market trends, highlighting Linamar’s specific strengths and strategic wins. InvestingPro analysis indicates the stock is currently undervalued, with additional upside potential. The company’s strong free cash flow yield of 20% suggests robust operational efficiency.

Outlook & Guidance

Looking ahead, Linamar projects sales growth and double-digit earnings growth in its mobility segment for 2025, despite anticipating declines in its industrial segment. With a beta of 1.54, investors should note the stock’s higher volatility compared to the market. InvestingPro subscribers can access detailed analysis of growth prospects and 10+ additional ProTips to make more informed investment decisions. The company expects a modest rebound in 2026, particularly in the agricultural market. These projections align with Linamar’s strategic focus on innovation and efficiency.

Executive Commentary

"We don’t just react, we seize on the opportunities," stated CEO Jim Geralt, emphasizing the company’s proactive approach to market challenges. Linda Hassenfratz, Executive Chair, highlighted the flexibility of Linamar’s equipment, which can adapt to various product types, underscoring the company’s innovative capabilities.

Risks and Challenges

• Continued sales decline in the industrial segment.
• Market softness in the agricultural and access equipment sectors.
• Potential impacts from tariffs and global trade tensions.
• Dependence on market conditions in North America and Europe, both projected to decline in 2025.

Q&A

During the earnings call, analysts inquired about Linamar’s strategies for mitigating tariff impacts and potential acquisitions of distressed suppliers. The company also addressed questions about margin expansion in the mobility segment and market share gains in its Skyjack division.

Full transcript - Linamar Corporation (LNR) Q2 2025:

Conference Operator: Good afternoon, ladies and gentlemen, and welcome to the Linamar Second Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded in Wednesday, 08/13/2025. I would now like to hand the call over to Linda Hassenfratz, Executive Chair of Linamar.

Please go ahead, ma’am.

Linda Hassenfratz, Executive Chair, Linamar: Thank you so much. Good afternoon, everyone, and welcome to our second quarter conference call. Before I begin, I’ll draw your attention to the disclaimer currently being broadcast. Joining me this afternoon, as usual, are Jim Geralt, our President and CEO and Dale Schneider, our CFO, both of whom will be addressing the call formally. Also available for questions are Mark Stauder, Kevin Hallihan and some other members of our corporate IR and marketing, finance and legal team.

I’ll start us off with some highlights of the quarter. So I think a good place to start is always a quick reminder of the key value drivers that make Lidamar such great investments and how they played out this quarter. So first, Linamar has a long track record of consistent, sustainable results driving out of our diverse business strategy. Q2 was another great example with solid earnings growth and our Mobility business going a long way to offset some very soft markets in our Industrial business. Being invested in both businesses helped trim those big swings up and down in individual markets and leaves us with a more consistent sustainable level of performance.

Strong mobility performance this year will carry us to a profit for the year despite a tough year for industrial, just like two years ago when industrial took us to a profit for the year to set us up during mobility. The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment that can be used on a large variety of types of products across different vehicle platforms and types of propulsion. Continued softness on electric vehicle platforms has allowed us to continue to reallocate capital into launching hybrid electric or internal combustion uplift programs, keeping our capital build down as you saw it down this quarter, down almost 25% over last year. We’re also using that flexible equipment to our advantage at the moment to help us win takeover business.

Third, we’ve always run a prudent conservative balance sheet. We target keeping net debt to EBITDA under 1.5x. Q2 signed net debt to EBITDA at 1.02x, an excellent level to be at given great opportunities in the market today. Lastly, returning cash to shareholders is a key value creation driver at Linamar as well. You saw that play out this quarter with some continued repurchase of shares early in the quarter under our NCIB, which we do intend to be more active on in the upcoming quarter.

Okay. Turning to highlights for the quarter. I would like to emphasize these as our most relevant accomplishments. First, we continue to be largely untouched by U. S.

Tariffs, thanks to a well thought out long term strategy. We will review the tariff situation in more detail in a minute. Secondly, we saw a fantastic level of free cash flow of nearly $180,000,000 thanks to strong earnings, careful management of CapEx and working capital. Third, it’s great to see our Mobility segment really delivering at the moment with 20% operating earnings growth and margins continuing to be back into our normal range of 6% to 8%. Our teams have been doing an outstanding job operational improvements and cost recovery initiatives to drive those results.

Finally, we saw market share gains in every business in key areas for each, which is helping to temper soft markets across the board. Turning to the numbers. We saw sales of $2,600,000,000 that’s down 7% over last year end markets, down significantly more, as Jim will outline for you in a moment. Sales were down 22% in our industrial business with both the ag businesses and Skyjack down and markets dramatically down. Sales were flat in the Mobility segment with launching business really helping to offset very soft markets.

North America was down 4%, Europe down 2%, both very important markets for us. Normalized net earnings were $168,400,000 or 6.4 percent of sales. Normalized EPS was $2.81 down over last year, but up a little from Q1 of this year. I would summarize our results this quarter as being most impacted by operational improvements and cost reductions in both segments, launching business in the Mobility segment and some FX tailwind, offset by steep declines in both ag and access markets as well as declines in the North American and European vehicle markets, notably EVs. Cash flow was very strong at $178,000,000 as noted.

We expect to continue to generate significant free cash flow in 2025 for another strongly positive result this year. Finally, let’s look at an update on the tariff side. Despite the myriad of tariffs that have faced over the last several months, Linamar continues to have minimal bottom line impact. We have some impact in a few areas, but not at a material level, as you can see here detailed by each type of tariff active at the moment. I think there’s four key reasons for this.

Number one, we have long followed the strategy of producing our products in the same continent as our customers and not chasing low cost labor around the world. As a result, we’re not making product in Asia or Europe that ships to The US and therefore, triggers tariffs, helping us to completely avoid that. For products produced in Canada and Mexico, our products are USMCA compliant for virtually everything we ship into The U. S, meaning no tariffs for our customers on the mobility side where they are the importers of record or for us on our industrial products where we are the importer of record. Third reason is our largest business is our automotive business, where our customers, again, are the importer of record and would therefore be responsible for paying tariffs in the event any bids become applicable.

And finally, I would note that our U. S. Footprint is reasonably small at just 10 of 75 plants globally, meaning tariffs on any imported product from a supply chain perspective is not material to our overall business performance. Of course, manufacturing locations located in The U. S.

Are bearing all the burden of the tariffs. So less plants in The U. S. Does mean less tariffs overall. I do worry about the growing impact of tariffs on our automaker customers, however, as they continue to build up, whether they be metal, tariffs, vehicle tariffs, parts tariffs for the offshore purchases, the cost to our customers as we’ve seen are in the billions.

And I do have some concern about the potential impact of vehicle pricing and therefore, demand longer term. On the positive side, we are seeing customers looking at onshoring parts and systems they are currently buying from Asia or Europe. We are building up a list of new business opportunities that are in the quotation process for our North American plants. The U. S.

Is still respecting the USMCA agreement, meaning these parts can be supplied from The U. S, Canada or Mexico tariff free at the moment as long as they are USMCA compliant. Where the job goes will depend on where we have capacity, experience, teams available to take on the work as well, of course, as customer preference. We believe that our governments in North America will prioritize a USMCA two point zero renegotiation to cement in place what I think of as fortress North America in terms of territory trade with likely some amendments, which would be positive, of course, for our business in North America. In addition, we believe there may be an opportunity for market share increases for domestic producers in North America as consumers avoid imported vehicles that are subject to between 1525% tariff.

Higher volumes for vehicles produced in North America will absolutely drive sales growth for our Mobility business. With that, I’m going to turn it over to our CEO, Jim Gerell, to review industry and operations update in more detail. Over to you, Jim.

Jim Geralt, President and CEO, Linamar: Great. Thank you, Linda, and great to be with everyone listening in tonight. As I said last quarter and what you see on the screen remains the key theme that keeps our team at Linamar focused in 2025 and basically will remain consistent for the foreseeable future. Growing our revenue, growing our profits and growing our team during this time frame is fundamental for our long term success. We run everything through these three strategic filters.

If it doesn’t hit at least one, it’s a hard pass, no time wasted, no energy spent. We stay focused fast and relentlessly aligned as a team. Staying focused in times of uncertainty is no small feat and visibility challenges are real for every business. Linda noted tariffs are one piece of the puzzle, yet we continue to navigate confidently through global market volatility, shifting customer demand, evolving technology trends, cost pressures, talent dynamics and regulatory changes. What sets us apart to succeed is our entrepreneurial mindset.

We don’t just react, we seize on the opportunities. We stay anchored to our long term vision, operate with lean discipline and make fast, flexible decisions. At the core, our resilient culture is what powers us forward. Speaking about resilient culture, I’d like to start with a story about how the Little Mart team overcomes remarkable circumstances, and they do this by sharing some fantastic news we received in the quarter, which was being selected as Supplier of the Year by Ford Motor Company, which you can see on the screen here. In particular, the award was in recognition for crisis management stemming from Linamar’s coordinated response to Hurricane Valine that devastated parts of North Carolina in late September last year.

As I’ve highlighted in my opening couple of slides and commentary, responsiveness and execution in times of crisis is something that sets Linamar apart and is a testament to the leadership of the Linamar team. Linamar has significant operations in Asheville, North Carolina area. We were directly impacted. Despite extreme damage to highways, infrastructure, factories and even employees’ homes that followed after the storm, Little Mar was able to mobilize response teams from our global locations, set up relief operations, quickly restore operations and ensure no disruptions to our customers happen. This way the way that the Little Mar North Carolina team came together during that crisis supported by their global team mix was truly inspiring.

It is great to see one of our top customers recognize that really responsive effort. And with that, I’ll provide a business update for the quarter on our two reporting segments. We’re in first, starting at Skyjack and the Access or AWP market. First off, the market overall has experienced what I would call a sustained environment of sluggish volumes compared to what we had expected earlier in the year. Year to date, we’ve seen tariff uncertainty, some rental customer consolidation and interest rates that have remained at higher levels with no change since late twenty twenty four.

So in the market, there seems to be some holding off on the projects that drive construction and AWP volumes. In Q2, Skyjack stayed ahead of the market and increased unit volume sales by 6.3%, while the industry as a whole was down 24.5% versus Q2 ’twenty four. Year to date, Skyjack is down just 3.8, while the market overall has experienced a 29% decline. The critical thing for all of us to know is Skyjack has to ensure that they are staying ahead of where the market is, and that is exactly what they’re doing. Skyjack had market share increases in several categories during the second quarter, most notably scissor lifts globally and booms in Europe.

It’s great to see the reputation for simply reliable AWP equipment continues to be valued in an otherwise uncertain market. Next, turning to the ag industry volumes. We are well into the 25 growing season, and many early crops such as winter wheat or spring cereals have largely been harvested. In most cases, the good news is that yields are slightly positive when compared to last year. We await the fall harvest of North American row crops.

The crop conditions look strong, though some late summer hot and dry conditions in Western regions could impact that going forward. This fact, along with the equipment order writing programs that begin later this year, will largely determine the outlook for ’twenty six. Today, dealer inventories overall remain high as to interest rates, which are also additional key factors influencing overall ag market demand. The full year 2025 expectation is mostly unchanged from our prior update. The large ag industry continues at its well documented multiyear down cycle with a 30% decline in expected year over year in our primary North American market.

Europe is performing better and is expected to be down only 5%, while the rest of the world looks to be flat overall. Through the first six months of ’twenty five, Linamar’s three ag divisions of Bakktan, Salford and Bourgeaux have experienced a unit combined volume decline of 18%, while the addressable markets they compete in are down nearly 26%. Again, the technology advantage of short line brands have outpaced the overall market and achieved share gains. Sharing some recent news from the quarter, Borgo has once again be recognized for its excellent product and after sales support with Dealer’s Choice Award for short line OEMs from the North American Equipment Dealers Association. At MacDon, we continue to deliver product innovation, this time with the introduction of the FT2 plus header.

The FT2, already the market leader for draper header technology, now offers flexible cutter bar, allowing even better ground following performance that prevents seed loss by ensuring no crops are left on the ground. While market cycles are beyond our control, our continued success stems from focusing on what truly drives value for our customers. These are two excellent examples that illustrate why we remain leaders in the market. Next to the Mobility segment, Q2 saw industry vehicle volumes decreased by 3.8% in North America, 2% in Europe, with Asia Pacific up 6.1%. Industry experts have begun to ease some of the negative impacts from tariffs they originally had built into their annual forecast for both 2025 and ’twenty six.

Linda already reviewed how tariff impacts are playing out and how the existing USMCA policy is keeping supply chains flowing and production lines running. The latest view for full year 2025 is an industry decline of 3.9% in North America, a 2.5% drop in Europe and Asia, up about 2.5% when compared to 2024. Linamar’s content per vehicle remained stable and consistent with a modest increase in the second quarter versus Q2 prior year in North America, a significant increase in Asia Pacific and not surprisingly a slight decline in Europe. All told, global CPV for the second quarter was $82.35 consistent with the sequential prior quarter, but down slightly from the same quarter last year, but trending above full year 2024 level. Keep winning business, that is what we are telling our commercial team.

And so far this year, they have delivered in two key areas, takeover work and in the commercial vehicle sector. New business wins overall totaled $3.28 in the second quarter, dollars 103,000,000 of that is for components for commercial vehicle applications, an area of opportunity we identified earlier this year. Linamar has a long history in supplying commercial and industrial customers. And near the end of last year, we renewed our team focus, and it is paying off. Takeover work business wins were over $50,000,000 in the quarter, including the suspension and chassis component example you see here, which helps to grow our propulsion agnostic sales book.

That takes the total annualized value of takeover new business wins to well over $225,000,000 and that’s what we’ve been able to secure over the past eight to twelve months. As mentioned earlier with the customer recognition for crisis management, this is a prime example of how our reputation for delivering in distressed situations continues to pay off. Controlling what we can by executing and being opportunistic in times of uncertainty ensures we remain a leading supplier in the market when current headwinds clear. So with that, I will pass it over to Dale, our CFO, for a more in-depth financial review. Thank you, Jim, and

Dale Schneider, CFO, Linamar: good afternoon, everyone. Linda covered a high level of financial performance in the quarter, so I’ll jump directly into the business segment review starting with Industrial. Industrial sales decreased by 22.4% or $198,400,000 to $688,200,000 in the second quarter. This decline was primarily due to the lower agricultural and access equipment sales despite market share growth in these key products and regions that we serve. This decline was expected and was included in our outlook for Q2 as is provided in the Q1 call.

We outperformed the market given the market share that we’re able to achieve in the down market. Normalized industrial operating earnings for Q2 decreased by $61,000,000 or 37.1% over last year to $103,300,000 This decline was primarily driven by the contribution impact from the lower sales in both agriculture and access in addition to an unfavorable product mix in the quarter. We had further cost reductions and operational efficiencies in the quarter that helped mitigate the impact of the lower sales volumes. Turning to Mobility. Sales decreased by CAD 7,600,000.0 or by 0.4% over Q2 last year to CAD 2,000,000,000.

This decline was primarily due to the continued downturns in the European and North American automotive markets, including the electric vehicle markets. We did also see reduced production for certain pending programs as well. The impacts of these were partially offset by changes in FX rates in Q2 twenty twenty four. Q2 normalized operating earnings from loan ability were up 19.6% over the last year to $150,900,000 This improvement was driven by the continuation of cost reductions and operational efficiencies. Mobility also experienced a positive product mix and contribution on launching programs and a favorable impact from changes in foreign exchange rates last year.

However, these positive impacts were partially offset by the contribution impact of supply points in the automotive and electric vehicle market and the lower production on certain pending programs. Despite the sales decline, Mobility has achieved its outlook for double digit earnings growth in Q2 and has expanded back into our normal range of 7% to 10%. Starting with our cash position, we came in at 1,000,000,000 on June 30, an increase of $244,400,000 compared to June. The second quarter generated $3.00 $5,000,000 in cash from operating activities, which was partially used to fund our Q2 CapEx. Turning to leverage, net debt to EBITDA was 2.02 times in the quarter, an improvement from last year’s 1.2 times.

The amount available credit on our credit facilities was $914,600,000 at the end of the quarter. Our liquidity at the end of Q2 remains strong at $1,900,000,000 To resolve, we currently believe we have sufficient liquidity to satisfy our financial obligations during 2025. Turning to the status of the NCIB program that was launched and announced at our Q3 twenty twenty four earnings call. The twelve month program allows Limer to purchase and cancel up to 4,000,000 shares. Program to date, we are nearly at 1,800,000.0 shares repurchased, which equates to nearly $100,000,000 being spent on the program.

With increased certainty around the market conditions and clearer understanding on how tariffs influence OEM decision making and product scheduling, Lenimar is intending to be active in the repurchasing of shares under our NCIB in Q3. While some uncertainty remains in the broader market, Linamar is confident in its cash performance and financial position. This aligns with our capital allocation strategy of optimizing our balance sheet, especially in these turbulent times, focusing on growing the business and returning excess cash to shareholders. I’ll start by explaining the segment’s expectations for Q3 for 2025 and 2026. The Mobility segment will see sales growth and double digit normalized OE growth compared to Q3 twenty twenty four.

Sales will grow despite the fact that the global automotive markets are expected to be flat year over year. The normalized OE will continue to improve on cost reductions, operational improvements and from added contribution from launching programs. Industrial segment will see double digit sales and normalized OE declines when compared to Q3 last year. The sales are declining on down markets expected in both Ag and Access. Normalized OE is down because of the decremental impact of the change in sales in addition to a product mix, which is currently predicted to be unfavorable.

Turning to the full year 2025. For mobility, industry forecasters are predicting continued market softness of 25% in North America and Europe. Notwithstanding the market softness, our sales will grow over twenty twenty four levels and OE will grow at an accelerated double digit rate. Business leaving is expected to remain at the low end of our normal range of 5% to 10%. We still see launching programs maintaining our previous outlook and adding between 500,000,000 and 700,000,000 that will help mitigate the market decline.

As a result, we are expecting still expecting to see margin expansion and mobility will be within our normal range of 7% to 10%. Industrial will see double digit market decline into both Ag and Access, which will result in overall double digit decline in sales for the segment. The sales decline and an unfavorable sales mix will result in a double digit decline in OE over ’24. Regardless of the anticipated operating earnings, margins will still be in the normal range of 14% to 18% for the segment. In ’26, the Mobility segment expected to continue its sales growth, if at a more modest rate and achieve continued operating earnings growth.

Automotive markets are projected to be to slightly decline over ’25, launching programs are anticipated to contribute an additional 500,000,000 to $700,000,000 in sales and business ending is expected to remain at the low end of our range. OE growth will continue and OE margins are expected to be in our normal range of sales of 7% to 10%. Industrial segment is also forecast to experience growth in both sales and OE for 2026. The access market is expected to shrink by about 1% to 25%, which will add to the market share for SkyJet, driven by sales growth in the dental market. Furthermore, the agricultural markets are anticipated to start to rebound in 2026, contributing to sales growth in the ag business.

Also, finally, the OE is expected to grow in 2026 due to the volume increases in both Access and Ag and will result in margin expansion. The expectation on the consolidated results for Q3 is to have a modest decline in sales and normalized EPS is expected to be flat year over year. Even with the reductions in the markets, free cash flow generation is expected to remain strong in the third quarter. Overall, for 2025, sales will have a modest decline. EPS will grow, driven by the strong double digit Mobility earnings growth.

Free cash flow generation will remain strong, which will ensure that our balance sheet is also strong. The segments will drive overall modest sales of 2026 and will result in earnings per share growth, thereby expanding net margins. The balance sheet is expected to remain strong with solid leverage and strong free cash flow generation. Thank you. And I’d now like to open up the call for questions.

Conference Operator: Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Tamy Chen from BMO Capital Markets. Please go ahead.

Tamy Chen, Analyst, BMO Capital Markets: Hi, thanks for the question. I wanted to start with the mobility segment. So I think given what you said on the outlook for the rest of this year, you’re probably looking around that 7% or so mobility margin for full year. Can you just talk about next year? Because it does look like you’ve tempered your expectation for year over year mobility margin trend for next year.

Although, you know, you should still be having good contribution from launches and your operational excellence initiatives. So I’m just wondering what specifically prompted the tempering of the 26% mobility margin guide.

Linda Hassenfratz, Executive Chair, Linamar: Yes. I would say a couple of things that Tammy led us to dial back again on 2026 expectations. One is just a little bit of a softer outlook for the market for next year. But probably more relevant is actually a much more positive outlook for 2025 than we were expecting last quarter. If you look at IHS volumes for North America, for instance, they added 800,000 units to the forecast.

So notwithstanding the fact that the market is down, it’s going to be down a lot less than it was expected. So that means a stronger 25%, which obviously tempers the growth expectation for 2026. We still feel quite good about what’s happening in terms of launches for next year and a solid performance for the segment.

Jim Geralt, President and CEO, Linamar: Yes. And I think, again, for next year, we dialed back a little bit, as Linda said, because of the expectations later this year. But definitely some of the launches and that will be additive and some of the new business takeover work as well starts to come into play next year too, Tammy.

Tamy Chen, Analyst, BMO Capital Markets: Okay. Understood. And I wanted to ask about the industrial segment as well. You said this quarter had unfavorable mix as well. What’s that referring to?

Like, is it an unfavorable mix in one of the businesses, whether it’s Skyjack or ag? Or is it just mix between Skyjack and ag overall? And I’m wondering if, like, if there’s any pricing headwinds in either of the segments, just given like how the end markets are trending?

Jim Geralt, President and CEO, Linamar: What was the last question? Well, the pricing. Yes. I mean, I think a couple of things from my side. Last year had some really, really good Q2 favorable mix, and this year, it’s a lot different.

So that has a massive movement there as well. And from a pricing standpoint, of course, last year, we probably had a little bit more ability to price based off the market. So we have to be a little bit more aggressive this year to move some of that equipment.

Linda Hassenfratz, Executive Chair, Linamar: And I would say just broadly, I mean, the ag market, as noted, is very soft and starting to impact our agricultural businesses, whereas last year, that wasn’t really the case because we had a backlog that we were still fulfilling. So we didn’t really feel the impact of market declines as much last year. So as a result, the ag business is a smaller portion than it was last year of the segment, and that’s a big part of the product mix shift.

Jim Geralt, President and CEO, Linamar: Yes. And then on the Skyjack side as well, I mean, some of the things that we track is daily order intake, and we could say for Q2 and now it’s sort of notably up from Q2 last year. Certainly, the backlog has stayed consistent. We also track total number of customers, which has gone up as well. And these are at Skyjack.

And certainly, on the ag side, the uncertainty remains, but a lot of people are talking we’re at the trough. And you can still see higher inventory interest rates, and then we’ll really get a good sense in the early ordering programs for the ag side that really begin sort of now like in the Q3, later Q3 timeframe.

Tamy Chen, Analyst, BMO Capital Markets: Okay, got it. That was it for me. Thank you.

Conference Operator: Your next question is from the line of Michael Glenn from Raymond James. Please go ahead.

Michael Glenn, Analyst, Raymond James: Hey. So, just to circle back in on Skyjack, like in your slides, you have Skyjack total volume up 6%, global market volume down 24%. I know there’s some weighted average, but I’m just trying to understand better like where the gains are coming from and that help explain that volume outperformance relative to the market. Like what’s happening there with the customers or product? Just trying to understand that better.

Jim Geralt, President and CEO, Linamar: I would say a lot of it is driven in North America, would be a primary focus of that. And a lot was from scissors in this quarter. And again, we’ve I was mentioning as well our order intake now is notably up as well going forward. And certainly, the backlog sort of has stayed consistent.

Brian Morrison, Analyst, TD Cowen: Oh,

Jim Geralt, President and CEO, Linamar: yes. And sorry, mentioning booms in Europe as well was up.

Brian Morrison, Analyst, TD Cowen: Okay.

Michael Glenn, Analyst, Raymond James: Like what can you say anything about like where your market share sits right now on scissors or booms in Europe?

Linda Hassenfratz, Executive Chair, Linamar: We don’t disclose our specific market share. But as noted, market share is up for SCADAC in key products, scissors being one of them. And in fact, the scissor market share growth is a big driver of the unit growth. I mean, our volumes are up in scissor sales over last year on a global basis when the market is down quite a bit.

Michael Glenn, Analyst, Raymond James: Okay. And is overall, like unit volumes being up 6%, can you say sales for Skyjack were up year over year as well?

Linda Hassenfratz, Executive Chair, Linamar: No, because units and sales don’t always go hand in hand because scissors are sold for a lower revenue than, let’s say, a telehandler or a boom for that matter. So the sales is dependent on that.

Michael Glenn, Analyst, Raymond James: Okay. And just on in the press release, talk about having a war chest of cash. What’s your appetite for acquiring distressed suppliers? Because I think those are also referenced in the press release too from a takeover work perspective. I’m just wondering what your appetite is for potentially acquiring some of these distressed auto parts suppliers.

Jim Geralt, President and CEO, Linamar: Yes. I think you can look to our history, what we did with MobX a couple of years back. And I would also dovetail this on our customers themselves, certainly come to companies that do have the balance sheet and the wherewithal to right size and create a sustainable long term company. And there is no shortage of distress out there. And I could say that we are highly engaged in lots of discussions with OEMs and these areas right now.

So I would say, from our side, appetite is good, but it has to be something that we work directly with our OEMs to create a sustainable future, profitable future, and then we’re prepared to jump in and do the fixing.

Linda Hassenfratz, Executive Chair, Linamar: And I think that last is really it’s absolutely we’re interested. It’s got to be the right deals. It’s got to be profitable day one.

Michael Glenn, Analyst, Raymond James: And so when obviously, suppliers will be distressed for many reasons, but are you able are there opportunities before that acquisition is completed or negotiated that you are able to renegotiate pricing or all of the

Jonathan Goldman, Analyst, Scotiabank: things that you need to do

Michael Glenn, Analyst, Raymond James: to make that business profitable?

Jim Geralt, President and CEO, Linamar: I mean, we wouldn’t want to disclose any of the things like that exactly. But yes, I mean, if there’s a distressed company that’s losing money and we want to make day one profit, we have to work something out that makes sense for the OEMs. And the other thing I would say because the OEMs would expect us to take it over and if we make a commercial arrangement, Linamar, our goal is to get it better so that we can pass on savings back to them down the road, but keep our profitability growing. And that’s part of our success, right, being able to do that and do it well. So I would say, yes, to your point, there is commercial agreements that are done upfront to support it day one.

Michael Glenn, Analyst, Raymond James: Okay. Thank you for taking the questions.

Dale Schneider, CFO, Linamar: You’re welcome.

Conference Operator: Your next question is from the line of Brian Morrison from TD Cowen. Please go ahead.

Brian Morrison, Analyst, TD Cowen: Good evening. A couple of questions, mostly reconciliation. The first one is the q one mobility margin. I know that you have anticipated cost reductions, operational efficiency and and mix improvements, but you were up a 130 basis points on flat revenue. In q one, you said it’d be about 60 basis points.

What really drove that the strength in that performance?

Linda Hassenfratz, Executive Chair, Linamar: In Q2, are you talking better? You’re asking Exactly. About

Brian Morrison, Analyst, TD Cowen: Yeah. I’m sorry about that. Just to be clear. In Q1, you stated we’re going to see a flat revenue performance in Q2. And operating margins, you anticipate up 60 basis points, which I don’t think anyone believed at the time.

You came in and knocked it out of the park with 130 basis points. You cited the reasons being cost reductions, operational efficiencies and mix. But what really drove that strength or outperformance relative to what you thought only a few months ago?

Jim Geralt, President and CEO, Linamar: Yes. I think, again, our discipline on the lean side, Brian, certainly some of the commercial things that we had agreed to last year have sort of played out cost reductions with suppliers rightsizing and to a certain extent too, right? The EV change in more ice back to ice, it’s not splitting your volumes now. You’re a little bit more focused back to ice volumes, not to say EV is completely gone. So I would say all those factors really underscored our ability to push up our OE.

Linda Hassenfratz, Executive Chair, Linamar: I mean, the team is doing an outstanding job of really focusing on operational improvements. Don’t forget, we also did some rightsizing in Europe last year, so that was also helpful. We’ve been able to get some adjustments for the higher costs that from a commercial perspective and have long discussed to help us get back to where we should be. So I mean, last quarter, we told you there’d be an expansion in the margins. I don’t recall giving you a specific base point amount of growth there.

We just said expansion, and we did expand. So we were really happy with the results.

Brian Morrison, Analyst, TD Cowen: Yes. Was in the Q1 transcript, Linda, but I do appreciate the agility and flexibility of your machine to drive these margins. I want to get back to the 20% decline in industrial and just maybe parse out mobility and industrial. I understand mix and pricing, but with 6.3% growth in Skyjack and 18% decline in industrial, maybe you could just maybe respecting, you probably want to still want to disclose too much, but of this decline, how much of this was priced and how much of it was mixed? Because it looks like it should be down maybe somewhere in the neighborhood of 10% and it’s down 20%.

I’m just wondering how much of that’s mix and how much is priced to move the product?

Linda Hassenfratz, Executive Chair, Linamar: Yes. Again, you can’t take a change in unit volume and translate that into sales. Like you can’t do that because it could be a completely different mix of products. And when something is growing and it’s maybe a smaller dollar value, it’s absolutely not going to translate into the same kind of change on the sales growth side. So I’d say that’s for a start.

So I mean, I think mix, obviously.

Jim Geralt, President and CEO, Linamar: Mix is a big portion. Of course, Brian, we’ve had to get a little bit more aggressive on pricing in the last little while because the market’s down, and so there’s a lot of push in the market for that. So certainly, played a part of it. But I would say the mix was the biggest driver. And as Linda said, scissors are lower value than what you would have on telehandlers boom.

So that can lead to some thinking around that, too.

Brian Morrison, Analyst, TD Cowen: Yes. No, that totally makes sense, Jim. Okay. Last question, and it’s a bit of a layup. I just want to see if we end up in the same place here.

So I understand, Linda, your comments with respect to the auto sector being a little bit stronger than you anticipated, which has been a positive for this year. And then it looks like in reverse industrial a little bit weaker. When you get to your normalized EPS growth, it’s gone from double digit growth to growth for 2026. But do those moving parts are we ending up at the exact same place as you had envisioned when you put out the Q1 guidance?

Linda Hassenfratz, Executive Chair, Linamar: Are you talking about for ’25 or for I’m talking for

Brian Morrison, Analyst, TD Cowen: the 2026 I’m talking about the 2026 outlook, where it’s gone from double digit growth to growth for normalized EPS. But there’s moving parts within, which looks like it actually balances out. And I’m wondering if you end up at the same spot is what you’re telling us.

Linda Hassenfratz, Executive Chair, Linamar: I mean, wouldn’t say exactly the same spot. I do think that the stronger mobility than market than expected, although notably still is helping the 2025 number, but there is weakness out in 2026 as well. So both factors are playing in our more conservative look at 2026. I think we’ll have a better sense for it next quarter for you. Frankly, we debated around this because the ability to predict 2026 when it’s hard to predict two months from now with everything that’s happening.

We debated what we should and shouldn’t be paying for ’26. So we’re being a little more conservative, just with a more conservative outlook for next year. We’ll have a better sense next quarter once we have a better understanding of the agricultural and access markets, which ag, we always get a better sense for as we get into the latter months of the year.

Jim Geralt, President and CEO, Linamar: Yes, because again, Q3 that we’re into now for agriculture is really starting to get the early order programs going, Brian. So that really gives you a good sense of the ag side that Linda mentioned. And then also Skyjack will get a better sense as well based on bigger construction things that are going on in Europe, Asia and North America. So we get a better sense of that. And then the other thing that really start to is your daily order intake that really sort of drives that.

So as Linda said, predicting the future is pretty easy. Predicting it right is a challenge.

Brian Morrison, Analyst, TD Cowen: Yes, for sure. And sorry, just last question. Is there a reason why you didn’t put an outlook for Q3 in your presentation package? Is it just

Dale Schneider, CFO, Linamar: opaque at this point in time? Or what was

Brian Morrison, Analyst, TD Cowen: the reason we didn’t put a quarterly outlook?

Linda Hassenfratz, Executive Chair, Linamar: We’re just trying to simplify the communication materials. We were concerned that our the slide that we had in the past was too much information and a little bit too complicated and hard to understand. So we went with a simpler format. Bill did give you verbally what our expectation around Q3 is, both on a segment perspective and overall. So we just chose not to add it as on the slide just to simplify things.

But you do have our outlook for Q3.

Brian Morrison, Analyst, TD Cowen: All right. Thank you very much all.

Dale Schneider, CFO, Linamar: Thanks, Brian.

Conference Operator: Your next question is from the line of Jonathan Goldman from Scotiabank. Please go ahead.

Jonathan Goldman, Analyst, Scotiabank: Hi, good evening team and thanks for taking my questions. I just want to echo the comments really nice performance on the mobility margins in the quarter. I feel the things you called out in disclosures made a lot of sense. I guess just maybe to level set anybody or everybody rather, outside of the normal seasonality throughout the year, should we be thinking of 7.7% as the right jumping off point going forward?

Linda Hassenfratz, Executive Chair, Linamar: We would never be so specific in guidance for a margin. We like to offer a range. So mobility margin at the operating level of 7% to 10% is a good expectation. For sure, you’re going to see seasonality as you get into Q3 and Q4, which

Tamy Chen, Analyst, BMO Capital Markets: are traditionally

Linda Hassenfratz, Executive Chair, Linamar: lower levels. We have further talked about overall expansion this year in margins compared to last year and then holding things pretty steady for next year as the current outlook for mobility. So I think that gives you a little bit more of a sense.

Jonathan Goldman, Analyst, Scotiabank: That makes sense. And maybe would it be fair to characterize the improvements in the quarter as mostly structural?

Jim Geralt, President and CEO, Linamar: What do you define as structural? Fixed cost. Cost and Internal industry. Yes, I would say a lot of that I was would say it’s the efficiencies out of our facilities. It’s basically working with suppliers to look for cost reductions and value engineering ideas.

So all those would play into it.

Jonathan Goldman, Analyst, Scotiabank: Okay. That makes sense. And maybe circling back to the light vehicle outlook for 2026. Does the outlook assume that sales volume is aligned Or do you anticipate any more inventory management dynamics in ’twenty six?

Linda Hassenfratz, Executive Chair, Linamar: I mean, typically, we expect alignment with the overall market expectations.

Jim Geralt, President and CEO, Linamar: I mean, of course, we watch the inventories, just as you stated, and that gives us another thing what we have to think around, right? If we see inventories creeping up, I mean, then we sort of think that through, but then we also keep watching with what our customers are forecasting.

Dale Schneider, CFO, Linamar: Okay. That makes sense.

Jonathan Goldman, Analyst, Scotiabank: And maybe one more for me. Really strong free cash flow generation in the quarter. At least by my math, if you were to max out the NCIB, that would still leave you at a pretty conservative leverage position and with lots of dry powders. Just how are you thinking about your remaining capital allocation options for the balance of the year?

Linda Hassenfratz, Executive Chair, Linamar: Yes. I mean, as Daniel said, we are looking to get back into the market. We were a little light on our buying in the second quarter, just given all the dynamics that were going on and wanting to understand what the economic and market impact of that would be. So we’re planning on getting back into the market.

Jim Geralt, President and CEO, Linamar: And the capital allocation, we want to grow our revenue, we want to grow our income. So we’re very focused on creative opportunities that we talked about in the distressed area as well.

Jonathan Goldman, Analyst, Scotiabank: Okay. Thanks for taking my questions. I’ll get back in queue.

Conference Operator: Thank you very much. There are no further questions at this time. I’ll hand the call over to Ms. Linda Hassenfratz for closing comments. Please go ahead.

Linda Hassenfratz, Executive Chair, Linamar: Okay. Thank you very much. Okay. To wrap up, I’d like to leave you with our key message for the quarter, which is, of course, identical to what it turned out with that. Number one, we’re largely untouched by The U.

S. Tariff, thanks to our focused long term strategy and our opportunistic approach to this situation. Number two, we’re doing a great job of generating very strong cash flow to help fund our future growth. Number three, we saw excellent growth of 20% on the earnings side in our Mobility segment and a margin performance back in our targeted normal range again. And with market share gains in key areas of every business, I think we’re doing a great job of offsetting stock markets, which is absolutely key to growth in times of economic weakness.

So thanks very much, everybody, and have a great evening.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you very much for your participation. You may now disconnect.

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