MARTINREA INTERNATIONAL INC. · PDF file©2016 Martinrea International Inc. Confidential and proprietary. Do ... Ford1 Escape/Focus ... Our Martinrea 2.0 methodology is the four pillar

©2016 Martinrea International Inc. Confidential and proprietary. Do not distribute or copy.

MARTINREA INTERNATIONAL INC.

Q1 2017 Company Presentation

MARTINREA OVERVIEW

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Leading Tier One automotive parts supplier – The second largest North American steel metal former– Top three North American fluid management systems supplier– A global market leader in aluminum parts through Martinrea Honsel

One of the fastest growing automotive parts suppliers in the past 15 years ($0 to ~$4.0 billion in sales)– Footprint now in place– Focus now on operational excellence, lean manufacturing, margin improvement

MARTINREA OVERVIEW

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Operating 44 facilities in 8 countries: Canada, USA, Mexico, Brazil, Germany, Slovakia, Spain and China– Each facility a center of excellence, with an entrepreneurial “owner‐managed culture”– Approximately 15,000 trained and motivated employees– Over 9,000,000 square feet of manufacturing space with expansion potential and multiple expansions occurring

Market statistics (TSX: MRE)– Market Cap – approx. $950 Million– Enterprise Value – approx. $1.6 Billion– LTM Adj. EBITDA – $356 Million– LTM Adj. FD EPS – $1.57

MARTINREA’S EVOLUTION

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FootprintIn Place

AcquiresSKD Automotive

MAR 2009(Metallics)

NOV 2001

AcquiresRea International

APR 2002(Fluid Management Systems)

Royal Laser changes name to:

Martinrea International Inc.JUN 2002

Acquires Pilot Industries

DEC 2002(Fluid Management Systems)

AcquiresDepco International

MAY 2006(Metallics)

AcquiresThyssenKrupp Budd Fabco North America

DEC 2006(Metallics)

Acquires majorityof HonselJULY 2011(Aluminum)

Acquires plant from Oxford AutomotiveDEC 2005(Metallics)

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Acquires balanceof HonselAUG 2014

20172001


MARTINREA VISION, MISSION AND PRINCIPLES

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MARTINREA’S GLOBAL PRESENCE

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MEXICO10 Plants

BRAZIL1 Plant

SPAIN2 Plants

US13 Plants

CANADA13 Plants

SLOVAKIA1 Plant

GERMANY2 Plants

CHINA2 Plants

MARTINREA’S PRODUCTS

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Steel Metal Forming

Aluminum Components

Fluid Management Systems

COMPETITIVE LANDSCAPE

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Steel Metal Forming (North America) Fluid Management Systems (North America, China, Slovakia)

Second largest North American metal former by sales

Primary Competitors

Other Competitors

Top three supplier in North America

Leader in growth since 2005

Primary Competitors

Other Competitors

Aluminum Components (Worldwide)

Leading supplier of light metal components

Primary Competitors

Other Competitors

Current Top 10 Platforms

Ford Escape/Focus

GM Equinox /Terrain

Ford Fusion/Edge

GM Pickups, SUVs

GM Malibu/Impala

Chrysler 300/Challenger/Charger

Jeep Commander/Grand Cherokee

Jeep Wrangler

Dodge Ram

BMW SUV

NORTH AMERICAN PLATFORM PORTFOLIO

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1

2

3

4

5

6

7

8

9

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Martinrea 2.0 is the framework to become a great company…diverse people and groups working together to be One CompanyIt is principle centered to promote specific behaviours to create a strong culture

Our Martinrea 2.0 methodology is the four pillar strategy:

• A High Performance Culture supported by engaging and developing our people

• Operational Excellence requires Lean thinking and tools. Operational Excellence is learning by doing to attack waste, lower costs and continually improve profitability

• Financial Management is increasing our financial capability and responsibly managing all aspects of our business effectively (in a fiscally responsible way)

• Customer is King assures us profitable growth by being the best supplier. We create Customer enthusiasm through our Casper the Ghost approach and our benchmark performance

WHAT IS MARTINREA 2.0?

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WHERE WE AREWHERE WE ARE

WHERE WE ARE GOING

WHERE WE ARE GOING

HIGH PER

FORM

ANCE

CU

LTURE

OPE

RATIONAL

EXCE

LLEN

CE

FINANCIAL

MANAGEM

ENT

CUST

OMER

IS KIN

G!

OUR STRATEGY FOCUS

Continuously Improve

Cost‐Down Every Day

Deliver on Time with Quality

Develop Your People

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OPERATIONAL

EXCELLENCE

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SO WHAT IS LEAN?Wikipedia:A systematic method for the elimination of waste within a manufacturing system. Lean also takes into account waste created through overburden and waste created through unevenness in work loads. Working from the perspective of the client who consumes a product or service, "value" is any action or process that a customer would be willing to pay for.

Finding and Eliminating WasteSIMPLY

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RESPECTING our people

USING lean tools

DEVELOPING our people

ATTRIBUTES OF THE MARTINREA MANUFACTURING SYSTEM

Learn by DOING

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A thinking way using lean tools–the WHY

To continuously improve

To develop our people

MARTINREA MANUFACTURING SYSTEM (MMS)

Problem Solving Skill / Human Development (All Levels)

Standardized Work & Clear Standards

The Process: How Results are Achieved Determines Sustainability

Visualization

Flexible Manpower Lines / Quick Changes

Kaizen of Standardized Work

P & L

Just in TimeGo & See

on the Floor with Own Eyes

Built in Quality with Ownership

Foun

datio

n

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Make what the customer needs at the right time in the right amountMinimize inventoryFully utilize man and machine (separate the work)…regardless of volumeBuild quality into the processReduce lead time, assure flexibility in schedulingPush process waste away from T/M who add value building product Push waste upstream

**Overproduction is the root of all operational evil.**

MMS BLUEPRINT

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SAFETY PERFORMANCE ‐ COMPANYWIDE

Total recordable injury frequency has improved

Total Recordable Injury Frequency

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QUALITY PERFORMANCE

As Martinrea, we want to be Casper the Ghost• 100% On‐time delivery• 100% Compliance –on‐time submission & operate as we say we do

• 100% on‐time, flawless launches and APQP Gate completion

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Severity Score

PR/R's

QUALITY PERFORMANCEQuality performance has improved

2014: Alfield, Rollstar, Ridgetown, Slovakia, Silao

2015: Alfield, Rollstar, Ridgetown, Silao

2015 Quality Premium Award: Silao

2015 Quality Excellence Award: Meschede HPDC

2015/2016 Supplier of the Year: Queretaro

2016 Top Supplier

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Who

How

What

OPERATIONAL STRATEGY

Lean Activity/People

Flexible Processes

Products(Light Weighting)

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FLEXIBLE PROCESSES

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FLEXIBLE ASSEMBLY‐METALLICSToday ‐ Rear Cradle Line Future ‐ Rear Cradle Line

Lifespan: 6 years Tooling change‐over: 4 weeks Service part capability: None Volume Flex Capability: Low

Lifespan: 12+ years Tooling Change‐over: 30 minutes Service Parts: Capable Volume flexibility: High

40% Less capital 20% Less labor

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PRODUCTSOUR KEY STRATEGY

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A LIGHT WEIGHTING COMPANYA Definition:Continuously developing and evolving core metallic products (high strength steel, aluminum, assemblies, etc.) to reduce vehicle weight and CO2 contribution, improving overall vehicle efficiency (MPG).

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20

25

30

35

40

45

50

55

60

65

2000 2005 2010 2015 2020 2025

LIGHT WEIGHTING TREND DRIVEN BY CO2/MPG REGULATIONS

Targets in MPG/Grams of CO2

2025 55/110

2021 61/95

2020 55/105

2020 50/116

10% reduction in weight provides a 6‐7% improvement in fuel economy

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MARKET TRENDS – ALUMINUM (NORTH AMERICA)

Source: North American Light Vehicle Aluminum Content Study June 2014; Ducker Analysis

+ 39%

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MARTINREA’S POSITION

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B‐PILLAR DESIGN EVOLUTION

Tailor Rolled Hot‐Stamp14.3 lbs

Multi‐Piece Steel17.6 lbs

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MATERIAL OPTIONS – CROSSMEMBERS AND CONTROL ARMS

Aluminum – Hollow27.3 lbs

Aluminum ‐ Solid34.0 lbs

Steel41.2 lbs

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Steel11.2 lbs

Aluminum9.9 lbs

HollowAluminum6.2 lbs


MATERIAL OPTIONS – ENGINE BLOCKS

Cast Iron225 lbs

Cast Aluminum w/ Steel Liners64 lbs

Cast Aluminum w/ SprayBore46 lbs

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PLASMA SPRAY STEEL COATING FOR ENGINE BLOCKS

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MARTINREA HONSEL ALUTHINFER® = BORE SPRAY COATING:is a technology to replace iron liners in engine blocks by a thin (100 micron)steel layerEffects: weight reduction of block, better wear performance, less friction, less oil and fuel consumption, better heat dissipation from engine

Thermal Spray Process AluThinFer® no Liners!


PROCESS DEVELOPMENTS FOR HIGH PRESSURE DIE CASTING

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MICRO SPRAY TECHNOLOGY – FOR HPDC CASTING:is a technology for die surface lubrication which uses a minimum amount of lubricant and internal cooling Effects: improvement of casting surface, extension of die life up to approx. 120‐150k shots (from 100k), improved mechanical properties

Conventional spraying after33,788 shots

Micro spraying after103,826 shots


HYBRID DESIGN DEVELOPMENT

Steel

Cast Engine Mounts

• Rear Cast AluminumProvides improved tolerances

• Front SteelProvides necessary crash performance

• Cast Engine Mounts AluminumProvides tighter packaging

• SteelProvides greater stiffness and necessary crash performance

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WHATEVER THE FUTURE HOLDS, MARTINREA WILL BE A LEADER

HYBRIDPLUG‐IN HYBRID

FUEL CELL

DRIVERLESS

ELECTRIC

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MACROECONOMIC OUTLOOK

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MACROECONOMIC OUTLOOK ‐ AUTOMOTIVEGlobal vehicle production is anticipated to increase over time

North America, Europe, China markets are anticipated to grow over time

Positive factors in North America– New auto affordability at or near record lows– Consumer debt levels in U.S. have improved– U.S. housing market is healthy– Oil and gas prices remain low– Financing is available at low rates– Average vehicle age 12 years– Customer base remains healthy, employment/participation levels in North America have increased– Annual population growth adding new drivers– New vehicles have more features, may be more economical to drive– Volumes are at a healthy level

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MACROECONOMIC OUTLOOK ‐ AUTOMOTIVE

Global Production Volume Bridge – 2015 to 2022 (millions)

BETWEEN 2015 AND 2022, GLOBAL VEHICLE PRODUCTION WILL LIKELY INCREASE BY ANOTHER 22 MILLION UNITS

Source: PWC Autofacts

88.2

110.5

9.10

4.60

2.501.90

2.601.30

80

83

85

88

90

93

95

98

100

103

105

108

110

2015 China BRI NA EU ASEAN MEA Other Developed AP 2022F

0.8

0.5

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TAKEAWAYS FROM THE 2017 DETROIT AUTO SHOW

Overall positive tone, one of confidence for the industry

Outlook of global auto production is one of growth

U.S. may be at a plateau but the view is a good one

Electrification is coming in various forms but it will take time; North America expected to emphasis hybrids

Driverless car is coming but in stages, creating an exciting time for our industry

Current OEMs will play prominent role and be leaders in whatever the future holds


FINANCIALS

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SALES

Sales growth since 2009 has been staggering

Excluding FX impacts, growth is expected to normalize

Module assembly business moving to a VAA pricing model

Focus is on new programs exceeding specific investment return hurdles

1,091

1,570

2,076

2,706 3,019

3,354 3,705 3,715 3,648

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119

117

195

203

245

162 253 282

1,138

1,689

2,193

2,901

3,222

3,599

3,867 3,968 3,930

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2009 2010 2011 2012 2013 2014 2015 2016 LTM Mar2017A

In M

illio

ns

Of

Can

adia

n D

olla

rs

Production Sales Tooling Sales

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HIGHLIGHTS OF RECENT NEW BUSINESS AWARDS

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Customer Products Annualized Sales at Peak Volumes SOP

Aluminum knuckles and control arms $200,000,000 2015‐2018

Steel Metal Forming ‐ Equinox, Terrain $175,000,000 2017

Pick‐up trucks and SUVs – steel metal forming and fluid handling $175,000,000 2018‐2020

Transmission engine fluids systems $20,000,000 2018

Fluids systems ‐ Small Car $25,000,000 2018‐2019

Steel Metal Forming – Mid Size SUVs $25,000,000 2019

VAA module assembly – SRX $10,000,000 2019

2.0L aluminum engine block $100,000,000 2018

3.5L V6 engine block $50,000,000 2020

Aluminum powertrain $10,000,000 2018

Fluids systems (RAM/Wrangler) $10,000,000 2018

Steel Metal Forming – Compact Sedan $30,000,000 2018

V8 AMG aluminum engine block $25,000,000 2017

Aluminum transmission (X5) $15,000,000 2018

Steel Metal Forming $10,000,000 2018

4 cyl aluminum diesel engine block $35,000,000 2018


ADJUSTED OPERATING INCOME MARGINAdjusted operating income margin for Q1 2017 was 5.6% compared to 5.0% for 2016, 4.6% for 2015 and 4.1% for 2014

Positive trend is expected to continue in 2017

Operating income margins are expected to improve to >6% by the end of 2017

6% is not the ceiling – margins expected to continue to increase after 2017

4.1%4.6%

5.0%

5.6%>6%

0%

2%

4%

6%

8%

Adju

sted

Ope

ratin

g In

com

e M

argi

n %

Note: Operating income margins presented have been adjusted for unusual and other items highlighted in our MD&A

Q1 YTD 2017 ‐ 5.6%, up year‐over‐year

from 4.9%PROGRESS ON TRACK

2016A YTD Mar 2017A

2014A 2015A 2017F

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$52 $67 $73

$82 $83 $119

$130 $136 0.61

0.79 0.880.97 0.98

1.38

1.501.57

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014 2015 2016 LTMMar2017

In M

illio

ns O

f Can

adian

Dol

lars

Net Earnings* Diluted Net Earnings Per Share*

Full Year Financials

*Note: Adjusted for Unusual and Other Items highlighted in our MD&A

ADJUSTED NET EARNINGS PER SHARE

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BALANCE SHEET

The Company is a significant cash flow generator with operating cash flow increasing every year since 2010

Investments in the business continue to be made

Capex in 2017 expected to be ~ $240M

Net Debt to Adjusted EBITDA ratio trending down – targeted to be 1.5X by the end of 2017

$89 $142 $146

$237 $259 $308

$348 $355

050

100150200250300350400

2010 2011 2012 2013 2014 2015 2016 LTM Mar2017

In M

illio

ns o

f Can

adia

n D

olla

rs Operating Cash Flow

$91 $149

$201 $189 $204 $215 $249 $240

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017F

In M

illio

ns o

f Can

adia

n D

olla

rs Capex

1.39x1.75x 1.62x

2.54x 2.37x 2.16x 1.89x 1.78

0

0.5

1

1.5

2

2.5

3

2011 2012 2013 Q3 2014 2014 2015 2016 Q1 2017

Net Debt to Adjusted EBITDA

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This presentation contains forward-looking statements within the meaning of applicable securities laws (“forward-looking statements”),including, but not limited to, statements relating to future expectations of our revenues, (adjusted) operating income margins, SG&A, earningsand adjusted net earnings, cash flow from operations, operating performance, targeted financial ratios, investment in capital and programs;strategy, market opportunity and vision; views on the outlook of and growth of the automotive industry (including production volumes andgrowth of electric and autonomous vehicles and the role of OEMs in the future); Martinrea’s ability to capitalize on opportunities in theautomotive industry as well as other forward-looking statements. The words “continue”, “expect”, “anticipate”, “estimate”, “may”, “will”, “intend”,“believe”, “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based onestimates and assumptions made by Martinrea in light of its experience and its perception of historical trends, current conditions and expectedfuture developments, as well as other factors that Martinrea believes are appropriate in the circumstances. These forward-looking statementsare subject to risks, uncertainties and assumptions that may cause actual results, performance or achievements to differ materially from thoseexpected or implied by the forward-looking statements. Factors that may cause such differences include, but are not limited to, North Americanand global economic and political conditions; the highly cyclical nature of the automotive industry and the industry’s dependence on consumerspending and general economic conditions; Martinrea’s dependence on a limited number of significant customers; Martinrea’s reliance oncritical suppliers for components and the risk that suppliers will not be able to supply components on a timely basis or in sufficient quantities;competition; the factors discussed under the headings “Industry Highlights” and “Trends and Risks and Uncertainties” in Martinrea’s mostrecent Management Discussion and Analysis and Annual Information Form filed with applicable securities commissions, as well as other riskfactors identified therein, available at www.sedar.com, and the documents incorporated by reference into such documents. These factorsshould be considered carefully, and readers should not place undue reliance on Martinrea’s forward-looking statements. If any of such risksactually occur, they could materially adversely affect our business, financial condition or results of operations. In that case, the trading price ofour common shares could decline, perhaps materially. We provide forward-looking statements solely for the purpose of providing informationabout management's current expectations and plans relating to the future. You are cautioned that such information may not be appropriate forother purposes. Except as required by law, we do not undertake or accept any obligation or undertaking to release publicly any updates orrevisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions orcircumstances on which any such statement is based.

LEGAL DISCLAIMER

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MARTINREA INTERNATIONAL INC. · PDF file©2016 Martinrea International Inc. Confidential and proprietary. Do ... Ford1 Escape/Focus ... Our Martinrea 2.0 methodology is the four pillar