Martinrea International Inc. Releases First Quarter Results and
Announces Dividend
Record Quarterly Revenues, Improving Operations
TORONTO, ONTARIO--(Marketwired - May 15, 2014) - Martinrea
International Inc. (TSX:MRE), a leader in the production of quality
metal parts, assemblies and modules and fluid management systems
focused primarily on the automotive sector, announced today the
release of its financial results for the first quarter ended March
31, 2014, record quarterly revenues, improving operations and a
quarterly dividend.
HIGHLIGHTS
- Record Quarterly Revenues
- Quarter-over-Quarter Operational and Margin Improvement
- Record Quarter for Martinrea Honsel
- Profitability Increasing in Second Quarter
- Dividend Announced
OVERVIEW
Nick Orlando, Martinrea's President and Chief Executive Officer,
stated: "We are highly focused on improving our operations
everywhere, including in our metal plants in the United States,
which are showing improvement in the first quarter and year to
date. The first quarter results are tempered somewhat because of
launch costs from several launches and the issues we experienced at
our Hopkinsville plant late last year which carried over into the
first quarter, but we are making progress. Many of our plants,
whether doing fluids, metallic, aluminum or assembly work, are
performing very well financially. In terms of new business won
since our last release just a few weeks ago, we have won
approximately $40 million in incremental annualized business
including $25 million in incremental volume on Daimler's next
generation AMG V8 engine block starting in 2016, $10 million of
incremental content on Ford's CD4.3 platform in both China and
North America starting in 2016 and $5 million of business for the
Company's Rollstar plant for Chrysler on its minivan line starting
in 2016."
Fred Di Tosto, Martinrea's Chief Financial Officer, stated:
"Revenues for our first quarter, excluding tooling revenues, were
approximately $838 million, within the range of our previously
announced sales guidance, and a record quarter for us. In the first
quarter, our adjusted earnings per share, on a basic and diluted
basis, was $0.21, after adjusting for relatively low unusual items
in the nature of non-insured litigation costs, and within our
recently announced quarterly guidance. The Martinrea Honsel
operations contributed $0.12 per share to our first quarter
results, a record contribution for us. The Martinrea Honsel
operations benefitted from higher revenues, resulting from higher
customer demand in Europe in the first quarter, in particular in
our German operations. As a result of the strong performance of
Martinrea Honsel, the value of the put option on the Company's
balance sheet increased by $31 million during the quarter to $186
million at March 31, 2014, demonstrating the significant increase
in value we have brought to that asset. While Martinrea Honsel is
expected to continue to contribute strongly to our overall
business, we anticipate that the next several quarters will
contribute less earnings than the first quarter, as volumes will be
somewhat lower and as we enter into a period of higher launch
activity on business previously won and announced."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "While
2013 overall was a good year for us, we believe 2014 will be better
overall. In our first quarter we started to see operational and
financial improvements from the previous quarter. Most of our
businesses are doing well-our aluminum and fluids businesses had
strong quarters; our assembly operations are doing well; and many
of our metallic plants are meeting or exceeding budget. Certain
U.S. metallic plants are making the necessary improvements to
operations that will improve margin. Our second quarter is expected
to generate revenues for the quarter (excluding tooling revenues)
in the range of $860 to $890 million and we believe our earnings
per share will be in the range of 27 to 31 cents per share, one of
the best quarters in our history from a financial point of view.
Most of the profit improvement will come from our Martinrea Classic
operations. Our Martinrea Honsel operations are anticipated to
generate earnings per share in the range of 7 to 9 cents for the
quarter. In summary, the future looks good for us. We are making
good progress and are addressing our issues; our profitability
overall is improving; our financial position is strong; we have a
committed and strong independent board of directors and a dedicated
team at the company focused on the future; and we will continue to
improve."
RESULTS OF
OPERATIONS
Martinrea currently employs over 13,000 skilled and motivated
people in 38 plants in Canada, the United States, Mexico, Brazil,
Europe, and China. All amounts in this press release are in
Canadian dollars, unless otherwise stated; and all tabular amounts
are in thousands of Canadian dollars, except earnings per share and
number of shares. Additional information about the Company,
including the Company's Management Discussion and Analysis of
Operating Results and Financial Position for the first quarter
ended March 31, 2014 ("MD&A") dated as of May 15, 2014, the
Company's unaudited interim condensed consolidated financial
statements for the first quarter ended March 31, 2014 (the
"unaudited consolidated financial statements") and the Company's
Annual Information Form for the financial year ended December 31,
2013, can be found at www.sedar.com.
Non-IFRS
Measures
The Company prepares its financial statements in accordance with
International Financial Reporting Standards ("IFRS"). However, the
Company has included certain non-IFRS financial measures and ratios
in this Press Release that the Company believes will provide useful
information in measuring the financial performance and financial
condition of the Company. These measures do not have a standardized
meaning prescribed by IFRS and therefore may not be comparable to
similarly titled measures presented by other publicly traded
companies, nor should they be construed as an alternative to the
other financial measures determined in accordance with IFRS.
Non-IFRS measures referred to in the analysis include "adjusted net
earnings" and "adjusted earnings per share on a basic and diluted
basis", and are defined in Table A under "Adjustments to Net
Income" of this Press Release.
Revenue
Three months ended March 31, 2014 to three months ended
March 31, 2013 comparison
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2014 |
|
Three months ended March 31, 2013 |
|
$ Change |
|
% Change |
|
North
America |
$ |
663,664 |
|
$ |
610,531 |
|
53,133 |
|
8.7 |
% |
Europe |
|
183,653 |
|
|
141,811 |
|
41,842 |
|
29.5 |
% |
Rest of World |
|
17,176 |
|
|
16,780 |
|
396 |
|
2.4 |
% |
Revenue |
$ |
864,493 |
|
$ |
769,122 |
|
95,371 |
|
12.4 |
% |
The Company's consolidated revenues for the first quarter of
2014 increased by $95.4 million or 12.4% to $864.5 million as
compared to $769.1 million for the first quarter of 2013. Revenues
increased year-over-year across all operating segments.
Revenues for the first quarter of 2014 in the Company's North
America operating segment increased by $53.1 million or 8.7% to
$663.7 million from $610.5 million for the first quarter of 2013.
The increase was due to an overall increase in North American OEM
light vehicle production, in particular year-over-year increased
production volumes on the GM Equinox/Terrain, Ford Fusion and Ford
Escape, three of the Company's largest platforms, the launch of new
programs during or subsequent to the first quarter of 2013,
including GM's full size pick-up trucks, Chevrolet Impala and BMW
X5, and the impact of foreign exchange on the translation of U.S.
denominated production revenue, which had a positive impact on
revenue for the first quarter of 2014 of $45.3 million. The
increase in revenue was partially offset by a $29.1 million
decrease in tooling revenues, which is typically dependent on the
timing of tooling construction and final inspection and acceptance
by the customer.
Revenues for the first quarter of 2014 in the Company's Europe
operating segment, comprised predominately of the European
operations of Martinrea Honsel, increased by $41.8 million or 29.5%
to $183.7 million from $141.8 million for the first quarter of
2013. The increase was due to the launch of new incremental
aluminum business with Jaguar Land Rover including the sub-frame
and shock towers for the new Range Rover Sport; an overall
year-over-year increase in European OEM light vehicle production; a
$6.1 million increase in tooling revenues; an $18.7 million benefit
from the impact of foreign exchange on the translation of Euro
denominated production revenue; and year-over-year increased
production revenues in the Company's plant in Slovakia, which
continues to ramp-up and launch its backlog of business.
Revenues for the first quarter of 2014 in the Company's Rest of
World operating segment, currently comprised of the Brazilian
operations of Martinrea Honsel and a facility in China in its early
stages, increased by $0.4 million or 2.4% to $17.2 million from
$16.8 million for the first quarter of 2013. The increase can be
attributed to the launch of the Company's first product in China
for the Ford CD4 program, which began to ramp up at the end of the
second quarter of 2013, partially offset by a year-over-year
decrease in production volumes in Brazil, the impact of foreign
exchange on the translation of Brazilian Real denominated
production revenue, which had a negative impact on revenue for the
first quarter of 2014 of $0.8 million, and a year-over-year
decrease in tooling revenue of $0.8 million.
Overall tooling revenue decreased by $23.8 million from $50.7
million for the first quarter of 2013 to $26.9 million for the
first quarter of 2014.
Gross Margin
Three months ended March 31, 2014 to three months ended
March 31, 2013 comparison
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2014 |
|
Three months ended March 31, 2013 |
|
$ Change |
|
% Change |
|
Gross
margin |
$ |
87,479 |
|
$ |
75,715 |
|
11,764 |
|
15.5 |
% |
% of revenue |
|
10.1 |
% |
|
9.8 |
% |
|
|
|
|
The gross margin percentage for the first quarter of 2014 of
10.1% increased as a percentage of revenue by 0.3% as compared to
the gross margin percentage for the first quarter of 2013 of 9.8%.
The increase in gross margin as a percentage of revenue was
generally due to:
- higher capacity utilization from an overall increase in
year-over-year production revenues including the launch of new
programs subsequent or during the first quarter of 2013 (as noted
above);
- productivity and efficiency improvements at certain operating
facilities, in particular the Martinrea Honsel operations in
Germany;
- improved pricing on certain long-term customer contracts in the
operations of Martinrea Honsel; and
- a decrease in tooling revenue which typically earns low or no
margins for the Company.
These factors were partially offset by:
- an increase in integrator or assembly work which typically
generates lower margins as a percentage of revenue, although return
on capital tends to be higher;
- program specific launch costs related to new programs that
recently launched or are set to launch and ramp up over the next
few quarters including the BMW X5, Ford Transit, Ford 2.3 L
aluminum engine block, Chrysler 200 and Lincoln MKC; and
- operational inefficiencies at certain operating facilities, in
particular, Hopkinsville, Kentucky (see below).
The performance of the Company's operating facility in
Hopkinsville, Kentucky continued to be impacted by launch costs and
other operational expenses stemming from the operational issues
experienced by the facility during the fourth quarter of 2013. The
issues were rooted in serious equipment failures on two of the
plant's large tonnage presses which has resulted in incremental
premium costs as the facility deals with new program launches,
customer-requested engineering changes, which have impacted
productivity, and the overall ramp-up in production volumes being
experienced in the automotive industry. The presses are currently
operational but are not performing at optimal levels. Upgrades to
the presses are planned during the 2014 summer and December holiday
shutdowns in order to reduce the risk of any further failures and
improve the performance of the presses. Notwithstanding the planned
upgrades, progress is being made at improving efficiencies at this
facility and costs are expected to subside, and margins improve, as
operational improvements are made. The facility is focused on cost
reduction and improving efficiency with the objective of expanding
margin.
In addition to the expected productivity and efficiency
improvements at certain operating facilities, in particular in
Hopkinsville, Kentucky (as noted above), gross margin is expected
to be positively impacted by incremental new business as the
Company continues to work through the launch of a significant
backlog of business over the next 36 months including the following
awarded programs in addition to the programs referred to above: the
next wave of Ford CD4 in Europe and North America, GM Omega
aluminum engine cradle, GM 31XX (Traverse, SRX), Jaguar LandRover
aluminum swivel bearing, Ford Transit, Nissan aluminum I4 engine
block, Daimler aluminum transmission casing and engine cradle for
the VW Golf.
Adjustments To Net
Earnings
(Attributable to Equity Holders of the Company)
Adjusted net earnings exclude certain unusual items, as set out
in the table below and described in the notes thereto. Management
uses adjusted earnings as a measurement of operating performance of
the Company and believes that, in conjunction with IFRS measures,
it provides useful information about the financial performance and
condition of the Company.
TABLE
A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Three months ended |
|
|
|
|
March 31, 2014 |
|
March 31, 2013 |
|
(a-b |
) |
|
(a |
) |
(b |
) |
Change |
|
|
|
|
|
|
|
|
NET EARNINGS (A) |
$16,691 |
|
$19,888 |
|
$(3,197 |
) |
|
|
|
|
|
|
|
Add back - Unusual Items: |
|
|
|
|
|
|
External legal and forensic accounting costs related to litigation
(1) |
1,153 |
|
- |
|
1,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL ITEMS BEFORE TAX |
$1,153 |
|
- |
|
$1,153 |
|
Tax impact of above item |
(288 |
) |
- |
|
(288 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL ITEMS AFTER TAX (B) |
$865 |
|
- |
|
$865 |
|
|
|
|
|
|
|
|
ADJUSTED NET EARNINGS (A + B) |
$17,556 |
|
$19,888 |
|
$(2,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Outstanding - Basic ('000) |
84,480 |
|
83,757 |
|
|
|
Adjusted Basic Net Earnings Per Share |
$0.21 |
|
$0.24 |
|
|
|
Number of Shares Outstanding - Diluted ('000) |
85,044 |
|
84,364 |
|
|
|
Adjusted Diluted Net Earnings Per Share |
$0.21 |
|
$0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) External Legal and Forensic Accounting Costs Related to
Litigation
As previously disclosed, on September 26, 2013, a former
director of the Company filed a statement of claim against the
Company making certain allegations against the Company, certain
directors and officers, and two Martinrea suppliers. Supervision of
the litigation has been delegated to a Special Committee of the
Board. Legal counsel has been retained to advise the Special
Committee with respect to litigation and legal matters. The Special
Committee has retained PricewaterhouseCoopers LLP as its
independent financial experts to provide such financial and
accounting advice and forensic services as the Special Committee
may deem appropriate.
In addition, the Company and certain of its officers and
directors have been served with a Notice of Action and Statement of
Claim that was filed in Windsor, Ontario by an alleged shareholder
(the "Statement of Claim"). In the Statement of Claim, the
plaintiff seeks, among other things: an order certifying the
proceeding as a class proceeding; a declaration that the defendants
made negligent misrepresentations in the time period from March 6,
2006 to December 18, 2013 by representing that the Company's
financial statements were prepared in accordance with GAAP and/or
IFRS; an order granting leave to amend the claim to assert causes
of action under the secondary market liability provisions of the
Securities Act (Ontario); and special and general damages and costs
of notice in the class action in the sum of $100 million.
The costs added back for adjusted net income purposes reflects
the legal and forensic accounting costs incurred by the Company in
relation to these matters that are not covered by insurance
(recorded in SG&A expense). Further amounts related to the
costs expensed to date may be recovered from the Company's
insurance providers upon completion of their review of the costs
incurred.
Net Earnings |
|
(Attributable to Equity Holders of the Company) |
|
|
|
Three months ended March 31, 2014 to three months
ended March 31, 2013 comparison |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2014 |
|
Three months ended March 31, 2013 |
|
$ Change |
|
% Change |
|
Net Earnings |
$ |
16,691 |
|
$ |
19,888 |
|
(3,197 |
) |
(16.1 |
%) |
Adjusted net earnings |
$ |
17,556 |
|
$ |
19,888 |
|
(2,332 |
) |
(11.7 |
%) |
Net Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.20 |
|
$ |
0.24 |
|
|
|
|
|
|
Diluted |
$ |
0.20 |
|
$ |
0.24 |
|
|
|
|
|
Adjusted Net Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.21 |
|
$ |
0.24 |
|
|
|
|
|
|
Diluted |
$ |
0.21 |
|
$ |
0.24 |
|
|
|
|
|
Net earnings, before adjustments, for the first quarter of 2014
decreased by $3.2 million to $16.7 million from $19.9 million for
the first quarter of 2013. Excluding $1.2 million in external legal
and forensic accounting costs related to litigation incurred during
the first quarter of 2014, as explained in Table A under
"Adjustments to Net Earnings", the net earnings for the first
quarter of 2014 decreased to $17.6 million or $0.21 per share, on a
basic and diluted basis, in comparison to adjusted net earnings of
$19.9 million or $0.24 per share, on a basic and diluted basis, for
the first quarter of 2013.
The net earnings for the first quarter of 2014, as compared to
the first quarter of 2013, were negatively impacted by the
following:
- program specific launch costs related to new programs that
recently launched or are set to launch and ramp up over the next
few quarters including the BMW X5, Ford Transit, Ford 2.3 L
aluminum engine block, Chrysler 200 and the Lincoln MKC;
- lower margins as a result of operational inefficiencies at
certain operating facilities, in particular, Hopkinsville, Kentucky
(as discussed above).
- year-over-year increases in SG&A expense as previously
discussed, research and development expense as a result of
increased amortization of development costs and, finance expense
related to increased levels of debt used to sustain the increased
capital related to new product launches; and
- a year-over-year decrease in net foreign exchange gain to a net
foreign exchange loss during the quarter (included in Other Finance
Income and Expense in the Interim Condensed Consolidated Statement
of Operations).
These factors were partially offset by the following:
- higher margins from an overall increase in year-over-year
production revenues including the launch of new programs subsequent
to or during the first quarter 2013, in particular as it relates to
the Martinrea Honsel operations;
- productivity and efficiency improvements at certain operating
facilities, in particular the Martinrea Honsel operations in
Germany;
- improved pricing on certain long-term customer contracts in
Martinrea Honsel; and
- a lower effective tax rate due generally to mix of earnings and
the utilization of tax losses in Martinrea Honsel not previously
benefitted.
The contribution of Martinrea Honsel to net earnings for the
first quarter of 2014, after factoring in the interest costs
incurred by Martinrea International on the debt issued to finance
the acquisition and operations of Martinrea Honsel, increased to
$0.12 per share from $0.04 per share in the first quarter of 2013.
The increase was generally due to the addition of new incremental
aluminum business with Jaguar LandRover, generally higher
production volumes in Europe, improved pricing on certain long term
customer contracts and ongoing productivity, efficiency
improvements at certain facilities, in particular in Germany, and a
lower effective tax rate resulting from the utilization of tax
losses not previously benefitted.
Additions to Property,
Plant and Equipment
Three months ended March 31, 2014 to three months ended
March 31, 2013 comparison
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2014 |
|
Three months ended March 31, 2013 |
|
$ Change |
|
% Change |
|
Additions to Property, Plant and Equipment |
$ |
37,051 |
|
$ |
56,705 |
|
(19,654 |
) |
(34.7 |
%) |
Additions to property, plant and equipment decreased by $19.7
million to $37.1 million in the first quarter of 2014 from $56.7
million in the first quarter of 2013. Additions as a percentage of
revenue decreased to 4.3% for the first quarter of 2014 compared to
7.4% for the first quarter of 2013. Despite the decrease, while
capital expenditures are made to refurbish or replace assets
consumed in the normal course of business and for productivity
improvements, a large portion of the investment in the first
quarter of 2014 continues to be for manufacturing equipment for
programs launching over the next 24 months.
DIVIDEND
A cash dividend of $0.03 per share has been declared by the
Board of Directors payable to shareholders of record on June 30,
2014 on or about July 15, 2014.
CONFERENCE CALL
DETAILS
A conference call to discuss these results will be held on
Friday, May 16, 2014 at 8:00 a.m. (Toronto time) which can be
accessed by dialing (416) 340-8410 or toll free (866) 225-2055.
Please call 10 minutes prior to the start of the conference
call.
If you have any teleconferencing questions, please call Andre La
Rosa at (416) 749-0314.
There will also be a rebroadcast of the call available by
dialing (905) 694-9451 or (800) 408-3053 (conference id 7928718#).
The rebroadcast will be available until May 30, 2014.
FORWARD-LOOKING
INFORMATION
Special Note
Regarding Forward-Looking Statements
This Press Release contains forward-looking statements within
the meaning of applicable Canadian securities laws including
related to the expectations and guidance as to revenue and gross
margin percentage (and earnings per share), expansion of or
improvements in gross margin, including due to positive impact from
launches, statements as to the growth of the Company and pursuit of
its strategies, the launching of new metal forming and fluid
systems programs including expectations as to the financial impact
of launches, the Company's expectations as to the contribution of
Martinrea Honsel to the Company's business, statements as to the
progress and expectations of operational and productivity
improvements and operational and productivity efficiencies, the
Company's expectations regarding the future amount and type of
restructuring expenses to be expensed, statements as to the
reduction of costs, including the expectation of a reduction in
costs and inefficiencies and stabilization of and operational
improvements at the Hopkinsville plant and expectations as to the
continued operation of and successful upgrades to the presses, the
Company's views on the long term outlook of the automotive industry
and economic recovery, the Company's ability to capitalize on
opportunities in the automotive industry and the successful
integration of acquisitions, statements as to the recovery of
litigation related expenses from insurance providers, and as well
as other forward-looking statements. The words "continue",
"expect", "anticipate", "estimate", "may", "will", "should",
"views", "intend", "believe", "plan" and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements are based on estimates and assumptions made by the
Company in light of its experience and its perception of historical
trends, current conditions and expected future developments, as
well as other factors that the Company believes are appropriate in
the circumstances. Many factors could cause the Company's actual
results, performance or achievements to differ materially from
those expressed or implied by the forward-looking statements,
including, without limitation, the following factors, some of which
are discussed in detail in the Company's Annual Information Form
and other public filings which can be found at www.sedar.com:
- North American and global economic and political
conditions;
- the highly cyclical nature of the automotive industry and the
industry's dependence on consumer spending and general economic
conditions;
- the Company's dependence on a limited number of significant
customers;
- financial viability of suppliers;
- the Company's reliance on critical suppliers and on 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 increasing pressure on the Company to absorb costs related
to product design and development, engineering, program management,
prototypes, validation and tooling;
- increased pricing of raw materials;
- outsourcing and insourcing trends;
- the risk of increased costs associated with product warranty
and recalls together with the associated liability;
- the Company's ability to enhance operations and manufacturing
techniques;
- dependence on key personnel;
- limited financial resources;
- risks associated with the integration of acquisitions;
- costs associated with rationalization of production
facilities;
- launch costs;
- the potential volatility of the Company's share price;
- changes in governmental regulations or laws including any
changes to the North American Free Trade Agreement;
- labour disputes;
- litigation;
- currency risk;
- fluctuations in operating results;
- internal controls over financial reporting and disclosure
controls and procedures;
- environmental regulation;
- a shift away from technologies in which the Company is
investing;
- competition with low cost countries;
- the Company's ability to shift its manufacturing footprint to
take advantage of opportunities in emerging markets;
- risks of conducting business in foreign countries, including
China, Brazil and other growing markets;
- potential tax exposure;
- a change in the Company's mix of earnings between jurisdictions
with lower tax rates and those with higher tax rates, as well as
the Company's ability to fully benefit from tax losses;
- under-funding of pension plans; and
- the cost of post-employment benefits.
These factors should be considered carefully, and readers should
not place undue reliance on the Company's forward-looking
statements. The Company has no intention and undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
The common shares of Martinrea trade on The Toronto Stock
Exchange under the symbol "MRE".
Martinrea International Inc. |
|
Interim Condensed Consolidated Balance Sheets |
|
(in thousands of Canadian dollars)
(unaudited) |
|
|
|
|
|
|
|
Note |
|
March 31, 2014 |
|
|
December 31, 2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
|
$ |
43,185 |
|
|
$ |
56,224 |
|
Trade
and other receivables |
|
4 |
|
|
654,971 |
|
|
|
541,598 |
|
Inventories |
|
5 |
|
|
329,961 |
|
|
|
302,810 |
|
Prepaid expenses and deposits |
|
|
|
|
14,726 |
|
|
|
13,128 |
|
Income taxes recoverable |
|
|
|
|
3,998 |
|
|
|
3,727 |
|
TOTAL CURRENT ASSETS |
|
|
|
|
1,046,841 |
|
|
|
917,487 |
|
Property, plant and equipment |
|
6 |
|
|
887,202 |
|
|
|
847,548 |
|
Deferred income tax assets |
|
|
|
|
110,270 |
|
|
|
100,156 |
|
Intangible assets |
|
7 |
|
|
62,754 |
|
|
|
59,640 |
|
TOTAL NON-CURRENT ASSETS |
|
|
|
|
1,060,226 |
|
|
|
1,007,344 |
|
TOTAL ASSETS |
|
|
|
$ |
2,107,067 |
|
|
$ |
1,924,831 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Trade
and other payables |
|
8 |
|
$ |
686,950 |
|
|
$ |
597,591 |
|
Provisions |
|
9 |
|
|
5,230 |
|
|
|
6,362 |
|
Income taxes payable |
|
|
|
|
20,485 |
|
|
|
22,530 |
|
Current portion of long-term debt |
|
10 |
|
|
51,204 |
|
|
|
37,276 |
|
TOTAL CURRENT LIABILITIES |
|
|
|
|
763,869 |
|
|
|
663,759 |
|
Long-term debt |
|
10 |
|
|
455,809 |
|
|
|
434,501 |
|
Pension and other post-retirement benefits |
|
|
|
|
51,139 |
|
|
|
45,270 |
|
Deferred income tax liabilities |
|
|
|
|
76,108 |
|
|
|
73,051 |
|
Other financial liability |
|
3 |
|
|
185,664 |
|
|
|
154,239 |
|
TOTAL NON-CURRENT LIABILITIES |
|
|
|
|
768,720 |
|
|
|
707,061 |
|
TOTAL LIABILITIES |
|
|
|
$ |
1,532,589 |
|
|
$ |
1,370,820 |
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
|
Capital stock |
|
12 |
|
|
689,975 |
|
|
|
689,975 |
|
Contributed surplus |
|
|
|
|
44,963 |
|
|
|
44,853 |
|
Other
equity |
|
3 |
|
|
(185,664 |
) |
|
|
(154,239 |
) |
Accumulated other comprehensive income |
|
|
|
|
52,452 |
|
|
|
26,085 |
|
Accumulated deficit |
|
|
|
|
(131,415 |
) |
|
|
(142,376 |
) |
TOTAL
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY |
|
|
|
|
470,311 |
|
|
|
464,298 |
|
Non-controlling interest |
|
|
|
|
104,167 |
|
|
|
89,713 |
|
TOTAL EQUITY |
|
|
|
|
574,478 |
|
|
|
554,011 |
|
TOTAL LIABILITIES AND EQUITY |
|
|
|
$ |
2,107,067 |
|
|
$ |
1,924,831 |
|
|
See accompanying notes to the interim
condensed consolidated financial statements. |
On behalf of the Board:
"Robert Wildeboer"
Director
"Suleiman Rashid"
Director
Martinrea International Inc. |
|
Interim Condensed Consolidated Statements of
Operations |
|
(in thousands of Canadian dollars, except per
share amounts) (unaudited) |
|
|
|
|
|
|
|
Three months ended |
|
|
Three months ended |
|
|
|
Note |
|
March 31, 2014 |
|
|
March 31, 2013 |
|
SALES |
|
|
|
$ |
864,493 |
|
|
$ |
769,122 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales (excluding depreciation of property, plant and
equipment) |
|
|
|
|
(752,883 |
) |
|
|
(672,332 |
) |
Depreciation of property, plant and equipment (production) |
|
|
|
|
(24,131 |
) |
|
|
(21,075 |
) |
Total cost of sales |
|
|
|
|
(777,014 |
) |
|
|
(693,407 |
) |
GROSS MARGIN |
|
|
|
|
87,479 |
|
|
|
75,715 |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development costs |
|
|
|
|
(4,642 |
) |
|
|
(4,168 |
) |
Selling, general and administrative |
|
|
|
|
(43,331 |
) |
|
|
(34,803 |
) |
Depreciation of property, plant and equipment (non-production) |
|
|
|
|
(1,464 |
) |
|
|
(1,474 |
) |
Amortization of customer contracts and relationships |
|
|
|
|
(343 |
) |
|
|
(486 |
) |
Loss on disposal of property, plant and equipment |
|
|
|
|
(140 |
) |
|
|
(111 |
) |
OPERATING INCOME |
|
|
|
|
37,559 |
|
|
|
34,673 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense |
|
|
|
|
(5,179 |
) |
|
|
(4,683 |
) |
Other finance income (expense) |
|
|
|
|
(222 |
) |
|
|
983 |
|
INCOME BEFORE INCOME TAXES |
|
|
|
|
32,158 |
|
|
|
30,973 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
11 |
|
|
(5,499 |
) |
|
|
(7,468 |
) |
NET INCOME FOR THE PERIOD |
|
|
|
$ |
26,659 |
|
|
$ |
23,505 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
|
|
(9,968 |
) |
|
|
(3,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY |
|
|
|
$ |
16,691 |
|
|
$ |
19,888 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
13 |
|
$ |
0.20 |
|
|
$ |
0.24 |
|
Diluted earnings per share |
|
13 |
|
$ |
0.20 |
|
|
$ |
0.24 |
|
|
See accompanying notes to the interim
condensed consolidated financial statements. |
|
|
Martinrea International Inc. |
Interim Condensed Consolidated Statements of
Comprehensive Income |
(in thousands of Canadian dollars)
(unaudited) |
|
|
|
|
Three months ended |
|
|
Three months ended |
|
|
|
March 31, 2014 |
|
|
March 31, 2013 |
|
|
|
|
|
|
|
|
|
NET INCOME FOR THE PERIOD |
|
$ |
26,659 |
|
|
$ |
23,505 |
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
Items
that may be reclassified to net income |
|
|
|
|
|
|
|
|
Foreign currency translation differences for foreign
operations |
|
|
30,853 |
|
|
|
12,470 |
|
Items
that will not be reclassified to net income |
|
|
|
|
|
|
|
|
Actuarial gains (losses) from the remeasurement of defined benefit
plans |
|
|
(3,195 |
) |
|
|
1,111 |
Other comprehensive income, net of tax |
|
|
27,658 |
|
|
|
13,581 |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
|
$ |
54,317 |
|
|
$ |
37,086 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Equity holders of the Company |
|
|
39,863 |
|
|
|
32,086 |
|
Non-controlling interest |
|
|
14,454 |
|
|
|
5,000 |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
|
$ |
54,317 |
|
|
$ |
37,086 |
|
See accompanying notes to the interim
condensed consolidated financial statements. |
|
|
|
|
Martinrea International Inc. |
|
Interim Condensed Consolidated Statements of Changes
in Equity |
|
(in thousands of Canadian dollars)
(unaudited) |
|
|
|
|
Equity attributable to equity holders of the
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
Non- |
|
|
|
|
Capital |
Contributed |
|
Other |
|
translation |
|
Accumulated |
|
|
|
controlling |
|
Total |
|
|
stock |
surplus |
|
equity |
|
account |
|
deficit |
|
Total |
|
interest |
|
equity |
|
Balance at December 31, 2012 |
$ |
675,606 |
$ |
46,897 |
|
$ |
(87,100 |
) |
$ |
(22,001 |
) |
$ |
(155,721 |
) |
$ |
457,681 |
|
$ |
66,240 |
|
$ |
523,921 |
|
Net income for the period |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
19,888 |
|
|
19,888 |
|
|
3,617 |
|
|
23,505 |
|
Compensation expense related to stock options |
|
- |
|
315 |
|
|
- |
|
|
- |
|
|
- |
|
|
315 |
|
|
- |
|
|
315 |
|
Change in fair value of put option granted to
non-controlling interest |
|
- |
|
- |
|
|
(3,963 |
) |
|
- |
|
|
- |
|
|
(3,963 |
) |
|
- |
|
|
(3,963 |
) |
Purchase of non-controlling interest (note 2) |
|
|
|
- |
|
|
- |
|
|
- |
|
|
(2,880 |
) |
|
(2,880 |
) |
|
(1,928 |
) |
|
(4,808 |
) |
Exercise of employee stock options |
|
9,438 |
|
(2,321 |
) |
|
- |
|
|
- |
|
|
- |
|
|
7,117 |
|
|
- |
|
|
7,117 |
|
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains from the remeasurement of defined benefit
plans |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
1,111 |
|
|
1,111 |
|
|
- |
|
|
1,111 |
|
|
Foreign currency translation differences |
|
- |
|
- |
|
|
- |
|
|
11,087 |
|
|
- |
|
|
11,087 |
|
|
1,383 |
|
|
12,470 |
|
Balance at March 31, 2013 |
|
685,044 |
|
44,891 |
|
|
(91,063 |
) |
|
(10,914 |
) |
|
(137,602 |
) |
|
490,356 |
|
|
69,312 |
|
|
559,668 |
|
Net income (loss) for the period |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(2,938 |
) |
|
(2,938 |
) |
|
17,362 |
|
|
14,424 |
|
Compensation expense related to stock options |
|
- |
|
1,297 |
|
|
- |
|
|
- |
|
|
- |
|
|
1,297 |
|
|
- |
|
|
1,297 |
|
Change in fair value of put option granted to
non-controlling interest |
|
- |
|
- |
|
|
(63,176 |
) |
|
- |
|
|
- |
|
|
(63,176 |
) |
|
- |
|
|
(63,176 |
) |
Dividends ($0.09 per share) |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(7,588 |
) |
|
(7,588 |
) |
|
- |
|
|
(7,588 |
) |
Exercise of employee stock options |
|
4,931 |
|
(1,335 |
) |
|
- |
|
|
- |
|
|
- |
|
|
3,596 |
|
|
- |
|
|
3,596 |
|
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains from the remeasurement of defined benefit
plans |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
5,752 |
|
|
5,752 |
|
|
- |
|
|
5,752 |
|
|
Foreign currency translation differences |
|
- |
|
- |
|
|
- |
|
|
36,999 |
|
|
- |
|
|
36,999 |
|
|
3,039 |
|
|
40,038 |
|
Balance at December 31, 2013 |
|
689,975 |
|
44,853 |
|
|
(154,239 |
) |
|
26,085 |
|
|
(142,376 |
) |
|
464,298 |
|
|
89,713 |
|
|
554,011 |
|
Net income for the period |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
16,691 |
|
|
16,691 |
|
|
9,968 |
|
|
26,659 |
|
Compensation expense related to stock options |
|
- |
|
110 |
|
|
- |
|
|
- |
|
|
- |
|
|
110 |
|
|
- |
|
|
110 |
|
Dividends ($0.03 per share) |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(2,535 |
) |
|
(2,535 |
) |
|
- |
|
|
(2,535 |
) |
Change in fair value of put option granted to
non-controlling interest |
|
- |
|
- |
|
|
(31,425 |
) |
|
- |
|
|
- |
|
|
(31,425 |
) |
|
- |
|
|
(31,425 |
) |
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses from the remeasurement of defined benefit
plans |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(3,195 |
) |
|
(3,195 |
) |
|
- |
|
|
(3,195 |
) |
|
Foreign currency translation differences |
|
- |
|
- |
|
|
- |
|
|
26,367 |
|
|
- |
|
|
26,367 |
|
|
4,486 |
|
|
30,853 |
|
Balance at March 31, 2014 |
$ |
689,975 |
$ |
44,963 |
|
$ |
(185,664 |
) |
$ |
52,452 |
|
$ |
(131,415 |
) |
$ |
470,311 |
|
$ |
104,167 |
|
$ |
574,478 |
|
|
See
accompanying notes to the interim condensed consolidated financial
statements. |
|
|
|
|
Martinrea International Inc. |
|
Interim Condensed Consolidated Statements of Cash
Flows |
|
(in thousands of Canadian dollars)
(unaudited) |
|
|
|
|
|
|
Three months ended |
|
|
Three months ended |
|
|
|
|
March 31, 2014 |
|
|
March 31, 2013 |
|
CASH PROVIDED BY (USED IN): |
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Income for the period |
|
$ |
26,659 |
|
|
$ |
23,505 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
25,595 |
|
|
|
22,549 |
|
|
Amortization of customer contracts and relationships |
|
|
343 |
|
|
|
486 |
|
|
Amortization of development costs |
|
|
2,104 |
|
|
|
1,545 |
|
|
Accretion of interest on promissory note |
|
|
- |
|
|
|
(30 |
) |
|
Unrealized losses (gains) on foreign exchange forward
contracts |
|
|
2,535 |
|
|
|
(228 |
) |
|
Finance costs |
|
|
5,179 |
|
|
|
4,683 |
|
|
Income tax expense |
|
|
5,499 |
|
|
|
7,468 |
|
|
Loss
on disposal of property, plant and equipment |
|
|
140 |
|
|
|
111 |
|
|
Stock-based compensation |
|
|
110 |
|
|
|
315 |
|
|
Pension and other post-retirement benefits expense |
|
|
1,167 |
|
|
|
1,202 |
|
|
Contributions made to pension and other post-retirement
benefits |
|
|
(1,028 |
) |
|
|
(2,468 |
) |
|
|
|
|
68,303 |
|
|
|
59,138 |
|
Changes in non-cash working capital items: |
|
|
|
|
|
|
|
|
|
Trade
and other receivables |
|
|
(95,491 |
) |
|
|
(88,525 |
) |
|
Inventories |
|
|
(16,423 |
) |
|
|
2,843 |
|
|
Prepaid expenses and deposits |
|
|
(1,111 |
) |
|
|
3,480 |
|
|
Trade, other payables and provisions |
|
|
69,431 |
|
|
|
36,927 |
|
|
|
|
24,709 |
|
|
|
13,863 |
|
|
Interest paid (excluding capitalized interest) |
|
|
(4,712 |
) |
|
|
(3,731 |
) |
|
Income taxes paid |
|
|
(12,242 |
) |
|
|
(4,741 |
) |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
$ |
7,755 |
|
|
$ |
5,391 |
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(2,535 |
) |
|
|
- |
|
|
Increase in long-term debt |
|
|
36,953 |
|
|
|
51,498 |
|
|
Repayment of long-term debt |
|
|
(10,191 |
) |
|
|
(5,856 |
) |
|
Exercise of employee stock options |
|
|
- |
|
|
|
7,117 |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
$ |
24,227 |
|
|
$ |
52,759 |
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment* |
|
|
(42,823 |
) |
|
|
(56,705 |
) |
|
Capitalized development costs |
|
|
(3,411 |
) |
|
|
(3,122 |
) |
|
Proceeds on disposal of property, plant and equipment |
|
|
593 |
|
|
|
28 |
|
|
Purchase of non-controlling interest (note 2) |
|
|
- |
|
|
|
(4,808 |
) |
NET CASH USED IN INVESTING ACTIVITIES |
|
$ |
(45,641 |
) |
|
$ |
(64,607 |
) |
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and
cash equivalents |
|
|
620 |
|
|
|
(1,351 |
) |
|
|
|
|
|
|
|
|
|
|
DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(13,039 |
) |
|
|
(7,808 |
) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
56,224 |
|
|
|
29,422 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
43,185 |
|
|
$ |
21,614 |
|
|
* As at March 31, 2014, $7,444 (December
31, 2013 - $13,216) of purchases of property, plant and equipment
remain unpaid. |
|
See accompanying notes to the interim
condensed consolidated financial statements. |
Martinrea International Inc.Fred Di TostoChief Financial
Officer(416) 749-0314(289) 982-3001Martinrea International Inc.3210
Langstaff RoadVaughan, Ontario L4K 5B2
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