Post by
Rational43 on May 06, 2022 2:22pm
First Take - Scotia Bank
Latest Research (May 06, 2022):OUR TAKE: Positive. MRE’s Q1 adjusted EBIT came in ~38% ahead of consensus as the company’s footprint (i.e., overexposure to North America and GM; underexposure to Europe and China) was clearly advantaged in Q1. The y/y and q/q improvement in results was nothing short of exceptional: production sales were up ~20% y/y (in a down market) and adjusted EBIT went from -$3 million in Q4 to +$44 million in Q1. While we hesitate to straight-line the improvement, management expects 2H to show steady improvement over 1H as launch costs moderate, inflationary pressures ease or are recovered (negotiations are happening, with some success), and supply chain bottlenecks lessen (remains to be seen) and customer production schedules become less erratic. On inflation, management estimated the 2022 y/y cost headwind at >$100 million. Management seemed very confident that it would realize recoveries on, what sounded like, a substantial portion of this amount – we wouldn’t expect the $100 million to be “recovered”, rather re-priced (on a go-forward basis) to reflect current realities. Either way, it would still represent a meaningful potential y/y tailwind for 2023. With that, management reiterated its $200 million FCF objective for 2023
Comment by
Puma1back on May 06, 2022 3:50pm
Well the market sure liked it