TORONTO, ONTARIO--(Marketwired - Aug. 6, 2015) - Martinrea International Inc. (TSX:MRE), a leader in the production and development of quality metal parts, assemblies and modules and fluid management systems and complex aluminum products focused primarily on the automotive sector, announced today the release of its financial results for the second quarter ended June 30, 2015 and a quarterly dividend.
HIGHLIGHTS
- Record revenues
- Record net earnings
- Continued improvements in operating income and EBITDA margins
- $35 million in new business awards
- Dividend of $0.03 per share announced
OVERVIEW
Pat D'Eramo, Martinrea's President and Chief Executive Officer stated: "Our team has performed well this quarter, with record sales and profits. Our operations are improving as we focus on making improvements on the floor, in our processes and in all areas of our business. We continue to focus on serving our customers better every day, with quality product and performance. As a result of this, in addition to the awards announced previously, we have won $35 million in incremental new annualized business representing an aluminum diesel engine block for Volvo starting in 2018."
Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Sales in our second quarter, excluding tooling sales, were $946 million, in line with the previously announced sales guidance. In the second quarter, our net earnings per share, on a basic and diluted basis, was $0.39, within our quarterly guidance. Second quarter operating income and EBITDA margins improved year over year and quarter over quarter, despite continuing pre-operating costs at new plants currently preparing for upcoming launches. Strengthening of our operating income margins in North America continued in the second quarter, as our U.S. Metallic operations showed year-over-year improvement. Our operating income margins in Europe were weaker year-over-year, as anticipated, given the pre-operating and launch costs in Spain and Slovakia, as these plants ramp up, and anticipated reduction in volumes of some programs in Germany. Our adjusted EBITDA for the quarter was $83.8 million, or 8.5% of total sales, representing a 14.4% year-over-year increase, and a quarterly record for us."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "Our company continues to strengthen, operationally and financially, and 2015 is shaping up to be a very good year for us. The third quarter of the year tends to be lower in revenues and earnings than previous quarters because of the seasonality of the business with customer shutdowns in North America and Europe, but we expect to have a record third quarter, with sales for the quarter, excluding tooling sales, in the range of $865 to $905 million, and net earnings per share in the range of $0.27 to $0.31 per share. Our people are striving to build a better Martinrea, and we want to acknowledge their commitment and drive."
RESULTS OF OPERATIONS
Results of operations include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Company results. In addition to IFRS measures, management uses non-IFRS measures in the Company's disclosures that it believes provides the most appropriate basis on which to evaluate the Company's results.
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 (the "MD&A") for the three and six months ended June 30, 2015 dated as of August 6, 2015, the Company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2015 (the "unaudited consolidated financial statements"), the Company's audited consolidated financial statements and MD&A for the year ended December 31, 2014 together with the notes thereto and the Company's Annual Information Form for the financial year ended December 31, 2014, can be found at www.sedar.com
OVERALL RESULTS
The following table sets out certain highlights of the Company's performance for the three and six months ended June 30, 2015 and 2014. Refer to the Company's interim condensed consolidated financial statements for the three and six months ended June 30, 2015 for a detailed account of the Company's performance for both periods presented in the tables below.
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Sales |
$ |
984,046 |
|
$ |
930,915 |
|
53,131 |
|
5.7 |
% |
Gross Margin |
|
106,379 |
|
|
95,863 |
|
10,516 |
|
11.0 |
% |
Operating Income |
|
50,238 |
|
|
43,129 |
|
7,109 |
|
16.5 |
% |
Net Income for the period |
|
33,607 |
|
|
29,626 |
|
3,981 |
|
13.4 |
% |
Net Income Attributable to Equity Holders of the Company |
$ |
33,411 |
|
$ |
23,308 |
|
10,103 |
|
43.3 |
% |
Earnings per Share - Basic |
$ |
0.39 |
|
$ |
0.28 |
|
0.11 |
|
39.3 |
% |
Earnings per Share - Diluted |
$ |
0.39 |
|
$ |
0.27 |
|
0.12 |
|
44.4 |
% |
Non-IFRS Measures* |
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income |
$ |
50,238 |
|
$ |
43,537 |
|
6,701 |
|
15.4 |
% |
as a % of Sales |
|
5.1 |
% |
|
4.7 |
% |
|
|
|
|
Adjusted EBITDA |
|
83,793 |
|
|
73,250 |
|
10,543 |
|
14.4 |
% |
as a % of Sales |
|
8.5 |
% |
|
7.9 |
% |
|
|
|
|
Adjusted Net Earnings Attributable to Equity Holders of the Company |
|
33,411 |
|
|
23,614 |
|
9,797 |
|
41.5 |
% |
Adjusted Earnings per Share - Basic and Diluted |
$ |
0.39 |
|
$ |
0.28 |
|
0.11 |
|
39.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Sales |
$ |
1,901,577 |
|
$ |
1,795,408 |
|
106,169 |
|
5.9 |
% |
Gross Margin |
|
202,018 |
|
|
183,342 |
|
18,676 |
|
10.2 |
% |
Operating Income |
|
93,948 |
|
|
80,688 |
|
13,260 |
|
16.4 |
% |
Net Income for the period |
|
64,115 |
|
|
56,285 |
|
7,830 |
|
13.9 |
% |
Net Income Attributable to Equity Holders of the Company |
$ |
63,830 |
|
$ |
39,999 |
|
23,831 |
|
59.6 |
% |
Earnings per Share - Basic |
$ |
0.75 |
|
$ |
0.47 |
|
0.28 |
|
59.6 |
% |
Earnings per Share - Diluted |
$ |
0.74 |
|
$ |
0.47 |
|
0.27 |
|
57.4 |
% |
Non-IFRS Measures* |
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income |
$ |
93,948 |
|
$ |
82,249 |
|
11,699 |
|
14.2 |
% |
as a % of Sales |
|
4.9 |
% |
|
4.6 |
% |
|
|
|
|
Adjusted EBITDA |
|
158,716 |
|
|
140,144 |
|
18,572 |
|
13.3 |
% |
as a % of Sales |
|
8.3 |
% |
|
7.8 |
% |
|
|
|
|
Adjusted Net Earnings Attributable to Equity Holders of the Company |
|
63,830 |
|
|
41,170 |
|
22,660 |
|
55.0 |
% |
Adjusted Earnings per Share - Basic |
$ |
0.75 |
|
$ |
0.49 |
|
0.26 |
|
53.1 |
% |
Adjusted Earnings per Share - Diluted |
$ |
0.74 |
|
$ |
0.48 |
|
0.26 |
|
54.2 |
% |
* Non-IFRS Measures
The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). However, the Company considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Company. These measures, which the Company believes are widely used by investors, securities analysts and other interested parties in evaluating the Company's performance, 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 financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted Net Income", "Adjusted Net Income per Share (on a basic and diluted basis)", "Adjusted Operating Income" and "Adjusted EBITDA". Unusual and other items are explained in the "Adjustments to Net Income" section of this press release.
The following tables provide a reconciliation of IFRS "Net Income Attributable to Equity Holders of the Company" to Non-IFRS "Adjusted Net Income Attributable to Equity Holders of the Company", "Adjusted Operating Income" and "Adjusted EBITDA":
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
Net Income Attributable to Equity Holders of the Company |
$ |
33,411 |
|
$ |
23,308 |
|
Unusual and Other Items (after-tax)* |
|
- |
|
|
306 |
|
Adjusted Net Income Attributable to Equity Holders of the Company |
$ |
33,411 |
|
$ |
23,614 |
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
Net Income Attributable to Equity Holders of the Company |
$ |
63,830 |
|
$ |
39,999 |
|
Unusual and Other Items (after-tax)* |
|
- |
|
|
1,171 |
|
Adjusted Net Income Attributable to Equity Holders of the Company |
$ |
63,830 |
|
$ |
41,170 |
|
* Unusual and other items are explained in the "Adjustments to Net Income" section of this Press Release. |
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
Net Income Attributable to Equity Holders of the Company |
$ |
33,411 |
|
$ |
23,308 |
|
Non-controlling interest |
|
196 |
|
|
6,318 |
|
Income tax expense |
|
10,732 |
|
|
8,404 |
|
Other finance income |
|
(650 |
) |
|
(231 |
) |
Finance costs |
|
6,549 |
|
|
5,330 |
|
Unusual and Other Items (before-tax)* |
|
- |
|
|
408 |
|
Adjusted Operating Income |
$ |
50,238 |
|
$ |
43,537 |
|
Depreciation of property, plant and equipment |
|
30,135 |
|
|
27,000 |
|
Amortization of intangible assets |
|
3,595 |
|
|
2,730 |
|
Loss/(gain) on disposal of property, plant and equipment |
|
(175 |
) |
|
(17 |
) |
Adjusted EBITDA |
$ |
83,793 |
|
$ |
73,250 |
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
Net Income Attributable to Equity Holders of the Company |
$ |
63,830 |
|
$ |
39,999 |
|
Non-controlling interest |
|
285 |
|
|
16,286 |
|
Income tax expense |
|
19,981 |
|
|
13,903 |
|
Other finance income |
|
(3,252 |
) |
|
(9 |
) |
Finance costs |
|
13,104 |
|
|
10,509 |
|
Unusual and Other Items (before-tax)* |
|
- |
|
|
1,561 |
|
Adjusted Operating Income |
$ |
93,948 |
|
$ |
82,249 |
|
Depreciation of property, plant and equipment |
|
58,717 |
|
|
52,595 |
|
Amortization of intangible assets |
|
6,796 |
|
|
5,177 |
|
Loss/(gain) on disposal of property, plant and equipment |
|
(745 |
) |
|
123 |
|
Adjusted EBITDA |
$ |
158,716 |
|
$ |
140,144 |
|
* Unusual and other items are explained in the "Adjustments to Net Income" section of this Press Release. |
|
|
|
|
|
|
|
|
The year-over-year changes in significant accounts and financial highlights are discussed in detail in the sections below.
SALES
Three months ended June 30, 2015 to three months ended June 30, 2014 comparison
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
North America |
$ |
798,705 |
|
$ |
745,304 |
|
53,401 |
|
7.2 |
% |
Europe |
|
165,962 |
|
|
173,037 |
|
(7,075 |
) |
(4.1 |
%) |
Rest of the World |
|
19,379 |
|
|
12,574 |
|
6,805 |
|
54.1 |
% |
Total Sales |
$ |
984,046 |
|
$ |
930,915 |
|
53,131 |
|
5.7 |
% |
The Company's consolidated sales for the second quarter of 2015 increased by $53.1 million or 5.7 % to $984.0 million as compared to $930.9 million for the second quarter of 2014. The total overall increase in sales was driven by increases in the Company's North America and Rest of the World operating segments, partially offset by a year-over-year decrease in sales in Europe.
Sales for the second quarter of 2015 in the Company's North America operating segment increased by $53.4 million or 7.2% to $798.7 million from $745.3 million for the second quarter of 2014. The increase was due to the launch of new programs during or subsequent to the second quarter of 2014, including the new Chrysler 200 and Ford Edge, and the impact of foreign exchange on the translation of U.S. denominated production sales, which had a positive impact on overall sales for the second quarter of 2015 of approximately $73.1 million as compared to the second quarter of 2014. These positive factors were partially offset by a $19.1 million decrease in tooling sales, which are typically dependent on the timing of tooling construction and final acceptance by the customer, and lower year-over-year OEM production volumes on certain light-vehicle platforms including the Chrysler Minivan platform, which was down for thirteen weeks during the first half of 2015 for re-tooling and other light-vehicle platforms late in their product life cycle such as the current GM Equinox and Cruze.
Sales for the second quarter of 2015 in the Company's Europe operating segment decreased by $7.1 million or 4.1% to $166.0 million from $173.0 million for the second quarter of 2014. The decrease can be attributed to a $5.2 million decrease in tooling sales, the impact of foreign exchange on the translation of Euro denominated production sales, which had a negative impact on overall sales for the second quarter of 2015 of approximately $19.2 million as compared to the second quarter of 2014, and lower overall production volumes in the Company's Martinrea Honsel German operations; partially offset by new incremental aluminum business with Jaguar Land Rover and increased production sales in the Company's operating facility in Slovakia, which continues to ramp up and launch its backlog of business.
Sales for the second quarter of 2015 in the Company's Rest of the World operating segment increased by $6.8 million or 54.1% to $19.4 million from $12.6 million in the second quarter of 2014. The increase was mainly due to a year-over-year increase in production sales in the Company's new fluids systems plant in China, which began operations in 2013 and continues to ramp up its backlog of business, and a $0.6 million increase in tooling sales; partially offset by the impact of foreign exchange on the translation of foreign denominated production sales, which had a negative impact on overall sales for the second quarter of 2015 of approximately $0.6 million as compared to the second quarter of 2014. OEM production volumes in Brazil continue to trend at low levels, although production sales for the second quarter of 2015 in the Company's operating facility in Brazil did increase slightly year-over-year generally due to sales mix.
Overall tooling sales decreased by $23.7 million to $37.5 million for the second quarter of 2015 from $61.2 million for the second quarter of 2014.
Six months ended June 30, 2015 to six months ended June 30, 2014 comparison
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
North America |
$ |
1,511,821 |
|
$ |
1,408,968 |
|
102,853 |
|
7.3 |
% |
Europe |
|
353,364 |
|
|
356,690 |
|
(3,326 |
) |
(0.9 |
%) |
Rest of the World |
|
36,392 |
|
|
29,750 |
|
6,642 |
|
22.3 |
% |
Total Sales |
$ |
1,901,577 |
|
$ |
1,795,408 |
|
106,169 |
|
5.9 |
% |
The Company's consolidated sales for the six months ended June 30, 2015 increased by $106.2 million or 5.9% to $1,901.6 million as compared to $1,795.4 million for the six months ended June 30, 2014. The total overall increase in sales was driven by increases in the Company's North America and Rest of the World operating segments, partially offset by a year-over-year decrease in sales in Europe.
Sales for the six months ended June 30, 2015 in the Company's North America operating segment increased by $102.9 million or 7.3% to $1,511.8 million from $1,409.0 million for the six months ended June 30, 2014. The increase was due to the launch of new programs during or subsequent to the six months ended June 30, 2014, including the new Chrysler 200 and Ford Edge, and the impact of foreign exchange on the translation of U.S. denominated production sales, which had a positive impact on overall sales for the six months ended June 30, 2015 of approximately $130.8 million as compared to the comparative period of 2014. These positive variances were partially offset by a year-over-year decrease in tooling sales of $17.4 million and lower year-over-year OEM production volumes on certain light-vehicle platforms including the Chrysler Minivan platform, which was down for thirteen weeks during the first half of 2015 for re-tooling and other light-vehicle platforms late in their product life cycle.
Sales for the six months ended June 30, 2015 in the Company's Europe operating segment decreased by $3.3 million or 0.9% to $353.4 million from $356.7 million for the six months June 30, 2014. The decrease can be attributed to a $4.0 million decrease in tooling sales, the impact of foreign exchange on the translation of Euro denominated production sales, which had a negative impact on overall sales for the six months ended June 30, 2015 of approximately $27.9 million as compared to the comparable period of 2014, and lower overall production volumes in the Company's Martinrea Honsel German operations; partially offset by new incremental aluminum business with Jaguar Land Rover and increased production sales in the Company's operating facility in Slovakia, which continues to ramp up and launch its backlog of business.
Sales for the six months ended June 30, 2015 in the Company's Rest of the World operating segment increased by $6.6 million or 22.3% to $36.4 million from $29.8 million for the six months ended June 30, 2014. The increase can be attributed to an increase in production sales in the Company's new fluids systems plant in China, which began operations in 2013 and continues to ramp up its backlog of business, and a $1.3 million increase in tooling sales; partially offset by a year-over-year decrease in OEM light and medium heavy vehicle production in Brazil and the translation of foreign denominated production sales, which had a negative impact on overall sales for the six months ended June 30, 2015 of $0.5 million as compared to the comparative period of 2014.
Overall tooling sales decreased by $20.1 million from $88.1 million for the six months ended June 30, 2014 to $68.0 million for the six months ended June 30, 2015.
GROSS MARGIN
Three months ended June 30, 2015 to three months ended June 30, 2014 comparison
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Gross margin |
$ |
106,379 |
|
$ |
95,863 |
|
10,516 |
|
11.0 |
% |
% of sales |
|
10.8 |
% |
|
10.3 |
% |
|
|
|
|
The gross margin percentage for the second quarter of 2015 of 10.8% increased as a percentage of sales by 0.5% as compared to the gross margin percentage for the second quarter of 2014 of 10.3%. The increase in gross margin as a percentage of sales was generally due to productivity and efficiency improvements at certain operating facilities, in particular in the Company's U.S. Metallic operations, and a decrease in tooling sales which typically earn low or no margins for the Company; partially offset by the following:
- increased pre-operating and launch costs, in particular at new operating facilities in Spain, Mexico, China and Riverside, Missouri as these new plants prepare for upcoming new program launches;
- operational inefficiencies and other costs at certain other facilities;
- lower recoveries from scrap steel; and
- lower production volumes in the Company's Martinrea Honsel German operations.
Six months ended June 30, 2015 to six months ended June 30, 2014 comparison
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Gross margin |
$ |
202,018 |
|
$ |
183,342 |
|
18,676 |
|
10.2 |
% |
% of sales |
|
10.6 |
% |
|
10.2 |
% |
|
|
|
|
The gross margin percentage for the six months ended June 30, 2015 of 10.6% increased as a percentage of sales by 0.4% as compared to the gross margin percentage for the six months ended June 30, 2014 of 10.2%. The increase in gross margin as a percentage of sales was generally due to productivity and efficiency improvements at certain operating facilities, in particular in the Company's U.S. Metallic operations, and a decrease in tooling sales which typically earn low or no margins for the Company; partially offset by the following:
- increased pre-operating and launch costs, in particular at new operating facilities in Spain, Mexico, China and Riverside, Missouri as these new plants prepare for upcoming new program launches;
- operational inefficiencies and other costs at certain other facilities;
- lower recoveries from scrap steel;
- lower production volumes in the Company's Martinrea Honsel German operations; and
- the resolution of certain commercial disputes in the Company's European operations which positively impacted the first quarter of 2014 as compared to the first quarter of 2015.
ADJUSTMENTS TO NET INCOME
(ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)
Adjusted net income excludes certain unusual and other items, as set out in the following tables and described in the notes thereto. Management uses adjusted net income 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 |
|
|
|
|
June 30, 2015 |
|
June 30, 2014 |
|
|
|
|
(a) |
|
(b) |
|
(a)-(b)
Change |
|
|
|
|
|
|
|
|
NET INCOME (A) |
$33,411 |
|
$23,308 |
|
$10,103 |
|
|
|
|
|
|
|
|
Add back - Unusual and Other Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
External legal and forensic accounting costs related to litigation (1) |
- |
|
408 |
|
(408 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX |
- |
|
$408 |
|
($408 |
) |
|
|
|
|
|
|
|
Tax impact of above item |
- |
|
(102 |
) |
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) |
- |
|
$306 |
|
($306 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME (A + B) |
$33,411 |
|
$23,614 |
|
$9,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Outstanding - Basic ('000) |
85,800 |
|
84,498 |
|
|
|
Adjusted Basic Net Income Per Share |
$0.39 |
|
$0.28 |
|
|
|
Number of Shares Outstanding - Diluted ('000) |
86,608 |
|
85,609 |
|
|
|
Adjusted Diluted Net Income Per Share |
$0.39 |
|
$0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
Six months ended |
|
|
|
|
June 30, 2015 |
|
June 30, 2014 |
|
|
|
|
(a) |
|
(b) |
|
(a)-(b)
Change |
|
|
|
|
|
|
|
|
NET INCOME (A) |
$63,830 |
|
$39,999 |
|
$23,831 |
|
|
|
|
|
|
|
|
Add back - Unusual and Other Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
External legal and forensic accounting costs related to litigation (1) |
- |
|
1,561 |
|
(1,561 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX |
- |
|
$1,561 |
|
($1,561 |
) |
|
|
|
|
|
|
|
Tax impact of above item |
- |
|
(390 |
) |
390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) |
- |
|
$1,171 |
|
($1,171 |
) |
|
|
|
|
|
|
|
ADJUSTED NET INCOME (A + B) |
$63,830 |
|
$41,170 |
|
$22,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Outstanding - Basic ('000) |
85,444 |
|
84,489 |
|
|
|
Adjusted Basic Net Income Per Share |
$0.75 |
|
$0.49 |
|
|
|
Number of Shares Outstanding - Diluted ('000) |
86,099 |
|
85,317 |
|
|
|
Adjusted Diluted Net Income Per Share |
$0.74 |
|
$0.48 |
|
|
|
|
|
|
|
|
|
|
(1) External Legal and Forensic Accounting Costs Related to Litigation
The costs added back for adjusted net income purposes for the three and six months ended June 30, 2014 reflects the legal and forensic accounting costs not covered by insurance (recorded as SG&A expense) incurred by the Company in relation to specific litigation matters outside the ordinary course of business as outlined in the Company's Annual Information Form for the year ended December 31, 2014.
NET INCOME
(ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)
Three months ended June 30, 2015 to three months ended June 30, 2014 comparison
|
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Net Income |
$ |
33,411 |
|
$ |
23,308 |
|
10,103 |
|
43.3 |
% |
Adjusted Net Income |
$ |
33,411 |
|
$ |
23,614 |
|
9,797 |
|
41.5 |
% |
Net Income per Share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
$ |
0.28 |
|
|
|
|
|
|
Diluted |
$ |
0.39 |
|
$ |
0.27 |
|
|
|
|
|
Adjusted Net Income per Share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
$ |
0.28 |
|
|
|
|
|
|
Diluted |
$ |
0.39 |
|
$ |
0.28 |
|
|
|
|
|
Net income, before adjustments, for the second quarter of 2015 increased by $10.1 million to $33.4 million from $23.3 million for the second quarter of 2014. Excluding the unusual and other items incurred during the second quarter of 2014 as explained in Table A under "Adjustments to Net Income", net income for the second quarter of 2015 increased to $33.4 million or $0.39 per share, on a basic and diluted basis, from $23.6 million or $0.28 per share, on a basic and diluted basis, for the second quarter of 2014.
Net income for the second quarter of 2015, as compared to the second quarter of 2014, after adjustments, was positively impacted by the following:
- higher gross profit from an overall increase in year-over-year production sales as previously explained;
- productivity and efficiency improvements at certain operating facilities in particular in the Company's U.S. Metallic operations; and
- the inclusion of 100% of the net earnings from the Martinrea Honsel group after the Company purchased the 45% non-controlling interest on August 7, 2014 (see "Acquisitions" section of the MD&A for further details on the transaction).
These factors were partially offset by the following:
- increased pre-operating and launch costs, in particular at new operating facilities in Spain, Mexico, China, and Riverside, Missouri as these new plants prepare for upcoming new program launches;
- operational inefficiencies and other costs at certain other facilities;
- lower recoveries from scrap steel;
- lower production volumes in the Company's Martinrea Honsel German operations;
- a higher effective tax rate on adjusted income due generally to the mix of earnings (24.2% for the second quarter of 2015 compared to 22.1% for the second quarter of 2014); and
- year-over-year increases in SG&A expense as previously discussed, research and development expenses, due in large part to increased amortization of development costs, and finance expense related to increased levels of debt primarily used to sustain the increased level of capital expenditures related to new program launches and fund the purchase of the 45% non-controlling interest of the Martinrea Honsel group on August 7, 2014 (see "Acquisitions" section of the MD&A for further details on the transaction).
Three months ended June 30, 2015 actual to guidance comparison:
On May 5, 2015, the Company provided the following guidance for the second quarter of 2015:
|
|
|
Guidance |
|
|
Actual |
|
|
|
|
|
|
|
Production sales (in millions) |
$ |
920 - 960 |
|
$ |
946 |
|
|
|
|
|
|
|
Net Income per Share |
|
|
|
|
|
|
Basic & Diluted |
$ |
0.37 - 0.41 |
|
$ |
0.39 |
For the second quarter of 2015, production sales of $946 million and net income per share of $0.39 were within the range of published guidance.
Six months ended June 30, 2015 to six months ended June 30, 2014 comparison
|
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Net Income |
$ |
63,830 |
|
$ |
39,999 |
|
23,831 |
|
59.6 |
% |
Adjusted Net Income |
$ |
63,830 |
|
$ |
41,170 |
|
22,660 |
|
55.0 |
% |
Net Income per Share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.75 |
|
$ |
0.47 |
|
|
|
|
|
|
Diluted |
$ |
0.74 |
|
$ |
0.47 |
|
|
|
|
|
Adjusted Net Income per Share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.75 |
|
$ |
0.49 |
|
|
|
|
|
|
Diluted |
$ |
0.74 |
|
$ |
0.48 |
|
|
|
|
|
Net income, before adjustments, for the six months ended June 30, 2015 increased by $23.8 million to $63.8 million from $40.0 million for the six months ended June 30, 2014. Excluding the unusual and other item incurred during the six months ended June 30, 2014 as explained in Table B under "Adjustments to Net Income", net income for the six months ended June 30, 2015 increased to $63.8 million or $0.75 per share, on a basic basis, and $0.74 per share on diluted basis, from $41.2 million or $0.49 per share, on a basic basis, and $0.48 on a diluted basis, for the six months ended June 30, 2014.
Net income for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014, after adjustments, was positively impacted by the following:
- higher gross profit from an overall increase in year-over-year production sales as previously explained;
- productivity and efficiency improvements at certain operating facilities in particular in the Company's U.S. Metallic operations;
- the inclusion of 100% of the net earnings from the Martinrea Honsel group after the Company purchased the 45% non-controlling interest on August 7, 2014 (see "Acquisitions" section of the MD&A for further details on the transaction); and
- a net foreign exchange gain of $3.2 million for the six months ended June 30, 2015 compared to a net foreign exchange loss of $0.1 million for the comparative period of 2014.
These factors were partially offset by the following:
- increased pre-operating and launch costs, in particular at new operating facilities in Spain, Mexico, China, and Riverside, Missouri as these new plants prepare for upcoming new program launches;
- operational inefficiencies and other costs at certain other facilities;
- lower recoveries from scrap steel;
- lower production volumes in the Company's Martinrea Honsel German operations;
- the resolution of certain commercial disputes in the Company's European operations which positively impacted the first quarter of 2014 as compared to the first quarter of 2015;
- a higher effective tax rate on adjusted income due generally to the mix of earnings (23.8% for the six months ended June 30, 2015 compared to 19.8% for the comparative period of 2014); and
- year-over-year increases in SG&A expense as previously discussed, research and development expenses, due predominantly to increased amortization of development costs, and finance expense related to increased levels of debt primarily used to sustain the increased level of capital expenditures related to new program launches and to fund the purchase of the 45% non-controlling interest of the Martinrea Honsel group on August 7, 2014 (see "Acquisitions" section of the MD&A for further details on the transaction).
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Three months ended June 30, 2015 to three months ended June 30, 2014 comparison
|
Three months ended
June 30, 2015 |
|
Three months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Additions to PP&E |
$ |
37,398 |
|
$ |
47,311 |
|
(9,913 |
) |
(21.0 |
%) |
Additions to PP&E decreased by $9.9 million to $37.4 million in the second quarter of 2015 from $47.3 million in the second quarter of 2014 due generally to the timing of expenditures. Additions as a percentage of sales decreased year-over-year to 3.8% for the second quarter of 2015 from 5.1% for the second quarter of 2014. 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 second quarter of 2015 continued to be for manufacturing equipment and multiple expansions for programs that recently launched or will be launching over the next 24 months.
Six months ended June 30, 2015 to six months ended June 30, 2014 comparison
|
Six months ended
June 30, 2015 |
|
Six months ended
June 30, 2014 |
|
$ Change |
|
% Change |
|
Additions to PP&E |
$ |
84,735 |
|
$ |
84,362 |
|
373 |
|
0.4 |
% |
Additions to PP&E remained relatively consistent year-over-year at $84.7 million for the six months ended June 30, 2015 compared to $84.4 million for the six months ended June 30, 2014. Additions as a percentage of sales decreased year-over-year to 4.5% for the six months ended June 30, 2015 from 4.7% for the comparative period of 2014. Despite the slight decrease as a percentage of sales, the Company continues to make significant investments in the business in particular at new operating facilities in Spain, Mexico, China, and Riverside, Missouri as these new plants prepare for upcoming new program launches.
DIVIDEND
A cash dividend of $0.03 per share has been declared by the Board of Directors payable to shareholders of record on September 30, 2015 on or about October 15, 2015.
ABOUT MARTINREA
Martinrea currently employs over 14,000 skilled and motivated people in 44 operating divisions in Canada, the United States, Mexico, Brazil, Germany, Slovakia, Spain and China.
Martinrea's vision for the future is to be the best, preferred and most valued automotive parts supplier in the world in the products and services we provide our customers. The Company's mission is to deliver: outstanding quality products and services to our customers; meaningful opportunity, job satisfaction and job security to our people through competitiveness and prudent growth; superior long term investment returns to our stakeholders; and positive contributions to our communities as good corporate citizens.
CONFERENCE CALL DETAILS
A conference call to discuss the financial results will be held on Friday, August 7, 2015 at 9:30 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 toll free (800) 408-3053 (conference id - 3030132#). The rebroadcast will be available until August 21, 2015.
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 statements related to the expectations of, improvements in, expansion of and/or guidance as to revenue, gross margin and earnings per share, the growth and strengthening of the Company, opening of facilities and pursuit of its strategies, the launching of new programs and the financial impact of launches, the progress and expectations of operational and productivity improvements and efficiencies, the reduction of costs and expenses, the opportunity to increase sales and ability to capitalize on opportunities in the automotive industry, the sale of the Soest assets, the payment of dividends 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 | | June 30, 2015 | | | December 31, 2014 | |
ASSETS | | | | | | | |
Cash and cash equivalents | | $ | 21,028 | | $ | 52,401 | |
Trade and other receivables | 3 | | 577,020 | | | 520,844 | |
Inventories | 4 | | 309,985 | | | 313,436 | |
Prepaid expenses and deposits | | | 15,858 | | | 10,039 | |
Income taxes recoverable | | | 10,388 | | | 8,321 | |
Assets held for sale | 5 | | 24,473 | | | - | |
TOTAL CURRENT ASSETS | | | 958,752 | | | 905,041 | |
Property, plant and equipment | 6 | | 1,051,482 | | | 984,681 | |
Deferred income tax assets | | | 168,455 | | | 153,367 | |
Intangible assets | 7 | | 76,247 | | | 71,806 | |
TOTAL NON-CURRENT ASSETS | | | 1,296,184 | | | 1,209,854 | |
TOTAL ASSETS | | $ | 2,254,936 | | $ | 2,114,895 | |
| | | | | | | |
LIABILITIES | | | | | | | |
Trade and other payables | 8 | $ | 696,803 | | $ | 645,862 | |
Provisions | 9 | | 4,060 | | | 5,504 | |
Income taxes payable | | | 21,108 | | | 31,140 | |
Liabilities associated with assets held for sale | 5 | | 3,907 | | | - | |
Current portion of long-term debt | 10 | | 39,882 | | | 37,526 | |
TOTAL CURRENT LIABILITIES | | | 765,760 | | | 720,032 | |
Long-term debt | 10 | | 648,775 | | | 654,916 | |
Pension and other post-retirement benefits | | | 63,581 | | | 62,557 | |
Deferred income tax liabilities | | | 104,367 | | | 101,644 | |
TOTAL NON-CURRENT LIABILITIES | | | 816,723 | | | 819,117 | |
TOTAL LIABILITIES | | $ | 1,582,483 | | $ | 1,539,149 | |
| | | | | | | |
EQUITY | | | | | | | |
Capital stock | 12 | | 706,130 | | | 694,198 | |
Contributed surplus | | | 43,182 | | | 45,347 | |
Accumulated other comprehensive income | | | 82,667 | | | 55,927 | |
Accumulated deficit | | | (159,565 | ) | | (219,480 | ) |
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | | | 672,414 | | | 575,992 | |
Non-controlling interest | | | 39 | | | (246 | ) |
TOTAL EQUITY | | | 672,453 | | | 575,746 | |
TOTAL LIABILITIES AND EQUITY | | $ | 2,254,936 | | $ | 2,114,895 | |
Contingencies (note 17)
See accompanying notes to the interim condensed consolidated financial statements.
On behalf of the Board:
"Robert Wildeboer" Director
"Scott Balfour" Director
Martinrea International Inc.
Interim Condensed Consolidated Statements of Operations
(in thousands of Canadian dollars, except per share amounts) (unaudited)
| | | | | | | | | | | | | |
| Note | | Three months ended June 30, 2015 | | | Three months ended June 30, 2014 | | | Six months ended June 30, 2015 | | | Six months ended June 30, 2014 | |
| | | | | | | | | | | | | |
SALES | | $ | 984,046 | | $ | 930,915 | | $ | 1,901,577 | | $ | 1,795,408 | |
| | | | | | | | | | | | | |
Cost of sales (excluding depreciation of property, plant and equipment) | | | (849,387 | ) | | (809,766 | ) | | (1,644,384 | ) | | (1,562,649 | ) |
Depreciation of property, plant and equipment (production) | | | (28,280 | ) | | (25,286 | ) | | (55,175 | ) | | (49,417 | ) |
Total cost of sales | | | (877,667 | ) | | (835,052 | ) | | (1,699,559 | ) | | (1,612,066 | ) |
GROSS MARGIN | | | 106,379 | | | 95,863 | | | 202,018 | | | 183,342 | |
| | | | | | | | | | | | | |
Research and development costs | | | (5,278 | ) | | (4,875 | ) | | (10,874 | ) | | (9,517 | ) |
Selling, general and administrative | | | (48,606 | ) | | (45,594 | ) | | (93,283 | ) | | (88,925 | ) |
Depreciation of property, plant and equipment (non-production) | | | (1,855 | ) | | (1,714 | ) | | (3,542 | ) | | (3,178 | ) |
Amortization of customer contracts and relationships | | | (577 | ) | | (568 | ) | | (1,116 | ) | | (911 | ) |
Gain/(loss) on disposal of property, plant and equipment | | | 175 | | | 17 | | | 745 | | | (123 | ) |
OPERATING INCOME | | | 50,238 | | | 43,129 | | | 93,948 | | | 80,688 | |
| | | | | | | | | | | | | |
Finance costs | | | (6,549 | ) | | (5,330 | ) | | (13,104 | ) | | (10,509 | ) |
Other finance income | 14 | | 650 | | | 231 | | | 3,252 | | | 9 | |
INCOME BEFORE INCOME TAXES | | | 44,339 | | | 38,030 | | | 84,096 | | | 70,188 | |
| | | | | | | | | | | | | |
Income tax expense | 11 | | (10,732 | ) | | (8,404 | ) | | (19,981 | ) | | (13,903 | ) |
NET INCOME FOR THE PERIOD | | $ | 33,607 | | $ | 29,626 | | $ | 64,115 | | $ | 56,285 | |
| | | | | | | | | | | | | |
Non-controlling interest | | | (196 | ) | | (6,318 | ) | | (285 | ) | | (16,286 | ) |
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | | $ | 33,411 | | $ | 23,308 | | $ | 63,830 | | $ | 39,999 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Basic earnings per share | 13 | $ | 0.39 | | $ | 0.28 | | $ | 0.75 | | $ | 0.47 | |
Diluted earnings per share | 13 | $ | 0.39 | | $ | 0.27 | | $ | 0.74 | | $ | 0.47 | |
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 | | | Six months ended | | Six months ended | |
| | June 30, 2015 | | | June 30, 2014 | | | June 30, 2015 | | June 30, 2014 | |
| | | | | | | | | | | |
NET INCOME FOR THE PERIOD | $ | 33,607 | | $ | 29,626 | | $ | 64,115 | $ | 56,285 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | |
| Items that may be reclassified to net income | | | | | | | | | | | |
| Foreign currency translation differences for foreign operations | | (324 | ) | | (34,741 | ) | | 26,740 | | (3,888 | ) |
| Items that will not be reclassified to net income | | | | | | | | | | | |
| Actuarial gains (losses) from the remeasurement of defined benefit plans | | 4,430 | | | (735 | ) | | 1,240 | | (3,930 | ) |
Other comprehensive income (loss), net of tax | | 4,106 | | | (35,476 | ) | | 27,980 | | (7,818 | ) |
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD | $ | 37,713 | | $ | (5,850 | ) | $ | 92,095 | $ | 48,467 | |
| | | | | | | | | | | |
Attributable to: | | | | | | | | | | | |
| Equity holders of the Company | | 37,517 | | | (6,648 | ) | | 91,810 | | 33,215 | |
| Non-controlling interest | | 196 | | | 798 | | | 285 | | 15,252 | |
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD | $ | 37,713 | | $ | (5,850 | ) | $ | 92,095 | $ | 48,467 | |
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 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Capital stock | | Contributed surplus | | | Other equity | | | Cumulative translation account | | | Accumulated deficit | | | Total | | | Non-controlling interest | | | Total equity | |
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 | | - | | - | | | - | | | - | | | 39,999 | | | 39,999 | | | 16,286 | | | 56,285 | |
Compensation expense related to stock options | | - | | 665 | | | - | | | - | | | - | | | 665 | | | - | | | 665 | |
Change in fair value of put option granted to non-controlling interest | | - | | - | | | (78,561 | ) | | - | | | - | | | (78,561 | ) | | - | | | (78,561 | ) |
Dividends ($0.06 per share) | | - | | - | | | - | | | - | | | (5,071 | ) | | (5,071 | ) | | - | | | (5,071 | ) |
Exercise of employee stock options | | 493 | | (134 | ) | | - | | | - | | | - | | | 359 | | | - | | | 359 | |
Other comprehensive income (loss), | | | | | | | | | | | | | | | | | | | | | | | |
net of tax | | | | | | | | | | | | | | | | | | | | | | | |
| Actuarial losses from the remeasurement of defined benefit plans | | - | | - | | | - | | | - | | | (3,930 | ) | | (3,930 | ) | | - | | | (3,930 | ) |
| Foreign currency translation differences | | - | | - | | | - | | | (2,854 | ) | | - | | | (2,854 | ) | | (1,034 | ) | | (3,888 | ) |
Balance at June 30, 2014 | | 690,468 | | 45,384 | | | (232,800 | ) | | 23,231 | | | (111,378 | ) | | 414,905 | | | 104,965 | | | 519,870 | |
Net income for the period | | - | | - | | | - | | | - | | | 31,305 | | | 31,305 | | | 1,826 | | | 33,131 | |
Compensation expense related to stock options | | - | | 1,034 | | | - | | | - | | | - | | | 1,034 | | | - | | | 1,034 | |
Change in fair value of put option granted to non-controlling interest | | - | | - | | | (2,867 | ) | | - | | | - | | | (2,867 | ) | | - | | | (2,867 | ) |
Purchase of non-controlling interest (note 2) | | - | | - | | | 235,667 | | | - | | | (127,198 | ) | | 108,469 | | | (108,469 | ) | | - | |
Dividends ($0.06 per share) | | - | | - | | | - | | | - | | | (5,088 | ) | | (5,088 | ) | | - | | | (5,088 | ) |
Exercise of employee stock options | | 3,730 | | (1,071 | ) | | - | | | - | | | - | | | 2,659 | | | - | | | 2,659 | |
Other comprehensive income (loss), | | | | | | | | | | | | | | | | | | | | | | | |
net of tax | | | | | | | | | | | | | | | | | | | | | | | |
| Actuarial losses from the remeasurement of defined benefit plans | | - | | - | | | - | | | - | | | (7,121 | ) | | (7,121 | ) | | - | | | (7,121 | ) |
| Foreign currency translation differences | | - | | - | | | - | | | 32,696 | | | - | | | 32,696 | | | 1,432 | | | 34,128 | |
Balance at December 31, 2014 | | 694,198 | | 45,347 | | | - | | | 55,927 | | | (219,480 | ) | | 575,992 | | | (246 | ) | | 575,746 | |
Net income for the period | | - | | - | | | - | | | - | | | 63,830 | | | 63,830 | | | 285 | | | 64,115 | |
Compensation expense related to stock options | | - | | 978 | | | - | | | - | | | - | | | 978 | | | - | | | 978 | |
Dividends ($0.06 per share) | | - | | - | | | - | | | - | | | (5,155 | ) | | (5,155 | ) | | - | | | (5,155 | ) |
Exercise of employee stock options | | 11,932 | | (3,143 | ) | | - | | | - | | | - | | | 8,789 | | | - | | | 8,789 | |
Other comprehensive income (loss), | | | | | | | | | | | | | | | | | | | | | | | |
net of tax | | | | | | | | | | | | | | | | | | | | | | | |
| Actuarial gains from the remeasurement of defined benefit plans | | - | | - | | | - | | | - | | | 1,240 | | | 1,240 | | | - | | | 1,240 | |
| Foreign currency translation differences | | - | | - | | | - | | | 26,740 | | | - | | | 26,740 | | | - | | | 26,740 | |
Balance at June 30, 2015 | $ | 706,130 | $ | 43,182 | | $ | - | | $ | 82,667 | | $ | (159,565 | ) | $ | 672,414 | | $ | 39 | | $ | 672,453 | |
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 | | | Six months ended | | | Six months ended | |
| | June 30, 2015 | | | June 30, 2014 | | | June 30, 2015 | | | June 30, 2014 | |
CASH PROVIDED BY (USED IN): | | | | | | | | | | | | |
OPERATING ACTIVITIES: | | | | | | | | | | | | |
Net Income for the period | $ | 33,607 | | $ | 29,626 | | $ | 64,115 | | $ | 56,285 | |
Adjustments for: | | | | | | | | | | | | |
| Depreciation of property, plant and equipment | | 30,135 | | | 27,000 | | | 58,717 | | | 52,595 | |
| Amortization of customer contracts and relationships | | 577 | | | 568 | | | 1,116 | | | 911 | |
| Amortization of development costs | | 3,018 | | | 2,162 | | | 5,680 | | | 4,266 | |
| Unrealized losses/(gains) on foreign exchange forward contracts | | (183 | ) | | (1,344 | ) | | 817 | | | 1,191 | |
| Finance costs | | 6,549 | | | 5,330 | | | 13,104 | | | 10,509 | |
| Income tax expense | | 10,732 | | | 8,404 | | | 19,981 | | | 13,903 | |
| (Gain)/loss on disposal of property, plant and equipment | | (175 | ) | | (17 | ) | | (745 | ) | | 123 | |
| Stock-based compensation | | 779 | | | 555 | | | 978 | | | 665 | |
| Pension and other post-retirement benefits expense | | 1,119 | | | 1,265 | | | 2,216 | | | 2,432 | |
| Contributions made to pension and other post-retirement benefits | | (160 | ) | | (764 | ) | | (1,628 | ) | | (1,792 | ) |
| | 85,998 | | | 72,785 | | | 164,351 | | | 141,088 | |
Changes in non-cash working capital items: | | | | | | | | | | | | |
| Trade and other receivables | | 34,523 | | | 32,837 | | | (40,897 | ) | | (62,654 | ) |
| Inventories | | 3,955 | | | (6,043 | ) | | 4,380 | | | (22,466 | ) |
| Prepaid expenses and deposits | | (2,437 | ) | | (6,068 | ) | | (5,382 | ) | | (7,179 | ) |
| Trade, other payables and provisions | | (4,616 | ) | | 20,998 | | | 26,660 | | | 90,429 | |
| | 117,423 | | | 114,509 | | | 149,112 | | | 139,218 | |
| Interest paid (excluding capitalized interest) | | (5,926 | ) | | (4,873 | ) | | (11,114 | ) | | (9,585 | ) |
| Income taxes paid | | (22,129 | ) | | (2,787 | ) | | (44,557 | ) | | (15,029 | ) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 89,368 | | $ | 106,849 | | $ | 93,441 | | $ | 114,604 | |
| | | | | | | | | | | | |
FINANCING ACTIVITIES: | | | | | | | | | | | | |
| Increase in long-term debt | | - | | | - | | | 19,029 | | | 36,953 | |
| Repayment of long-term debt | | (41,819 | ) | | (48,700 | ) | | (51,416 | ) | | (58,891 | ) |
| Dividends paid | | (2,573 | ) | | (2,536 | ) | | (5,121 | ) | | (5,071 | ) |
| Exercise of employee stock options | | 2,562 | | | 359 | | | 8,789 | | | 359 | |
NET CASH USED IN FINANCING ACTIVITIES | $ | (41,830 | ) | $ | (50,877 | ) | $ | (28,719 | ) | $ | (26,650 | ) |
| | | | | | | | | | | | |
INVESTING ACTIVITIES: | | | | | | | | | | | | |
Purchase of property, plant and equipment* | | (45,204 | ) | | (51,475 | ) | | (91,705 | ) | | (94,298 | ) |
Capitalized development costs | | (3,549 | ) | | (5,965 | ) | | (7,571 | ) | | (9,376 | ) |
Proceeds on disposal of property, plant and equipment | | 537 | | | 251 | | | 2,382 | | | 844 | |
NET CASH USED IN INVESTING ACTIVITIES | $ | (48,216 | ) | $ | (57,189 | ) | $ | (96,894 | ) | $ | (102,830 | ) |
| | | | | | | | | | | | |
Effect of foreign exchange rate changes on cash and cash equivalents | | 1,032 | | | (3,508 | ) | | 799 | | | (2,888 | ) |
| | | | | | | | | | | | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | 354 | | | (4,725 | ) | | (31,373 | ) | | (17,764 | ) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | 20,674 | | | 43,185 | | | 52,401 | | | 56,224 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 21,028 | | $ | 38,460 | | $ | 21,028 | | $ | 38,460 | |
*As at June 30, 2015, $6,402 (December 31, 2014 - $13,372) of purchases of property, plant and equipment remain unpaid.
See accompanying notes to the interim condensed consolidated financial statements.