Linamar Corporation
TSX : LNR

Linamar Corporation

November 12, 2009 16:00 ET

Linamar Restores Profitability on Rebounding Sales; Continues to Generate Cash and Grow Automotive Market Share in North America

GUELPH, ONTARIO--(Marketwire - Nov. 12, 2009) - Linamar Corporation (TSX:LNR) -

- Sales increase 11.4% over the second quarter of 2009;

- Reported adjusted net earnings of $1.1 million or $0.02 per share;

- Powertrain/Driveline segment operating earnings increased $7.2 million from the third quarter of 2008

- New business wins YTD with start of production by mid 2010 now close to $300 million;

- North American content per vehicle up 10% from the second quarter of 2009 and 25% from the third quarter of 2008; and

- Debt net of cash reduced by a further $15.2 million from June 30, 2009 for a total YTD reduction of $115.6 million.



Three Months Ended
Sep 30 Jun 30 Sep 30
2009 2009 2008
(in millions of dollars, except
earnings per share figures) $ $ $
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Sales $ 421.1 $ 378.0 $ 540.4
Operating Earnings (Loss)
Powertrain/Driveline 12.0 (52.6) 4.8
Industrial (8.5) (10.4) 2.4
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Operating Earnings (Loss) $ 3.5 $ (63.0) $ 7.2
Unusual Items 2.3 53.2 3.9
Operating Earnings (Loss) - Adjusted $ 5.8 $ (9.8) $ 11.1

Net Earnings (Loss) $ (0.5) $ (48.4) $ 12.0
Unusual Items 1.6 38.3 2.7
Net Earnings (Loss) - Adjusted 1.1 (10.1) 14.7

Earnings (Loss) per Share (0.01) (0.75) 0.17
Earnings (Loss) per Share - Adjusted 0.02 (0.16) 0.22
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Unusual Items
Taxable Items before Tax
1) Severance related to the global
economic slow down $ 2.3 $ 5.4 $ 3.9
2) Capital asset impairments due to
market conditions - 46.3 -
----------------------------------
2.3 51.7 3.9
Tax Impact (0.7) (14.9) (1.2)
----------------------------------
1.6 36.8 2.7

Non-Taxable Items
3) Intangible Asset Impairments - 1.5 -
----------------------------------
Total Unusual Items after Tax $ 1.6 $ 38.3 $ 2.7
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Operating Highlights

Sales for the third quarter of 2009 were $421.1 million, up $43.1 million from $378.0 million from the second quarter of 2009:

- Sales for the Powertrain/Driveline segment increased by $54.9 million, or 16.0% in the third quarter to $379.2 million compared to $324.3 million in the second quarter of 2009. The increase was a result of improved Powertrain volumes driven from General Motors and Chrysler resuming production after the extended shutdowns in the second quarter of 2009;

- Industrial segment sales decreased 22.0% or $11.8 million for the quarter from $53.7 million in the second quarter of 2009 to $41.9 million in the third quarter of 2009. The sales decrease in the third quarter of 2009 was due to the seasonality of the Consumer Products, the Industrial Fabrication and the Access Equipment Divisions.

The company's operating earnings for the third quarter of 2009 was $5.8 million after adjusting for unusual items in the quarter. This compares to $9.8 million adjusted operating loss for the second quarter of 2009, an increase of $15.6 million:

- The increase was driven by the better absorption of fixed costs due to the improved volume in global markets in Powertrain/Driveline and by the continued overhead and fixed cost reduction program executed in the quarter in both segments;

- Third quarter adjusted operating earnings for the Powertrain/Driveline segment were higher by $14.3 million from $0.6m in the second quarter of 2009;

- The adjusted operating losses for the Industrial segment were $7.9 million in third quarter of 2009, an increase of $1.3 million or 14.1% over the second quarter of 2009.

Taking into account the unusual items in the respective quarters, adjusted net earnings for the third quarter of 2009 was $1.1 million or $0.02 net earnings per share versus $10.1 million or $0.16 per share in the second quarter of 2009.

The company generated $64.4 million in operational cash flow, $24.4 million of which was from reductions in non-cash working capital. The company generated $21.9 million in Free Cashflow(1).

At September 30, 2009 the amount available under the company's syndicated revolving credit facility was $207.4 million, up $5.9 million from June 30, 2009.

"After a very challenging first 6 months we are very pleased to see production and sales levels picking up and a return to profitability," said Linamar CEO Linda Hasenfratz, "We continue to execute strongly on every aspect of our action plan, from strong market share growth to continued cash generation and cost improvement, and look optimistically towards continuing to enjoy the benefits of those results in the future."

(1) "Free Cashflow" is defined as Cash from Operating Activities, Payments for purchase of property, plant and equipment and Dividends to shareholders as present on the company's Consolidated Statements of Cash Flows.

Dividends

The Board of Directors today declared an eligible dividend in respect to the quarter ended September 30, 2009 of CDN$0.03 per share on the common shares of the company, payable on or after December 11, 2009 to shareholders of record on November 26.

Risk and Uncertainties (forward looking statements)

Linamar no longer provides a financial outlook.

Certain information provided by Linamar in these unaudited interim financial statements, MD&A and other documents published throughout the year that are not recitation of historical facts may constitute forward-looking statements. The words "estimate", "believe", "expect" and similar expressions are intended to identify forward-looking statements. Persons reading this report are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.

Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar. Some risks and uncertainties may cause results to differ from current expectations. The factors which are expected to have the greatest impact on Linamar include but are not limited to (in the various economies in which Linamar operates): the extent of OEM outsourcing, industry cyclicality, trade and labour disruptions, pricing concessions and cost absorptions, delays in program launches, the company's dependence on certain engine and transmission programs and major OEM customers, currency exposure, and technological developments by Linamar's competitors.

A large proportion of the company's cash flows are denominated in foreign currencies. The movement of foreign currency exchange rates against the Canadian dollar has the potential to have a negative impact on financial results. The company has employed a hedging strategy as appropriate to attempt to mitigate the impact but cannot be completely assured that the entire exchange effect has been offset.

Other factors and risks and uncertainties that could cause results to differ from current expectations are discussed in the MD&A and include, but are not limited to: fluctuations in interest rates, environmental emission and safety regulations, governmental, environmental and regulatory policies, and changes in the competitive environment in which Linamar operates. Linamar assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

Conference Call Information

Q3 Conference Call Information

Linamar will hold a conference call on November 12, 2009 at 5:00 p.m. EST to discuss its third quarter results. The numbers for this call are (647) 427-3420 (local/overseas) or (888) 300-0053 (North America) confirmation number 17906931, with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's full quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on November 12, 2009 and at www.sedar.com by the start of business on November 13, 2009. A taped replay of the conference call will also be made available starting at 11:00 p.m. on November 12, 2009 for seven days. The number for replay is (800) 766-3735, Conference ID 17906931. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Q4 Conference Call Information

Linamar will hold a conference call on March 4, 2010 at 5:00 p.m. EST to discuss its fourth quarter results. The numbers for this call are (647) 427-3420 (local/overseas) or (888) 300-0053 (North America) confirmation number 38693646, with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's full quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on March 4, 2010 and at www.sedar.com by the start of business on March 5, 2010. A taped replay of the conference call will also be made available starting at 11:00 p.m. on March 4, 2010 for seven days. The number for replay is (800) 642-1687, Conference ID 38693646. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of highly engineered products. The company's Powertrain and Driveline focused divisions are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle and power generation markets. The company's Industrial division is a world leader in the design and production of innovative mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 9,200 employees in 37 manufacturing locations, 5 R&D centers and 11 sales offices in Canada, the US, Mexico, Germany, Hungary, the UK, China, Korea and Japan, Linamar generated sales of over $2.2 Billion in 2008. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com.

Contact Information