Linamar Corporation
TSX : LNR

Linamar Corporation

May 08, 2008 16:00 ET

Linamar Announces First Quarter Results

GUELPH, ONTARIO--(Marketwire - May 8, 2008) - Linamar Corporation (TSX:LNR), a diversified global manufacturing company of highly engineered products, today announced its financial results for the first quarter ended March 31, 2008. The company's Powertrain and Driveline divisions ("Powertrain/Driveline") are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle markets. The company's Industrial division ("Industrial") is a world leader in the design and production of innovative mobile industrial products, notably its class-leading aerial work platforms. With over 12,000 employees in 37 manufacturing locations, 5 R&D centres and 12 sales offices in Canada, the US, Mexico, Germany, Hungary, China, Korea and Japan, Linamar generated sales of close to $2.3 billion in 2007. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com.



(CDN dollars in thousands except per share figures)
Three Months Ended
March 31
2008 2007
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$ $

Sales 614,516 579,419
Gross Margin 80,378 70,763
Operating Earnings(1) 49,937 44,827
Earnings from Continuing Operations 29,487 26,742
Net Earnings 29,487 26,742
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Diluted Earnings per Share
from Continuing Operations 0.43 0.38
Diluted Earnings per Share 0.43 0.38
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First Quarter Operating Highlights

Sales for the first quarter of 2008 at $614.5 million were up $35.1 million compared to $579.4 million for the first quarter of 2007. Powertrain/Driveline sales were up 7.6% to $484.1 million compared to $449.8 million in the same quarter last year. The major contributor to the sales increase was the ramping up of key programs that were in the start up phase in the first quarter of 2007, our acquisition of the driveline plant in Mexico in late 2007, the strong growth in Europe, and the continuing ramp of our Asian operations. Industrial sales remained stable at $130.4 million for the quarter compared to $129.6 million for the same quarter in 2007.

(1) "Operating earnings", as used by the chief operating decision makers and management, monitors the performance of the business specifically at the segmented level. Operating earnings is calculated by the company as gross margin less selling, general and administrative expenses.



Three Months Ended
March 31
2008 2007
------------------------------------------------------------
$ $

Gross margin 80,378 70,763
Selling, general and administrative 30,441 25,936
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Operating earnings 49,937 44,827
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Under Canadian generally accepted accounting principles ("GAAP"), this financial measure does not have a standardized meaning and is unlikely to be comparable to similar measures presented by other issuers.

The company's operating earnings increased to $49.9 million for the first quarter of 2008 compared to $44.8 million for the first quarter of 2007, an increase of $5.1 million. Significant growth in Powertrain/Driveline sales with strong gross margins led to operating earnings of $31.1 million for the quarter compared to $21.1 million for the same quarter last year, an increase of 47.4%. Operating earnings for Industrial were lower in the first quarter of 2008 at $18.8 million as compared to $23.7 million for the same quarter of 2007. Industrial operating earnings decline were largely attributable to increased sales, marketing and research and development costs related to the new Booms and Telehandler product offerings, continued startup costs for Linamar Consumer Products, increased research & development costs and increased raw material component and outsourcing costs.

Earnings from continuing operations for the quarter were $29.5 million (4.8% of sales) versus $26.7 million (4.6% of sales) in 2007, an increase of 10.5%.

Dividends

The Board of Directors today declared an eligible dividend in respect to the quarter ended March 31, 2008 of CDN$0.06 per share on the common shares of the company, payable on or after June 6, 2008 to shareholders of record on May 26, 2008.

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 sales are denominated in U.S. dollars and the company also purchases a significant amount of raw materials, supplies and equipment in U.S. dollars. The strengthening of 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

Q1 Conference Call Information:

Linamar will hold a conference call on May 8, 2008 at 5:00 p.m. EST to discuss its first quarter results. The numbers for this call are (416) 642-5212 (local/overseas) or (866) 321-6651 (North America), 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 Thursday, May 8, 2008 and at www.sedar.com by the start of business on May 9, 2008. A taped replay of the conference call will also be made available starting at 11:00 p.m. on May 8, 2008 for seven days. The number for replay is (647) 436-0148 or (888) 203-1112, Conference ID 1944408. 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.

Q2 Conference Call Information

Linamar will hold a conference call on August 14, 2008 at 5:00 p.m. EST to discuss its second quarter results. The numbers for this call are (416) 642-5212 (local/overseas) or (866) 321-6651 (North America), 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 August 14, 2008 and at www.sedar.com by the start of business on August 15, 2008. A taped replay of the conference call will also be made available starting at 11:00 p.m. on August 14, 2008 for seven days. The number for replay is (647) 436-0148 or (888) 203-1112, Conference ID 3473280. 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.

Frank Hasenfratz, Chairman of the Board

Linda Hasenfratz, Chief Executive Officer

Contact Information

  • Linamar Corporation
    Linda Hasenfratz
    (519) 836-7550
    Website: www.linamar.com