TORONTO, ONTARIO--(Marketwired - Nov. 5, 2015) - Martinrea International Inc. (TSX:MRE), a leader in the development and production 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 third quarter ended September 30, 2015 and a quarterly dividend.
HIGHLIGHTS
- Record third quarter sales
- Record third quarter adjusted net income
- Successful sale of Soest facility
- $100 million in new business awards
- Dividend of $0.03 per share
OVERVIEW
Pat D'Eramo, Martinrea's President and Chief Executive Officer, stated: "I am really pleased with the team's performance this quarter and year to date, as we continue to drive a lean manufacturing culture and improve our operations. We had our best third quarter ever from an earnings point of view, after some restructuring costs incurred in rationalizing our workforce, making us more competitive for the future. Overall, 2015 has been a very good year. We continue to work well with our customers, and I am happy to announce new product awards totaling approximately $100 million on an annual basis when launched. New product wins included a fuel filler for GM starting in 2018 ($10 million); an engine block for GM in Brazil starting in 2018 ($10 million); some additional aluminum components for Jaguar LandRover starting in 2016 ($10 million); and approximately $70 million in incremental metallic and fluid work on the new generation of GM trucks starting in 2018, in addition to the replacement work on the same platform. Overall, year to date we have announced over $500 million in new business awards, as well as significant replacement business we do not announce separately. This business is a testament to the hard work of our people and the support we have from our customers, in all our product groups, all of which have been winning work."
Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Sales in our third quarter, excluding tooling sales, were $899 million, in line with the previously announced sales guidance. In the third quarter, our adjusted net earnings per share, on a basic and diluted basis, was $0.30, within our quarterly guidance and a third quarter record for us. Third quarter adjusted operating income and EBITDA margins improved year-over-year, despite continuing pre-operating costs at new plants currently preparing for upcoming launches. Our adjusted EBITDA for the quarter was $75.8 million, or 8.1% of total sales, representing a strong 21.6% year-over-year increase. We experienced some unusual and other items totalling $15.4 million in the quarter, the bulk of which related to rationalizing our work force in Meschede, streamlining our plant for the future. Future restructuring costs in Meschede are now anticipated to be lower given the higher than expected cuts achieved in the third quarter."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "We are confident in a great future, and we continue to take steps that support a better company every day. In the quarter, we completed the sale of our Soest facility, a non-strategic asset for us that had an uncertain future, at a price approximating book value. While this removes approximately $80 million in annualized revenue from our future projections, the move is not expected to hurt margins as the future Soest business was low margin work. We continued to ramp up our new facilities, and both our new Spanish plant and our Riverside facility are in the process of launching new work at this time. Our 2015 year should finish on a positive note, and we expect to have a solid fourth quarter, with sales for the quarter, excluding tooling sales, in the range of $930 to $970 million, and net earnings per share in the range of $0.30 to $0.34 per share. Earnings guidance for the fourth quarter reflects continued start-up costs, a slightly higher tax rate than previous quarters, and customer shutdowns for re-tooling, in and above the typical December shutdown, including a slowdown of our Martinrea Honsel Mexico facility as Chrysler moves to the next generation Pentastar engine block. We expect the engine program to start ramping back up in February and be back at full volume by the second quarter of next year. In sum, we anticipate 2015 will be our best year ever from a financial point of view, and we are budgeting for improvement in 2016. In addition, on the litigation front, I note that the plaintiffs in the Rea litigation have discontinued their suit against the Company and the other defendants."
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 nine months ended September 30, 2015 dated as of November 5, 2015, the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 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 tables set out certain highlights of the Company's performance for the three and nine months ended September 30, 2015 and 2014. Refer to the Company's interim condensed consolidated financial statements for the three and nine months ended September 30, 2015 for a detailed account of the Company's performance for the periods presented in the tables below.
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | $ Change | % Change | ||||||||
| Sales | $ | 929,880 | $ | 859,456 | 70,424 | 8.2% | |||||
| Gross Margin | 96,385 | 78,076 | 18,309 | 23.5% | |||||||
| Operating Income | 24,837 | 31,555 | (6,718 | ) | (21.3% | ) | |||||
| Net Income for the period | 15,232 | 21,205 | (5,973 | ) | (28.2% | ) | |||||
| Net Income Attributable to Equity Holders of the Company | $ | 15,469 | $ | 19,384 | (3,915 | ) | (20.2% | ) | |||
| Net Earnings per Share - Basic and Diluted | $ | 0.18 | $ | 0.23 | (0.05 | ) | (21.7% | ) | |||
| Non-IFRS Measures* | |||||||||||
| Adjusted Operating Income | $ | 40,228 | $ | 31,555 | 8,673 | 27.5% | |||||
| as a % of Sales | 4.3% | 3.7% | |||||||||
| Adjusted EBITDA | 75,773 | 62,291 | 13,482 | 21.6% | |||||||
| as a % of Sales | 8.1% | 7.2% | |||||||||
| Adjusted Net Income Attributable to Equity Holders of the Company | 25,899 | 19,384 | 6,515 | 33.6% | |||||||
| Adjusted Net Earnings per Share - Basic and Diluted | $ | 0.30 | $ | 0.23 | 0.07 | 30.4% |
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | $ Change | % Change | ||||||
| Sales | $ | 2,831,457 | $ | 2,654,864 | 176,593 | 6.7% | |||
| Gross Margin | 298,403 | 261,418 | 36,985 | 14.1% | |||||
| Operating Income | 118,785 | 112,243 | 6,542 | 5.8% | |||||
| Net Income for the period | 79,347 | 77,490 | 1,857 | 2.4% | |||||
| Net Income Attributable to Equity Holders of the Company | $ | 79,299 | $ | 59,383 | 19,916 | 33.5% | |||
| Net Earnings per Share - Basic | $ | 0.93 | $ | 0.70 | 0.23 | 32.9% | |||
| Net Earnings per Share - Diluted | $ | 0.92 | $ | 0.69 | 0.23 | 33.3% | |||
| Non-IFRS Measures* | |||||||||
| Adjusted Operating Income | $ | 134,176 | $ | 113,804 | 20,372 | 17.9% | |||
| as a % of Sales | 4.7% | 4.3% | |||||||
| Adjusted EBITDA | 234,489 | 202,435 | 32,054 | 15.8% | |||||
| as a % of Sales | 8.3% | 7.6% | |||||||
| Adjusted Net Income Attributable to Equity Holders of the Company | 89,729 | 60,554 | 29,175 | 48.2% | |||||
| Adjusted Net Earnings per Share - Basic | $ | 1.05 | $ | 0.72 | 0.33 | 45.8% | |||
| Adjusted Net Earnings per Share - Diluted | $ | 1.04 | $ | 0.71 | 0.33 | 46.5% |
*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 Earnings 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 September 30, 2015 | Three months ended September 30, 2014 | |||
| Net Income Attributable to Equity Holders of the Company | $ | 15,469 | $ | 19,384 |
| Unusual and Other Items (after-tax)* | 10,430 | - | ||
| Adjusted Net Income Attributable to Equity Holders of the Company | $ | 25,899 | $ | 19,384 |
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||
| Net Income Attributable to Equity Holders of the Company | $ | 79,299 | $ | 59,383 |
| Unusual and Other Items (after-tax)* | 10,430 | 1,171 | ||
| Adjusted Net Income Attributable to Equity Holders of the Company | $ | 89,729 | $ | 60,554 |
| *Unusual and other items are explained in the "Adjustments to Net Income" section of this Press Release | ||||
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||
| Net Income Attributable to Equity Holders of the Company | $ | 15,469 | $ | 19,384 | ||
| Non-controlling interest | (237 | ) | 1,821 | |||
| Income tax expense | 4,087 | 5,322 | ||||
| Other finance income | (807 | ) | (882 | ) | ||
| Finance costs | 6,325 | 5,910 | ||||
| Unusual and Other Items (before-tax)* | 15,391 | - | ||||
| Adjusted Operating Income | $ | 40,228 | $ | 31,555 | ||
| Depreciation of property, plant and equipment | 31,879 | 27,735 | ||||
| Amortization of intangible assets | 3,674 | 3,037 | ||||
| Loss/(gain) on disposal of property, plant and equipment | (8 | ) | (36 | ) | ||
| Adjusted EBITDA | $ | 75,773 | $ | 62,291 | ||
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||
| Net Income Attributable to Equity Holders of the Company | $ | 79,299 | $ | 59,383 | ||
| Non-controlling interest | 48 | 18,107 | ||||
| Income tax expense | 24,068 | 19,225 | ||||
| Other finance income | (4,059 | ) | (891 | ) | ||
| Finance costs | 19,429 | 16,419 | ||||
| Unusual and Other Items (before-tax)* | 15,391 | 1,561 | ||||
| Adjusted Operating Income | $ | 134,176 | $ | 113,804 | ||
| Depreciation of property, plant and equipment | 90,596 | 80,330 | ||||
| Amortization of intangible assets | 10,470 | 8,214 | ||||
| Loss/(gain) on disposal of property, plant and equipment | (753 | ) | 87 | |||
| Adjusted EBITDA | $ | 234,489 | $ | 202,435 | ||
| *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 September 30, 2015 to three months ended September 30, 2014 comparison | ||||||||
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | $ Change | % Change | |||||
| North America | $ | 745,034 | $ | 685,686 | 59,348 | 8.7% | ||
| Europe | 163,982 | 159,373 | 4,609 | 2.9% | ||||
| Rest of the World | 20,864 | 14,397 | 6,467 | 44.9% | ||||
| Total Sales | $ | 929,880 | $ | 859,456 | 70,424 | 8.2% | ||
The Company's consolidated sales for the third quarter of 2015 increased by $70.4 million or 8.2% to $929.9 million as compared to $859.5 million for the third quarter of 2014. Sales increased year-over-year across all operating segments.
Sales for the third quarter of 2015 in the Company's North America operating segment increased by $59.3 million or 8.7% to $745.0 million from $685.7 million for the third quarter of 2014. The increase was due to the launch of new programs during or subsequent to the third quarter of 2014, including the BMW X6, Ford Edge and Ford Transit, 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 third quarter of 2015 of approximately $94.9 million as compared to the third quarter of 2014. These positive factors were partially offset by a $41.7 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 late in their product life cycle such as the current GM Malibu, Cruze and Camaro.
Sales for the third quarter of 2015 in the Company's Europe operating segment increased by $4.6 million or 2.9% to $164.0 million from $159.4 million for the third quarter of 2014. The increase can be attributed to increased production sales in the Company's operating facilities in Spain and Slovakia, which continue to ramp up and launch their backlog of business; partially offset by a $2.3 million decrease in tooling sales, a $4.1 million negative foreign exchange impact from the translation of Euro denominated production sales as compared to the third quarter of 2014, and lower overall production volumes in the Company's Martinrea Honsel German operations including the impact from the sale of the Company's operating facility in Soest, Germany on August 31, 2015.
Sales for the third quarter of 2015 in the Company's Rest of the World operating segment increased by $6.5 million or 44.9% to $20.9 million from $14.4 million in the third 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 $0.3 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 third quarter of 2015 of approximately $0.2 million as compared to the third quarter of 2014. OEM light vehicle production volumes in Brazil continue to trend at low levels, although production sales for the third quarter of 2015 in the Company's operating facility in Brazil were stable year-over-year generally due to sales mix.
Overall tooling sales decreased by $43.7 million to $31.1 million for the third quarter of 2015 from $74.8 million for the third quarter of 2014.
| Nine months ended September 30, 2015 to nine months ended September 30, 2014 comparison | ||||||||
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | $ Change | % Change | |||||
| North America | $ | 2,256,856 | $ | 2,094,654 | 162,202 | 7.7% | ||
| Europe | 517,345 | 516,063 | 1,282 | 0.2% | ||||
| Rest of the World | 57,256 | 44,147 | 13,109 | 29.7% | ||||
| Total Sales | $ | 2,831,457 | $ | 2,654,864 | 176,593 | 6.7% | ||
The Company's consolidated sales for the nine months ended September 30, 2015 increased by $176.6 million or 6.7% to $2,831.5 million as compared to $2,654.9 million for the nine months ended September 30, 2014. Sales increased year-over-year across all operating segments.
Sales for the nine months ended September 30, 2015 in the Company's North America operating segment increased by $162.2 million or 7.7% to $2,256.9 million from $2,094.7 million for the nine months ended September 30, 2014. The increase was due to the launch of new programs during or subsequent to the nine months ended September 30, 2014, including the new Chrysler 200, BMW X6, Ford Edge and Ford Transit, 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 nine months ended September 30, 2015 of approximately $226.8 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 $59.2 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 platforms late in their product life cycle.
Sales for the nine months ended September 30, 2015 in the Company's Europe operating segment increased by $1.3 million or 0.2% to $517.3 million from $516.1 million for the nine months ended September 30, 2014. The increase can be attributed to increased production sales in the Company's operating facilities in Spain and Slovakia, which continue to ramp up and launch their backlog of business; partially offset by a $6.3 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 nine months ended September 30, 2015 of approximately $31.3 million as compared to the comparable period of 2014, and lower overall production volumes in the Company's Martinrea Honsel German operations including the impact from the sale of the Company's operating facility in Soest, Germany on August 31, 2015.
Sales for the nine months ended September 30, 2015 in the Company's Rest of the World operating segment increased by $13.1 million or 29.7% to $57.3 million from $44.1 million for the nine months ended September 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 $1.7 million increase in tooling sales; partially offset by lower year-over-year production sales in the Company's operating facility in Brazil and the translation of foreign denominated production sales, which had a negative impact on overall sales for the nine months ended September 30, 2015 of $0.8 million as compared to the comparative period of 2014.
Overall tooling sales decreased by $63.8 million to $99.2 million for the nine months ended September 30, 2015 from $163.0 million for the nine months ended September 30, 2014.
| GROSS MARGIN | ||||||||
| Three months ended September 30, 2015 to three months ended September 30, 2014 comparison | ||||||||
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | $ Change | % Change | |||||
| Gross margin | $ | 96,385 | $ | 78,076 | 18,309 | 23.5% | ||
| % of sales | 10.4% | 9.1% | ||||||
The gross margin percentage for the third quarter of 2015 of 10.4% increased as a percentage of sales by 1.3% as compared to the gross margin percentage for the third quarter of 2014 of 9.1%. 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;
- lower recoveries from scrap steel;
- operational inefficiencies and other costs at certain other facilities; and
- lower production volumes in the Company's Martinrea Honsel operating facility in Meschede, Germany.
| Nine months ended September 30, 2015 to nine months ended September 30, 2014 comparison | ||||||||
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | $ Change | % Change | |||||
| Gross margin | $ | 298,403 | $ | 261,418 | 36,985 | 14.1% | ||
| % of sales | 10.5% | 9.8% | ||||||
The gross margin percentage for the nine months ended September 30, 2015 of 10.5% increased as a percentage of sales by 0.7% as compared to the gross margin percentage for the nine months ended September 30, 2014 of 9.8%. 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;
- lower recoveries from scrap steel;
- operational inefficiencies and other costs at certain other facilities;
- lower production volumes in the Company's Martinrea Honsel operating facility in Meschede, Germany; 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 September 30, 2015 to three months ended September 30, 2014 comparison
| Three months ended | Three months ended | ||||
| September 30, 2015 | September 30, 2014 | (a)-(b) | |||
| (a) | (b) | Change | |||
| NET INCOME (A) | $15,469 | $19,384 | ($3,915) | ||
| Add back - Unusual and Other Items: | |||||
| Restructuring costs (1) | 13,619 | - | 13,619 | ||
| Executive separation agreement (2) | 1,402 | - | 1,402 | ||
| Loss on sale of assets and liabilities held for sale (3) | 370 | - | 370 | ||
| TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX | $15,391 | - | $15,391 | ||
| Tax impact of above items | (4,961) | - | (4,961) | ||
| TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) | $10,430 | - | $10,430 | ||
| ADJUSTED NET INCOME (A + B) | $25,899 | $19,384 | $6,515 | ||
| Number of Shares Outstanding - Basic ('000) | 86,203 | 84,600 | |||
| Adjusted Basic Net Income Per Share | $0.30 | $0.23 | |||
| Number of Shares Outstanding - Diluted ('000) | 86,768 | 86,013 | |||
| Adjusted Diluted Net Income Per Share | $0.30 | $0.23 | |||
| TABLE B - Nine months ended September 30, 2015 to nine months ended September 30, 2014 comparison | |||||
| Nine months ended | Nine months ended | ||||
| September 30, 2015 | September 30, 2014 | (a)-(b) | |||
| (a) | (b) | Change | |||
| NET INCOME (A) | $79,299 | $59,383 | $19,916 | ||
| Add back - Unusual and Other Items: | |||||
| Restructuring costs (1) | 13,619 | - | 13,619 | ||
| Executive separation agreement (2) | 1,402 | - | 1,402 | ||
| Loss on sale of assets and liabilities held for sale (3) | 370 | - | 370 | ||
| External legal and forensic accounting costs related to litigation (4) | - | 1,561 | (1,561) | ||
| TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX | $15,391 | $1,561 | $13,830 | ||
| Tax impact of above items | (4,961) | (390) | (4,571) | ||
| TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) | $10,430 | $1,171 | $9,259 | ||
| ADJUSTED NET INCOME (A + B) | $89,729 | $60,554 | $29,175 | ||
| Number of Shares Outstanding - Basic ('000) | 85,700 | 84,526 | |||
| Adjusted Basic Net Income Per Share | $1.05 | $0.72 | |||
| Number of Shares Outstanding - Diluted ('000) | 86,265 | 85,549 | |||
| Adjusted Diluted Net Income Per Share | $1.04 | $0.71 | |||
(1) Restructuring costs
As part of the acquisition of Honsel (as described in the "Acquisitions" section of the MD&A), a certain level of restructuring was planned in order to be cost competitive over the long term, in particular at the Company's operating facility in Meschede, Germany. In connection with these restructuring activities, $13.6 million (EUR9.7 million) of employee related severance was recognized during the third quarter of 2015. No such restructuring costs were incurred during 2014. Additional employee related severance associated with the Martinrea Honsel operations, may be incurred in the future.
(2) Executive separation agreement
On July 14, 2015, Danny Infusino stepped down as the Company's Executive Vice President of Business Development and Engineering and Vice President of Operations. The costs added back for Adjusted Net Income purposes represents Mr. Infusino's termination benefits (included in SG&A expense) as set out in his employment contract payable over an eighteen month period.
(3) Loss on sale of assets and liabilities held for sale
During the second quarter of 2015, certain assets and liabilities of the Company's operating facility in Soest, Germany were transferred to assets held for sale. The Soest facility specializes in aluminum extrusions which the Company determined was not core to the strategy of the overall business going forward. The agreement to sell the Soest facility was closed on August 31, 2015. The net assets were sold for proceeds of $20.6 million (EUR14.6 million) resulting in a pre-tax loss on sale of $0.4 million (EUR0.3 million).
(4) External legal and forensic accounting costs related to litigation
The costs added back for Adjusted Net Income purposes for the nine months ended September 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 September 30, 2015 to three months ended September 30, 2014 comparison | ||||||||||
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | $ Change | % Change | |||||||
| Net Income | $ | 15,469 | $ | 19,384 | (3,915 | ) | (20.2% | ) | ||
| Adjusted Net Income | $ | 25,899 | $ | 19,384 | 6,515 | 33.6% | ||||
| Net Earnings per Share | ||||||||||
| Basic | $ | 0.18 | $ | 0.23 | ||||||
| Diluted | $ | 0.18 | $ | 0.23 | ||||||
| Adjusted Net Earnings per Share | ||||||||||
| Basic | $ | 0.30 | $ | 0.23 | ||||||
| Diluted | $ | 0.30 | $ | 0.23 | ||||||
Net income, before adjustments, for the third quarter of 2015 decreased to $15.5 million from $19.4 million for the third quarter of 2014. Excluding the unusual and other items incurred during the third quarter of 2015 as explained in Table A under "Adjustments to Net Income", net income for the third quarter of 2015 increased to $25.9 million or $0.30 per share, on a basic and diluted basis, from $19.4 million or $0.23 per share, on a basic and diluted basis, for the third quarter of 2014.
Adjusted Net Income for the third quarter of 2015, as compared to the third quarter of 2014, 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;
- lower recoveries from scrap steel;
- operational inefficiencies and other costs at certain other facilities;
- lower production volumes in the Company's Martinrea Honsel operating facility in Meschede, Germany;
- a higher effective tax rate on adjusted pre-tax income due generally to the mix of earnings (26.1% for the third quarter of 2015 compared to 20.1% for the third 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 September 30, 2015 actual to guidance comparison: | ||||||
| On August 6, 2015, the Company provided the following guidance for the third quarter of 2015: | ||||||
| Guidance | Actual | |||||
| Production sales (in millions) | $ | 865 - 905 | $ | 899 | ||
| Adjusted Net Earnings per Share | ||||||
| Basic & Diluted | $ | 0.27 - 0.31 | $ | 0.30 | ||
For the third quarter of 2015, production sales of $899 million and Adjusted Net Income per share of $0.30 were within the range of published guidance.
| Nine months ended September 30, 2015 to nine months ended September 30, 2014 comparison | |||||||||
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | $ Change | % Change | ||||||
| Net Income | $ | 79,299 | $ | 59,383 | 19,916 | 33.5% | |||
| Adjusted Net Income | $ | 89,729 | $ | 60,554 | 29,175 | 48.2% | |||
| Net Earnings per Share | |||||||||
| Basic | $ | 0.93 | $ | 0.70 | |||||
| Diluted | $ | 0.92 | $ | 0.69 | |||||
| Adjusted Net Earnings per Share | |||||||||
| Basic | $ | 1.05 | $ | 0.72 | |||||
| Diluted | $ | 1.04 | $ | 0.71 | |||||
Net income, before adjustments, for the nine months ended September 30, 2015 increased by $19.9 million to $79.3 million from $59.4 million for the nine months ended September 30, 2014. Excluding the unusual and other items incurred during the nine months ended September 30, 2015 and 2014 as explained in Table B under "Adjustments to Net Income", Net Income for the nine months ended September 30, 2015 increased to $89.7 million or $1.05 per share, on a basic basis, and $1.04 per share on a diluted basis, from $60.6 million or $0.72 per share, on a basic basis, and $0.71 per share, on a diluted basis, for the nine months ended September 30, 2014.
Adjusted Net Income for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, 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 $4.0 million for the nine months ended September 30, 2015 compared to a net foreign exchange gain of $0.7 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;
- lower recoveries from scrap steel;
- operational inefficiencies and other costs at certain other facilities;
- lower production volumes in the Company's Martinrea Honsel operating facility in Meschede, Germany;
- 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 pre-tax income due generally to the mix of earnings (24.4% for the nine months ended September 30, 2015 compared to 20.0% 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 September 30, 2015 to three months ended September 30, 2014 comparison | ||||||||||
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | $ Change | % Change | |||||||
| Additions to PP&E | $ | 44,801 | $ | 52,015 | (7,214 | ) | (13.9% | ) | ||
Additions to PP&E decreased by $7.2 million to $44.8 million in the third quarter of 2015 from $52.0 million in the third quarter of 2014 due generally to the timing of expenditures. Additions as a percentage of sales decreased year-over-year to 4.8% for the third quarter of 2015 from 6.1% for the third 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 third 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.
| Nine months ended September 30, 2015 to nine months ended September 30, 2014 comparison | ||||||||||
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | $ Change | % Change | |||||||
| Additions to PP&E | $ | 129,536 | $ | 136,377 | (6,841 | ) | (5.0% | ) | ||
Additions to PP&E decreased year-over-year to $129.5 million for the nine months ended September 30, 2015 compared to $136.4 million for the nine months ended September 30, 2014 generally due to the timing of expenditures. Additions as a percentage of sales decreased year-over-year to 4.6% for the nine months ended September 30, 2015 from 5.1% for the comparative period of 2014. Despite the decrease as a percentage of sales, the Company continues to make 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 December 31, 2015 on or about January 15, 2016.
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, November 6, 2015 at 8:00 a.m. (Toronto time) which can be accessed by dialing 416-340-2219 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 be a rebroadcast of the call available by dialing 905-694-9451 or toll free 800-408-3053 (conference id - 9688571#). The rebroadcast will be available until November 20, 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 future revenue, sales, gross margin, earnings, and earnings per share, the growth and strengthening of and the competitiveness of the Company, the 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 and the lean manufacturing culture, the reduction of costs and expense, including expectations of future restructuring costs, the opportunity to increase sales and ability to capitalize on opportunities in the automotive industry, customer working relationships, expectations as to margins as a result of 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 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 under-funding of pensions 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 commons 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 | September 30, 2015 | December 31, 2014 | ||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 7,896 | $ | 52,401 | ||||||
| Trade and other receivables | 3 | 628,332 | 520,844 | |||||||
| Inventories | 4 | 350,574 | 313,436 | |||||||
| Prepaid expenses and deposits | 21,662 | 10,039 | ||||||||
| Income taxes recoverable | 10,990 | 8,321 | ||||||||
| TOTAL CURRENT ASSETS | 1,019,454 | 905,041 | ||||||||
| Property, plant and equipment | 6 | 1,119,359 | 984,681 | |||||||
| Deferred income tax assets | 179,678 | 153,367 | ||||||||
| Intangible assets | 7 | 81,337 | 71,806 | |||||||
| TOTAL NON-CURRENT ASSETS | 1,380,374 | 1,209,854 | ||||||||
| TOTAL ASSETS | $ | 2,399,828 | $ | 2,114,895 | ||||||
| LIABILITIES | ||||||||||
| Trade and other payables | 8 | $ | 730,929 | $ | 645,862 | |||||
| Provisions | 9 | 16,761 | 5,504 | |||||||
| Income taxes payable | 30,373 | 31,140 | ||||||||
| Current portion of long-term debt | 10 | 43,103 | 37,526 | |||||||
| TOTAL CURRENT LIABILITIES | 821,166 | 720,032 | ||||||||
| Long-term debt | 10 | 677,516 | 654,916 | |||||||
| Pension and other post-retirement benefits | 67,248 | 62,557 | ||||||||
| Deferred income tax liabilities | 104,078 | 101,644 | ||||||||
| TOTAL NON-CURRENT LIABILITIES | 848,842 | 819,117 | ||||||||
| TOTAL LIABILITIES | $ | 1,670,008 | $ | 1,539,149 | ||||||
| EQUITY | ||||||||||
| Capital stock | 12 | $ | 708,762 | $ | 694,198 | |||||
| Contributed surplus | 42,621 | 45,347 | ||||||||
| Accumulated other comprehensive income | 126,425 | 55,927 | ||||||||
| Accumulated deficit | (147,790 | ) | (219,480 | ) | ||||||
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | 730,018 | 575,992 | ||||||||
| Non-controlling interest | (198 | ) | (246 | ) | ||||||
| TOTAL EQUITY | 729,820 | 575,746 | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,399,828 | $ | 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 September 30, 2015 | Three months ended September 30, 2014 | Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||
| SALES | $ | 929,880 | $ | 859,456 | $ | 2,831,457 | $ | 2,654,864 | |||||
| Cost of sales (excluding depreciation of property, plant and equipment) | (803,477 | ) | (755,409 | ) | (2,447,861 | ) | (2,318,058 | ) | |||||
| Depreciation of property, plant and equipment (production) | (30,018 | ) | (25,971 | ) | (85,193 | ) | (75,388 | ) | |||||
| Total cost of sales | (833,495 | ) | (781,380 | ) | (2,533,054 | ) | (2,393,446 | ) | |||||
| GROSS MARGIN | 96,385 | 78,076 | 298,403 | 261,418 | |||||||||
| Research and development costs | (5,911 | ) | (4,427 | ) | (16,785 | ) | (13,944 | ) | |||||
| Selling, general and administrative | (49,300 | ) | (39,462 | ) | (142,583 | ) | (128,387 | ) | |||||
| Depreciation of property, plant and equipment (non-production) | (1,861 | ) | (1,764 | ) | (5,403 | ) | (4,942 | ) | |||||
| Amortization of customer contracts and relationships | (495 | ) | (904 | ) | (1,611 | ) | (1,815 | ) | |||||
| Restructuring costs | 9 | (13,619 | ) | - | (13,619 | ) | - | ||||||
| Loss on sale of assets and liabilities held for sale | 5 | (370 | ) | - | (370 | ) | - | ||||||
| Gain/(loss) on disposal of property, plant and equipment | 8 | 36 | 753 | (87 | ) | ||||||||
| OPERATING INCOME | 24,837 | 31,555 | 118,785 | 112,243 | |||||||||
| Finance costs | (6,325 | ) | (5,910 | ) | (19,429 | ) | (16,419 | ) | |||||
| Other finance income | 14 | 807 | 882 | 4,059 | 891 | ||||||||
| INCOME BEFORE INCOME TAXES | 19,319 | 26,527 | 103,415 | 96,715 | |||||||||
| Income tax expense | 11 | (4,087 | ) | (5,322 | ) | (24,068 | ) | (19,225 | ) | ||||
| NET INCOME FOR THE PERIOD | $ | 15,232 | $ | 21,205 | $ | 79,347 | $ | 77,490 | |||||
| Non-controlling interest | 237 | (1,821 | ) | (48 | ) | (18,107 | ) | ||||||
| NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | $ | 15,469 | $ | 19,384 | $ | 79,299 | $ | 59,383 | |||||
| Basic earnings per share | 13 | $ | 0.18 | $ | 0.23 | $ | 0.93 | $ | 0.70 | ||||
| Diluted earnings per share | 13 | $ | 0.18 | $ | 0.23 | $ | 0.92 | $ | 0.69 |
| Martinrea International Inc. |
| Interim Condensed Consolidated Statements of Comprehensive Income |
| (in thousands of Canadian dollars) (unaudited) |
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||
| NET INCOME FOR THE PERIOD | $ | 15,232 | $ | 21,205 | $ | 79,347 | $ | 77,490 | ||||
| Other comprehensive income, net of tax: | ||||||||||||
| Items that may be reclassified to net income | ||||||||||||
| Foreign currency translation differences for foreign operations | 43,758 | 22,467 | 70,498 | 18,579 | ||||||||
| Items that will not be reclassified to net income | ||||||||||||
| Actuarial gains (losses) from the remeasurement of defined benefit plans | (1,104 | ) | (1,630 | ) | 136 | (5,560 | ) | |||||
| Other comprehensive income, net of tax | 42,654 | 20,837 | 70,634 | 13,019 | ||||||||
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | $ | 57,886 | $ | 42,042 | $ | 149,981 | $ | 90,509 | ||||
| Attributable to: | ||||||||||||
| Equity holders of the Company | 58,123 | 38,789 | 149,933 | 72,004 | ||||||||
| Non-controlling interest | (237 | ) | 3,253 | 48 | 18,505 | |||||||
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | $ | 57,886 | $ | 42,042 | $ | 149,981 | $ | 90,509 | ||||
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 | - | - | - | - | 59,383 | 59,383 | 18,107 | 77,490 | |||||||||||||||
| Compensation expense related to stock options | - | 894 | - | - | - | 894 | - | 894 | |||||||||||||||
| Change in fair value of put option granted to non-controlling interest | - | - | (81,428 | ) | - | - | (81,428 | ) | - | (81,428 | ) | ||||||||||||
| Purchase of non-controlling interest (note 2) | 235,667 | (127,198 | ) | 108,469 | (108,469 | ) | - | ||||||||||||||||
| Dividends ($0.09 per share) | - | - | - | - | (7,611 | ) | (7,611 | ) | - | (7,611 | ) | ||||||||||||
| Exercise of employee stock options | 2,607 | (781 | ) | - | - | - | 1,826 | - | 1,826 | ||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||
| Actuarial losses from the remeasurement of defined benefit plans | - | - | - | - | (5,560 | ) | (5,560 | ) | - | (5,560 | ) | ||||||||||||
| Foreign currency translation differences | - | - | - | 18,181 | - | 18,181 | 398 | 18,579 | |||||||||||||||
| Balance at September 30, 2014 | 692,582 | 44,966 | - | 44,266 | (223,362 | ) | 558,452 | (251 | ) | 558,201 | |||||||||||||
| Net income for the period | - | - | - | - | 11,921 | 11,921 | 5 | 11,926 | |||||||||||||||
| Compensation expense related to stock options | - | 805 | - | - | - | 805 | - | 805 | |||||||||||||||
| Dividends ($0.03 per share) | - | - | - | - | (2,548 | ) | (2,548 | ) | - | (2,548 | ) | ||||||||||||
| Exercise of employee stock options | 1,616 | (424 | ) | - | - | - | 1,192 | - | 1,192 | ||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||
| Actuarial losses from the remeasurement of defined benefit plans | - | - | - | - | (5,491 | ) | (5,491 | ) | - | (5,491 | ) | ||||||||||||
| Foreign currency translation differences | - | - | - | 11,661 | - | 11,661 | - | 11,661 | |||||||||||||||
| Balance at December 31, 2014 | 694,198 | 45,347 | - | 55,927 | (219,480 | ) | 575,992 | (246 | ) | 575,746 | |||||||||||||
| Net income for the period | - | - | - | - | 79,299 | 79,299 | 48 | 79,347 | |||||||||||||||
| Compensation expense related to stock options | - | 1,180 | - | - | - | 1,180 | - | 1,180 | |||||||||||||||
| Dividends ($0.09 per share) | - | - | - | - | (7,745 | ) | (7,745 | ) | - | (7,745 | ) | ||||||||||||
| Exercise of employee stock options | 14,564 | (3,906 | ) | - | - | - | 10,658 | - | 10,658 | ||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||
| Actuarial gains from the remeasurement of defined benefit plans | - | - | - | - | 136 | 136 | - | 136 | |||||||||||||||
| Foreign currency translation differences | - | - | - | 70,498 | - | 70,498 | - | 70,498 | |||||||||||||||
| Balance at September 30, 2015 | $ | 708,762 | $ | 42,621 | $ | - | $ | 126,425 | $ | (147,790 | ) | $ | 730,018 | $ | (198 | ) | $ | 729,820 | |||||
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 September 30, 2015 | Three months ended September 30, 2014 | Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | ||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||
| OPERATING ACTIVITIES: | |||||||||||||
| Net Income for the period | $ | 15,232 | $ | 21,205 | $ | 79,347 | $ | 77,490 | |||||
| Adjustments for: | |||||||||||||
| Depreciation of property, plant and equipment | 31,879 | 27,735 | 90,596 | 80,330 | |||||||||
| Amortization of customer contracts and relationships | 495 | 904 | 1,611 | 1,815 | |||||||||
| Amortization of development costs | 3,179 | 2,133 | 8,859 | 6,399 | |||||||||
| Unrealized losses on foreign exchange forward contracts | 824 | 1,229 | 1,641 | 2,420 | |||||||||
| Finance costs | 6,325 | 5,910 | 19,429 | 16,419 | |||||||||
| Income tax expense | 4,087 | 5,322 | 24,068 | 19,225 | |||||||||
| Loss on sale of assets and liabilities held for sale (note 5) | 370 | - | 370 | - | |||||||||
| (Gain)/loss on disposal of property, plant and equipment | (8 | ) | (36 | ) | (753 | ) | 87 | ||||||
| Stock-based compensation | 202 | 229 | 1,180 | 894 | |||||||||
| Pension and other post-retirement benefits expense | 861 | 1,207 | 3,077 | 3,639 | |||||||||
| Contributions made to pension and other post-retirement benefits | (1,332 | ) | (1,574 | ) | (2,960 | ) | (3,366 | ) | |||||
| 62,114 | 64,264 | 226,465 | 205,352 | ||||||||||
| Changes in non-cash working capital items: | |||||||||||||
| Trade and other receivables | (20,978 | ) | 27,795 | (61,875 | ) | (34,859 | ) | ||||||
| Inventories | (21,349 | ) | (4,642 | ) | (16,969 | ) | (27,108 | ) | |||||
| Prepaid expenses and deposits | (4,857 | ) | (2,833 | ) | (10,239 | ) | (10,012 | ) | |||||
| Trade, other payables and provisions | 8,726 | (12,432 | ) | 35,386 | 77,997 | ||||||||
| 23,656 | 72,152 | 172,768 | 211,370 | ||||||||||
| Interest paid (excluding capitalized interest) | (6,320 | ) | (5,738 | ) | (17,434 | ) | (15,323 | ) | |||||
| Income taxes paid | (4,528 | ) | (16,522 | ) | (49,085 | ) | (31,551 | ) | |||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 12,808 | $ | 49,892 | $ | 106,249 | $ | 164,496 | |||||
| FINANCING ACTIVITIES: | |||||||||||||
| Increase in long-term debt | 13,116 | 245,313 | 32,145 | 282,266 | |||||||||
| Repayment of long-term debt | (10,327 | ) | (21,913 | ) | (61,743 | ) | (80,804 | ) | |||||
| Dividends paid | (2,582 | ) | (2,534 | ) | (7,703 | ) | (7,605 | ) | |||||
| Exercise of employee stock options | 1,869 | 1,467 | 10,658 | 1,826 | |||||||||
| NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES | $ | 2,076 | $ | 222,333 | $ | (26,643 | ) | $ | 195,683 | ||||
| INVESTING ACTIVITIES: | |||||||||||||
| Purchase of property, plant and equipment* | (45,404 | ) | (48,871 | ) | (137,109 | ) | (143,169 | ) | |||||
| Capitalized development costs | (3,999 | ) | (6,771 | ) | (11,570 | ) | (16,147 | ) | |||||
| Proceeds on sale of assets and liabilities held for sale (note 5) | 20,638 | - | 20,638 | - | |||||||||
| Proceeds on disposal of property, plant and equipment | 116 | 471 | 2,498 | 1,315 | |||||||||
| Purchase of non-controlling interest (note 2) | - | (235,667 | ) | - | (235,667 | ) | |||||||
| NET CASH USED IN INVESTING ACTIVITIES | $ | (28,649 | ) | $ | (290,838 | ) | $ | (125,543 | ) | $ | (393,668 | ) | |
| Effect of foreign exchange rate changes on cash and cash equivalents | 633 | 5,438 | 1,432 | 2,550 | |||||||||
| DECREASE IN CASH AND CASH EQUIVALENTS | (13,132 | ) | (13,175 | ) | (44,505 | ) | (30,939 | ) | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 21,028 | 38,460 | 52,401 | 56,224 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 7,896 | $ | 25,285 | $ | 7,896 | $ | 25,285 | |||||
*As at September 30, 2015, $5,799 (December 31, 2014 - $13,372) of purchases of property, plant and equipment remain unpaid.
See accompanying notes to the interim condensed consolidated financial statements.
Contact Information:
Fred Di Tosto
Chief Financial Officer
(416) 749-0314
(289) 982-3001 (FAX)
3210 Langstaff Road
Vaughan, Ontario L4K 5B2