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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Martinrea International Inc | TSX:MRE | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.29 | -2.39% | 11.82 | 11.78 | 11.90 | 12.14 | 11.79 | 12.14 | 93,109 | 21:11:08 |
Record Quarterly Revenues, Improving Operations
TORONTO, ONTARIO--(Marketwired - May 15, 2014) - Martinrea International Inc. (TSX:MRE), a leader in the production of quality metal parts, assemblies and modules and fluid management systems focused primarily on the automotive sector, announced today the release of its financial results for the first quarter ended March 31, 2014, record quarterly revenues, improving operations and a quarterly dividend.
HIGHLIGHTS
OVERVIEW
Nick Orlando, Martinrea's President and Chief Executive Officer, stated: "We are highly focused on improving our operations everywhere, including in our metal plants in the United States, which are showing improvement in the first quarter and year to date. The first quarter results are tempered somewhat because of launch costs from several launches and the issues we experienced at our Hopkinsville plant late last year which carried over into the first quarter, but we are making progress. Many of our plants, whether doing fluids, metallic, aluminum or assembly work, are performing very well financially. In terms of new business won since our last release just a few weeks ago, we have won approximately $40 million in incremental annualized business including $25 million in incremental volume on Daimler's next generation AMG V8 engine block starting in 2016, $10 million of incremental content on Ford's CD4.3 platform in both China and North America starting in 2016 and $5 million of business for the Company's Rollstar plant for Chrysler on its minivan line starting in 2016."
Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Revenues for our first quarter, excluding tooling revenues, were approximately $838 million, within the range of our previously announced sales guidance, and a record quarter for us. In the first quarter, our adjusted earnings per share, on a basic and diluted basis, was $0.21, after adjusting for relatively low unusual items in the nature of non-insured litigation costs, and within our recently announced quarterly guidance. The Martinrea Honsel operations contributed $0.12 per share to our first quarter results, a record contribution for us. The Martinrea Honsel operations benefitted from higher revenues, resulting from higher customer demand in Europe in the first quarter, in particular in our German operations. As a result of the strong performance of Martinrea Honsel, the value of the put option on the Company's balance sheet increased by $31 million during the quarter to $186 million at March 31, 2014, demonstrating the significant increase in value we have brought to that asset. While Martinrea Honsel is expected to continue to contribute strongly to our overall business, we anticipate that the next several quarters will contribute less earnings than the first quarter, as volumes will be somewhat lower and as we enter into a period of higher launch activity on business previously won and announced."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "While 2013 overall was a good year for us, we believe 2014 will be better overall. In our first quarter we started to see operational and financial improvements from the previous quarter. Most of our businesses are doing well-our aluminum and fluids businesses had strong quarters; our assembly operations are doing well; and many of our metallic plants are meeting or exceeding budget. Certain U.S. metallic plants are making the necessary improvements to operations that will improve margin. Our second quarter is expected to generate revenues for the quarter (excluding tooling revenues) in the range of $860 to $890 million and we believe our earnings per share will be in the range of 27 to 31 cents per share, one of the best quarters in our history from a financial point of view. Most of the profit improvement will come from our Martinrea Classic operations. Our Martinrea Honsel operations are anticipated to generate earnings per share in the range of 7 to 9 cents for the quarter. In summary, the future looks good for us. We are making good progress and are addressing our issues; our profitability overall is improving; our financial position is strong; we have a committed and strong independent board of directors and a dedicated team at the company focused on the future; and we will continue to improve."
RESULTS OF OPERATIONS
Martinrea currently employs over 13,000 skilled and motivated people in 38 plants in Canada, the United States, Mexico, Brazil, Europe, and China. 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 for the first quarter ended March 31, 2014 ("MD&A") dated as of May 15, 2014, the Company's unaudited interim condensed consolidated financial statements for the first quarter ended March 31, 2014 (the "unaudited consolidated financial statements") and the Company's Annual Information Form for the financial year ended December 31, 2013, can be found at www.sedar.com.
Non-IFRS Measures
The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-IFRS financial measures and ratios in this Press Release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures 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 the other financial measures determined in accordance with IFRS. Non-IFRS measures referred to in the analysis include "adjusted net earnings" and "adjusted earnings per share on a basic and diluted basis", and are defined in Table A under "Adjustments to Net Income" of this Press Release.
Revenue
Three months ended March 31, 2014 to three months ended March 31, 2013 comparison
Three months ended March 31, 2014 | Three months ended March 31, 2013 | $ Change | % Change | |||||||
North America | $ | 663,664 | $ | 610,531 | 53,133 | 8.7 | % | |||
Europe | 183,653 | 141,811 | 41,842 | 29.5 | % | |||||
Rest of World | 17,176 | 16,780 | 396 | 2.4 | % | |||||
Revenue | $ | 864,493 | $ | 769,122 | 95,371 | 12.4 | % |
The Company's consolidated revenues for the first quarter of 2014 increased by $95.4 million or 12.4% to $864.5 million as compared to $769.1 million for the first quarter of 2013. Revenues increased year-over-year across all operating segments.
Revenues for the first quarter of 2014 in the Company's North America operating segment increased by $53.1 million or 8.7% to $663.7 million from $610.5 million for the first quarter of 2013. The increase was due to an overall increase in North American OEM light vehicle production, in particular year-over-year increased production volumes on the GM Equinox/Terrain, Ford Fusion and Ford Escape, three of the Company's largest platforms, the launch of new programs during or subsequent to the first quarter of 2013, including GM's full size pick-up trucks, Chevrolet Impala and BMW X5, and the impact of foreign exchange on the translation of U.S. denominated production revenue, which had a positive impact on revenue for the first quarter of 2014 of $45.3 million. The increase in revenue was partially offset by a $29.1 million decrease in tooling revenues, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer.
Revenues for the first quarter of 2014 in the Company's Europe operating segment, comprised predominately of the European operations of Martinrea Honsel, increased by $41.8 million or 29.5% to $183.7 million from $141.8 million for the first quarter of 2013. The increase was due to the launch of new incremental aluminum business with Jaguar Land Rover including the sub-frame and shock towers for the new Range Rover Sport; an overall year-over-year increase in European OEM light vehicle production; a $6.1 million increase in tooling revenues; an $18.7 million benefit from the impact of foreign exchange on the translation of Euro denominated production revenue; and year-over-year increased production revenues in the Company's plant in Slovakia, which continues to ramp-up and launch its backlog of business.
Revenues for the first quarter of 2014 in the Company's Rest of World operating segment, currently comprised of the Brazilian operations of Martinrea Honsel and a facility in China in its early stages, increased by $0.4 million or 2.4% to $17.2 million from $16.8 million for the first quarter of 2013. The increase can be attributed to the launch of the Company's first product in China for the Ford CD4 program, which began to ramp up at the end of the second quarter of 2013, partially offset by a year-over-year decrease in production volumes in Brazil, the impact of foreign exchange on the translation of Brazilian Real denominated production revenue, which had a negative impact on revenue for the first quarter of 2014 of $0.8 million, and a year-over-year decrease in tooling revenue of $0.8 million.
Overall tooling revenue decreased by $23.8 million from $50.7 million for the first quarter of 2013 to $26.9 million for the first quarter of 2014.
Gross Margin
Three months ended March 31, 2014 to three months ended March 31, 2013 comparison
Three months ended March 31, 2014 | Three months ended March 31, 2013 | $ Change | % Change | |||||||
Gross margin | $ | 87,479 | $ | 75,715 | 11,764 | 15.5 | % | |||
% of revenue | 10.1 | % | 9.8 | % |
The gross margin percentage for the first quarter of 2014 of 10.1% increased as a percentage of revenue by 0.3% as compared to the gross margin percentage for the first quarter of 2013 of 9.8%. The increase in gross margin as a percentage of revenue was generally due to:
These factors were partially offset by:
The performance of the Company's operating facility in Hopkinsville, Kentucky continued to be impacted by launch costs and other operational expenses stemming from the operational issues experienced by the facility during the fourth quarter of 2013. The issues were rooted in serious equipment failures on two of the plant's large tonnage presses which has resulted in incremental premium costs as the facility deals with new program launches, customer-requested engineering changes, which have impacted productivity, and the overall ramp-up in production volumes being experienced in the automotive industry. The presses are currently operational but are not performing at optimal levels. Upgrades to the presses are planned during the 2014 summer and December holiday shutdowns in order to reduce the risk of any further failures and improve the performance of the presses. Notwithstanding the planned upgrades, progress is being made at improving efficiencies at this facility and costs are expected to subside, and margins improve, as operational improvements are made. The facility is focused on cost reduction and improving efficiency with the objective of expanding margin.
In addition to the expected productivity and efficiency improvements at certain operating facilities, in particular in Hopkinsville, Kentucky (as noted above), gross margin is expected to be positively impacted by incremental new business as the Company continues to work through the launch of a significant backlog of business over the next 36 months including the following awarded programs in addition to the programs referred to above: the next wave of Ford CD4 in Europe and North America, GM Omega aluminum engine cradle, GM 31XX (Traverse, SRX), Jaguar LandRover aluminum swivel bearing, Ford Transit, Nissan aluminum I4 engine block, Daimler aluminum transmission casing and engine cradle for the VW Golf.
Adjustments To Net Earnings
(Attributable to Equity Holders of the Company)
Adjusted net earnings exclude certain unusual items, as set out in the table below and described in the notes thereto. Management uses adjusted earnings 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 | |||||
March 31, 2014 | March 31, 2013 | (a-b | ) | |||
(a | ) | (b | ) | Change | ||
NET EARNINGS (A) | $16,691 | $19,888 | $(3,197 | ) | ||
Add back - Unusual Items: | ||||||
External legal and forensic accounting costs related to litigation (1) | 1,153 | - | 1,153 | |||
TOTAL UNUSUAL ITEMS BEFORE TAX | $1,153 | - | $1,153 | |||
Tax impact of above item | (288 | ) | - | (288 | ) | |
TOTAL UNUSUAL ITEMS AFTER TAX (B) | $865 | - | $865 | |||
ADJUSTED NET EARNINGS (A + B) | $17,556 | $19,888 | $(2,332 | ) | ||
Number of Shares Outstanding - Basic ('000) | 84,480 | 83,757 | ||||
Adjusted Basic Net Earnings Per Share | $0.21 | $0.24 | ||||
Number of Shares Outstanding - Diluted ('000) | 85,044 | 84,364 | ||||
Adjusted Diluted Net Earnings Per Share | $0.21 | $0.24 | ||||
(1) External Legal and Forensic Accounting Costs Related to Litigation
As previously disclosed, on September 26, 2013, a former director of the Company filed a statement of claim against the Company making certain allegations against the Company, certain directors and officers, and two Martinrea suppliers. Supervision of the litigation has been delegated to a Special Committee of the Board. Legal counsel has been retained to advise the Special Committee with respect to litigation and legal matters. The Special Committee has retained PricewaterhouseCoopers LLP as its independent financial experts to provide such financial and accounting advice and forensic services as the Special Committee may deem appropriate.
In addition, the Company and certain of its officers and directors have been served with a Notice of Action and Statement of Claim that was filed in Windsor, Ontario by an alleged shareholder (the "Statement of Claim"). In the Statement of Claim, the plaintiff seeks, among other things: an order certifying the proceeding as a class proceeding; a declaration that the defendants made negligent misrepresentations in the time period from March 6, 2006 to December 18, 2013 by representing that the Company's financial statements were prepared in accordance with GAAP and/or IFRS; an order granting leave to amend the claim to assert causes of action under the secondary market liability provisions of the Securities Act (Ontario); and special and general damages and costs of notice in the class action in the sum of $100 million.
The costs added back for adjusted net income purposes reflects the legal and forensic accounting costs incurred by the Company in relation to these matters that are not covered by insurance (recorded in SG&A expense). Further amounts related to the costs expensed to date may be recovered from the Company's insurance providers upon completion of their review of the costs incurred.
Net Earnings | |||||||||||
(Attributable to Equity Holders of the Company) | |||||||||||
Three months ended March 31, 2014 to three months ended March 31, 2013 comparison | |||||||||||
Three months ended March 31, 2014 | Three months ended March 31, 2013 | $ Change | % Change | ||||||||
Net Earnings | $ | 16,691 | $ | 19,888 | (3,197 | ) | (16.1 | %) | |||
Adjusted net earnings | $ | 17,556 | $ | 19,888 | (2,332 | ) | (11.7 | %) | |||
Net Earnings per common share | |||||||||||
Basic | $ | 0.20 | $ | 0.24 | |||||||
Diluted | $ | 0.20 | $ | 0.24 | |||||||
Adjusted Net Earnings per common share | |||||||||||
Basic | $ | 0.21 | $ | 0.24 | |||||||
Diluted | $ | 0.21 | $ | 0.24 |
Net earnings, before adjustments, for the first quarter of 2014 decreased by $3.2 million to $16.7 million from $19.9 million for the first quarter of 2013. Excluding $1.2 million in external legal and forensic accounting costs related to litigation incurred during the first quarter of 2014, as explained in Table A under "Adjustments to Net Earnings", the net earnings for the first quarter of 2014 decreased to $17.6 million or $0.21 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $19.9 million or $0.24 per share, on a basic and diluted basis, for the first quarter of 2013.
The net earnings for the first quarter of 2014, as compared to the first quarter of 2013, were negatively impacted by the following:
These factors were partially offset by the following:
The contribution of Martinrea Honsel to net earnings for the first quarter of 2014, after factoring in the interest costs incurred by Martinrea International on the debt issued to finance the acquisition and operations of Martinrea Honsel, increased to $0.12 per share from $0.04 per share in the first quarter of 2013. The increase was generally due to the addition of new incremental aluminum business with Jaguar LandRover, generally higher production volumes in Europe, improved pricing on certain long term customer contracts and ongoing productivity, efficiency improvements at certain facilities, in particular in Germany, and a lower effective tax rate resulting from the utilization of tax losses not previously benefitted.
Additions to Property, Plant and Equipment
Three months ended March 31, 2014 to three months ended March 31, 2013 comparison
Three months ended March 31, 2014 | Three months ended March 31, 2013 | $ Change | % Change | |||||||
Additions to Property, Plant and Equipment | $ | 37,051 | $ | 56,705 | (19,654 | ) | (34.7 | %) |
Additions to property, plant and equipment decreased by $19.7 million to $37.1 million in the first quarter of 2014 from $56.7 million in the first quarter of 2013. Additions as a percentage of revenue decreased to 4.3% for the first quarter of 2014 compared to 7.4% for the first quarter of 2013. Despite the decrease, 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 first quarter of 2014 continues to be for manufacturing equipment for programs launching over the next 24 months.
DIVIDEND
A cash dividend of $0.03 per share has been declared by the Board of Directors payable to shareholders of record on June 30, 2014 on or about July 15, 2014.
CONFERENCE CALL DETAILS
A conference call to discuss these results will be held on Friday, May 16, 2014 at 8:00 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 (800) 408-3053 (conference id 7928718#). The rebroadcast will be available until May 30, 2014.
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 related to the expectations and guidance as to revenue and gross margin percentage (and earnings per share), expansion of or improvements in gross margin, including due to positive impact from launches, statements as to the growth of the Company and pursuit of its strategies, the launching of new metal forming and fluid systems programs including expectations as to the financial impact of launches, the Company's expectations as to the contribution of Martinrea Honsel to the Company's business, statements as to the progress and expectations of operational and productivity improvements and operational and productivity efficiencies, the Company's expectations regarding the future amount and type of restructuring expenses to be expensed, statements as to the reduction of costs, including the expectation of a reduction in costs and inefficiencies and stabilization of and operational improvements at the Hopkinsville plant and expectations as to the continued operation of and successful upgrades to the presses, the Company's views on the long term outlook of the automotive industry and economic recovery, the Company's ability to capitalize on opportunities in the automotive industry and the successful integration of acquisitions, statements as to the recovery of litigation related expenses from insurance providers, 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:
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 | March 31, 2014 | December 31, 2013 | ||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 43,185 | $ | 56,224 | ||||||
Trade and other receivables | 4 | 654,971 | 541,598 | |||||||
Inventories | 5 | 329,961 | 302,810 | |||||||
Prepaid expenses and deposits | 14,726 | 13,128 | ||||||||
Income taxes recoverable | 3,998 | 3,727 | ||||||||
TOTAL CURRENT ASSETS | 1,046,841 | 917,487 | ||||||||
Property, plant and equipment | 6 | 887,202 | 847,548 | |||||||
Deferred income tax assets | 110,270 | 100,156 | ||||||||
Intangible assets | 7 | 62,754 | 59,640 | |||||||
TOTAL NON-CURRENT ASSETS | 1,060,226 | 1,007,344 | ||||||||
TOTAL ASSETS | $ | 2,107,067 | $ | 1,924,831 | ||||||
LIABILITIES | ||||||||||
Trade and other payables | 8 | $ | 686,950 | $ | 597,591 | |||||
Provisions | 9 | 5,230 | 6,362 | |||||||
Income taxes payable | 20,485 | 22,530 | ||||||||
Current portion of long-term debt | 10 | 51,204 | 37,276 | |||||||
TOTAL CURRENT LIABILITIES | 763,869 | 663,759 | ||||||||
Long-term debt | 10 | 455,809 | 434,501 | |||||||
Pension and other post-retirement benefits | 51,139 | 45,270 | ||||||||
Deferred income tax liabilities | 76,108 | 73,051 | ||||||||
Other financial liability | 3 | 185,664 | 154,239 | |||||||
TOTAL NON-CURRENT LIABILITIES | 768,720 | 707,061 | ||||||||
TOTAL LIABILITIES | $ | 1,532,589 | $ | 1,370,820 | ||||||
EQUITY | ||||||||||
Capital stock | 12 | 689,975 | 689,975 | |||||||
Contributed surplus | 44,963 | 44,853 | ||||||||
Other equity | 3 | (185,664 | ) | (154,239 | ) | |||||
Accumulated other comprehensive income | 52,452 | 26,085 | ||||||||
Accumulated deficit | (131,415 | ) | (142,376 | ) | ||||||
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | 470,311 | 464,298 | ||||||||
Non-controlling interest | 104,167 | 89,713 | ||||||||
TOTAL EQUITY | 574,478 | 554,011 | ||||||||
TOTAL LIABILITIES AND EQUITY | $ | 2,107,067 | $ | 1,924,831 |
See accompanying notes to the interim condensed consolidated financial statements. |
On behalf of the Board:
"Robert Wildeboer" Director
"Suleiman Rashid" Director
Martinrea International Inc. | ||||||||||
Interim Condensed Consolidated Statements of Operations | ||||||||||
(in thousands of Canadian dollars, except per share amounts) (unaudited) | ||||||||||
Three months ended | Three months ended | |||||||||
Note | March 31, 2014 | March 31, 2013 | ||||||||
SALES | $ | 864,493 | $ | 769,122 | ||||||
Cost of sales (excluding depreciation of property, plant and equipment) | (752,883 | ) | (672,332 | ) | ||||||
Depreciation of property, plant and equipment (production) | (24,131 | ) | (21,075 | ) | ||||||
Total cost of sales | (777,014 | ) | (693,407 | ) | ||||||
GROSS MARGIN | 87,479 | 75,715 | ||||||||
Research and development costs | (4,642 | ) | (4,168 | ) | ||||||
Selling, general and administrative | (43,331 | ) | (34,803 | ) | ||||||
Depreciation of property, plant and equipment (non-production) | (1,464 | ) | (1,474 | ) | ||||||
Amortization of customer contracts and relationships | (343 | ) | (486 | ) | ||||||
Loss on disposal of property, plant and equipment | (140 | ) | (111 | ) | ||||||
OPERATING INCOME | 37,559 | 34,673 | ||||||||
Finance expense | (5,179 | ) | (4,683 | ) | ||||||
Other finance income (expense) | (222 | ) | 983 | |||||||
INCOME BEFORE INCOME TAXES | 32,158 | 30,973 | ||||||||
Income tax expense | 11 | (5,499 | ) | (7,468 | ) | |||||
NET INCOME FOR THE PERIOD | $ | 26,659 | $ | 23,505 | ||||||
Non-controlling interest | (9,968 | ) | (3,617 | ) | ||||||
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | $ | 16,691 | $ | 19,888 | ||||||
Basic earnings per share | 13 | $ | 0.20 | $ | 0.24 | |||||
Diluted earnings per share | 13 | $ | 0.20 | $ | 0.24 |
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 | |||||||
March 31, 2014 | March 31, 2013 | |||||||
NET INCOME FOR THE PERIOD | $ | 26,659 | $ | 23,505 | ||||
Other comprehensive income, net of tax: | ||||||||
Items that may be reclassified to net income | ||||||||
Foreign currency translation differences for foreign operations | 30,853 | 12,470 | ||||||
Items that will not be reclassified to net income | ||||||||
Actuarial gains (losses) from the remeasurement of defined benefit plans | (3,195 | ) | 1,111 | |||||
Other comprehensive income, net of tax | 27,658 | 13,581 | ||||||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | $ | 54,317 | $ | 37,086 | ||||
Attributable to: | ||||||||
Equity holders of the Company | 39,863 | 32,086 | ||||||
Non-controlling interest | 14,454 | 5,000 | ||||||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | $ | 54,317 | $ | 37,086 |
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 | ||||||||||||||||||||||||
Cumulative | Non- | |||||||||||||||||||||||
Capital | Contributed | Other | translation | Accumulated | controlling | Total | ||||||||||||||||||
stock | surplus | equity | account | deficit | Total | interest | equity | |||||||||||||||||
Balance at December 31, 2012 | $ | 675,606 | $ | 46,897 | $ | (87,100 | ) | $ | (22,001 | ) | $ | (155,721 | ) | $ | 457,681 | $ | 66,240 | $ | 523,921 | |||||
Net income for the period | - | - | - | - | 19,888 | 19,888 | 3,617 | 23,505 | ||||||||||||||||
Compensation expense related to stock options | - | 315 | - | - | - | 315 | - | 315 | ||||||||||||||||
Change in fair value of put option granted to non-controlling interest | - | - | (3,963 | ) | - | - | (3,963 | ) | - | (3,963 | ) | |||||||||||||
Purchase of non-controlling interest (note 2) | - | - | - | (2,880 | ) | (2,880 | ) | (1,928 | ) | (4,808 | ) | |||||||||||||
Exercise of employee stock options | 9,438 | (2,321 | ) | - | - | - | 7,117 | - | 7,117 | |||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||
Actuarial gains from the remeasurement of defined benefit plans | - | - | - | - | 1,111 | 1,111 | - | 1,111 | ||||||||||||||||
Foreign currency translation differences | - | - | - | 11,087 | - | 11,087 | 1,383 | 12,470 | ||||||||||||||||
Balance at March 31, 2013 | 685,044 | 44,891 | (91,063 | ) | (10,914 | ) | (137,602 | ) | 490,356 | 69,312 | 559,668 | |||||||||||||
Net income (loss) for the period | - | - | - | - | (2,938 | ) | (2,938 | ) | 17,362 | 14,424 | ||||||||||||||
Compensation expense related to stock options | - | 1,297 | - | - | - | 1,297 | - | 1,297 | ||||||||||||||||
Change in fair value of put option granted to non-controlling interest | - | - | (63,176 | ) | - | - | (63,176 | ) | - | (63,176 | ) | |||||||||||||
Dividends ($0.09 per share) | - | - | - | - | (7,588 | ) | (7,588 | ) | - | (7,588 | ) | |||||||||||||
Exercise of employee stock options | 4,931 | (1,335 | ) | - | - | - | 3,596 | - | 3,596 | |||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||
Actuarial gains from the remeasurement of defined benefit plans | - | - | - | - | 5,752 | 5,752 | - | 5,752 | ||||||||||||||||
Foreign currency translation differences | - | - | - | 36,999 | - | 36,999 | 3,039 | 40,038 | ||||||||||||||||
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 | - | - | - | - | 16,691 | 16,691 | 9,968 | 26,659 | ||||||||||||||||
Compensation expense related to stock options | - | 110 | - | - | - | 110 | - | 110 | ||||||||||||||||
Dividends ($0.03 per share) | - | - | - | - | (2,535 | ) | (2,535 | ) | - | (2,535 | ) | |||||||||||||
Change in fair value of put option granted to non-controlling interest | - | - | (31,425 | ) | - | - | (31,425 | ) | - | (31,425 | ) | |||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||
Actuarial losses from the remeasurement of defined benefit plans | - | - | - | - | (3,195 | ) | (3,195 | ) | - | (3,195 | ) | |||||||||||||
Foreign currency translation differences | - | - | - | 26,367 | - | 26,367 | 4,486 | 30,853 | ||||||||||||||||
Balance at March 31, 2014 | $ | 689,975 | $ | 44,963 | $ | (185,664 | ) | $ | 52,452 | $ | (131,415 | ) | $ | 470,311 | $ | 104,167 | $ | 574,478 | ||||||
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 | ||||||||
March 31, 2014 | March 31, 2013 | ||||||||
CASH PROVIDED BY (USED IN): | |||||||||
OPERATING ACTIVITIES: | |||||||||
Net Income for the period | $ | 26,659 | $ | 23,505 | |||||
Adjustments for: | |||||||||
Depreciation of property, plant and equipment | 25,595 | 22,549 | |||||||
Amortization of customer contracts and relationships | 343 | 486 | |||||||
Amortization of development costs | 2,104 | 1,545 | |||||||
Accretion of interest on promissory note | - | (30 | ) | ||||||
Unrealized losses (gains) on foreign exchange forward contracts | 2,535 | (228 | ) | ||||||
Finance costs | 5,179 | 4,683 | |||||||
Income tax expense | 5,499 | 7,468 | |||||||
Loss on disposal of property, plant and equipment | 140 | 111 | |||||||
Stock-based compensation | 110 | 315 | |||||||
Pension and other post-retirement benefits expense | 1,167 | 1,202 | |||||||
Contributions made to pension and other post-retirement benefits | (1,028 | ) | (2,468 | ) | |||||
68,303 | 59,138 | ||||||||
Changes in non-cash working capital items: | |||||||||
Trade and other receivables | (95,491 | ) | (88,525 | ) | |||||
Inventories | (16,423 | ) | 2,843 | ||||||
Prepaid expenses and deposits | (1,111 | ) | 3,480 | ||||||
Trade, other payables and provisions | 69,431 | 36,927 | |||||||
24,709 | 13,863 | ||||||||
Interest paid (excluding capitalized interest) | (4,712 | ) | (3,731 | ) | |||||
Income taxes paid | (12,242 | ) | (4,741 | ) | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 7,755 | $ | 5,391 | |||||
FINANCING ACTIVITIES: | |||||||||
Dividends paid | (2,535 | ) | - | ||||||
Increase in long-term debt | 36,953 | 51,498 | |||||||
Repayment of long-term debt | (10,191 | ) | (5,856 | ) | |||||
Exercise of employee stock options | - | 7,117 | |||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | $ | 24,227 | $ | 52,759 | |||||
INVESTING ACTIVITIES: | |||||||||
Purchase of property, plant and equipment* | (42,823 | ) | (56,705 | ) | |||||
Capitalized development costs | (3,411 | ) | (3,122 | ) | |||||
Proceeds on disposal of property, plant and equipment | 593 | 28 | |||||||
Purchase of non-controlling interest (note 2) | - | (4,808 | ) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | $ | (45,641 | ) | $ | (64,607 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 620 | (1,351 | ) | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (13,039 | ) | (7,808 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 56,224 | 29,422 | |||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 43,185 | $ | 21,614 |
* As at March 31, 2014, $7,444 (December 31, 2013 - $13,216) of purchases of property, plant and equipment remain unpaid. |
See accompanying notes to the interim condensed consolidated financial statements. |
Martinrea International Inc.Fred Di TostoChief Financial Officer(416) 749-0314(289) 982-3001Martinrea International Inc.3210 Langstaff RoadVaughan, Ontario L4K 5B2
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