Martinrea International Inc. (TSX : MRE), a diversified and global
automotive supplier engaged in the design, development and
manufacturing of highly engineered, value-added Lightweight
Structures and Propulsion Systems, today announced the release of
its financial results for the third quarter ended September 30,
2022 and that it has declared a quarterly cash dividend of $0.05
per share.
THIRD QUARTER HIGHLIGHTS
- Total sales of $1,194.1 million, up
40.7% year-over-year, a quarterly record for the Company.
- Diluted net earnings per share of
$0.45 and Adjusted Net Earnings per Share(1) of $0.56.
- Adjusted Operating Income Margin(1)
of 5.8%.
- Adjusted EBITDA of $140.2 million,
a quarterly record for the Company.
- Third quarter financial results
demonstrated a solid improvement over the second quarter of 2022,
reflecting higher margins and increased production sales.
- Third quarter financial results
were much improved compared to the third quarter of 2021, as
semiconductor and other supply shortages had a pronounced impact on
prior-year volumes.
- 2023 is expected to be a strong
year, with higher sales, margins, earnings and Free Cash Flow(1)
compared to 2022.
- Net debt-to-Adjusted EBITDA(1)
ratio continues to strengthen.
- Quarterly cash dividend of $0.05
declared.
OVERVIEW
Pat D’Eramo, President and Chief Executive
Officer, stated: “Our third quarter financial results were a solid
improvement over our second quarter performance, on better
production sales and a higher Adjusted Operating Income Margin(1).
Compared to last quarter, third quarter results benefitted from
improved volume and mix, a reduction of launch related costs, and
continued improvements in our Martinrea Operating System or lean
activity. We also continue to make good progress on recovering
inflationary costs through commercial negotiations with our
customers. I am proud of the work our team has done here. These
negotiations have a lot of layers and are never simple, but we have
concluded several agreements on acceptable terms, and we expect to
see additional progress as the year comes to an end.”
He added: “Overall, our third quarter results
were as expected, and we expect a strong finish to the year with
good momentum into 2023. Having said that, we continue to face a
challenging environment on several fronts. While we have seen a
steady improvement in the production environment since last year,
we continue to deal with supply-related disruptions from several of
our customers. Inflationary cost pressures continue. Energy costs
remain a significant headwind in our European business.
Interest rates have risen and cut into our free cash flow. The good
news is we continue to expect that 2023 will mark the beginning of
a strong cycle for our business, with the majority of our plants
running at full or near-full capacity.”
Fred Di Tosto, Chief Financial Officer, stated:
“Sales for the third quarter, excluding tooling sales of $67.0
million, were $1,127.1 million, and Adjusted Net Earnings per
Share(1) was $0.56. Adjusted Operating Income(1) of $69.7 million
and Adjusted EBITDA(1) of $140.2 million were much improved over
the second quarter, up approximately 53% and 23% respectively.
Adjusted EBITDA(1) was a quarterly record for the Company. Overall,
a strong quarter in a challenging environment. Free Cash Flow(1)
was $64.1 million, up sharply over the prior quarter, reflecting
higher Adjusted EBITDA(1) and positive working capital flows. We
expect Free Cash Flow(1) to be positive for the full year of
2022.”
He continued: “Net Debt(1) was approximately
flat quarter over quarter at $928.2 million. Net Debt would have
actually decreased by greater than $40 million if not for foreign
exchange translations. Recall that under our amended
lending agreements with our banking syndicate that we announced
earlier this year, Adjusted EBITDA(1) is ignored for the third and
fourth quarters of 2021, with the remaining quarters in the
trailing twelve-month period pro-rated when calculating Net Debt to
Adjusted EBITDA(1) for covenant purposes. On this basis, our
calculated Net Debt to Adjusted EBITDA(1) ratio under the revised
terms was 2.17x in the third quarter, down from 2.38x in the second
quarter. A comfortable level, and well below the covenant maximum.
Our leverage ratio should naturally continue to improve in the
coming quarters as we generate an increasing amount of Adjusted
EBITDA(1) and Free Cash Flow(1), a portion of which we will use to
pay down debt. In sum, our balance sheet is in good shape. We have
strong relationships with our lenders, and we thank them for their
continued support.”
Rob Wildeboer, Executive Chairman, stated: “Our
third quarter financial results were outstanding, with record
sales, record Adjusted EBITDA(1), excellent Free Cash Flow(1) and
solid net earnings. Quite the accomplishment, especially in the
context of the challenging world in which we live. Headwinds
remain, from continued production volatility and stubbornly high
input costs. As such, we are updating our 2023 outlook. We now
expect 2023 total sales to be between $4.8 and $5.0 billion,
Adjusted Operating Income Margin(1) to be between 6%-7%, and Free
Cash Flow(1) to be between $150-$200 million. Next year is shaping
up to be the best year in our history, given anticipated volumes,
from a sales, earnings and cash flow perspective. We don’t have a
crystal ball, and we know we live in a turbulent world, but we are
confident that we will navigate our way through challenges as we
have in the past. Challenges are often opportunities, and they make
us better. We are very positive about our industry and our
future.”
_______________________________________________1The 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, included anywhere in this press release, include
“Adjusted Net Income”, “Adjusted Net Earnings per Share (on a basic
and diluted basis)”, “Adjusted Operating Income”, "Adjusted
EBITDA”, “Free Cash Flow” and “Net Debt”. The relevant IFRS
financial measure, as applicable, and a reconciliation of certain
non-IFRS financial measures to measures determined in accordance
with IFRS are contained in the Company’s Management Discussion and
Analysis for the three and nine months ended September 30, 2022 and
in this press release.
RESULTS OF OPERATIONS
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 three and nine
months ended September 30, 2022 (“MD&A”), the Company’s interim
condensed consolidated financial statements for the three and nine
months ended September 30, 2022 (the “interim financial
statements”) and the Company’s Annual Information Form for the year
ended December 31, 2021 can be found at www.sedar.com.
OVERALL RESULTS
Results of operations may include certain items
which have been separately disclosed, where appropriate, in order
to provide a clear assessment of the underlying Company results. In
addition to International Financial Reporting Standards ("IFRS")
measures, management uses non-IFRS measures in the Company’s
disclosures that it believes provide the most appropriate basis on
which to evaluate the Company’s results.
The following tables set out certain highlights
of the Company’s performance for the three and nine months ended
September 30, 2022 and 2021. Refer to the Company’s interim
financial statements for the three and nine months ended September
30, 2022 for a detailed account of the Company’s performance for
the periods presented in the tables below.
|
Three months endedSeptember 30,
2022 |
|
|
Three months endedSeptember 30,
2021 |
|
|
$ Change |
|
% Change |
|
Sales |
$ |
1,194,083 |
|
|
$ |
848,497 |
|
|
345,586 |
|
40.7 |
% |
Gross Margin |
|
152,534 |
|
|
|
50,007 |
|
|
102,527 |
|
205.0 |
% |
Operating Income (Loss) |
|
61,627 |
|
|
|
(16,234 |
) |
|
77,861 |
|
479.6 |
% |
Net
Income (Loss) for the period |
|
35,932 |
|
|
|
(17,120 |
) |
|
53,052 |
|
309.9 |
% |
Net Earnings (Loss) per Share - Basic and Diluted |
$ |
0.45 |
|
|
$ |
(0.21 |
) |
|
0.66 |
|
314.3 |
% |
Non-IFRS Measures* |
|
|
|
|
|
|
|
Adjusted Operating Income
(Loss) |
$ |
69,730 |
|
|
$ |
(16,234 |
) |
|
85,964 |
|
529.5 |
% |
% of Sales |
|
5.8 |
% |
|
|
(1.9 |
)% |
|
|
|
|
Adjusted EBITDA |
|
140,227 |
|
|
|
44,898 |
|
|
95,329 |
|
212.3 |
% |
% of Sales |
|
11.7 |
% |
|
|
5.3 |
% |
|
|
|
|
Adjusted Net Income (Loss) |
|
45,072 |
|
|
|
(17,120 |
) |
|
62,192 |
|
363.3 |
% |
Adjusted Net Earnings (Loss) per Share - Basic and Diluted |
$ |
0.56 |
|
|
$ |
(0.21 |
) |
|
0.77 |
|
366.7 |
% |
|
Nine months endedSeptember 30, 2022 |
|
|
Nine months endedSeptember 30, 2021 |
|
|
$ Change |
|
% Change |
|
Sales |
$ |
3,462,996 |
|
|
$ |
2,730,513 |
|
|
732,483 |
|
26.8 |
% |
Gross Margin |
|
400,759 |
|
|
|
282,592 |
|
|
118,167 |
|
41.8 |
% |
Operating Income |
|
147,219 |
|
|
|
65,817 |
|
|
81,402 |
|
123.7 |
% |
Net
Income for the period |
|
86,611 |
|
|
|
45,533 |
|
|
41,078 |
|
90.2 |
% |
Net Earnings per Share - Basic and Diluted |
$ |
1.08 |
|
|
$ |
0.57 |
|
|
0.51 |
|
89.5 |
% |
Non-IFRS Measures* |
|
|
|
|
|
|
|
Adjusted Operating Income |
$ |
159,559 |
|
|
$ |
71,290 |
|
|
88,269 |
|
123.8 |
% |
% of Sales |
|
4.6 |
% |
|
|
2.6 |
% |
|
|
|
|
Adjusted EBITDA |
|
366,898 |
|
|
|
254,331 |
|
|
112,567 |
|
44.3 |
% |
% of Sales |
|
10.6 |
% |
|
|
9.3 |
% |
|
|
|
|
Adjusted Net Income |
|
95,385 |
|
|
|
42,537 |
|
|
52,848 |
|
124.2 |
% |
Adjusted Net Earnings per Share - Basic and Diluted |
$ |
1.19 |
|
|
$ |
0.53 |
|
|
0.66 |
|
124.5 |
% |
*Non-IFRS Measures
The Company prepares its interim financial
statements in accordance with 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 (Loss)”, “Adjusted Net
Earnings (Loss) per Share (on a basic and diluted basis)”,
“Adjusted Operating Income (Loss)”, "Adjusted EBITDA”, “Free Cash
Flow”, and “Net Debt”.
The following tables provide a reconciliation of
IFRS “Net Income (Loss)” to Non-IFRS “Adjusted Net Income (Loss)”,
“Adjusted Operating Income (Loss)” and “Adjusted EBITDA”:
|
Three months endedSeptember 30,
2022 |
|
Three months endedSeptember 30,
2021 |
|
Net Income (Loss) |
$ |
35,932 |
|
$ |
(17,120 |
) |
Adjustments, after tax* |
|
9,140 |
|
|
— |
|
Adjusted Net Income (Loss) |
$ |
45,072 |
|
$ |
(17,120 |
) |
|
Nine months endedSeptember 30, 2022 |
|
Nine months endedSeptember 30, 2021 |
Net Income |
$ |
86,611 |
|
$ |
45,533 |
|
Adjustments, after tax* |
|
8,774 |
|
|
(2,996 |
) |
Adjusted Net Income |
$ |
95,385 |
|
$ |
42,537 |
|
*Adjustments are explained in the "Adjustments
to Net Income (Loss)" section of this Press Release
|
Three months endedSeptember 30,
2022 |
|
|
Three months endedSeptember 30,
2021 |
|
Net Income (Loss) |
$ |
35,932 |
|
|
$ |
(17,120 |
) |
Income tax expense
(recovery) |
|
14,647 |
|
|
|
(5,541 |
) |
Other finance income |
|
(5,038 |
) |
|
|
(2,341 |
) |
Share of loss of equity
investments |
|
1,043 |
|
|
|
871 |
|
Finance expense |
|
15,043 |
|
|
|
7,897 |
|
Adjustments, before tax* |
|
8,103 |
|
|
|
— |
|
Adjusted Operating Income (Loss) |
$ |
69,730 |
|
|
$ |
(16,234 |
) |
Depreciation of property, plant and equipment and right-of-use
assets |
|
68,788 |
|
|
|
58,023 |
|
Amortization of development
costs |
|
2,817 |
|
|
|
3,011 |
|
Loss
(gain) on disposal of property, plant and equipment |
|
(1,108 |
) |
|
|
98 |
|
Adjusted EBITDA |
$ |
140,227 |
|
|
$ |
44,898 |
|
|
Nine months endedSeptember 30, 2022 |
|
|
Nine months endedSeptember 30, 2021 |
|
Net Income |
$ |
86,611 |
|
|
$ |
45,533 |
|
Income tax expense |
|
31,774 |
|
|
|
14,791 |
|
Other finance income |
|
(6,168 |
) |
|
|
(13,691 |
) |
Share of loss of equity
investments |
|
3,409 |
|
|
|
2,780 |
|
Finance expense |
|
35,643 |
|
|
|
24,204 |
|
Adjustments, before tax* |
|
8,290 |
|
|
|
(2,327 |
) |
Adjusted Operating Income |
$ |
159,559 |
|
|
$ |
71,290 |
|
Depreciation of property, plant and equipment and right-of-use
assets |
|
200,393 |
|
|
|
173,300 |
|
Amortization of development
costs |
|
8,136 |
|
|
|
9,577 |
|
Loss
(gain) on disposal of property, plant and equipment |
|
(1,190 |
) |
|
|
164 |
|
Adjusted EBITDA |
$ |
366,898 |
|
|
$ |
254,331 |
|
*Adjustments are explained in the "Adjustments
to Net Income (Loss)" section of this Press Release
SALES
Three months ended September 30,
2022 to three months ended
September 30, 2021 comparison
|
Three months endedSeptember 30,
2022 |
|
|
Three months endedSeptember 30,
2021 |
|
|
$ Change |
|
% Change |
|
North America |
$ |
887,372 |
|
|
$ |
625,339 |
|
|
262,033 |
|
41.9 |
% |
Europe |
|
264,373 |
|
|
|
195,786 |
|
|
68,587 |
|
35.0 |
% |
Rest of the World |
|
48,049 |
|
|
|
34,697 |
|
|
13,352 |
|
38.5 |
% |
Eliminations |
|
(5,711 |
) |
|
|
(7,325 |
) |
|
1,614 |
|
22.0 |
% |
Total Sales |
$ |
1,194,083 |
|
|
$ |
848,497 |
|
|
345,586 |
|
40.7 |
% |
The Company’s consolidated sales for the third
quarter of 2022 increased by $345.6 million or 40.7% to $1,194.1
million as compared to $848.5 million for the third quarter of
2021. The total increase in sales was driven by year-over-year
increases across all operating segments.
Sales for the third quarter of 2022 in the
Company’s North America operating segment increased by $262.0
million or 41.9% to $887.4 million from $625.3 million for the
third quarter of 2021. The increase was due generally to the
recovery in production volumes of certain light vehicle platforms
that were disproportionately impacted by the industry-wide shortage
of semiconductor chips during 2021; the launch and ramp up of new
programs, including the new Jeep Grand Cherokee and Wagoneer,
Nissan Pathfinder, Ford Mustang Mach E, Lucid Air, Tesla Model Y,
and Mercedes' new electric vehicle platform (EVA2); 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 2022 of $26.2 million as compared to the third quarter
of 2021; the impact of material passthrough on customer pricing;
and an increase in tooling sales of $5.4 million, which are
typically dependent on the timing of tooling construction and final
acceptance by the customer. Overall third quarter OEM light vehicle
production volumes in North America increased by approximately 24%
year-over-year, with the industry-wide shortage of semiconductor
chips negatively impacting prior year volumes.
Sales for the third quarter of 2022 in the
Company’s Europe operating segment increased by $68.6 million or
35.0% to $264.4 million from $195.8 million for the third quarter
of 2021. The increase was due to overall higher OEM light vehicle
production volumes, which increased in Europe by approximately 20%
year-over-year, primarily as a result of the industry-wide shortage
of semiconductor chips during 2021; the launch and ramp up of new
programs, including Mercedes' new electric vehicle platform (EVA2)
and the Lucid Air; the impact of material passthrough on customer
pricing; and a $9.2 million increase in tooling sales. These
positive factors were partially offset by the impact of foreign
exchange on the translation of Euro denominated production sales,
which had a negative impact on overall sales for the third quarter
of 2022 of $26.9 million as compared to the third quarter of
2021.
Sales for the third quarter of 2022 in the
Company’s Rest of the World operating segment increased by $13.4
million or 38.5% to $48.0 million from $34.7 million in the third
quarter of 2021. The increase was largely driven by overall higher
OEM light vehicle production volumes across several platforms; the
launch and ramp up of new programs, namely with Geely; and a $0.8
million increase in tooling sales. These positive factors were
partially offset by a $0.2 million negative foreign exchange impact
from the translation of foreign denominated production sales as
compared to the third quarter of 2021.
Overall tooling sales increased by $15.7 million
(including outside segment sales eliminations) to $67.0 million for
the third quarter of 2022 from $51.3 million for the third quarter
of 2021.
Nine months ended September 30,
2022 to nine months ended
September 30, 2021 comparison
|
Nine months endedSeptember 30, 2022 |
|
|
Nine months endedSeptember 30, 2021 |
|
|
$ Change |
|
% Change |
|
North America |
$ |
2,573,796 |
|
|
$ |
1,965,292 |
|
|
608,504 |
|
31.0 |
% |
Europe |
|
781,667 |
|
|
|
660,831 |
|
|
120,836 |
|
18.3 |
% |
Rest of the World |
|
126,475 |
|
|
|
125,766 |
|
|
709 |
|
0.6 |
% |
Eliminations |
|
(18,942 |
) |
|
|
(21,376 |
) |
|
2,434 |
|
11.4 |
% |
Total Sales |
$ |
3,462,996 |
|
|
$ |
2,730,513 |
|
|
732,483 |
|
26.8 |
% |
The Company’s consolidated sales for the nine
months ended September 30, 2022 increased by $732.5 million or
26.8% to $3,463.0 million as compared to $2,730.5 million for the
nine months ended September 30, 2021. Sales for the nine months
ended September 30, 2022 increased across all operating
segments.
Sales for the nine months ended September 30,
2022 in the Company’s North America operating segment increased by
$608.5 million or 31.0% to $2,573.8 million from $1,965.3 million
for the nine months ended September 30, 2021. The increase was due
generally to the recovery in production volumes of certain light
vehicle platforms that were disproportionately impacted by the
industry-wide shortage of semiconductor chips during 2021; the
launch and ramp up of new programs, including the new Jeep Grand
Cherokee and Wagoneer, Nissan Pathfinder, Ford Mustang Mach E,
Lucid Air, Tesla Model Y, and Mercedes' new electric vehicle
platform (EVA2); 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, 2022 of $39.8 million as compared to the
corresponding period of 2021. These positive factors were partially
offset by a decrease in tooling sales of $7.3 million, which are
typically dependent on the timing of tooling construction and final
acceptance by the customer.
Sales for the nine months ended September 30,
2022 in the Company’s Europe operating segment increased by $120.8
million or 18.3% to $781.7 million from $660.8 million for the nine
months ended September 30, 2021. The increase can be attributed to
the recovery in production volumes of certain light vehicle
platforms that were disproportionately impacted by the
industry-wide shortage of semiconductor chips during 2021; the
launch and ramp up of new programs including Mercedes' new electric
vehicle platform (EVA2) and the Lucid Air; the impact of material
passthrough on customer pricing; and a $19.0 million increase in
tooling sales. These positive factors were partially offset by 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, 2022 of $64.9 million as
compared to the corresponding period of 2021.
Sales for the nine months ended September 30,
2022 in the Company’s Rest of the World operating segment increased
by $0.7 million or 0.6% to $126.5 million from $125.8 million for
the nine months ended September 30, 2021. The increase was largely
driven by overall higher OEM light vehicle production volumes
across several platforms; the launch and ramp up of new programs
namely with Geely; and a $1.9 million positive foreign exchange
impact from the translation of foreign denominated production sales
as compared to the corresponding period of 2021.These positive
factors were partially offset by a program that came with the
operations acquired from Metalsa that ended production during or
subsequent to the nine months ended September 30, 2021; and a
decrease in tooling sales of $0.1 million.
Overall tooling sales increased by $10.5 million
(including outside segment sales eliminations) to $180.8 million
for the nine months ended September 30, 2022 from $170.3 million
for the nine months ended September 30, 2021.
GROSS MARGIN
Three months ended
September 30, 2022 to three months
ended September 30, 2021
comparison
|
Three months endedSeptember 30,
2022 |
|
|
Three months endedSeptember 30,
2021 |
|
|
$ Change |
|
% Change |
|
Gross margin |
$ |
152,534 |
|
|
$ |
50,007 |
|
|
102,527 |
|
205.0 |
% |
% of
Sales |
|
12.8 |
% |
|
|
5.9 |
% |
|
|
|
|
The gross margin percentage for the third
quarter of 2022 of 12.8% increased as a percentage of sales by 6.9%
as compared to the gross margin percentage for the third quarter of
2021 of 5.9%. The increase in gross margin as a percentage of sales
was generally due to:
- overall higher production sales
volume and corresponding higher utilization of assets;
- a positive sales mix;
- favourable commercial settlements;
and
- productivity and efficiency
improvements at certain operating facilities.
These factors were partially offset by:
- higher labour, material and energy
costs;
- operational inefficiencies at
certain operating facilities including launch related costs and
upfront costs incurred in preparation of upcoming new
programs;
- the impact of material passthrough
on customer pricing; and
- a decrease in COVID-related
government subsidies.
Gross margin for the third quarter of 2022
continued to be impacted by production inefficiencies related to
the semiconductor chip shortage and other supply chain disruptions
driven by the unpredictability of customer production
schedules.
Nine months ended September 30,
2022 to nine months ended
September 30, 2021 comparison
|
Nine months endedSeptember 30, 2022 |
|
|
Nine months endedSeptember 30, 2021 |
|
|
$ Change |
|
% Change |
|
Gross margin |
$ |
400,759 |
|
|
$ |
282,592 |
|
|
118,167 |
|
41.8 |
% |
% of
Sales |
|
11.6 |
% |
|
|
10.3 |
% |
|
|
|
|
The gross margin percentage for the nine months
ended September 30, 2022 of 11.6% increased as a percentage of
sales by 1.3% as compared to the gross margin percentage for the
nine months ended September 30, 2021 of 10.3%. The increase in
gross margin as a percentage of sales was generally due to:
- overall higher production sales
volume and corresponding higher utilization of assets;
- a positive sales mix;
- favourable commercial settlements;
and
- productivity and efficiency
improvements at certain operating facilities.
These factors were partially offset by:
- higher labour, material and energy
costs;
- operational inefficiencies at
certain operating facilities including launch related costs and
upfront costs incurred in preparation of upcoming new
programs;
- the impact of material passthrough
on customer pricing; and
- a decrease in COVID-related
government subsidies.
Gross margin for the nine months ended September
30, 2022 continued to be impacted by production inefficiencies
related to the semiconductor chip shortage and other supply chain
disruptions driven by the unpredictability of customer production
schedules.
ADJUSTMENTS TO NET INCOME (LOSS)
Adjusted Net Income (Loss) excludes certain
items as set out in the following tables and described in the notes
thereto. Management uses Adjusted Net Income (Loss) 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, 2022 to three months
ended September 30, 2021
comparison
|
Three months endedSeptember 30,
2022 |
|
|
Three months endedSeptember 30,
2021 |
|
|
$ Change |
|
NET INCOME (LOSS) |
$ |
35,932 |
|
|
$ |
(17,120 |
) |
|
$ |
53,052 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Impairment of assets (1) |
|
4,494 |
|
|
|
— |
|
|
|
4,494 |
|
Restructuring costs (2) |
|
3,609 |
|
|
|
— |
|
|
|
3,609 |
|
ADJUSTMENTS, BEFORE TAX |
$ |
8,103 |
|
|
$ |
— |
|
|
$ |
8,103 |
|
|
|
|
|
|
|
Tax impact of adjustments |
|
(180 |
) |
|
|
— |
|
|
|
(180 |
) |
Writedown of deferred tax asset (1) |
|
1,217 |
|
|
|
— |
|
|
|
1,217 |
|
ADJUSTMENTS, AFTER TAX |
$ |
9,140 |
|
|
$ |
— |
|
|
$ |
9,140 |
|
|
|
|
|
|
|
ADJUSTED NET INCOME (LOSS) |
$ |
45,072 |
|
|
$ |
(17,120 |
) |
|
$ |
62,192 |
|
|
|
|
|
|
|
Number of Shares Outstanding –
Basic (‘000) |
|
80,387 |
|
|
|
80,354 |
|
|
|
Adjusted Basic Net Earnings
(Loss) Per Share |
$ |
0.56 |
|
|
$ |
(0.21 |
) |
|
|
Number of Shares Outstanding –
Diluted (‘000) |
|
80,387 |
|
|
|
80,354 |
|
|
|
Adjusted Diluted Net Earnings (Loss) Per Share |
$ |
0.56 |
|
|
$ |
(0.21 |
) |
|
|
TABLE B
Nine months ended September 30,
2022 to nine months ended
September 30, 2021 comparison
|
Nine months endedSeptember 30, 2022 |
|
|
Nine months endedSeptember 30, 2021 |
|
|
$ Change |
|
NET INCOME |
$ |
86,611 |
|
|
$ |
45,533 |
|
|
$ |
41,078 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Impairment of assets (1) |
|
4,494 |
|
|
|
— |
|
|
|
4,494 |
|
Restructuring costs (2) |
|
7,846 |
|
|
|
5,473 |
|
|
|
2,373 |
|
Gain on dilution of equity
investments (3) |
|
(4,050 |
) |
|
|
(7,800 |
) |
|
|
3,750 |
|
ADJUSTMENTS, BEFORE TAX |
$ |
8,290 |
|
|
$ |
(2,327 |
) |
|
$ |
10,617 |
|
|
|
|
|
|
|
Tax impact of adjustments |
|
(733 |
) |
|
|
(669 |
) |
|
|
(64 |
) |
Writedown of deferred tax asset (1) |
|
1,217 |
|
|
|
— |
|
|
|
1,217 |
|
ADJUSTMENTS, AFTER TAX |
$ |
8,774 |
|
|
$ |
(2,996 |
) |
|
$ |
11,770 |
|
|
|
|
|
|
|
ADJUSTED NET INCOME |
$ |
95,385 |
|
|
$ |
42,537 |
|
|
$ |
52,848 |
|
|
|
|
|
|
|
Number of Shares Outstanding –
Basic (‘000) |
|
80,376 |
|
|
|
80,327 |
|
|
|
Adjusted Basic Net Earnings
Per Share |
$ |
1.19 |
|
|
$ |
0.53 |
|
|
|
Number of Shares Outstanding –
Diluted (‘000) |
|
80,376 |
|
|
|
80,434 |
|
|
|
Adjusted Diluted Net Earnings Per Share |
$ |
1.19 |
|
|
$ |
0.53 |
|
|
|
(1) Impairment of
assets
During the third quarter of 2022, the Company
recorded impairment charges on property, plant, equipment, right of
use assets, and inventories totaling $4.5 million representing a
writedown of the total assets of a Cash Generating Unit (“CGU”) in
China, comprised of two operating facilities originally acquired
from Metalsa S.A in 2020, included in the Rest of the World
operating segment. The impairment charges resulted from the
cancellation of the OEM light vehicle platforms being serviced by
the CGU before the end of their expected life cycles. This has led
to a decision to close the facilities. The impairment charges were
recorded where the carrying amount of the assets exceeded their
estimated recoverable amounts. The decision to close the facilities
also resulted in a writedown of deferred tax assets of $1.2
million.
(2) Restructuring
costs
Additions to the restructuring provision during
the three and nine months ended September 30, 2022 totaled $3.6
million and $7.8 million, respectively, and represent
employee-related severance resulting from the rightsizing of
operations in Canada and China related to the cancellation of
certain OEM light vehicle platforms before the end of their
expected life cycle.
Additions to the restructuring provision during
the nine months ended September 30, 2021, totaled $5.5 million and
represent employee-related severance resulting from the rightsizing
of an operating facility in Germany.
(3) Gain on dilution of
equity investments
As at December 31, 2021, the Company held
35,045,954 common shares of NanoXplore Inc. (“NanoXplore”)
representing a 22.2% equity interest in NanoXplore (on a
non-diluted basis). On February 24, 2022, NanoXplore closed a
bought deal public offering of 6,522,000 common shares from
treasury at a price of $4.60 per common share for aggregate gross
proceeds of $30.0 million. Upon finalization of the transaction,
the Company’s net ownership interest decreased to 21.2% from 22.2%.
This dilution resulted in a deemed disposition of a portion of the
Company’s ownership interest in NanoXplore, resulting in a gain on
dilution of $4.1 million during the first quarter of 2022.
As at December 31, 2020, the Company held
34,045,954 common shares of NanoXplore representing a 23.3% equity
interest in NanoXplore (on a non-diluted basis). On February 12,
2021, NanoXplore completed a public offering of 11,500,000 common
shares for gross proceeds of $46.0 million. In a separate
transaction on February 12, 2021, the Company purchased 1,000,000
common shares from NanoXplore's President and Chief Executive
Officer for consideration of $4.0 million. Subsequent to these
transactions, the Company's net ownership interest decreased to
22.2% from 23.3%. This dilution resulted in a deemed disposition of
a portion of the Company’s ownership interest in NanoXplore,
resulting in a gain on dilution of $7.8 million during the first
quarter of 2021.
NET INCOME (LOSS)
Three months ended September 30,
2022 to three months ended
September 30, 2021 comparison
|
Three months endedSeptember 30,
2022 |
|
Three months endedSeptember 30,
2021 |
|
|
$ Change |
|
% Change |
|
Net Income (Loss) |
$ |
35,932 |
|
$ |
(17,120 |
) |
|
53,052 |
|
309.9 |
% |
Adjusted Net Income
(Loss) |
|
45,072 |
|
$ |
(17,120 |
) |
|
62,192 |
|
363.3 |
% |
Net Earnings (Loss) per
Share |
|
|
|
|
|
|
|
Basic and Diluted |
$ |
0.45 |
|
$ |
(0.21 |
) |
|
|
|
|
Adjusted Net Earnings (Loss)
per Share |
|
|
|
|
|
|
|
Basic and Diluted |
$ |
0.56 |
|
$ |
(0.21 |
) |
|
|
|
|
Net Income, before adjustments, for the third
quarter of 2022 increased by $53.1 million to $35.9 million or
$0.45 per share, on a basic and diluted basis, from a Net Loss of
$17.1 million or $(0.21) per share, on a basic and diluted basis,
for the third quarter of 2021. Excluding the adjustments explained
in Table A under “Adjustments to Net Income (Loss)”, Adjusted Net
Income for the third quarter of 2022 increased by $62.2 million to
$45.1 million or $0.56 per share, on a basic and diluted basis,
from an Adjusted Net Loss of $17.1 million or $(0.21) per share, on
a basic and diluted basis, for the third quarter of 2021.
Adjusted Net Income for the third quarter of
2022, as compared to the third quarter of 2021, was positively
impacted by the following:
- higher gross
profit margin on higher year-over-year sales volume as previously
explained;
- a net foreign exchange gain of $5.0
million for the third quarter of 2022 compared to a gain of $2.4
million for the third quarter of 2021; and
- a lower effective tax rate on
adjusted income (23.2% for the third quarter of 2022 compared to
24.5% for the third quarter of 2021).
These factors were partially offset by the
following:
- a year-over-year increase in
SG&A expense, as previously explained; and
- a $7.1 million
year-over-year increase in finance expense as a result of increased
debt levels and borrowing rates on the Company's revolving bank
debt.
Nine months ended September 30,
2022 to nine months ended
September 30, 2021 comparison
|
Nine months endedSeptember 30, 2022 |
|
Nine months endedSeptember 30, 2021 |
|
$ Change |
|
% Change |
|
Net Income |
$ |
86,611 |
|
$ |
45,533 |
|
41,078 |
|
90.2 |
% |
Adjusted Net Income |
|
95,385 |
|
$ |
42,537 |
|
52,848 |
|
124.2 |
% |
Net Earnings per Share |
|
|
|
|
|
|
|
Basic and Diluted |
$ |
1.08 |
|
$ |
0.57 |
|
|
|
|
Adjusted Net Earnings per
Share |
|
|
|
|
|
|
|
Basic and Diluted |
$ |
1.19 |
|
$ |
0.53 |
|
|
|
|
Net Income, before adjustments, for the nine
months ended September 30, 2022 increased by $41.1 million to $86.6
million or $1.08 per share, on a basic and diluted basis, from
$45.5 million or $0.57 per share, on a basic and diluted basis, for
the nine months ended September 30, 2021. Excluding the adjustments
explained in Table B under “Adjustments to Net Income (Loss)”,
Adjusted Net Income for the nine months ended September 30, 2022
increased by $52.8 million to $95.4 million or $1.19 per share, on
a basic and diluted basis, from $42.5 million or $0.53 per share,
on a basic and diluted basis, for the nine months ended September
30, 2021.
Adjusted Net Income for the nine months ended
September 30, 2022, as compared to the nine months ended September
30, 2021, was positively impacted by the following:
- higher gross
profit margin on higher year-over-year sales volume as previously
explained; and
- a lower effective tax rate on
adjusted income (24.7% for the nine months ended September 30, 2022
compared to 26.7% for the nine months ended September 30,
2021).
These factors were partially offset by the
following:
- a year-over-year increase in
SG&A expense, as previously explained;
- an $11.4 million year-over-year
increase in finance expense as a result of increased debt levels
and borrowing rates on the Company's revolving bank debt;
- a net foreign exchange gain of $5.9
million for the nine months ended September 30, 2022 compared to a
gain of $12.9 million for the nine months ended September 30, 2021;
and
- a
year-over-year increase in research and development costs.
DIVIDEND
A cash dividend of $0.05 per share has been
declared by the Board of Directors payable to shareholders of
record on December 31, 2022, on or about January 15, 2023.
ABOUT MARTINREA INTERNATIONAL
INC.
Martinrea is a diversified and global automotive
supplier engaged in the design, development and manufacturing of
highly engineered, value-added Lightweight Structures and
Propulsion Systems. Martinrea operates in 57 locations in Canada,
the United States, Mexico, Brazil, Germany, Slovakia, Spain, China,
South Africa and Japan. Martinrea’s vision is making lives better
by being the best supplier we can be in the products we make and
the services we provide. For more information on Martinrea, please
visit www.martinrea.com. Follow Martinrea on Twitter and
Facebook.
CONFERENCE CALL DETAILS
A conference call to discuss the financial
results will be held on Tuesday, November 1, 2022 at 5:30 p.m.
Eastern Time. To participate, please dial 416-641-6104 (Toronto
area) or 800-952-5114 (toll free Canada and US) and enter
participant code 8174433#. Please call 10 minutes prior to the
start of the conference call.
The conference call will also be webcast live in
listen‐only mode and archived for twelve months. The webcast and
accompanying presentation can be accessed online at
https://www.martinrea.com/investor-relations/events-presentations/.
There will also be a rebroadcast of the call
available by dialing 905-694-9451 or toll free 800-408-3053
(Conference ID – 8602412#). The rebroadcast will be available until
December 4, 2022.
If you have any teleconferencing questions,
please call Ganesh Iyer at 416-749-0314.
FORWARD-LOOKING INFORMATION
Special Note Regarding Forward-Looking
Statements
This Press Release and the documents
incorporated by reference therein contains forward-looking
statements within the meaning of applicable Canadian securities
laws including statements related to the growth or expectations of,
improvements in, expansion of and/or guidance or outlook (including
for 2022 and 2023) as to future results, revenue, sales, margin,
gross margin, earnings, and earnings per share, adjusted earnings
per share, free cash flow, volumes, adjusted net earnings per
share, operating income margins, operating margins, adjusted
operating income margins, leverage ratios, debt repayment, progress
on commercial negotiations, the growth of the Company and pursuit
of, and belief in, its strategies, its near and long-term potential
growth and continued improvement in results; the Company’s belief
about next year and strength of its future, the strength, recovery
and growth of the automotive industry and continuing challenges
(including supply chain, energy, inflation, erratic production
schedules), expectations for improvement in supply chain
bottlenecks; and the payment of dividends 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, such as expected sales and industry production
estimates, current foreign exchange rates, timing of product
launches and operational improvement during the period, and current
Board approved budgets. 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
for the year ended December 31, 2021, the Company’s MD&A for
the year ended December 31, 2021 and other public filings which can
be found at www.sedar.com:
- North American and Global Economic
and Political Conditions and Consumer Confidence;
- The highly cyclical nature of the
automotive industry and the industry’s dependence on consumer
spending and general economic conditions;
- Automotive Industry Risks;
- Pandemics and Epidemics (including
the ongoing COVID-19 Pandemic), Force Majeure Events, Natural
Disasters, Terrorist Activities, Political and Civil Unrest, and
Other Outbreaks;
- Dependence Upon Key Customers;
- Financial Viability of Suppliers
and Key Suppliers and Supply Disruptions;
- Competition;
- Cost and Risk Absorption and
Purchase Orders, including the increasing pressure on the Company
to absorb costs related to product design and development,
engineering, program management, prototypes, validation and
tooling;
- Quote/Pricing Assumptions;
- Increased pricing of raw materials
and commodities;
- Launch and Operational Costs and
Cost Structure;
- Material Prices and
Volatility;
- Fluctuations in Operating
Results;
- Outsourcing and Insourcing
Trends;
- Product Warranty, Recall, Product
Liability and Liability Risk;
- Product Development and
Technological Change;
- A Shift Away from Technologies in
Which the Company is Investing;
- Dependence Upon Key Personnel;
- Limited Financial
Resources/Uncertainty of Future Financing/Banking;
- Cybersecurity Threats;
- Acquisitions;
- Potential Tax Exposures;
- Potential Rationalization Costs,
Turnaround Costs and Impairment Charges;
- Labour Relations Matters;
- Trade Restrictions;
- Changes in Laws and Governmental
Regulations;
- Environmental Regulation and
Climate Change;
- Litigation and Regulatory
Compliance and Investigations;
- Risks of conducting business in
foreign countries, including China, Brazil and other growing
markets;
- Currency Risk – Hedging;
- Currency Risk - Competitiveness in
Certain Jurisdictions;
- Internal Controls Over Financial
Reporting and Disclosure Controls and Procedures;
- Loss of Use of Key Manufacturing
Facilities;
- Intellectual Property;
- Availability of Consumer Credit or
Cost of Borrowing;
- Competition with Low Cost
Countries;
- The Company’s ability to shift its
manufacturing footprint to take advantage of opportunities in
growing markets;
- Change in the Company’s mix of
earnings between jurisdictions with lower tax rates and those with
higher tax rates;
- Pension Plans and other post
employment benefits;
- Potential Volatility of Share
Prices;
- Dividends;
- Private or Public Equity
Investments in Technology Companies;
- Joint Ventures; and
- Lease Obligations.
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”.
For further information, please contact:
Fred Di TostoChief Financial OfficerMartinrea
International Inc.3210 Langstaff RoadVaughan, Ontario L4K
5B2Tel: 416-749-0314Fax: 289-982-3001
Martinrea International Inc.Interim Condensed
Consolidated Balance Sheets(in thousands of Canadian dollars)
(unaudited)
|
Note |
September 30, 2022 |
December 31, 2021 |
ASSETS |
|
|
|
Cash and cash equivalents |
|
$ |
158,505 |
$ |
153,291 |
Trade and other
receivables |
2 |
|
851,896 |
|
634,184 |
Inventories |
3 |
|
703,001 |
|
590,784 |
Prepaid expenses and
deposits |
|
|
35,091 |
|
23,892 |
Income
taxes recoverable |
|
|
1,532 |
|
18,609 |
TOTAL CURRENT ASSETS |
|
|
1,750,025 |
|
1,420,760 |
Property, plant and equipment |
4 |
|
1,898,297 |
|
1,727,914 |
Right-of-use assets |
5 |
|
231,238 |
|
222,934 |
Deferred tax assets |
|
|
175,057 |
|
138,612 |
Intangible assets |
|
|
47,724 |
|
47,809 |
Investments |
6 |
|
57,067 |
|
55,215 |
TOTAL NON-CURRENT ASSETS |
|
|
2,409,383 |
|
2,192,484 |
TOTAL ASSETS |
|
$ |
4,159,408 |
$ |
3,613,244 |
|
|
|
|
LIABILITIES |
|
|
|
Trade and other payables |
8 |
$ |
1,395,859 |
$ |
1,110,350 |
Provisions |
9 |
|
8,234 |
|
6,272 |
Income taxes payable |
|
|
36,775 |
|
11,955 |
Current portion of long-term
debt |
10 |
|
16,195 |
|
20,173 |
Current
portion of lease liabilities |
11 |
|
41,907 |
|
39,322 |
TOTAL CURRENT LIABILITIES |
|
|
1,498,970 |
|
1,188,072 |
Long-term debt |
10 |
|
1,070,529 |
|
990,817 |
Lease liabilities |
11 |
|
207,762 |
|
200,455 |
Pension and other
post-retirement benefits |
|
|
34,952 |
|
49,530 |
Deferred tax liabilities |
|
|
21,845 |
|
14,595 |
TOTAL NON-CURRENT LIABILITIES |
|
|
1,335,088 |
|
1,255,397 |
TOTAL LIABILITIES |
|
|
2,834,058 |
|
2,443,469 |
|
|
|
|
EQUITY |
|
|
|
Capital stock |
13 |
|
663,646 |
|
663,415 |
Contributed surplus |
|
|
45,351 |
|
44,845 |
Accumulated other
comprehensive income |
|
|
120,101 |
|
51,207 |
Retained earnings |
|
|
496,252 |
|
410,308 |
TOTAL EQUITY |
|
|
1,325,350 |
|
1,169,775 |
TOTAL LIABILITIES AND EQUITY |
|
$ |
4,159,408 |
$ |
3,613,244 |
Contingencies (note
19)
Subsequent event (note
19)
See accompanying notes to the interim condensed consolidated
financial statements.
On behalf of the Board:
“Robert Wildeboer” |
Director |
|
“Terry
Lyons” |
Director |
|
Martinrea International Inc.Interim Condensed
Consolidated Statements of Operations(in thousands of Canadian
dollars, except per share amounts) (unaudited)
|
Note |
Three months endedSeptember 30,
2022 |
Three months endedSeptember 30,
2021 |
Nine months endedSeptember 30,
2022 |
Nine months endedSeptember 30,
2021 |
|
|
|
|
|
|
SALES |
|
$ |
1,194,083 |
|
$ |
848,497 |
|
$ |
3,462,996 |
|
$ |
2,730,513 |
|
|
|
|
|
|
|
Cost of sales (excluding
depreciation of property, plant and equipment and right-of-use
assets) |
|
|
(976,910 |
) |
|
(744,245 |
) |
|
(2,873,617 |
) |
|
(2,286,154 |
) |
Depreciation of property, plant and equipment and right-of-use
assets (production) |
|
|
(64,639 |
) |
|
(54,245 |
) |
|
(188,620 |
) |
|
(161,767 |
) |
Total cost of sales |
|
|
(1,041,549 |
) |
|
(798,490 |
) |
|
(3,062,237 |
) |
|
(2,447,921 |
) |
GROSS MARGIN |
|
|
152,534 |
|
|
50,007 |
|
|
400,759 |
|
|
282,592 |
|
|
|
|
|
|
|
Research and development
costs |
|
|
(9,244 |
) |
|
(8,376 |
) |
|
(26,645 |
) |
|
(24,372 |
) |
Selling, general and
administrative |
|
|
(70,519 |
) |
|
(53,989 |
) |
|
(203,972 |
) |
|
(175,233 |
) |
Depreciation of property,
plant and equipment and right-of-use assets (non-production) |
|
|
(4,149 |
) |
|
(3,778 |
) |
|
(11,773 |
) |
|
(11,533 |
) |
Gain (loss) on disposal of
property, plant and equipment |
|
|
1,108 |
|
|
(98 |
) |
|
1,190 |
|
|
(164 |
) |
Impairment of assets |
7 |
|
(4,494 |
) |
|
— |
|
|
(4,494 |
) |
|
— |
|
Restructuring costs |
9 |
|
(3,609 |
) |
|
— |
|
|
(7,846 |
) |
|
(5,473 |
) |
OPERATING INCOME (LOSS) |
|
|
61,627 |
|
|
(16,234 |
) |
|
147,219 |
|
|
65,817 |
|
|
|
|
|
|
|
Share of loss of equity
investments |
6 |
|
(1,043 |
) |
|
(871 |
) |
|
(3,409 |
) |
|
(2,780 |
) |
Gain on dilution of equity
investments |
6 |
|
— |
|
|
— |
|
|
4,050 |
|
|
7,800 |
|
Finance expense |
15 |
|
(15,043 |
) |
|
(7,897 |
) |
|
(35,643 |
) |
|
(24,204 |
) |
Other
finance income |
15 |
|
5,038 |
|
|
2,341 |
|
|
6,168 |
|
|
13,691 |
|
INCOME (LOSS) BEFORE INCOME
TAXES |
|
|
50,579 |
|
|
(22,661 |
) |
|
118,385 |
|
|
60,324 |
|
|
|
|
|
|
|
Income
tax recovery (expense) |
12 |
|
(14,647 |
) |
|
5,541 |
|
|
(31,774 |
) |
|
(14,791 |
) |
NET INCOME (LOSS) FOR THE
PERIOD |
|
$ |
35,932 |
|
$ |
(17,120 |
) |
$ |
86,611 |
|
$ |
45,533 |
|
|
|
|
|
|
|
Basic earnings (loss) per share |
14 |
$ |
0.45 |
|
$ |
(0.21 |
) |
$ |
1.08 |
|
$ |
0.57 |
|
Diluted
earnings (loss) per share |
14 |
$ |
0.45 |
|
$ |
(0.21 |
) |
$ |
1.08 |
|
$ |
0.57 |
|
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 endedSeptember 30,
2022 |
Three months endedSeptember
30,2021 |
Nine months endedSeptember 30,
2022 |
Nine months endedSeptember 30,
2021 |
|
|
|
|
|
NET INCOME (LOSS) FOR THE
PERIOD |
$ |
35,932 |
|
$ |
(17,120 |
) |
$ |
86,611 |
$ |
45,533 |
|
Other
comprehensive income (loss), net
of tax: |
|
|
|
|
Items that may be reclassified to net
income (loss) |
|
|
|
|
Foreign currency translation differences for foreign
operations |
|
78,349 |
|
|
24,897 |
|
|
68,810 |
|
(37,469 |
) |
Cash flow hedging derivative and non-derivative financial
instruments: |
|
|
|
|
Unrealized gain in fair value of financial instruments |
|
— |
|
|
— |
|
|
— |
|
892 |
|
Reclassification of gain to net income (loss) |
|
— |
|
|
(960 |
) |
|
— |
|
(4,014 |
) |
Items that will not be reclassified to net
income (loss) |
|
|
|
|
Share of other comprehensive income (loss) of equity investments
(note 6) |
|
(201 |
) |
|
108 |
|
|
84 |
|
183 |
|
Remeasurement of defined benefit plans |
|
(673 |
) |
|
674 |
|
|
11,390 |
|
12,816 |
|
Other comprehensive income
(loss), net of tax |
|
77,475 |
|
|
24,719 |
|
|
80,284 |
|
(27,592 |
) |
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD |
$ |
113,407 |
|
$ |
7,599 |
|
$ |
166,895 |
$ |
17,941 |
|
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)
|
Capital stock |
Contributed surplus |
Accumulated other comprehensive
income |
Retained earnings |
Total equity |
BALANCE AT DECEMBER 31, 2020 |
$ |
662,427 |
$ |
43,860 |
|
$ |
96,645 |
|
$ |
372,792 |
|
$ |
1,175,724 |
|
Net income for the period |
|
— |
|
— |
|
|
— |
|
|
45,533 |
|
|
45,533 |
|
Compensation expense related
to stock options |
|
— |
|
934 |
|
|
— |
|
|
— |
|
|
934 |
|
Dividends ($0.15 per
share) |
|
— |
|
— |
|
|
— |
|
|
(12,051 |
) |
|
(12,051 |
) |
Exercise of employee stock
options |
|
988 |
|
(239 |
) |
|
— |
|
|
— |
|
|
749 |
|
Other comprehensive income
(loss) net of tax |
|
|
|
|
|
Remeasurement of defined benefit plans |
|
— |
|
— |
|
|
— |
|
|
12,816 |
|
|
12,816 |
|
Foreign currency translation differences |
|
— |
|
— |
|
|
(37,469 |
) |
|
— |
|
|
(37,469 |
) |
Share of other comprehensive income of equity investments |
|
— |
|
— |
|
|
183 |
|
|
— |
|
|
183 |
|
Cash flow hedging derivative and non-derivative financial
instruments: |
|
|
|
|
|
Unrealized gain in fair value of financial instruments |
|
— |
|
— |
|
|
892 |
|
|
— |
|
|
892 |
|
Reclassification of gain to net income |
|
— |
|
— |
|
|
(4,014 |
) |
|
— |
|
|
(4,014 |
) |
BALANCE AT SEPTEMBER 30,
2021 |
|
663,415 |
|
44,555 |
|
|
56,237 |
|
|
419,090 |
|
|
1,183,297 |
|
Net loss for the period |
|
— |
|
— |
|
|
— |
|
|
(9,653 |
) |
|
(9,653 |
) |
Compensation expense related
to stock options |
|
— |
|
290 |
|
|
— |
|
|
— |
|
|
290 |
|
Dividends ($0.05 per
share) |
|
— |
|
— |
|
|
— |
|
|
(4,019 |
) |
|
(4,019 |
) |
Other comprehensive income
(loss) net of tax |
|
|
|
|
|
Remeasurement of defined benefit plans |
|
— |
|
— |
|
|
— |
|
|
4,890 |
|
|
4,890 |
|
Foreign currency translation differences |
|
— |
|
— |
|
|
(5,051 |
) |
|
— |
|
|
(5,051 |
) |
Share of other comprehensive income of equity investments |
|
— |
|
— |
|
|
21 |
|
|
— |
|
|
21 |
|
BALANCE AT DECEMBER 31, 2021 |
|
663,415 |
|
44,845 |
|
|
51,207 |
|
|
410,308 |
|
|
1,169,775 |
|
Net income for the period |
|
— |
|
— |
|
|
— |
|
|
86,611 |
|
|
86,611 |
|
Compensation expense related
to stock options |
|
— |
|
566 |
|
|
— |
|
|
— |
|
|
566 |
|
Dividends ($0.15 per
share) |
|
— |
|
— |
|
|
— |
|
|
(12,057 |
) |
|
(12,057 |
) |
Exercise of employee stock
options |
|
231 |
|
(60 |
) |
|
— |
|
|
— |
|
|
171 |
|
Other comprehensive income net
of tax |
|
|
|
|
|
Remeasurement of defined benefit plans |
|
— |
|
— |
|
|
— |
|
|
11,390 |
|
|
11,390 |
|
Foreign currency translation differences |
|
— |
|
— |
|
|
68,810 |
|
|
— |
|
|
68,810 |
|
Share of other comprehensive income of equity investments |
|
— |
|
— |
|
|
84 |
|
|
— |
|
|
84 |
|
BALANCE AT SEPTEMBER 30,
2022 |
$ |
663,646 |
$ |
45,351 |
|
$ |
120,101 |
|
$ |
496,252 |
|
$ |
1,325,350 |
|
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 endedSeptember 30,
2022 |
Three months endedSeptember 30,
2021 |
Nine months endedSeptember 30,
2022 |
Nine months endedSeptember 30,
2021 |
CASH PROVIDED BY (USED IN): |
|
|
|
|
OPERATING
ACTIVITIES: |
|
|
|
|
Net income (loss) for the period |
$ |
35,932 |
|
$ |
(17,120 |
) |
$ |
86,611 |
|
$ |
45,533 |
|
Adjustments for: |
|
|
|
|
Depreciation of property, plant and equipment and right-of-use
assets |
|
68,788 |
|
|
58,023 |
|
|
200,393 |
|
|
173,300 |
|
Amortization of development costs |
|
2,817 |
|
|
3,011 |
|
|
8,136 |
|
|
9,577 |
|
Impairment of assets (note 7) |
|
4,494 |
|
|
— |
|
|
4,494 |
|
|
— |
|
Unrealized loss (gain) on foreign exchange forward contracts |
|
(848 |
) |
|
3,043 |
|
|
908 |
|
|
859 |
|
Finance expense |
|
15,043 |
|
|
7,897 |
|
|
35,643 |
|
|
24,204 |
|
Income tax expense (recovery) |
|
14,647 |
|
|
(5,541 |
) |
|
31,774 |
|
|
14,791 |
|
Loss (gain) on disposal of property, plant and equipment |
|
(1,108 |
) |
|
98 |
|
|
(1,190 |
) |
|
164 |
|
Deferred and restricted share units expense (benefit) |
|
2,093 |
|
|
(809 |
) |
|
2,638 |
|
|
(1,284 |
) |
Stock options expense |
|
175 |
|
|
328 |
|
|
566 |
|
|
934 |
|
Share of loss of equity investments |
|
1,043 |
|
|
871 |
|
|
3,409 |
|
|
2,780 |
|
Gain on dilution of equity investments |
|
— |
|
|
— |
|
|
(4,050 |
) |
|
(7,800 |
) |
Pension and other post-retirement benefits expense |
|
846 |
|
|
991 |
|
|
2,568 |
|
|
3,006 |
|
Contributions made to pension and other post-retirement
benefits |
|
(805 |
) |
|
(861 |
) |
|
(2,465 |
) |
|
(2,738 |
) |
|
|
143,117 |
|
|
49,931 |
|
|
369,435 |
|
|
263,326 |
|
Changes in non-cash working
capital items: |
|
|
|
|
Trade and other receivables |
|
22,740 |
|
|
12,110 |
|
|
(179,959 |
) |
|
(103,178 |
) |
Inventories |
|
(33,586 |
) |
|
(62,603 |
) |
|
(91,714 |
) |
|
(190,542 |
) |
Prepaid expenses and deposits |
|
(4,066 |
) |
|
(2,271 |
) |
|
(9,916 |
) |
|
(6,620 |
) |
Trade, other payables and provisions |
|
45,726 |
|
|
33,406 |
|
|
267,362 |
|
|
177,807 |
|
|
|
173,931 |
|
|
30,573 |
|
|
355,208 |
|
|
140,793 |
|
Interest paid |
|
(18,237 |
) |
|
(7,732 |
) |
|
(42,208 |
) |
|
(25,155 |
) |
Income taxes paid |
|
(4,427 |
) |
|
(12,984 |
) |
|
(14,401 |
) |
|
(33,068 |
) |
NET CASH PROVIDED BY
OPERATING ACTIVITIES |
$ |
151,267 |
|
$ |
9,857 |
|
$ |
298,599 |
|
$ |
82,570 |
|
|
|
|
|
|
FINANCING
ACTIVITIES: |
|
|
|
|
Increase (Decrease) in long-term debt (net of deferred financing
fees) |
|
(172 |
) |
|
84,763 |
|
|
37,347 |
|
|
198,290 |
|
Repayment of long-term debt |
|
(6,207 |
) |
|
(4,207 |
) |
|
(17,228 |
) |
|
(12,918 |
) |
Principal payments of lease liabilities |
|
(10,488 |
) |
|
(8,303 |
) |
|
(30,811 |
) |
|
(25,305 |
) |
Dividends paid |
|
(4,019 |
) |
|
(4,015 |
) |
|
(12,056 |
) |
|
(12,048 |
) |
Exercise of employee stock options |
|
— |
|
|
113 |
|
|
171 |
|
|
749 |
|
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES |
$ |
(20,886 |
) |
$ |
68,351 |
|
$ |
(22,577 |
) |
$ |
148,768 |
|
|
|
|
|
|
INVESTING
ACTIVITIES: |
|
|
|
|
Purchase of property, plant and equipment (excluding capitalized
interest)* |
|
(84,174 |
) |
|
(45,153 |
) |
|
(257,288 |
) |
|
(210,954 |
) |
Capitalized development costs |
|
(1,863 |
) |
|
(2,010 |
) |
|
(5,489 |
) |
|
(6,178 |
) |
Equity investments (note 6) |
|
— |
|
|
— |
|
|
(1,000 |
) |
|
(8,036 |
) |
Proceeds on disposal of property, plant and equipment |
|
1,730 |
|
|
707 |
|
|
2,146 |
|
|
846 |
|
NET CASH USED IN
INVESTING ACTIVITIES |
$ |
(84,307 |
) |
$ |
(46,456 |
) |
$ |
(261,631 |
) |
$ |
(224,322 |
) |
|
|
|
|
|
Effect
of foreign exchange rate changes on cash and cash equivalents |
|
(3,432 |
) |
|
(2,092 |
) |
|
(9,177 |
) |
|
(2,478 |
) |
|
|
|
|
|
INCREASE
IN CASH AND CASH EQUIVALENTS |
|
42,642 |
|
|
29,660 |
|
|
5,214 |
|
|
4,538 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD |
|
115,863 |
|
|
127,664 |
|
|
153,291 |
|
|
152,786 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
158,505 |
|
$ |
157,324 |
|
$ |
158,505 |
|
$ |
157,324 |
|
*As at September 30, 2022, $97,990 (December 31,
2021 - $113,233) of purchases of property, plant and equipment
remain unpaid and are recorded in trade and other payables.
See accompanying notes to the interim condensed consolidated
financial statements.
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