Mr. Don Walker reports
MAGNA ANNOUNCES FIRST QUARTER RESULTS
Magna International Inc. has released financial results for the first quarter ended March 31, 2016.
Three months ended
March 31, March 31,
2016 2015
Sales $8,900 $7,772
Adjusted EBIT (1) $ 698 $ 631
Income from continuing
operations before
income taxes $675 $621
Net income from
continuing operations
attributable to Magna
International Inc. $492 $455
Diluted earnings per share
from continuing operations $1.22 $1.10
All results are reported in millions of U.S. dollars,
except per-share figures, which are in U.S. dollars.
(1) Adjusted EBIT is the measure of segment profit or
loss as reported in the company's attached unaudited
interim consolidated financial statements. Adjusted
EBIT represents income from operations before income
taxes; interest expense, net; and other (income)
expense, net.Commenting on the completion of the Getrag acquisition early in 2016, Don Walker, Magna's chief executive officer, stated: "We welcome all Getrag employees to the Magna family of companies. The combined capabilities of Magna Powertrain and Getrag better position us to capitalize on powertrain opportunities and future changes in the global automotive industry."
Three months ended March 31, 2016
The company posted sales of $8.9-billion for the first quarter ended March 31, 2016, an increase of $1.13-billion, or 15 per cent, from the first quarter of 2015. Excluding the impact of foreign currency translation, the company's sales increased 19 per cent in the first quarter of 2016, compared with the first quarter of 2015. North American and European light vehicle production increased 10 per cent and 7 per cent, respectively, in the first quarter of 2016, compared with the first quarter of 2015.
The company's complete vehicle assembly sales decreased 1 per cent in the first quarter of 2016, compared with the first quarter of 2015, while the company's complete vehicle assembly volumes decreased 15 per cent from the comparable quarter to approximately 23,000 units.
During the first quarter of 2016, income from continuing operations before income taxes was $675-million and net income from continuing operations attributable to Magna International was $492-million, increases of 9 per cent and 8 per cent, respectively, both compared with the first quarter of 2015. Diluted earnings per share from continuing operations increased 11 per cent in the first quarter of 2016, which includes the favourable impact of a reduced share count.
During the first quarter ended March 31, 2016, the company generated cash from operations of $767-million before changes in operating assets and liabilities, and it invested $469-million in operating assets and liabilities. Total investment activities for the first quarter of 2016 were $2.18-billion, including $1.78-billion in business combinations, $346-million in fixed-asset additions and $54-million in investments and other assets.
A more detailed discussion of the company's consolidated financial results for the first quarter ended March 31, 2016, is contained in the management discussion and analysis of results of operations and financial position, and the unaudited interim consolidated financial statements and notes thereto.
Return of capital to shareholders
During the first quarter of 2016, Magna repurchased 7.3 million shares for $300-million pursuant to the company's normal course issuer bid, which expires in November, 2016. The company has 30.1 million shares remaining and available for purchase under the normal course issuer bid.
On May 4, 2016, the company's board of directors declared a quarterly dividend of 25 cents with respect to the company's outstanding common shares for the quarter ended March 31, 2016. This dividend is payable on June 10, 2016, to shareholders of record on May 27, 2016.
Other matters
On May 2, 2016, Magna increased its revolving credit facility by $500-million to $2.75-billion and extended the final maturity date from June 22, 2020, to June 22, 2021.
Vince Galifi, Magna's chief financial officer, commented: "As a result of our continued growth, we believe it is prudent to both increase the amount and extend the term on our credit facility. This provides flexibility to allow us to capitalize on future opportunities."
UPDATED 2016 OUTLOOK
Light vehicle production (units)
North America 18.0 million
Europe 21.3 million
Production sales
North America $19.5-billion to $20.1-billion
Europe $8.8-billion to $9.2-billion
Asia $2.1-billion to $2.3-billion
Rest of world $0.3-billion to $0.4-billion
------------------------------
Total production sales $30.7-billion to $32.0-billion
Complete vehicle assembly sales $1.9-billion to $2.2-billion
Total sales $35.5-billion to $37.2-billion
EBIT margin (1) High 7-per-cent range
Interest expense, net Approximately $90-million
Tax rate (1) 25 per cent to 26 per cent
Capital spending $1.8-billion to $2-billion
(1) Excluding other expense, net.In this 2016 outlook, in addition to 2016 light vehicle production, the company has assumed no material acquisitions or divestitures. In addition, the company has assumed that foreign exchange rates for the most common currencies in which the company conducts business relative to its U.S.-dollar reporting currency will approximate current rates.
The company will hold a conference call for interested analysts and shareholders to discuss its first quarter results on Thursday, May 5, 2016, at 2:30 p.m. EDT. The conference call will be chaired by Mr. Walker, chief executive officer. The number to use for this call is 1-888-612-1048. The number for overseas callers is 1-416-981-9080. Please call in at least 10 minutes prior to the call. The company will also webcast the conference call on its website. The slide presentation accompanying the conference call will be available on the company's website Thursday afternoon prior to the call.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of U.S. dollars, except per-share figures)
Three months ended March 31,
2016 2015
Sales $ 8,900 $ 7,772
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Costs and expenses
Cost of goods sold 7,619 6,668
Depreciation and amortization 246 194
Selling, general and administrative 392 330
Interest expense, net 23 10
Equity income (55) (51)
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Income from continuing operations before income taxes 675 621
Income taxes 172 167
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Net income from continuing operations 503 454
Income from discontinued operations, net of tax - 10
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Net income 503 464
(Income) loss from continuing operations attributable to
non-controlling interest (11) 1
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Net income attributable to Magna International Inc. $ 492 $ 465
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Basic earnings per share
Continuing operations $ 1.23 $ 1.11
Discontinued operations - 0.03
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Attributable to Magna International Inc. $ 1.23 $ 1.14
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Diluted earnings per share
Continuing operations $ 1.22 $ 1.10
Discontinued operations - 0.02
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Attributable to Magna International Inc. $ 1.22 $ 1.12
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Cash dividends paid per common share $ 0.25 $ 0.22
We seek Safe Harbor.
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