Magna Announces First Quarter Results
AURORA, Ontario, May 5, 2016 /PRNewswire/ --
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the first quarter ended March 31, 2016.
THREE MONTHS ENDED
March 31, 2016 March 31, 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
We posted sales of $8.90 billion for the first quarter ended March 31, 2016, an increase of $1.13 billion or 15% from the first quarter of 2015. Excluding the impact of foreign currency translation, our sales increased 19% in the first quarter of 2016, compared to the first quarter of 2015. North American and European light vehicle production increased 10% and 7%, respectively, in the first quarter of 2016 compared to the first quarter of 2015.
Our complete vehicle assembly sales decreased 1% in the first quarter of 2016, compared to the first quarter of 2015, while our complete vehicle assembly volumes decreased 15% 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 Inc. was $492 million, increases of 9% and 8% respectively, both compared to the first quarter of 2015. Diluted earnings per share from continuing operations increased 11% in the first quarter of 2016, which includes the favourable impact of a reduced share count.
During the first quarter ended March 31, 2016, we generated cash from operations of $767 million before changes in operating assets and liabilities, and 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 our consolidated financial results for the first quarter ended March 31, 2016 is contained in the Management's Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.
RETURN OF CAPITAL TO SHAREHOLDERS
During the first quarter of 2016, Magna repurchased 7.3 million shares for $300 million pursuant to our Normal Course Issuer Bid ("NCIB") which expires in November 2016. We have 30.1 million shares remaining and available for purchase under the NCIB.
Yesterday, our Board of Directors declared a quarterly dividend of $0.25 with respect to our 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 - $20.1 billion
Europe $8.8 billion - $9.2 billion
Asia $2.1 billion - $2.3 billion
Rest of World $0.3 billion - $0.4 billion
Total Production Sales $30.7 billion - $32.0 billion
Complete Vehicle Assembly Sales $1.9 billion - $2.2 billion
Total Sales $35.5 billion - $37.2 billion
EBIT Margin(1) High 7% range
Interest Expense, net Approximately $90 million
Tax Rate(1) 25% - 26%
Capital Spending $1.8 billion - $2.0 billion
(1) Excluding other expense, net
In this 2016 outlook, in addition to 2016 light vehicle production, we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate current rates.
ABOUT MAGNA
We are a leading global automotive supplier with 306 manufacturing operations and 92 product development, engineering and sales centres in 29 countries. We have over 147,000 employees focused on delivering superior value to our customers through innovative products and processes, and World Class Manufacturing. These figures include manufacturing operations, product development, engineering and sales centres and employees in equity-accounted operations. Our product capabilities include producing body, chassis, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For further information about Magna, visit our website at http://www.magna.com.
We will hold a conference call for interested analysts and shareholders to discuss our first quarter results on Thursday, May 5, 2016 at 2:30 p.m. EDT. The conference call will be chaired by Don 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. We will also webcast the conference call at http://www.magna.com. The slide presentation accompanying the conference call will be available on our website Thursday afternoon prior to the call.
FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: Magna's forecasts of light vehicle production in North America and Europe; expected consolidated sales, based on such light vehicle production volumes; production sales, including expected split by segment, in its North America, Europe, Asia and Rest of World segments for 2016; complete vehicle assembly sales; consolidated EBIT margin, net interest expense; effective income tax rate; fixed asset expenditures; our ability to capitalize on powertrain opportunities and future changes in the global automotive industry as a result of our acquisition of Getrag; and future returns of capital to our shareholders, including through dividends or share repurchases. The forward-looking information in this document is presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation: the potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; fluctuations in relative currency values; continuing global or regional economic uncertainty; restructuring, downsizing and/or other significant non-recurring costs; underperformance of one or more of our operating divisions; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; our ability to successfully launch material new or takeover business; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; an increase in our risk profile as a result of completed acquisitions; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; inability to sustain or grow our business; risks of conducting business in foreign markets, including China, India, Eastern Europe, Brazil and other non-traditional markets for us; a prolonged disruption in the supply of components to us from our suppliers; work stoppages and labour relations disputes; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); our ability to successfully compete with other automotive suppliers; a reduction in outsourcing by our customers or the loss of a material production or assembly program; the termination or non-renewal by our customers of any material production purchase order; our ability to consistently develop innovative products or processes; exposure to, and ability to offset, volatile commodities prices; warranty and recall costs; restructuring actions by OEMs, including plant closures; shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; risk of production disruptions due to natural disasters or catastrophic event; the security and reliability of our information technology systems; pension liabilities; legal claims and/or regulatory actions against us; changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully benefit tax losses; impairment charges related to goodwill, long-lived assets and deferred tax assets; other potential tax exposures; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; liquidity risks; inability to achieve future investment returns that equal or exceed past returns; the unpredictability of, and fluctuation in, the trading price of our Common Shares; and other factors set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.
For further information about Magna, please see our website at http://www.magna.com. Copies of financial data and other publicly filed documents are available through the internet on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at http://www.sedar.com and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at http://www.sec.gov
Please contact Louis Tonelli, Vice-President, Investor Relations at +1-905-726-7035. For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.
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