Magna Announces Fourth Quarter and 2016 Results
AURORA, Ontario, February 24, 2017 /PRNewswire/ --
- Record 2016 sales up 13%, well above 4% growth in global light vehicle production
- Record 2016 diluted earnings per share from continuing operations increased 9%
- Record 2016 cash generated from operating activities of $3.4 billion, up 45%
- Returned $1.3 billion to shareholders in 2016
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the fourth quarter and year ended December 31, 2016.
THREE MONTHS ENDED
DECEMBER 31,
2016 2015
Sales $ 9,253 $ 8,568
Income from continuing operations before income taxes $ 646 $ 624
Net income from continuing operations attributable $ 478 $ 483
to Magna International Inc.
Adjusted EBIT(1) $ 696 $ 656
Diluted earnings per share from continuing operations $ 1.24 $ 1.19
(Table continued)
YEAR ENDED
DECEMBER 31,
2016 2015
Sales $ 36,445 $ 32,134
Income from continuing operations before income taxes $ 2,780 $ 2,651
Net income from continuing operations attributable $ 2,031 $ 1,946
to Magna International Inc.
Adjusted EBIT(1) $ 2,898 $ 2,529
Diluted earnings per share from continuing operations $ 5.16 $ 4.72
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
(1) Adjusted EBIT is a Non-GAAP financial measure that has no standardized meaning under U.S. GAAP and as a result may not be comparable to the calculation of similar measures by other companies. Adjusted EBIT represents net income before income taxes; interest expense, net; and other expense (income), net.
THREE MONTHS ENDED DECEMBER 31, 2016
We posted sales of $9.25 billion for the fourth quarter ended December 31, 2016, an increase of 8% over the fourth quarter of 2015. This strong year over year growth was achieved despite both North American and European light vehicle production decreasing 4% compared to the fourth quarter of 2015. Our complete vehicle assembly volumes decreased 70%, largely reflecting the end of production of the MINI Countryman and Paceman in the fourth quarter of 2016.
During the fourth quarter of 2016, income from continuing operations before income taxes was $646 million, an increase of 4% compared to the fourth quarter of 2015. Net income from continuing operations attributable to Magna International Inc. was $478 million, a decrease of 1% compared to the fourth quarter of 2015. Diluted earnings per share from continuing operations increased $0.05 in the fourth quarter of 2016, which includes the favourable impact of a reduced share count. Excluding unusual items, income from continuing operations before income taxes, net income from continuing operations attributable to Magna International Inc., and diluted earnings per share from continuing operations increased 6%, 1%, and 7%, respectively, in the fourth quarter of 2016 compared to the fourth quarter of 2015.
During the fourth quarter ended December 31, 2016, we generated cash from operations of $878 million before changes in operating assets and liabilities, and $840 million in operating assets and liabilities. Total investment activities for the fourth quarter of 2016 were $934 million, including $662 million in fixed asset additions, $155 million in investments and other assets and $117 million to purchase subsidiaries.
YEAR ENDED DECEMBER 31, 2016
We posted record sales of $36.45 billion for the year ended December 31, 2016, an increase of 13% from the year ended December 31, 2015. In comparison, both North American and European light vehicle production increased 2%, in 2016 compared to 2015. Our complete vehicle assembly volumes decreased 28%, largely reflecting the end of production of the MINI Countryman and Paceman in the fourth quarter of 2016.
During 2016, income from continuing operations before income taxes was $2.78 billion and net income from continuing operations attributable to Magna International Inc. was $2.03 billion, increases of $129 million and $85 million, respectively, both compared to 2015. Diluted earnings per share from continuing operations increased $0.44 or 9% in 2016, which includes the favourable impact of a reduced share count. Excluding unusual items, income from continuing operations before income taxes, net income from continuing operations attributable to Magna International Inc., and diluted earnings per share from continuing operations increased 13%, 11%, and 16%, respectively, in 2016 compared to 2015.
During December 31, 2016, we generated cash from operations before changes in operating assets and liabilities of $3.31 billion, and $81 million in operating assets and liabilities. Total investment activities for 2016 were $4.22 billion, including $1.93 billion to purchase subsidiaries, $1.81 billion in fixed asset additions and $478 million in investments and other assets.
A more detailed discussion of our consolidated financial results for the fourth quarter and year ended December 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.
"2016 was another great year for Magna, with sales growth well above the market, record earnings and strong operating cash flow. We expect 2017 to be a strong year for Magna as well. We also completed the acquisition of Getrag early last year, and began its integration into Magna. We are pleased with our progress to date, and are excited about the strategic value Getrag brings to us.
Looking forward, as the industry undergoes significant changes over the next number of years, we believe our capabilities, innovations and deep vehicle knowledge will be instrumental in enabling the 'Car of the Future'. This should drive significant shareholder value."
- Don Walker, Magna's Chief Executive Officer
RETURN OF CAPITAL TO SHAREHOLDERS
During the three months and year ended December 31, 2016, Magna repurchased 2.7 million shares for $114 million and 22.6 million shares for $913 million, respectively.
Yesterday, our Board of Directors declared a quarterly dividend of $0.275 with respect to our outstanding Common Shares for the quarter ended December 31, 2016. This dividend is payable on March 24, 2017 to shareholders of record on March 10, 2017.
"This 10% dividend increase, the eighth consecutive year of increases, reflects the confidence that both management and our Board currently have in Magna's future."
- Vince Galifi, Magna's Chief Financial Officer
2017 OUTLOOK Light Vehicle Production (Units) North America 17.7 million Europe 21.7 million Production Sales North America $19.2 - $19.8 billion Europe $8.7 - $9.1 billion Asia $2.2 - $2.4 billion Rest of World $0.3 - $0.4 billion Total Production Sales $30.4 - $31.7 billion Complete Vehicle Assembly Sales $2.7 - $3.0 billion Total Sales $36.0 - $37.7 billion EBIT Margin(2) Approximately 8% Interest Expense, net Approximately $90 million Tax Rate 25% - 26% Capital Spending Approximately $2.0 billion
(2) Earnings Before Interest and Taxes ("EBIT") represents net income before income taxes and interest expense, net. EBIT Margin is the ratio of EBIT to Total Sales.
In this 2017 outlook, in addition to 2017 light vehicle production, we have assumed no material unannounced 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.
We will hold a conference call for interested analysts and shareholders to discuss our fourth quarter and year ended December 31, 2016 results on Friday, February 24, 2017 at 8:00 a.m. EST. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-954-0695. The number for overseas callers is 1-416-981-9009. Please call in at least 10 minutes prior to the call. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call will be available on our website Friday morning prior to the call.
TAGS
Quarterly earnings, record quarter, financial results, sales growth
OUR BUSINESS(3)
We are a leading global automotive supplier with 317 manufacturing operations and 102 product development, engineering and sales centres in 29 countries. We have over 155,000 employees focused on delivering superior value to our customers through innovative products and processes, and world class manufacturing. We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, vision, closure and roof systems and have electronic and software capabilities across many of these areas. 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 www.magna.com.
(3) Manufacturing operations, product development, engineering and sales centres and employee figures include certain equity-accounted operations.
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 2017; complete vehicle assembly sales; consolidated EBIT margin, net interest expense; effective income tax rate; fixed asset expenditures; and future returns of capital to our shareholders, including through dividends or share repurchases. The forward-looking statements or forward-looking information in this press release 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 or forward-looking information 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 or forward-looking information. Any such forward-looking statements or forward-looking information 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; a decline in consumer confidence, which would typically result in lower production volume levels; the growth of protectionism and the implementation of measures that impede the free movement of goods, services, people and capital; planning risks created by rapidly changing economic or political conditions; fluctuations in relative currency values; legal claims and/or regulatory actions against us, including without limitation any proceedings that may arise out of our global review focused on anti-trust risk; our ability to successfully launch material new or takeover business; underperformance of one or more of our operating divisions; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; 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; our ability to successfully compete with other automotive suppliers, including disruptive technology innovators which are entering or expanding in the automotive industry; our ability to consistently develop innovative products or processes; our changing risk profile due to the increasing importance to us of product areas such as powertrain and electronics; restructuring, downsizing and/or other significant non-recurring costs; a reduction in outsourcing by our customers or the loss of a material production or assembly program; a prolonged disruption in the supply of components to us from our suppliers; shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); the termination or non-renewal by our customers of any material production purchase order; exposure to, and ability to offset, commodities price increases; restructuring actions by OEMs, including plant closures; work stoppages and labour relations disputes; risk of production disruptions due to natural disasters or catastrophic event; the security and reliability of our information technology systems; pension liabilities; 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, including tax and transfer pricing laws; 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 or forward-looking information, we caution readers not to place undue reliance on any forward-looking statements or forward-looking information, 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 or forward-looking information. 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 or forward-looking information to reflect subsequent information, events, results or circumstances or otherwise.
INVESTOR CONTACT:
Louis Tonelli
Vice-President, Investor Relations
louis.tonelli@magna.com
905-726-7035
MEDIA CONTACT:
Tracy Fuerst
Director of Corporate Communications & PR
tracy.fuerst@magna.com
248-631-5396
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