AURORA, Ontario, November 5, 2014 /PRNewswire/ --
Magna International Inc. today reported financial results for the third quarter ended September 30, 2014.
THREE MONTHS NINE MONTHS
SEPTEMBER 30, SEPTEMBER 30,
2014 2013 2014 2013
Sales $ 8,820 $ 8,338 $ 27,245 $ 25,661
Adjusted EBIT(1) $ 605 $ 444 $ 1,920 $ 1,458
Income from operations before income taxes $ 589 $ 391 $ 1,862 $ 1,391
Net income attributable to Magna International
Inc. $ 470 $ 319 $ 1,373 $ 1,103
Diluted earnings per share $ 2.19 $ 1.39 $ 6.26 $ 4.74
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
(1) We believe Adjusted EBIT is the most appropriate measure of operational profitability or loss of our reporting segments. Adjusted EBIT represents income from operations before taxes; interest expense, net; and other expense, net.
THREE MONTHS ENDED SEPTEMBER 30, 2014
We posted sales of $8.82 billion for the third quarter ended September 30, 2014, an increase of 6% from the third quarter of 2013. We achieved this sales increase in a period when vehicle production increased 8% in North America and 4% in Europe, both relative to the third quarter of 2013. In the third quarter of 2014, our North American and Asian production sales, complete vehicle assembly sales and tooling, engineering and other sales increased, while our European and Rest of World production sales decreased, in each case relative to the comparable quarter in 2013.
Complete vehicle assembly sales increased 9% to $740 million for the third quarter of 2014 compared to $680 million for the third quarter of 2013, while complete vehicle assembly volumes decreased 5% to approximately 32,000 units.
During the third quarter of 2014, income from operations before income taxes was $589 million, net income attributable to Magna International Inc. was $470 million and diluted earnings per share were $2.19, increases of $198 million, $151 million and $0.80 respectively, each compared to the third quarter of 2013.
Excluding other expense, after tax for the third quarters of 2014 and 2013, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share increased $157 million, $124 million and $0.69 respectively, each compared to the third quarter of 2013.During the third quarter ended September 30, 2014, we generated cash from operations of $737 million before changes in operating assets and liabilities, and invested $18 million in operating assets and liabilities. Total investment activities for the third quarter of 2014 were $365 million, including $315 million in fixed asset additions and a $50 million increase in investments and other assets.
NINE MONTHS ENDED SEPTEMBER 30, 2014
We posted sales of $27.25 billion for the nine months ended September 30, 2014, an increase of 6% from the nine months ended September 30, 2013. This higher sales level reflected increases in our North American, European and Asian production sales, complete vehicle assembly sales and tooling, engineering and other sales partially offset by a decrease in Rest of World production sales, in each case relative to the first nine months of 2013.
During the nine months ended September 30, 2014, vehicle production increased 5% to 12.8 million units in North America and increased 6% to 15.2 million units in Europe, each compared to the first nine months of 2013.
Complete vehicle assembly sales increased 3% to $2.35 billion for the nine months ended September 30, 2014 compared to $2.27 billion for the nine months ended September 30, 2013, while complete vehicle assembly volumes decreased 7% to approximately 102,000 units.
During the nine months ended September 30, 2014, income from operations before income taxes was $1.86 billion, net income attributable to Magna International Inc. was $1.37 billion and diluted earnings per share were $6.26, increases of $471 million, $270 million and $1.52, respectively, each compared to the first nine months of 2013.
Excluding other expense, after tax for the nine months ended September 30, 2014 and 2013, and the impact of the Austrian tax reform for the nine months ended September 30, 2014, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share increased $457 million, $299 million and $1.67 respectively, each compared to the nine months ended September 30, 2013.
During the nine months ended September 30, 2014, we generated cash from operations before changes in operating assets and liabilities of $2.16 billion, and invested $363 million in operating assets and liabilities. Total investment activities for the first nine months of 2014 were $1.07 billion, including $916 million in fixed asset additions and a $152 million increase in investments and other assets.
A more detailed discussion of our consolidated financial results for the third quarter and nine months ended September 30, 2014 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.
Today, our Board of Directors declared a quarterly dividend of $0.38 with respect to our outstanding Common Shares for the quarter ended September 30, 2014. This dividend is payable on December 12, 2014 to shareholders of record on November 28, 2014.
Subject to approval by the Toronto Stock Exchange and the New York Stock Exchange, our Board of Directors approved a normal course issuer bid to purchase up to 20 million of our Common Shares, representing approximately 9.8% of our public float of Common Shares. This new normal course issuer bid is expected to commence on or about November 13, 2014 and will terminate one year later.
UPDATED 2014 OUTLOOK
Light Vehicle Production (Units)
North America 17.0 million
Europe 20.2 million
North America $17.9 - $18.3 billion
Europe $9.7 - $10.0 billion
Asia $1.6 - $1.7 billion
Rest of World $0.6 - $0.7 billion
Total Production Sales $29.8 - $30.7 billion
Complete Vehicle Assembly Sales $3.1 - $3.3 billion
Total Sales $35.8 - $37.0 billion
Operating Margin(1) Approximately 6.9%
Tax Rate(1,2) Approximately 24.5%
Capital Spending Approximately $1.4 billion
(1) Excluding other expense, net
(2) Excluding the impact of the Austrian tax reform
In this 2014 outlook, in addition to 2014 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.
We are a leading global automotive supplier with 312 manufacturing operations and 83 product development, engineering and sales centres in 29 countries. We have over 130,000 employees focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include producing body, chassis, interior, 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 third quarter results on Wednesday, November 5, 2014 at 8:30 a.m. EST. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-381-7839. The number for overseas callers is +1-212-231-2913. 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 Wednesday morning prior to the call.
The previous discussion contains statements that constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: forecast light vehicle production volumes in North America and Europe; Magna's expected production sales in its North America, Europe and Rest of World segments; total sales; complete vehicle assembly sales; consolidated operating margin; average effective income tax rate; capital spending; future repurchases of Common Shares under our Normal Course Issuer Bid; and other matters. The 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 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 impact of economic or political conditions on consumer confidence, consumer demand for vehicles and vehicle production; our ability to successfully launch material new or takeover business; continued underperformance of one or more of our operating Divisions; restructuring, downsizing or other significant non-recurring costs, including in our European business; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; fines or penalties imposed by antitrust and regulatory authorities, including the German Cartel Office or CADE, Brazil's competition authority; our ability to grow our business with Asian-based customers; 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; risks of conducting business in foreign markets, including China, India, Russia, Brazil, Argentina, Eastern Europe and other non-traditional markets for us; 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 work stoppage or labour dispute; 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; impairment charges related to goodwill and long-lived assets; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successful ly identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct sufficient due diligence on acquisition targets; risk of production disruptions due to natural disasters; 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; 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 as a result of an unanticipated deterioration of economic conditions; our ability 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
For further information:
Louis Tonelli, Vice-President, Investor Relations at +1-905-726-7035.
For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.
Magna International Inc.