Magna Announces Record Third Quarter and Year to Date Results
AURORA, Ontario, November 3, 2016 /PRNewswire/ --
- Third quarter record sales up 16%, well above 3% growth in global light vehicle production
- Third quarter record diluted earnings per share from continuing operations increased 14%
- $288 million returned to shareholders through share repurchases and dividends
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the third quarter ended September 30, 2016.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2016 2015 2016 2015
Sales $ 8,849 $ 7,661 $ 27,192 $ 23,566
Adjusted EBIT(1) $ 715 $ 565 $ 2,202 $ 1,873
Income from
continuing
operations
before
income taxes $ 692 $ 680 $ 2,134 $ 2,027
Net income from
continuing
operations
attributable
to Magna
Internationa
l Inc. $ 503 $ 470 $ 1,553 $ 1,463
Diluted earnings
per share
from
continuing
operations $ 1.29 $ 1.13 $ 3.92 $ 3.53
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, net.
THREE MONTHS ENDED SEPTEMBER 30, 2016
We posted sales of $8.8 billion for the third quarter ended September 30, 2016, an increase of 16% over the third quarter of 2015. This strong year over year growth was achieved despite North American light vehicle production increasing only 1% and European light vehicle production declining 2%, compared to the third quarter of 2015.
Our complete vehicle assembly sales decreased 4% in the third quarter of 2016, compared to the third quarter of 2015, while our complete vehicle assembly volumes decreased 19% from the comparable quarter to approximately 19,000 units. The decreases largely reflect that we were nearing end of production of the MINI Countryman and Paceman.
During the third quarter of 2016, income from continuing operations before income taxes was $692 million and net income from continuing operations attributable to Magna International Inc. was $503 million, increases of 2% and 7% respectively, both compared to the third quarter of 2015. Diluted earnings per share from continuing operations increased $0.16 or 14% in the third quarter of 2016, which includes the favourable impact of a reduced share count.
During the third quarter ended September 30, 2016, we generated cash from operations of $796 million before changes in operating assets and liabilities, and invested $139 million in operating assets and liabilities. Total investment activities for the third quarter of 2016 were $556 million, including $390 million in fixed asset additions and $166 million in investments and other assets.
NINE MONTHS ENDED SEPTEMBER 30, 2016
We posted sales of $27.2 billion for the nine months ended September 30, 2016, an increase of 15% from the nine months ended September 30, 2015. Excluding the impact of foreign currency translation, our sales increased 17% in the first nine months of 2016, compared to the first nine months of 2015. In comparison, North American and European light vehicle production increased 4% and 5%, respectively, in the first nine months of 2016 compared to the first nine months of 2015.
Our complete vehicle assembly sales increased 1% in the first nine months of 2016, compared to the first nine months of 2015. Complete vehicle assembly volumes decreased 14% to approximately 68,000 units. The volume decrease largely reflects that we were nearing end of production of the MINI Countryman and Paceman.
During the nine months ended September 30, 2016, income from continuing operations before income taxes was $2.1 billion and net income from continuing operations attributable to Magna International Inc. was $1.6 billion, increases of $107 million and $90 million, respectively, both compared to the first nine months of 2015. Diluted earnings per share from continuing operations increased $0.39 or 11% for the nine months ended September 30, 2016, which includes the favourable impact of a reduced share count.
During the nine months ended September 30, 2016, we generated cash from operations before changes in operating assets and liabilities of $2.4 billion, and invested $759 million in operating assets and liabilities. Total investment activities for the first nine months of 2016 were $3.3 billion, including $1.8 billion to purchase subsidiaries, $1.1 billion in fixed asset additions and $323 million in investments and other assets.
A more detailed discussion of our consolidated financial results for the third quarter and nine months ended September 30, 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 three and nine months ended September 30, 2016, Magna repurchased 4.7 million shares for $191 million and 19.8 million shares for $799 million, respectively, pursuant to our existing Normal Course Issuer Bid which expires in November 2016.
Today, our Board of Directors declared a quarterly dividend of $0.25 with respect to our outstanding Common Shares for the quarter ended September 30, 2016. This dividend is payable on December 9, 2016 to shareholders of record on November 25, 2016.
OTHER MATTERS
Subject to the approval by the Toronto Stock Exchange and the New York Stock Exchange, our Board of Directors approved a Normal Course Issuer Bid ("NCIB") to purchase up to 38 million of our Common Shares, representing approximately 10% of our public float of Common Shares. This NCIB is expected to commence on or about November 14, 2016 and will terminate one year later.
UPDATED 2016 OUTLOOK
Light Vehicle Production (Units)
North America 17.8 million
Europe 21.5 million
Production Sales
North America $19.2 - $19.6 billion
Europe $9.0 - $9.3 billion
Asia $2.1 - $2.2 billion
Rest of World $0.4 - $0.5 billion
Total Production Sales $30.7 - $31.6 billion
Complete Vehicle Assembly Sales $2.0 - $2.2 billion
Total Sales $35.8 - $37.0 billion
EBIT Margin(2) Approximately 8%
Interest Expense, net Approximately $90 million
Tax Rate(2) Approximately 26%
Capital Spending $1.8 - $1.9 billion
(2) 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.
We will hold a conference call for interested analysts and shareholders to discuss our third quarter results on Thursday, November 3, 2016 at 8:30 a.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-926-6571. The number for overseas callers is 1-416-981-9025. 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 morning prior to the call.
TAGS
Quarterly earnings, record quarter, financial results, sales growth
ABOUT MAGNA INTERNATIONAL
We are a leading global automotive supplier with 312 manufacturing operations(3) and 98 product development, engineering and sales centres(3) in 29 countries. We have over 155,000 employees(3) 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, electronic, active driver assistance, vision, closure and roof systems. 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.
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; 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 be expected to result in lower production volume levels; economic or political uncertainty, including as a result of the U.K.'s potential exit from the European Union and/or the outcome of the 2016 U.S. Presidential election; 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; 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; restructuring, downsizing and/or other significant non-recurring 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; fluctuations in relative currency values; 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; 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 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.
(3) These figures include manufacturing operations, product development, engineering and sales centres and employees in certain equity-accounted operations
INVESTOR CONTACT: Louis Tonelli, Vice-President, Investor Relations, louis.tonelli@magna.com, +1-905-726-7035; MEDIA CONTACT: Tracy Fuerst, Director of Corporate Communications & PR, tracy.fuerst@magna.com , +1-248-631-5396
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