Linamar Posts Another Strong Quarter in Sales and Earnings Growth and Continued Margin Improvement
November 14 2012 - 3:00PM
Marketwired Canada
Linamar Corporation (TSX:LNR)
-- Sales increase 6.6% over the third quarter of 2011 ("Q3 2011") to reach
$773.4 million;
-- Net earnings up 56.8% over Q3 2011 to reach $33.7 million;
-- EPS is up 57.6% over Q3 2011 to reach $0.52;
-- New business wins continue to be strong, launch book at close to $2.4
billion;
-- Industrial segment sales up 14.2% and operating earnings up 153.3%;
-- Powertrain/Driveline segment sales up 5.5% and operating earnings up
4.9%;
-- Return on Capital Employed improved by 26.3% from Q3 2011 to reach
12.4%;
-- Return on Equity increased 44.6% from Q3 2011 to 13.5%; and
-- Total Debt levels reduced and Debt to Total Capitalization continues to
improve reaching 40.1% since Q2 2012.
Three Months Ended Six Months Ended
September 30 September 30
2012 2011 2012 2011
(in millions of dollars, except
earnings per share figures) $ $ $ $
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Sales 773.4 725.6 2,465.4 2,143.5
Operating Earnings (Loss)
Powertrain/Driveline 47.1 44.9 147.9 126.4
Industrial 0.8 (1.5) 22.3 (3.0)
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Operating Earnings (Loss) 47.9 43.4 170.2 123.4
Unusual Items - (2.2) - (2.2)
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Operating Earnings (Loss) -
Adjusted 47.9 41.2 170.2 121.2
Net Earnings Attributable to
Shareholders of the Company 33.7 21.5 115.4 74.4
Unusual Items - 3.6 (1.2) 3.6
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Net Earnings (Loss) Attributable
to Shareholders of the Company -
Adjusted 33.7 25.1 114.2 78.0
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Net Earnings per Share 0.52 0.33 1.78 1.15
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Net Earnings (Loss) per Share -
Adjusted 0.52 0.39 1.77 1.21
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Unusual Items
Taxable Items before Tax
1) Exchange loss (gain) on the
2017 and 2021 Private Placement
Notes - 7.9 (1.6) 7.9
Tax Impact - (2.1) 0.4 (2.1)
Non-Taxable Items
2) Bargain purchase gain on
Famer acquisition - (2.2) - (2.2)
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Total Unusual Items - 3.6 (1.2) 3.6
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Operating Highlights
Sales for the third quarter of 2012 ("Q3 2012") were $773.4 million, up $47.8
million from $725.6 million in Q3 2011.
Sales for the Powertrain/Driveline segment increased by $35.1 million, or 5.5%
in Q3 2012 to $671.4 million compared to $636.3 million in Q3 2011. The sales
increase in the third quarter was impacted by:
-- additional sales from new and expanded facilities;
-- higher volumes on increased consumer demand in the US;
-- significant levels of newly launched programs in each of Canada, Mexico
and Asia from the Company's substantial book of launch business; offset
by:
-- decreased consumer demand in Europe.
Industrial segment sales increased 14.2%, or $12.7 million from Q3 2011 to
$102.0 million. The sales increase was:
-- primarily due to increases in demand in the access equipment markets
resulting from fleet replacement initiatives;
-- increases in demand in the agricultural equipment markets serviced by
the European Fabrication Division; and
-- to a lesser extent due to increases in the energy programs that were
awarded and now have started to launch.
The company's operating earnings for Q3 2012 were $47.9 million. This compares
to adjusted operating earnings of $41.2 million in Q3 2011, an increase of $6.7
million.
Q3 2012 operating earnings of $47.1 million for the Powertrain/Driveline segment
were higher by $4.4 million from adjusted operating earnings of $42.7 million in
Q3 2011. The segment experienced the following in Q3 2012:
-- improved margins as production volumes increased on launching and mature
programs;
-- lower amount of start-up costs in comparison to the level of start-up
activity in Q3 2011; and
-- the bargain purchase gain recognized on the Famer Group acquisition in
Q3 2011.
The Q3 2012 operating earnings for the Industrial segment were $0.8 million, a
153.3% improvement from operating losses of $1.5 million in Q3 2011. The
Industrial operating earnings were predominantly driven by:
-- margin improvements on the increased volumes in the access equipment
market;
-- margin improvements on the increased volumes in the agricultural
equipment markets; and
-- a favourable mix towards higher margin sales; partially offset by:
-- the weakening US dollar and EUR against other currencies in the quarter
compared to the same period in 2011 that resulted in a foreign exchange
loss in Q3 2012 as compared to a foreign exchange gain in Q3 2011;
-- continued investment in labour and fixed overhead costs at Skyjack to
support the future growth in the market; and
-- to a lesser extent, launch costs associated with the energy programs.
"We are very pleased to see another strong quarter in Q3 in both sales and
earnings growth," said Linamar CEO Linda Hasenfratz. "Earnings growth continues
to outpace sales growth by a significant factor, leverage ratios continue to
improve and we continue to see great improvements in ROCE and ROE. Our
substantial launch book is driving great growth in the near term, and our
competitive strength and an opportunistic market is helping us build for long
term sustainable growth at Linamar."
Dividends
The Board of Directors today declared an eligible dividend in respect to the
quarter ended September 30, 2012 of CDN$0.08 per share on the common shares of
the company, payable on or after December 7, 2012 to shareholders of record on
November 26, 2012.
Risk and Uncertainties (forward looking statements)
Linamar no longer provides a financial outlook.
Certain information provided by Linamar in these unaudited interim financial
statements, MD&A and other documents published throughout the year that are not
recitation of historical facts may constitute forward-looking statements. The
words "estimate", "believe", "expect" and similar expressions are intended to
identify forward-looking statements. Persons reading this report are cautioned
that such statements are only predictions and the actual events or results may
differ materially. In evaluating such forward-looking statements, readers should
specifically consider the various factors that could cause actual events or
results to differ materially from those indicated by such forward-looking
statements.
Such forward-looking information may involve important risks and uncertainties
that could materially alter results in the future from those expressed or
implied in any forward-looking statements made by, or on behalf of, Linamar.
Some risks and uncertainties may cause results to differ from current
expectations. The factors which are expected to have the greatest impact on
Linamar include but are not limited to (in the various economies in which
Linamar operates): the extent of OEM outsourcing, industry cyclicality, trade
and labour disruptions, pricing concessions and cost absorptions, delays in
program launches, the Company's dependence on certain engine and transmission
programs and major OEM customers, currency exposure, and technological
developments by Linamar's competitors.
A large proportion of the Company's cash flows are denominated in foreign
currencies. The movement of foreign currency exchange rates against the Canadian
dollar has the potential to have a negative impact on financial results. The
Company has employed a hedging strategy as appropriate to attempt to mitigate
the impact but cannot be completely assured that the entire exchange effect has
been offset.
Other factors and risks and uncertainties that could cause results to differ
from current expectations are discussed in the MD&A and include, but are not
limited to: fluctuations in interest rates, environmental emission and safety
regulations, governmental, environmental and regulatory policies, and changes in
the competitive environment in which Linamar operates. Linamar assumes no
obligation to update the forward-looking statements, or to update the reasons
why actual results could differ from those reflected in the forward-looking
statements.
Conference Call Information
Q3 2012 Conference Call Information
Linamar will hold a conference call on November 14, 2012 at 5:00 p.m. EST to
discuss its third quarter results. The numbers for this call are (647) 427-3382
(local/overseas) or (888) 424-9894 (North America) confirmation number 12303441,
with a call-in required 10 minutes prior to the start of the conference call.
The conference call will be chaired by Linda Hasenfratz, Linamar's Chief
Executive Officer. A copy of the company's quarterly financial statements,
including the Management's Discussion & Analysis will be available on the
company's website after 4 p.m. EST on November 14, 2012 and at www.sedar.com by
the start of business on November 15, 2012. A taped replay of the conference
call will also be made available starting at 11:00 p.m. on November 14, 2012 for
seven days. The number for replay is (855) 859-2056, Conference ID 12303441. The
conference call can also be accessed by web cast at www.linamar.com, by
accessing the investor relations/events menu, and will be available for a 7 day
period.
Audio only streaming of the conference call available. Follow this link to
connect http://www.meetview.com/linamar20121114.
Q4 2012 Conference Call Information
Linamar will hold a conference call on March 6, 2013 at 5:00 p.m. EST to discuss
its fourth quarter/year end results. The numbers for this call are (647)
427-3383 (local/overseas) or (888) 424-9894 (North America) confirmation number
61988753, with a call-in required 10 minutes prior to the start of the
conference call. The conference call will be chaired by Linda Hasenfratz,
Linamar's Chief Executive Officer. A copy of the company's quarterly/year end
financial statements, including the Management's Discussion & Analysis will be
available on the company's website after 4 p.m. EST on March 6, 2013 and at
www.sedar.com by the start of business on March 7, 2013. A taped replay of the
conference call will also be made available starting at 11:00 p.m. on March 6,
2013 for seven days. The number for replay is (855) 859-2056, Conference ID
61988753. The conference call can also be accessed by web cast at
www.linamar.com, by accessing the investor relations/events menu, and will be
available for a 7 day period.
Audio only streaming of the conference call available. Follow this link to
connect http://www.meetview.com/linamar20130306.
Linamar Corporation (TSX:LNR) is a diversified global manufacturing Company of
highly engineered products powering vehicles, motion, work and lives. The
Company is made up of 2 operating segments - the Powertrain/Driveline segment
and the Industrial segments which are further divided into 4 key divisions -
Manufacturing, Driveline, Industrial Commercial Energy ("ICE") and Skyjack, all
world leaders in the design, development and production of highly engineered
products. The Company's Manufacturing and Driveline divisions focus on precision
metallic components, modules and systems for engine, transmission and driveline
systems designed for passenger vehicle markets. The ICE group concentrates on
similar products for on and off highway vehicle, energy and other industrial
markets. The Company's Skyjack division is noted for its innovative, high
quality mobile industrial equipment, notably its class-leading aerial work
platforms and telehandlers. With more than 16,700 employees in 39 manufacturing
locations, 5 R&D centers and 15 sales offices in 12 countries in North America,
Europe and Asia, Linamar generated sales of more than $2.8 Billion in 2011. For
more information about Linamar Corporation and its industry leading products and
services, visit www.linamar.com.
Frank Hasenfratz Linda Hasenfratz
Chairman of the Board Chief Executive Officer
Guelph, Ontario
November 14, 2012
FOR FURTHER INFORMATION PLEASE CONTACT:
Linamar Corporation
Linda Hasenfratz
Chief Executive Officer
(519) 836-7550
www.linamar.com
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