Linamar Announces Second Quarter Cash Generation of $80 Million; Adjusted Net Loss of $10.1 Million; and Increases Content Per V
August 13 2009 - 4:01PM
Marketwired Canada
Linamar Corporation (TSX:LNR) -
- Reported a net loss of $48.4 million or $0.75 per share for the second quarter
of 2009;
- Incurred unusual charges of $38.3 million after tax including capital asset
impairments, severance costs and facility amalgamation costs;
- North American content per vehicle up 9.2% from the second quarter of 2008;
- Reduced debt net of cash by $100 million from December 31, 2008, which will
save approximately $1.0 million in interest for the remainder of 2009;
- Over $60 million in cash generated in the second quarter through reductions in
non-cash working capital;
- Capital investment down almost $30 million from the same quarter a year ago as
the Company took advantage of its plant clustering and flexible asset strategy;
- Awarded a contract by a major European auto manufacturer which will exceed
$200 million in annualized volume at full production;
- Awarded over $250 million in takeover and quick start contracts; and
- Production of the engines to be used in the SES solar energy contract moved
successfully into the prototype stage.
Three Months Ended Six Months Ended
June 30 June 30
(in millions of dollars, except 2009 2008 2009 2008
earnings per share figures) $ $ $ $
----------------------------------------------------------------------------
Sales $ 378.0 $ 625.4 $ 802.9 $ 1,240.0
Operating Earnings (Loss)
Powertrain/Driveline (52.6) 38.1 (51.0) 69.3
Industrial (10.4) 14.2 (10.9) 33.0
----------------------------------------------------------------------------
$ (63.0) $ 52.3 $ (61.9) $ 102.3
Net Earnings (Loss) (48.4) 32.0 (61.0) 61.5
Earnings (Loss) per Share (0.75) 0.48 (0.94) 0.90
Net Earnings (Loss) - Adjusted (10.1) 32.0 (10.7) 59.7
Earnings (Loss) per Share - Adjusted (0.16) 0.48 (0.17) 0.88
Three Months Ended Six Months Ended
(in millions of dollars, June 30 June 30
except per share figures) 2009 2008 2009 2008
----------------------------------------------------------------------------
Net Earnings (Loss) $ (48.4) $ 32.0 $ (61.0) $ 61.5
Adjustments due to unusual items
Taxable Items before Tax
1) Severance related to the
slow down in the Automotive
Industry 5.4 - 9.8 -
2) Capital asset impairments due
to market conditions 46.3 - 46.3 -
3) Ontario Capital Tax - eliminated
retroactively to Jan 1, 2007 - - - (4.4)
4) Program specific asset write
down - - - 4.7
--------------------------------------
51.7 - 56.1 0.3
Tax Impact (14.9) - (19.0) (0.1)
--------------------------------------
36.8 - 37.1 0.2
Non-Taxable Items
5) Goodwill Impairments - - 11.7 -
6) Intangible Asset Impairments 1.5 - 1.5 -
7) Foreign Exchange loss (gain)
on Hungarian Forints held
in Escrow - - - (2.0)
--------------------------------------
Adjusted Net Earnings (Loss) $ (10.1) $ 32.0 $ (10.7) $ 59.7
--------------------------------------
--------------------------------------
As a percentage of Sales (2.7%) 5.1% (1.3%) 4.8%
Change over Prior Year (131.6%) (117.9%)
Earnings (Loss) per Share (0.16) 0.48 (0.17) 0.88
Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of
highly engineered products. The company's Powertrain and Driveline focused
divisions are world leaders in the collaborative design, development and
manufacture of precision metallic components, modules and systems for global
vehicle and power generation markets. The company's Industrial division is a
world leader in the design and production of innovative mobile industrial
equipment, notably its class-leading aerial work platforms and telehandlers.
With more than 9,000 employees in 37 manufacturing locations, 5 R&D centers and
11 sales offices in Canada, the US, Mexico, Germany, Hungary, the UK, China,
Korea and Japan, Linamar generated sales of over $2.2 Billion in 2008. For more
information about Linamar Corporation and its industry leading products and
services, visit www.linamar.com.
Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
$ $ $ $
----------------------------------------------------------------------------
Sales 378,028 625,438 802,902 1,239,954
Gross Margin (36,267) 86,491 (12,513) 166,869
Selling, general and
administrative 26,746 34,154 49,342 64,595
Operating Earnings (63,013) 52,337 (61,855) 102,274
Earnings from Continuing
Operations (48,380) 31,974 (49,274) 61,461
Net Earnings (Loss) (48,380) 31,974 (60,992) 61,461
Unusual Items 38,289 - 50,326 -
Net Earnings (Loss) - Adjusted (10,091) 31,974 (10,666) 61,461
----------------------------------------------------------------------------
Diluted Earnings (Loss)
per Share from Continuing
Operations (0.75) 0.48 (0.76) 0.90
Diluted Earnings (Loss)
per Share (0.75) 0.48 (0.94) 0.90
Diluted Earnings (Loss)
per Share - Adjusted (0.16) 0.48 (0.17) 0.90
----------------------------------------------------------------------------
Second Quarter Operating Highlights
Sales for the second quarter of 2009 were $378.0 million, down $247.4 million
from $625.4 million for the second quarter of 2008:
- Sales for the Powertrain/Driveline segment decreased by $150.4 million, or
31.7% in the second quarter to $324.3 million compared to $474.7 million in the
second quarter of 2008. The decrease was driven by significant volume reductions
in global vehicle markets.
- Industrial segment sales decreased 64.4% or $97.0 million for the quarter from
$150.7 million in the second quarter of 2008 to $53.7 million in the second
quarter of 2009. The sales for the second quarter of 2009 differed from the
corresponding period in 2008 due to significant global volume reductions as a
result of uncertainty in the market and restricted customer credit availability
on a global basis.
The company's operating loss for the second quarter of 2009 was $9.8 million
after adjusting for unusual items in the quarter. This compares to $52.3 million
adjusted operating earnings for the second quarter of 2008, a decrease of $62.1
million:
- The decrease was driven by:
-- under absorption of fixed costs due to the significant volume reductions in
global markets in both segments; and
-- the capital asset impairments related to the bankruptcy filings of General
Motors and Chrysler in the Powertrain/Drivelines segment.
- Second quarter adjusted operating earnings for the Powertrain/Driveline
segment were lower by $38.7 million or 101.7% to a loss of $0.6 million over the
same quarter of 2008 where adjusted operating earnings were $38.1 million.
- The adjusted operating losses for the Industrial segment were $9.2 million in
second quarter of 2009, a decrease of $23.4 million or 164.5% over the first
quarter of 2008.
Taking into account the unusual items of the second quarters of each year,
adjusted net loss for the second quarter of 2009 was $10.1 million ($0.16 net
loss per share) versus a profit of $32.0 million ($0.48 net earnings per share)
in the second quarter of 2008.
The company generated $88.4 million in operational cash flow, $61.7 million of
which was from reductions in working capital. At June 30, 2009 the amount
available under the company's syndicated revolving credit facility was $201.5
million, down $48.1 million from March 31, 2009. On April 16, 2009 the company
withdrew $100 million CAD from the syndicated revolving credit facility which
were held in short-term investments until June 5, 2009, at which time, the
company used these funds to repay the Series A Private Placement Notes that were
due in October 2009. As a result, net debt decreased by $81.2m since March 31,
2009.
"Despite the toll that excessive production shutdowns took on our sales and
earnings this quarter, we are very pleased by the excellent level of cash
generated, indicative of our ability to aggressively reallocate capital from
existing lines to new programs and continue to grow despite low cash investment"
said Linamar CEO Linda Hasenfratz. "We also had a fantastic quarter in terms of
new business both takeover and longer term, lining us up for continued growth in
the coming months and year"
Dividends
The Board of Directors today declared an eligible dividend in respect to the
quarter ended June 30, 2009 of CDN$0.03 per share on the common shares of the
company, payable on or after September 15, 2009 to shareholders of record on
August 28, 2009.
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
Q2 Conference Call Information
Linamar will hold a conference call on August 13, 2009 at 5:00 pm. EST to
discuss its second quarter results. The numbers for this call are (416) 640-5933
(local/overseas) or (866) 399-6716 (North America) confirmation number 2594477,
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 full quarterly financial statements,
including the Management's Discussion & Analysis will be available on the
company's website after 4 p.m. EST on August 13, 2009 and at www.sedar.com by
the start of business on August 14, 2009. A taped replay of the conference call
will also be made available starting at 11:00 p.m. on August 13, 2009 for seven
days. The number for replay is (647) 436-0148 or (888) 203-1112, Replay Passcode
25944777. 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.
Q3 Conference Call Information
Linamar will hold a conference call on November 12, 2009 at 5:00 p.m. EST to
discuss its third quarter results. The numbers for this call are (647) 427-3420
(local/overseas) or (888) 300-0053 (North America) confirmation number 17906931,
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 full quarterly financial statements,
including the Management's Discussion & Analysis will be available on the
company's website after 4 p.m. EST on November 12, 2009 and at www.sedar.com by
the start of business on November 13, 2009. A taped replay of the conference
call will also be made available starting at 11:00 p.m. on November 12, 2009 for
seven days. The number for replay is (800) 766-3735, Conference ID 17906931. 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.
Frank Hasenfratz Linda Hasenfratz
Chairman of the Board Chief Executive Officer
Guelph, Ontario
August 13, 2009
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