Linamar Accelerates Strong Performance in the Second Quarter
August 11 2010 - 4:00PM
Marketwired Canada
Linamar Corporation (TSX:LNR) -
-- Sales increase 50.4% over the second quarter of 2009 ("Q2 2009");
-- Reported net earnings of $26.6 million or $0.41 per share;
-- Net Earnings in company target zone at 4.7% of Sales;
-- Adjusted operating earnings up almost $37 million or 500% over Q2 2009.
-- Launch book remains strong at just over $1.8 Billion, driving short and
long term growth.
Three Months Ended
June 30
2010 2009
(in millions of dollars, except earnings per
share figures) $ $
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Sales $ 568.4 $ 378.0
Operating Earnings (Loss)
Powertrain/Driveline 45.1 (52.6)
Industrial (2.7) (10.4)
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Operating Earnings (Loss) $ 42.4 $ (63.0)
Unusual Items $ - $ 53.2
Operating Earnings (Loss) - Adjusted $ 42.4 $ (9.8)
Net Earnings (Loss) 26.6 (48.4)
Unusual Items - 38.3
Net Earnings (Loss) - Adjusted 26.6 (10.1)
Earnings (Loss) per Share 26.6 (10.1)
Earnings (Loss) per Share - Adjusted 0.41 (0.16)
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Unusual Items
Taxable Items before Tax
1) Severance related to the global economic
slow down - 5.4
2) Capital asset impairments due to market
conditions - 46.3
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- 51.7
Tax Impact - (14.9)
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- 36.8
Non-Taxable Items
3) Goodwill impairments - -
4) Intangible asset impairments - 1.5
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Total Unusual Items - 38.3
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Operating Highlights
Sales for the second quarter of 2010 ("Q2 2010") were $568.4 million, up $190.4
million from $378.0 million from Q2 2009:
-- Sales for the Powertrain/Driveline segment increased by $199.8 million,
or 61.6% in Q2 2010 to $524.1 million compared to $324.3 million in Q2
2009. The sales increase in the second quarter was impacted by the
vehicle volumes starting to recover in the global vehicle markets and
specifically by:
-- higher sales driven by increased consumer demand in the US;
-- higher sales from the Asia Pacific operations in Q2 2010; and
-- maturing volumes of key programs that were in the start-up phase in
2008/2009 including 6 speed transmissions.
Industrial segment sales decreased 17.5%, or $9.4 million from Q2 2009 to
$44.3 million. The sales decrease was due to:
-- significant declines in demand in the agricultural equipment markets
serviced by the European Fabrication Division;
-- significant declines in demand in the markets serviced by the
Consumer Products Division; and partially offset by
-- modest increases in the access equipment markets even though the
overall demand remains soft as rental houses continue extend fleet
life and delay purchases.
The company's adjusted operating earnings for Q2 2010 were $42.4 million. This
compares to $9.8 million adjusted operating loss for Q2 2009, an increase of
$52.2 million:
-- The increase was driven primarily by the better absorption of fixed
costs due to the improved volume in global markets and on launch
programs in the Powertrain/Driveline segments;
-- Q2 2010 adjusted operating earnings of $45.1 million for the
Powertrain/Driveline segment were higher by $45.7 million from the
adjusted operating loss of $0.6 million in Q2 2009;
-- The adjusted operating losses for the Industrial segment were $2.7
million in Q2 2010, a decrease in loss of $6.5 million from Q2 2009.
Net earnings for Q2 2010 were $26.6 million or $0.41 net earnings per share
versus $21.6 million or $0.33 per share in Q1 2010.
"We are happy to see our strong first quarter results improve even further in
the second quarter." said Linamar CEO Linda Hasenfratz, "We are continuing to
focus on improving earnings through top line growth coming from our robust
launch book on a global basis."
Dividends
The Board of Directors today declared an eligible dividend in respect to the
quarter ended June 30, 2010 of CDN$0.06 per share on the common shares of the
company, payable on or after September 14, 2010 to shareholders of record on
August 27, 2010.
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 11, 2010 at 5:00 p.m. EST to
discuss its second quarter results. The numbers for this call are (647) 427-3420
(local/overseas) or (888) 300-0053 (North America) confirmation number 69714326,
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 11, 2010 and at www.sedar.com by
the start of business on August 12, 2010. A taped replay of the conference call
will also be made available starting at 11:00 p.m. on August 11, 2010 for seven
days. The number for replay is (800) 642-1687, Conference ID 69714326. 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 11, 2010 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 91337561,
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 11, 2010 and at www.sedar.com by
the start of business on November 12, 2010. A taped replay of the conference
call will also be made available starting at 11:00 p.m. on November 11, 2010 for
seven days. The number for replay is (800) 642-1687, Conference ID 91337561. 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.
Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of
highly engineered products powering vehicles, motion, work and lives. 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 11,100 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
close to $1.7 Billion in 2009. 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
August 11, 2010
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