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
Contacts: Linamar Corporation Linda Hasenfratz Chief Executive
Officer (519) 836-7550 www.linamar.com
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