Martinrea International Inc. Releases 2012 Annual Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 03/20/13 -- Martinrea International Inc. (TSX: MRE), a leader in the production of quality metal parts, assemblies and modules and fluid management systems focused primarily on the automotive sector, announced today the release of its financial results for the year and fourth quarter ended December 31, 2012.
Martinrea currently employs over 12,000 skilled and motivated people in 37 plants in Canada, the United States, Mexico, Brazil, Europe, and China. All amounts in this press release are in Canadian dollars, unless otherwise stated; and all tabular amounts are in thousands of Canadian dollars, except earnings per share and number of shares.
Additional information about the Company, including the Company's Management Discussion and Analysis of Operating Results and Financial Position for the year and quarter ended December 31, 2012 ("MD&A") dated as of March 20, 2013, the Company's audited consolidated financial statements for the year ended December 31, 2012 (the "audited consolidated financial statements") and the Company's Annual Information Form for the financial year ended December 31, 2012, can be found at .
Non-IFRS Measures
The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-IFRS financial measures and ratios in this press release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to the other financial measures determined in accordance with IFRS. Non-IFRS measures referred to in the analysis include "adjusted net earnings", and "adjusted net earnings per share on a basic and diluted basis" and are defined in Tables A, B and C under "Adjustments to Net Income" of this press release.
Fourth Quarter 2012 to Fourth Quarter 2011 comparison
The Company's consolidated revenues for the fourth quarter of 2012 decreased by $9.2 million or 1.3% to $705.6 million as compared to $714.8 million for the fourth quarter of 2011. The total overall decrease in revenue was driven by decreases in the Company's Europe and Rest of World operating segments partially offset by an increase in revenue in North America.
Revenues for the fourth quarter of 2012 in the Company's North America operating segment increased by $23.9 million or 4.4% to $566.2 million from $542.3 million during the fourth quarter of 2011. The increase can be attributed to the launch of new programs during or subsequent to 2011 and improved overall production volumes in North American OEM light vehicle platforms. These positive gains were partially offset by a $3.7 million decline in tooling revenue, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer, and the impact of foreign exchange on the translation of U.S. dollar denominated revenue, which had a negative impact on revenue for the fourth quarter of 2012 of $10.1 million in comparison to the fourth quarter of 2011.
Revenues for the fourth quarter of 2012 in the Company's Europe operating segment, comprised predominantly of the European operations of Martinrea Honsel, decreased by $23.6 million to $127.2 million from $150.8 million during the fourth quarter of 2011. The decrease in revenue in Europe was due to a decrease in OEM light and medium-heavy vehicle production in Western Europe and the impact of foreign exchange on the translation of Euro denominated revenue, which had a negative impact on revenue for the fourth quarter of 2012 of $14.5 million as compared to the fourth quarter of 2011, partially offset by a year-over-year increase in tooling revenue of $11.1 million.
Revenues for the fourth quarter of 2012 in the Company's Rest of World operating segment, currently comprised of the Brazilian operations of Martinrea Honsel and a start-up facility in China in its early stages, decreased by $9.6 million to $12.1 million as compared to $21.7 million for the fourth quarter of 2011. The decrease can be attributed to a decrease in OEM light and medium-heavy vehicle production volumes in Brazil, a $0.7 million decrease in tooling revenue, and the impact of foreign exchange on the translation of Brazilian Real denominated revenue, which had a negative impact on revenue for the fourth quarter of 2012 of $2.3 million as compared to the fourth quarter of 2011.
Overall tooling revenue increased by $6.7 million from $29.9 million for the fourth quarter of 2011 to $36.6 million for the fourth quarter of 2012.
Fourth Quarter 2012 to Third Quarter 2012 comparison
The Company's consolidated revenues for the fourth quarter of 2012 increased by $8.4 million or 1.2% to $705.6 million as compared to $697.2 million for the third quarter of 2012. The total overall increase in revenue was driven by increases in the Company's North America and Europe operating segments partially offset by a decrease in revenue in the Company's Rest of World operating segment.
Revenues for the fourth quarter of 2012 in the Company's North America operating segment increased by $6.1 million or 1.1% to $566.2 million from $560.1 million during the third quarter of 2012. Revenues for North America for the fourth quarter of 2012 were positively impacted by higher overall North American OEM light vehicle production and the full benefit of recently launched business partially offset by a $16.5 million decrease in tooling revenue, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer, and the impact of foreign exchange on the translation of U.S. dollar denominated revenue, which had a negative impact on revenue for the fourth quarter of 2012 of $9.0 million in comparison to the third quarter of 2012. Excluding the decrease in tooling revenue and the negative impact the translation of U.S. dollar denominated revenue had on revenues for the quarter, revenues in North America would have increased by 5.6% quarter-over-quarter.
Revenues for the fourth quarter of 2012 in the Company's Europe operating segment, comprised predominantly of the European operations of Martinrea Honsel, increased by $5.7 million to $127.2 million from $121.6 million during the third quarter of 2012. The increase was mainly due to a $9.0 million increase in tooling revenue and the impact of foreign exchange on the translation of Euro denominated revenue, which had a positive impact on revenue for the fourth quarter of 2012 of $2.4 million as compared to the third quarter of 2012, partially offset by slightly lower production levels during the quarter.
Revenues for the fourth quarter of 2012 in the Company's Rest of World operating segment, currently comprised of the Brazilian operations of Martinrea Honsel and a start-up facility in China in its early stages, decreased by $3.4 million to $12.1 million as compared to $15.6 million for the third quarter of 2012. The decrease can be attributed to a decrease in OEM light and medium-heavy vehicle production volumes in Brazil partially offset by a $0.7 million increase in tooling revenue.
Overall tooling revenue decreased by $6.8 million from $43.4 million for the third quarter of 2012 to $36.6 million for the fourth quarter of 2012.
2012 to 2011 comparison
The Company's consolidated revenues for the year ended December 31, 2012 increased by $708.1 million or 32.3% to $2,901.0 million as compared to $2,192.9 million for the year ended December 31, 2011. The total overall increase in revenue was driven mainly by increases in revenues in the Company's North America and Europe operating segments of $410.6 million and $281.0 million, respectively. Included in the $410.6 million increase in revenue generated in North America was an increase of $55.5 million related to the operations of the Company's plant in Queretaro, Mexico, which formed part of the Honsel acquisition and for which 2012 includes twelve full months of revenue as compared to only five months in the comparative 2011 period (Martinrea Honsel was acquired on July 29, 2011). The remainder of the increase in North America can be attributed to the launch of new programs during 2011 and 2012, overall improved production volumes in North American OEM light vehicle platforms, a $53.0 million increase in tooling revenue, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer, and the impact of foreign exchange on the translation of U.S. dollar denominated revenue, which had a positive impact on revenue for the year ended December 31, 2012 of $22.7 million in comparison to the year ended December 31, 2011.
Revenues for the year ended December 31, 2012 in the Company's Europe operating segment, comprised predominantly of the European operations of Martinrea Honsel, increased by $281.0 million or 105.5% to $547.3 million from $266.3 million during the year ended December 31, 2011. Due to the timing of the Honsel acquisition, which closed on July 29, 2011, 2012 includes twelve full months of revenue from Martinrea Honsel as compared to only five months during the comparative 2011 period. As such, despite the increase in year-over-year revenue in Europe, average monthly revenue during the year decreased due to lower OEM light and medium-heavy vehicle production in Western Europe and the impact of foreign exchange on the translation of Euro denominated revenue, which had a negative impact on revenue for the year ended December 31, 2012 of $38.8 million as compared to the year ended December 31, 2011. Tooling revenues in Europe increased by $25.5 million year-over-year.
Revenues for the year ended December 31, 2012 in the Company's Rest of World operating segment, currently comprised of the Brazilian operations of Martinrea Honsel and a start-up facility in China in its early stages, increased by $16.5 million or 41.8% to $55.9 million as compared to $39.4 million for the year ended December 31, 2011. As noted above, 2012 includes twelve full months of revenue from Martinrea Honsel as compared to only five months during 2011. As such, despite the increase in year-over-year revenue, average monthly revenue in the Rest of World operating segment during the year in fact decreased driven mainly by a decrease in OEM light and medium-heavy vehicle production volumes in Brazil and the impact of foreign exchange on the translation of Brazilian Real denominated revenue, which had a negative impact on revenue for the year ended December 31, 2012 of $16.4 million as compared to the year ended December 31, 2011.
Overall tooling revenue increased by $78.1 million from $117.3 million for the year ended December 31, 2011 to $195.4 million for the year ended December 31, 2012.
Fourth Quarter 2012 to Fourth Quarter 2011 comparison
The gross margin percentage for the fourth quarter of 2012 of 8.8% decreased as a percentage of revenue by 2.2% from 11.0% realized during the fourth quarter of 2011. The reduction in gross margin percentage was predominantly due to lower capacity utilization from a decrease in production volumes in Europe and Brazil, as previously noted, and increased levels of launch costs and other launch-related operational expenses. The launch activity costs incurred during the quarter relate to several new programs that ramped up during the second half of 2012, which will generate approximately $450 million in annualized business when fully launched. The most significant of the new programs is the new Ford Escape, which launched in four Martinrea facilities in the U.S., including the Company's facilities in Shelbyville, Kentucky and Hopkinsville, Kentucky both of which are discussed further below. In addition to the content on the new Ford Escape, launches during the second half of 2012 include content on the following OEM platforms: Ford CD4, GM Global Gamma, GM Alpha, GM Epsilon, Nissan L12F and Honda C-5.
During the second half of the year, the Company's Shelbyville facility, approximating one million square feet, completed the largest single launch in the Company's history. A total of approximately $275 million in annualized business related to Ford's C520 program was launched at this facility. The new work has greatly expanded capacity utilization at Shelbyville, and is expected to turn a very large plant with negative gross margin and earnings into a positive gross margin and earnings contributor in 2013, as launch costs subside and operational efficiencies improve. The launch costs include costs relating to extra people, overtime and inefficiencies during the ramp up. The ramp up has been unprecedented and in a compressed time frame as the customer sold vehicles and built inventory in connection with the launch of the Ford Escape. Operations have stabilized and the Shelbyville plant is now focused on cost reduction and reducing cycle times. Further operational improvements to certain production lines were made over the Christmas break, which have taken hold and have resulted in increased throughput and reduced costs.
The Ford C520 business in Shelbyville consists of approximately $150 million in value added internally produced components (some of which are or will be manufactured by other Martinrea facilities) and $125 million in components purchased from other suppliers that will be integrated with internally produced components to produce finished welded assemblies. The gross margins on components purchased from other suppliers are typically lower than for value added work, although return on capital is higher. With the launch of the Ford C520 program in Shelbyville, approximately 25% of Martinrea's business excluding Martinrea Honsel involves integrator or assembly work.
During the second half of 2012, the Company's Hopkinsville, Kentucky facility was also involved in several launches simultaneously, together with existing programs, which resulted and continues to result in significant costs, as the plant deals with the increases in production volume. As discussed in Table B under "Adjustments to Net Income", the Company experienced a major press equipment failure at this facility in June and July, which involved substantial costs. Although the press is now operational, some of the facility's weld assembly lines struggled to keep up with the aggressive volume requirements of the Company's customers during the second half of the year. The customer volume requirements and the need to upgrade and improve equipment performance simultaneously resulted in substantial costs for overtime, extra personnel, and customer charge backs including expedited freight to meet customer deadlines all of which had a negative impact on gross margin. Operations have since stabilized and, similar to Shelbyville, the plant is now focused on cost reduction. Costs are expected to decline as operational improvements continue to be made.
Fourth Quarter 2012 to Third Quarter 2012 comparison
Gross margin percentage, before adjustments, for the fourth quarter of 2012 of 8.8% increased as a percentage of revenue by 0.4% from 8.4% realized during the third quarter of 2012. Excluding the impact of a major equipment failure at one of the Company's facilities in the U.S. in the third quarter of 2012 as described in Table B under "Adjustments to Net Income", gross margin percentage for the third quarter of 2012 would have been 9.0%, slightly higher than the gross margin percentage of 8.8% in the fourth quarter of 2012. Gross margin for both the fourth and third quarters was negatively impacted by launch costs and other launch-related operational expenses, predominantly at the Company's facilities in Shelbyville, Kentucky and Hopkinsville, Kentucky, as discussed above, and the increase in integrator or assembly work which typically has lower margins.
2012 to 2011 comparison
Gross margin percentage for the year ended December 31, 2012 of 9.6% decreased as a percentage of revenue by 1.0% from 10.6% realized during the year ended December 31, 2011. Excluding the impact of a major equipment failure at one of the Company's facilities in the U.S. as described in Table C under "Adjustments to Net Income", gross margin percentage for the year ended December 31, 2012 decreased by 0.8% to 9.8% from 10.6% for the year ended December 31, 2011. The gross margin percentage for the year ended December 31, 2012 was negatively impacted by lower absorption of overheads from softness in OEM production volumes in both Europe and Brazil, a significant increase in year-over-year tooling revenues, which typically earns no or low margins for the Company, and launch costs and other launch-related operational expenses, predominantly at the Company's facilities in Shelbyville, Kentucky and Hopkinsville, Kentucky, which increased year-over-year as discussed above.
ADJUSTMENTS TO NET INCOME
(ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)
Adjusted net earnings excludes certain unusual and other items, as set out in the following tables and described in the notes thereto. Management uses adjusted earnings as a measurement of operating performance of the Company and believes that, in conjunction with IFRS measures, it provides useful information about the financial performance and condition of the Company.
(1) Employee related severance and other restructuring costs
As part of the acquisition of Honsel, a certain level of restructuring was planned in order to be cost competitive over the long term, in particular at the Company's German facilities in Meschede and Soest. The restructuring efforts commenced immediately after the closing of the acquisition on July 29, 2011. In connection with these restructuring activities, $28.5 million of primarily employee related severance was recognized during the year ended December 31, 2012 ($11.4 million during the year ended December 31, 2011) of which $26.0 million was recognized during the fourth quarter of 2012 and $1.7 million during the third quarter of 2012. Additional employee related severance associated with the Martinrea Honsel operations may be incurred in 2013.
In addition, during the fourth quarter of 2011, the Company began the process of closing one of its small operating facilities in Mexico. The existing business and equipment of this facility was moved to other Company facilities in Mexico including a new facility the Company opened in Silao, Mexico in 2011. Restructuring costs relating to this closure amounted to $5.0 million for the year ended December 31, 2012 ($2.4 million during the year ended December 31, 2011) of which $1.5 million was incurred in the fourth quarter of 2012 and $0.6 million in the third quarter of 2012, consisting primarily of employee related severance and the dismantling and transporting of PP&E between Company facilities. The closure of this facility was completed during the fourth quarter of 2012. As such, no further costs related to this closure are expected to be incurred.
Costs associated with other restructuring activities totaled $2.4 million during the year ended December 31, 2012 of which $0.3 million was incurred in the fourth quarter of 2012 and $1.2 million during the third quarter of 2012, relating to the right sizing of certain other manufacturing facilities.
(2) Impairment (reversal) of Property, Plant and Equipment (PP&E) and Intangible Assets
Annual impairment tests were conducted on PP&E and intangible assets at December 31, 2012 and December 31, 2011. In addition, as required by IFRS, the Company evaluated all previously recorded impairment charges for potential reversal. Based on this analysis, incremental impairment charges were recorded which were offset by the reversal of certain previously recorded impairment charges resulting in a net impairment charge of $0.4 million during the year ended December 31, 2011. The reversal of previously recorded impairment charges in 2011 under the requirements of IFRS was primarily due to the significant improvements in North American vehicle production from 2009 and the benefits from the restructuring activities conducted during 2009 and 2010 which included the relocation of plant and equipment and the corresponding customer business to cost competitive facilities.
(3) Executive separation agreement
On June 29, 2012, the Company announced that Nat Rea stepped down as Vice Chairman and Director of Martinrea, effective as of such date, to pursue other opportunities. As part of the separation agreement and based on the terms of his employment contract, the Company paid Mr. Rea $5.2 million which was expensed during the second quarter of 2012 and included in SG&A expense. The Company does not expect to incur any further costs associated with Mr. Rea's departure.
(4) Impact of a major equipment failure at an operating facility in the U.S.
During the month of June 2012, a press in one of the Company's U.S. operating facilities experienced a significant failure and was not operational for approximately 23 days. As a consequence and due to the lack of press capacity at the facility, approximately thirty dies were outsourced to external stamping companies, which resulted in the following incremental costs:
These incremental costs, which totaled $8.5 million for the year ended December 31, 2012, were non-recurring in nature and had a significant impact on the performance of the facility during the months of June and July 2012 and part of August. The press is now operational again and, as a result, no further costs related to this matter have been incurred.
(5) Settlement of Customer Chargebacks
In conjunction with the surge in customer volume requirements related to the significant launch activity in the U.S. during the second half of 2012 as previously discussed, the Company incurred $4.9 million in customer chargebacks relating mainly to customer production downtime and premium freight costs paid by the customer. The charges were settled with the corresponding customers and expensed during the fourth quarter of 2012.
(6) Transaction and integration costs associated with the acquisition of Honsel
On July 29, 2011, the Company closed the purchase of the operations of Honsel to form the Martinrea Honsel Group. Martinrea joined with Anchorage in the transaction and, consequently, owns 55% of the Martinrea Honsel Group with Anchorage owning the remaining 45%. The Company expensed $9.7 million in transaction and integration costs related to the acquisition during the year ended December 31, 2011, of which $1.6 million was expensed in the fourth quarter of 2011. $0.6 million was expensed during the first quarter of 2012.
Fourth Quarter 2012 to Fourth Quarter 2011 comparison
Net earnings, before adjustments, for the fourth quarter of 2012 decreased by $25.1 million from net earnings of $18.5 million for the fourth quarter of 2011 to a net loss of $6.6 million for the fourth quarter of 2012. Excluding unusual and other items incurred during these two quarters as explained in Table A under "Adjustments to Net Income", the net earnings for the fourth quarter of 2012 decreased to $12.6 million or $0.15 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $19.9 million or $0.24 per share, on a basic and diluted basis, for the fourth quarter of 2011.
The adjusted net earnings for the fourth quarter of 2012, as compared to the fourth quarter of 2011, were positively impacted by an increase in OEM light vehicle production volumes in North America, the launch of new programs during or subsequent to the fourth quarter of 2011 and productivity and efficiency improvements at certain North American facilities. The positive impact was more than offset by an increase in launch costs and other launch-related operational expenses during the quarter, as previously discussed, an increase in year-over-year interest expense on higher debt levels and a decrease in the contribution of Martinrea Honsel to net earnings from $0.07 per share in the fourth quarter of 2011 to $0.01 per share in the fourth quarter of 2012, due mainly to the year-over-year decrease in OEM light and medium-heavy vehicle production volumes in Western Europe and Brazil.
Fourth Quarter 2012 to Third Quarter 2012 comparison
Net earnings, before adjustments, for the fourth quarter of 2012 decreased by $14.6 million from net earnings of $8.0 million for the third quarter of 2012 to a net loss of $6.6 million for the fourth quarter of 2012. Excluding the unusual and other items incurred during these two quarters, as explained in Table B under "Adjustments to Net Income", net earnings for the fourth quarter of 2012 decreased to $12.6 million or $0.15 per share, on a basic and diluted basis, as compared to net earnings of $13.8 million or $0.17 per share, on a basic and diluted basis, for the third quarter of 2012. Launch costs and other launch-related operational expenses as previously discussed continued to negatively impact the results of the fourth quarter. Further, the contribution of Martinrea Honsel decreased from $0.02 per share in the third quarter of 2012 to $0.01 per share in the fourth quarter of 2012 on slightly lower OEM production volumes in Western Europe and Brazil.
2012 to 2011 comparison
Net earnings, before adjustments, for the year ended December 31, 2012 of $38.8 million decreased by $15.7 million from $54.5 million for the year ended December 31, 2011. Excluding the unusual and other items incurred during these two years as explained in Table C under "Adjustments to Net Income", the net earnings for the year ended December 31, 2012 increased to $75.2 million or $0.91 per share, on a basic basis, and $0.90 per share on a diluted basis, in comparison to adjusted net earnings of $66.8 million or $0.80 per share, on a basic basis, and $0.79 per share on a diluted basis, for the year ended December 31, 2011.
The adjusted net earnings for the year ended December 31, 2012, as compared to the year ended December 31, 2011, were positively impacted by an increase in OEM light vehicle production volumes in North America, the launch of new programs during or subsequent to 2011 and productivity and efficiency improvements at certain North American facilities. The positive impact was partially offset by an increase in launch costs and other launch-related operational expenses during the year, predominantly during the second half of the year, as previously discussed, and an increase in year-over-year interest expense on higher debt levels. The contribution of Martinrea Honsel to net earnings increased from $0.13 per share for the year ended December 31, 2011 to $0.14 per share for the year ended December 31, 2012. Due to the timing of the Honsel acquisition, which closed on July 29, 2011, 2012 includes twelve full months of results from Martinrea Honsel as compared to only five months during 2011. Despite including twelve full months of results from Martinrea Honsel in the consolidated results of the Company for 2012 and resulting increased revenues, compared to only five months in 2011, the contribution of Martinrea Honsel did not increase substantially in 2012 due to lower overall capacity utilization resulting from a decline in OEM light and medium-heavy vehicle production volumes in Western Europe and Brazil.
Fourth Quarter 2012 to Fourth Quarter 2011 comparison
Capital expenditures on property, plant, and equipment increased by $10.0 million to $57.5 million in the fourth quarter of 2012 from $47.5 million in the fourth quarter of 2011. While capital expenditures are made to refurbish or replace assets consumed in the normal course of business and for productivity improvements, the increase is primarily due to the purchase of new program equipment in response to newly awarded business.
Fourth Quarter 2012 to Third Quarter 2012 comparison
Capital expenditures during the fourth quarter of 2012 remained relatively consistent with the previous quarter increasing by $3.0 million to $57.5 million in the fourth quarter of 2012 from $54.5 million in the third quarter of 2012. Capital expenditures incurred in both the third and fourth quarters of 2012 relate mainly to new program equipment for newly awarded business currently ramping up and scheduled to launch over the next two years.
2012 to 2011 comparison
In 2012, the Company once again made significant investments in the business, as it continued to invest both in its traditional North American market and to further establish the Company's footprint in growing regions such as Asia and South America. Capital expenditures increased by $49.8 million to an all-time high of $199.3 million for the year ended December 31, 2012 from $149.5 million during the year ended December 31, 2011. While capital expenditures are made to refurbish or replace assets consumed in the normal course of business and for productivity improvements, the increase is primarily due to an increase in the purchase of new program equipment in response to newly awarded business, some of which launched in 2012.
Nick Orlando, Martinrea's President and Chief Executive Officer, stated: "The year 2012 was a significant year for us at Martinrea, as we continued to build our company and our business. We enjoyed record revenues. Our adjusted net earnings for the year was the highest in our history. We launched more business than we ever have before. We grew our business with our customers. We expanded our workforce with more good people so that we now employ over 12,000 people worldwide. We expanded our number of plants and a number of our plants, and we started our first plant in China. We invested a record amount in capital to support our business. In terms of our final quarter in 2012, our fourth quarter results reflected strong Q4 revenues, adjusted net earnings, and extensive launch and pre-launch activity as we continued to ramp up the largest backlog in our history. The Company's operations are running well in many plants and meeting or exceeding expectations. However, launch costs and other operational costs in several plants negatively impacted results in the quarter. In terms of an operational update as to where we sit today on our operations in March 2013, we are progressing on all fronts. Our Shelbyville facility is now fully ramped up. We made a number of changes over the Christmas break to improve efficiencies, and we are in continuous improvement and cost reduction mode. We are meeting customer production schedules now with better cycle times, less overhead and fewer people, and such efficiencies should continue. Shelbyville was a profitable plant in February, and had positive cash flow in January. Improvements are being made in other plants also, and they are coming along. Our Hopkinsville facility is showing steady improvement, but is not yet profitable. All these improvements take time, but we are always in continuous improvement mode. I also note that we continue to quote new business to ensure we have a pipeline for the future. In that regard I am pleased to announce that we have won incremental business awards totalling $85 million annualized. This business consists of a new aluminum engine block from Nissan for our Martinrea Honsel operations in Mexico, with $20 million in anticipated annual revenues launching in 2015; an aluminum swivel bearing for our Martinrea Honsel operation in Spain, with $40 million in anticipated annual revenues launching in 2015; and $25 million in fluid management product with Ford on the next generation Lincoln MKS launching in 2016."
Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Revenues for the fourth quarter, excluding $36.6 million in tooling revenues, were approximately $669 million which was within our quarterly sales guidance as previously provided. In the fourth quarter of 2012 our adjusted earnings per share on a basic and diluted basis was $0.15, after factoring out restructuring costs, predominantly employee related severance costs especially at Martinrea Honsel's German operations, and the settlement of customer chargebacks relating mainly to customer production downtime and premium freight costs paid by the customer, within our quarterly earnings guidance as previously reported. Our fourth quarter results from the Martinrea Honsel assets, after factoring out unusual and other items, amounted to approximately $0.01 of earnings per share for the quarter, lower than our previous three quarters due mainly to softness in Brazil and Europe. Our fourth quarter from Martinrea Classic amounted to approximately $0.14 of earnings per share, after factoring out unusual and other items. As previously noted, we did experience some launch activity and operational costs which negatively impacted earnings in the quarter. These costs have begun to subside since year end. As noted in the past, we continue to expect gross margin to continue to improve over time as the restructuring measures taken in Martinrea Honsel take hold and we continue launching a significant backlog of business."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "We believe that the year 2012 has set the stage for a better 2013. Absent events we do not foresee at this time, 2013 should be a record year for revenues and earnings. Our first quarter, which is almost complete, is expected to generate revenues (excluding tooling revenues) in the range of $700 to $720 million, and we believe our earnings per share will be in the range of 22 to 26 cents per share, an upward trend from our fourth quarter as we rationalize our operations and improve efficiencies. We are pleased to announce that we do not expect to have any unusual or other items to report in the first quarter. We remain focused on improving shareholder value over time, as we always have, as we implement long-term prudent, profitable growth strategies."
Mr. Wildeboer added: "At year end we also reflect on the support we have received in the past year, and we thank all of our shareholders, lenders, customers and of course our employees, for their continued and valued support."
Forward-Looking Information
Special Note Regarding Forward-Looking Statements
This Press Release contains forward-looking statements within the meaning of applicable Canadian securities laws including related to the Company's expectations as to revenue and gross margin percentage and earnings per share (and the expectation as to absence of unusual items), statements as to the growth of the Company and pursuit of its strategies, the launching of new metal forming and fluid systems programs including expectations as to the financial impact of the launch at the Shelbyville and other plants, and statements as to the progress of operational improvements and the continuation of operational efficiencies (including at the Shelbyville and Hopkinsville plants), the opportunity to increase sales, statements regarding the continuation of monitoring, managing and rationalization of expenses (including of Martinrea Honsel), the reduction in certain costs (including the reduction of costs due to operational improvements), the Company's expectations regarding the future amount and type of restructuring expenses to be expensed (including Martinrea Honsel), the Company's view on the financial viability of its customers, the Company's views on the long term outlook of the automotive industry, and corresponding increased sales and production, statements as to the benefits of the Honsel acquisition, the Company's ability to capitalize on opportunities in the automotive industry, first quarter 2013 revenue and earnings per share estimates and as well as other forward-looking statements. The words "continue", "expect", "anticipate", "estimate", "may", "will", "should", "views", "intend", "believe", "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, some of which are discussed in detail in the Company's Annual Information Form and other public filings which can be found at :
These factors should be considered carefully, and readers should not place undue reliance on the Company's forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
A conference call to discuss these results will be held on Thursday, March 21, 2013 at 8:00 a.m. (Toronto time) which can be accessed by dialing 416.340.8410 or toll free 866.225.2055. Please call 10 minutes prior to the start of the conference call.
If you have any teleconferencing questions, please call Andre La Rosa at (416) 749-0314.
There will also be a rebroadcast of the call available by dialing 905.694.9451 or 800.408.3053 (conference id 4555837#). The rebroadcast will be available until April 4, 2013.
The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".
On behalf of the Board:
"Robert Wildeboer" Director
"Suleiman Rashid" Director
Contacts:
Martinrea International Inc.
Fred Di Tosto
Chief Financial Officer
(416) 749-0314
(289) 982-3001 (FAX)
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