- Sales increase 14.3% and operating earnings increase 49.4% over the third quarter of 2013 (“Q3 2013”);
- Net earnings up 52.7% over Q3 2013 and earnings per share up 53.8% over Q3 2013 reaching $79.4 million and $1.23 respectively;
- Net margins reach 7.8%;
- Launch book at more than $3.3 billion;
- Industrial segment showed significant margin improvements from Q3 2013 with operating earnings up 265.3%% to $27.4 million on a sales increase of 32.0%;
- Powertrain/Driveline segment showed strong margin improvements as well with operating earnings up 24.8% to $82.4 million from Q3 2013 on a sales increase of 11.3%;
- Return on Capital Employed reached 22.6% continuing our trend of solid improvements for the last 13 quarters;
- Completed the acquisition of Carolina Forge Company, LLC’s (“CFC”) business of high volume hot forged products, located in Wilson, North Carolina; and
- Continued cash generation of nearly $20 million despite the acquisition of CFC to drive one of the strongest balance sheets in our peer group.
| (in millions of dollars, except earnings per share figures) | Three Months Ended September 30 | Nine Months Ended September 30 | ||
| 2014 | 2013 | 2014 | 2013 | |
| $ | $ | $ | $ | |
| Sales | 1020.7 | 893.3 | 3168.6 | 2669.4 |
| Operating Earnings (Loss) | ||||
| Powertrain/Driveline | 82.4 | 66 | 250.5 | 188.5 |
| Industrial | 27.4 | 7.5 | 95.7 | 46.8 |
| Operating Earnings (Loss) | 109.8 | 73.5 | 346.2 | 235.3 |
| Net Earnings (Loss) | 79.4 | 52 | 248.8 | 161.1 |
| Net Earnings (Loss) per Share | 1.23 | 0.8 | 3.84 | 2.49 |
Operating Highlights
Sales for the third quarter of 2014 (“Q3 2014”) were $1,020.7 million, up $127.4 million from $893.3 million in Q3 2013.
Sales for the Powertrain/Driveline segment (“Powertrain/Driveline”) increased by $86.6 million, or 11.3% in Q3 2014 compared with Q3 2013. The sales increase in Q3 2014 was impacted by:
- the significant levels of newly launched programs and volume increases on mature programs in North America;
- increased European sales due to substantial levels of programs launching and our new German camshaft business acquired in Q4 2013;
- increased volumes and launching business from the Company’s on and off highway vehicle customers in all three regions; and
- • the ramp up of launching programs and volume increases on mature programs in Asia.
The Industrial segment (“Industrial”) product sales increased 32.0% or $40.8 million to $168.4 million in Q3 2014 from Q3 2013. The sales increase was due to:
- increased North American and European sales from higher market demand for access equipment;
- market share growth for scissor lifts in Europe; and
- market share growth for booms in North America.
The Company’s operating earnings for Q3 2014 were $109.8 million. This compares to $73.5 million in Q3 2013, an increase of $36.3 million.
Q3 2014 operating earnings for Powertrain/Driveline were higher by $16.4 million or 24.8% over Q3 2013. The Powertrain/Driveline segment experienced the following in Q3 2014:
- improved margins as production volumes increased on launching and mature programs;
- higher margins as a result of a favourable sales mix to highly capital intensive programs, which inherently have higher margins to meet return expectations; and
- better margins as a result of productivity and efficiency improvements; partially offset by
- increased management and sales costs supporting growth.
Industrial segment operating earnings in Q3 2014 increased $19.9 million or 265.3% over Q3 2013. The increase in Industrial operating earnings was predominantly driven by:
- increased demand and market share growth in the access equipment markets;
- productivity and efficiency improvements driven by higher volumes on new products and cost savings initiatives on mature products; partially offset by
- management and sales costs supporting growth.
“We are very pleased to report another outstanding quarter of double digit top and bottom line growth and margin expansion,” said Linamar CEO Linda Hasenfratz. “We have had an exceptional quarter on several fronts; financially of course, but also in terms of excellent new business wins to drive continued substantial growth over the next 5 years and execution on our strategic goals of vertically integrating into the forging field. We are delivering terrific results today and positioning for continued excellent performance in the long term.”
Dividends
The Board of Directors today declared an eligible dividend in respect to the quarter ended September 30, 2014 of CDN$0.10 per share on the common shares of the company, payable on or after December 12, 2014 to shareholders of record on November
26, 2014.
