Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the first quarter ended March 31, 2016.
| THREE MONTHS ENDED | |||||||
| March 31, 2016 | March 31, 2015 | ||||||
| Sales | $ | 8,900 | $ | 7,772 | |||
| Adjusted EBIT(1) | $ | 698 | $ | 631 | |||
| Income from continuing operations before | |||||||
| income taxes | $ | 675 | $ | 621 | |||
| Net income from continuing operations | |||||||
| attributable to Magna International Inc. | $ | 492 | $ | 455 | |||
| Diluted earnings per share | |||||||
| from continuing operations | $ | 1.22 | $ | 1.10 | |||
| All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
(1) Adjusted EBIT is the measure of segment profit or loss as reported in the Company’s attached unaudited interim consolidated financial statements. Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other (income) expense, net. |
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Commenting on the completion of the Getrag acquisition early in 2016, Don Walker, Magna’s Chief Executive Officer stated: “We welcome all Getrag employees to the Magna family of companies. The combined capabilities of Magna Powertrain and Getrag better position us to capitalize on powertrain opportunities and future changes in the global automotive industry.”
THREE MONTHS ENDED MARCH 31, 2016
We posted sales of $8.90 billion for the first quarter ended March 31, 2016, an increase of $1.13 billion or 15% from the first quarter of 2015. Excluding the impact of foreign currency translation, our sales increased 19% in the first quarter of 2016, compared to the first quarter of 2015. North American and European light vehicle production increased 10% and 7%, respectively, in the first quarter of 2016 compared to the first quarter of 2015.
Our complete vehicle assembly sales decreased 1% in the first quarter of 2016, compared to the first quarter of 2015, while our complete vehicle assembly volumes decreased 15% from the comparable quarter to approximately 23,000 units.
During the first quarter of 2016, income from continuing operations before income taxes was $675 million and net income from continuing operations attributable to Magna International Inc. was $492 million, increases of 9% and 8% respectively, both compared to the first quarter of 2015. Diluted earnings per share from continuing operations increased 11% in the first quarter of 2016, which includes the favourable impact of a reduced share count.
During the first quarter ended March 31, 2016, we generated cash from operations of $767 million before changes in operating assets and liabilities, and invested $469 million in operating assets and liabilities. Total investment activities for the first quarter of 2016 were $2.18 billion, including $1.78 billion in business combinations, $346 million in fixed asset additions and $54 million in investments and other assets.
A more detailed discussion of our consolidated financial results for the first quarter ended March 31, 2016 is contained in the Management’s Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.
RETURN OF CAPITAL TO SHAREHOLDERS
During the first quarter of 2016, Magna repurchased 7.3 million shares for $300 million pursuant to our Normal Course Issuer Bid (“NCIB”) which expires in November 2016. We have 30.1 million shares remaining and available for purchase under the NCIB.
Yesterday, our Board of Directors declared a quarterly dividend of $0.25 with respect to our outstanding Common Shares for the quarter ended March 31, 2016. This dividend is payable on June 10, 2016 to shareholders of record on May 27, 2016.
OTHER MATTERS
On May 2, 2016, Magna increased its revolving credit facility by $500 million to $2.75 billion and extended the final maturity date from June 22, 2020 to June 22, 2021.
Vince Galifi, Magna’s Chief Financial Officer commented: “As a result of our continued growth, we believe it is prudent to both increase the amount and extend the term on our credit facility. This provides flexibility to allow us to capitalize on future opportunities.”
UPDATED 2016 OUTLOOK
| Light Vehicle Production (Units) | |||||
| North America | 18.0 million | ||||
| Europe | 21.3 million | ||||
| Production Sales | |||||
| North America | $19.5 billion – $20.1 billion | ||||
| Europe | $8.8 billion – $9.2 billion | ||||
| Asia | $2.1 billion – $2.3 billion | ||||
| Rest of World | $0.3 billion – $0.4 billion | ||||
| Total Production Sales | $30.7 billion – $32.0 billion | ||||
| Complete Vehicle Assembly Sales | $1.9 billion – $2.2 billion | ||||
| Total Sales | $35.5 billion – $37.2 billion | ||||
| EBIT Margin(1) | High 7% range | ||||
| Interest Expense, net | Approximately $90 million | ||||
| Tax Rate(1) | 25% – 26% | ||||
| Capital Spending | $1.8 billion – $2.0 billion | ||||
| (1) Excluding other expense, net | |||||
In this 2016 outlook, in addition to 2016 light vehicle production, we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate current rates.
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