Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2016.
| THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
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| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Sales | $ | 9,443 | $ | 8,133 | $ | 18,343 | $ | 15,905 | |||||
| Adjusted EBIT(1) | $ | 789 | $ | 677 | $ | 1,487 | $ | 1,308 | |||||
| Income from continuing operations before | $ | 767 | $ | 726 | $ | 1,442 | $ | 1,347 | |||||
| income taxes | |||||||||||||
| Net income from continuing operations | $ | 558 | $ | 538 | $ | 1,050 | $ | 993 | |||||
| attributable to Magna International Inc. | |||||||||||||
| Diluted earnings per share | $ | 1.41 | $ | 1.29 | $ | 2.63 | $ | 2.39 | |||||
| from continuing operations | |||||||||||||
| 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, net. | |||||||||||||
Don Walker, Magna’s Chief Executive Officer commented: “We had a record second quarter in sales, adjusted EBITDA, and adjusted EBIT. Contributing to our results has been the organization’s continuing focus on manufacturing excellence and operational improvements. Going forward, we plan to remain highly focused on innovation to strengthen our competitive positioning for the Car of the Future.”
THREE MONTHS ENDED JUNE 30, 2016
We posted sales of $9.4 billion for the second quarter ended June 30, 2016, an increase of 16% over the second quarter of 2015. North American and European light vehicle production increased 2% and 6%, respectively, in the second quarter of 2016 compared to the second quarter of 2015.
Our complete vehicle assembly sales increased 7% in the second quarter of 2016, compared to the second quarter of 2015, while our complete vehicle assembly volumes decreased 9% from the comparable quarter to approximately 26,000 units.
During the second quarter of 2016, income from continuing operations before income taxes was $767 million and net income from continuing operations attributable to Magna International Inc. was $558 million, increases of 6% and 4% respectively, both compared to the second quarter of 2015. Diluted earnings per share from continuing operations increased 9% in the second quarter of 2016, which includes the favourable impact of a reduced share count.
During the second quarter ended June 30, 2016, we generated cash from operations of $864 million before changes in operating assets and liabilities, and invested $151 million in operating assets and liabilities. Total investment activities for the second quarter of 2016 were $543 million, including $409 million in fixed asset additions, $103 million in investments and other assets and $31 millionto purchase subsidiaries.
SIX MONTHS ENDED JUNE 30, 2016
We posted sales of $18.3 billion for the six months ended June 30, 2016, an increase of 15% from the six months ended June 30, 2015. Excluding the impact of foreign currency translation, our sales increased 18% in the first six months of 2016, compared to the first six months of 2015. North American and European light vehicle production increased 6% and 7%, respectively, in the first six months of 2016 compared to the first six months of 2015.
Our complete vehicle assembly sales increased 3% in the first six months of 2016, compared to the first six months of 2015. Complete vehicle assembly volumes decreased 13% to approximately 49,000 units.
During the six months ended June 30, 2016, income from continuing operations before income taxes was $1.4 billion, net income from continuing operations attributable to Magna International Inc. was $1.1 billion and diluted earnings per share from continuing operations were $2.63, increases of $95 million, $57 million and $0.24, respectively, each compared to the first six months of 2015.
During the six months ended June 30, 2016, we generated cash from operations before changes in operating assets and liabilities of$1.6 billion, and invested $620 million in operating assets and liabilities. Total investment activities for the first six months of 2016 were $2.7 billion, including $1.8 billion to purchase subsidiaries, $755 million in fixed asset additions and $157 million in investments and other assets.
A more detailed discussion of our consolidated financial results for the second quarter and six months ended June 30, 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 six months ended June 30, 2016, Magna repurchased 15.1 million shares for $608 million pursuant to our Normal Course Issuer Bid (“NCIB”) which expires in November 2016. We have 22.3 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 June 30, 2016. This dividend is payable on August 26, 2016 to shareholders of record on September 9, 2016.
UPDATED 2016 OUTLOOK
| Light Vehicle Production (Units) | ||||
| North America | 18.0 million | |||
| Europe | 21.4 million | |||
| Production Sales | ||||
| North America | $19.4 – $20.0 billion | |||
| Europe | $8.8 – $9.2 billion | |||
| Asia | $2.1 – $2.3 billion | |||
| Rest of World | $0.3 – $0.4 billion | |||
| Total Production Sales | $30.6 – $31.9 billion | |||
| Complete Vehicle Assembly Sales | $2.0 – $2.3 billion | |||
| Total Sales | $35.5 – $37.2 billion | |||
| EBIT Margin(2) | Approximately 8% | |||
| Interest Expense, net | Approximately $90 million | |||
| Tax Rate(2) | Approximately 26% | |||
| Capital Spending | $1.8 – $2.0 billion | |||
| (2) | 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.
