Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the third quarter ended September 30, 2014.
| THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||
| Sales | $ | 8,820 | $ | 8,338 | $ | 27,245 | $ | 25,661 | ||
| Adjusted EBIT(1) | $ | 605 | $ | 444 | $ | 1,920 | $ | 1,458 | ||
| Income from operations before income taxes | $ | 589 | $ | 391 | $ | 1,862 | $ | 1,391 | ||
| Net income attributable to Magna International Inc. | $ | 470 | $ | 319 | $ | 1,373 | $ | 1,103 | ||
| Diluted earnings per share | $ | 2.19 | $ | 1.39 | $ | 6.26 | $ | 4.74 | ||
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
(1)We believe Adjusted EBIT is the most appropriate measure of operational profitability or loss of our reporting segments.
Adjusted EBIT represents income from operations before taxes; interest expense, net; and other expense, net.
THREE MONTHS ENDED SEPTEMBER 30, 2014
We posted sales of $8.82 billion for the third quarter ended September 30, 2014, an increase of 6% from the third quarter of 2013. We achieved this sales increase in a period when vehicle production increased 8% in North America and 4% in Europe, both relative to the third quarter of 2013. In the third quarter of 2014, our North American and Asian production sales, complete vehicle assembly sales and tooling, engineering and other sales increased, while our European and Rest of World production sales decreased, in each case relative to the comparable quarter in 2013.
Complete vehicle assembly sales increased 9% to $740 million for the third quarter of 2014 compared to $680 million for the third quarter of 2013, while complete vehicle assembly volumes decreased 5% to approximately 32,000 units.
During the third quarter of 2014, income from operations before income taxes was $589 million, net income attributable to Magna International Inc. was $470 million and diluted earnings per share were $2.19, increases of $198 million, $151 million and $0.80 respectively, each compared to the third quarter of 2013.
Excluding other expense, after tax for the third quarters of 2014 and 2013, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share increased $157 million, $124 million and $0.69 respectively, each compared to the third quarter of 2013.
During the third quarter ended September 30, 2014, we generated cash from operations of $737 million before changes in operating assets and liabilities, and invested $18 million in operating assets and liabilities. Total investment activities for the third quarter of 2014 were $365 million, including $315 million in fixed asset additions and a $50 million increase in investments and other assets.
NINE MONTHS ENDED SEPTEMBER 30, 2014
We posted sales of $27.25 billion for the nine months ended September 30, 2014, an increase of 6% from the nine months ended September 30, 2013. This higher sales level reflected increases in our North American, European and Asian production sales, complete vehicle assembly sales and tooling, engineering and other sales partially offset by a decrease in Rest of World production sales, in each case relative to the first nine months of 2013.
During the nine months ended September 30, 2014, vehicle production increased 5% to 12.8 million units in North America and increased 6% to 15.2 million units in Europe, each compared to the first nine months of 2013.
Complete vehicle assembly sales increased 3% to $2.35 billion for the nine months ended September 30, 2014 compared to $2.27 billion for the nine months ended September 30, 2013, while complete vehicle assembly volumes decreased 7% to approximately 102,000 units.
During the nine months ended September 30, 2014, income from operations before income taxes was $1.86 billion, net income attributable to Magna International Inc. was $1.37 billion and diluted earnings per share were $6.26, increases of $471 million, $270 million and $1.52, respectively, each compared to the first nine months of 2013.
Excluding other expense, after tax for the nine months ended September 30, 2014 and 2013, and the impact of the Austrian tax reform for the nine months ended September 30, 2014, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share increased $457 million, $299 million and $1.67 respectively, each compared to the nine months ended September 30, 2013.
During the nine months ended September 30, 2014, we generated cash from operations before changes in operating assets and liabilities of $2.16 billion, and invested $363 million in operating assets and liabilities. Total investment activities for the first nine months of 2014 were $1.07 billion, including $916 million in fixed asset additions and a $152 million increase in investments and other assets.
A more detailed discussion of our consolidated financial results for the third quarter and nine months ended September 30, 2014 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.
DIVIDENDS
Today, our Board of Directors declared a quarterly dividend of $0.38 with respect to our outstanding Common Shares for the quarter ended September 30, 2014. This dividend is payable on December 12, 2014 to shareholders of record on November 28, 2014.
OTHER MATTERS
Subject to approval by the Toronto Stock Exchange and the New York Stock Exchange, our Board of Directors approved a normal course issuer bid to purchase up to 20 million of our Common Shares, representing approximately 9.8% of our public float of Common Shares. This new normal course issuer bid is expected to commence on or about November 13, 2014 and will terminate one year later.
UPDATED 2014 OUTLOOK
| Light Vehicle Production (Units) | |
| North America | 17.0 million |
| Europe | 20.2 million |
| Production Sales | |
| North America | $17.9 – $18.3 billion |
| Europe | $9.7 – $10.0 billion |
| Asia | $1.6 – $1.7 billion |
| Rest of World | $0.6 – $0.7 billion |
| Total Production Sales | $29.8 – $30.7 billion |
| Complete Vehicle Assembly Sales | $3.1 – $3.3 billion |
| Total Sales | $35.8 – $37.0 billion |
| Operating Margin(1) | Approximately 6.9% |
| Tax Rate(1,2) | Approximately 24.5% |
| Capital Spending | Approximately $1.4 billion |
(1)Excluding other expense, net
(2)Excluding the impact of the Austrian tax reform
In this 2014 outlook, in addition to 2014 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.
