Linamar's Q1 Revenue Breaks $1 Billion, Drives Record Earnings with Solid Margin Expansion to Industry Leading Levels

GUELPH, ON, May 7, 2014 /CNW/ - (TSX: LNR)

  • Sales increase 23.2% over the first quarter of 2013 ("Q1 2013") to reach record levels of $1,042.7 billion;
  • Operating earnings up 56.3% over Q1 2013 to reach record levels of $112.1 million;
  • Net earnings up 64.6% over Q1 2013 and earnings per share up 64.0% over Q1 2013 reaching $79.7 million and $1.23 respectively, a new record for both;
  • Net margins reach 7.6%, well above target levels of 4 to 6%;
  • Launch book at more than $3.0 billion;
  • Industrial segment showed significant margin improvements from Q1 2013 with operating earnings up 111.9% to $30.3 million on a sales increase of 31.2%;
  • Powertrain/Driveline showed strong margin improvements as well with operating earnings up 42.5% to $81.8 million from Q1 2013 on a sales increase of 21.6%;
  • Return on Capital Employed reached 19.5% continuing our trend of solid improvements for the last 11 quarters;
  • Return on Equity improved 26% from Q1 2013 to reach 22.6%; and
  • Total debt to capital continues to improve reaching 28.4%, one of the strongest balance sheets in our peer group.
      Three Months Ended
      March 31
      2014     2013
(in millions of dollars, except earnings per share figures)                          $     $
Sales     1,042.7     846.6
Operating Earnings (Loss)            
   Powertrain/Driveline     81.8     57.4
   Industrial     30.3     14.3
Operating Earnings (Loss)     112.1     71.7
Net Earnings (Loss)     79.7     48.4
Net Earnings (Loss) per Share     1.23     0.75

Operating Highlights
Sales for the first quarter of 2014 ("Q1 2014") were $1,042.7 million, up $196.1 million from $846.6 million in Q1 2013.

Sales for the Powertrain/Driveline segment ("Powertrain/Driveline") increased by $153.2 million, or 21.6% in Q1 2014 compared with Q1 2013.  The sales increase in Q1 2014 was impacted by:

  • increased European sales due to substantial levels of programs launching, market growth resumption and our new German camshaft business acquired in Q4 2013;
  • the significant levels of newly launched programs in North America;
  • the ramp up of launching programs in Asia; and
  • increased volumes from our on and off highway vehicle customers in both North America and Asia.

The Industrial segment ("Industrial") product sales increased 31.2% or $42.9 million to $180.4 million in Q1 2014 from Q1 2013.  The sales increase was due to:

  • increases in demand in the access equipment markets in both North America and Europe;
  • increased market share particularly in boom and telehandler products at Skyjack; and
  • the favourable impact of the strengthening U.S. dollar.

The Company's operating earnings for Q1 2014 were $112.1 million.  This compares to $71.7 million in Q1 2013, an increase of $40.4 million.

Q1 2014 operating earnings for Powertrain/Driveline were higher by $24.4 million or 42.5% over Q1 2013.  The Powertrain/Driveline segment experienced the following in Q1 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.

Industrial segment operating earnings in Q1 2014 increased $16.0 million or 111.9% over Q1 2013. The increase in Industrial operating earnings was predominantly driven by:

  • market share growth and increased demand in the access equipment market;
  • productivity and efficiency improvements driven by higher volumes on new products and cost savings initiatives on mature products; and
  • the favourable impact of the strengthening U.S. dollar on margins.

"What a terrific quarter for us at Linamar with sales exceeding that $1 billion mark and another exceptional level of margin improvement," said Linamar CEO Linda Hasenfratz.  "We continue to deliver double digit growth top and bottom line, excellent return on equity for our shareholders, and enjoyed significant growth in content per vehicle in every region.  We continue to build our launch book now north of $3 billion in annual sales currently under launch.  The market is opportunistic for continued growth and our team delivering on every count.  We are so pleased with the quarter, a great start to 2014."

Dividends
The Board of Directors today declared an eligible dividend in respect to the quarter ended March 31, 2014 of CDN$0.10 per share on the common shares of the company, payable on or after June 3, 2014 to shareholders of record on May 23, 2014.

Risk and Uncertainties (forward looking statements)
Linamar no longer provides a financial outlook.

Certain information provided by Linamar in these unaudited interim financial statements, MD&A and other documents published throughout the year that are not recitation of historical facts may constitute forward-looking statements. The words "estimate", "believe", "expect" and similar expressions are intended to identify forward-looking statements. Persons reading this report are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.

Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar.  Some risks and uncertainties may cause results to differ from current expectations. The factors which are expected to have the greatest impact on Linamar include but are not limited to (in the various economies in which Linamar operates): the extent of OEM outsourcing, industry cyclicality, trade and labour disruptions, pricing concessions and cost absorptions, delays in program launches, the Company's dependence on certain engine and transmission programs and major OEM customers, currency exposure, and technological developments by Linamar's competitors.

A large proportion of the Company's cash flows are denominated in foreign currencies. The movement of foreign currency exchange rates against the Canadian dollar has the potential to have a negative impact on financial results. The Company has employed a hedging strategy as appropriate to attempt to mitigate the impact but cannot be completely assured that the entire exchange effect has been offset.

Other factors and risks and uncertainties that could cause results to differ from current expectations are discussed in the MD&A and include, but are not limited to: fluctuations in interest rates, environmental emission and safety regulations, governmental, environmental and regulatory policies, and changes in the competitive environment in which Linamar operates. Linamar assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

Conference Call Information

Q1 2014 Conference Call Information

Linamar will hold a conference call on May 7, 2014 at 5:00 p.m. EST to discuss its first quarter results.  The numbers for this call are (647) 427-3383 (local/overseas) or (888) 424-9894 (North America) confirmation number 3087972, with a call-in required 10 minutes prior to the start of the conference call.  The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer.  A copy of the company's quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on May 7, 2014 and at www.sedar.com by the start of business on May 8, 2014.  A taped replay of the conference call will also be made available starting at 11:00 p.m. on May 7, 2014 for seven days.  The number for replay is (855) 859-2056, Conference ID 3087972.  The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Audio only streaming of the conference call available at http://www.media-server.com/m/p/edy3x8h7

Q2 2014 Conference Call Information

Linamar will hold a conference call on August 7, 2014 at 5:00 p.m. EST to discuss its second quarter results.  The numbers for this call are (647) 427-3383 (local/overseas) or (888) 424-9894 (North America) confirmation number 3091591, with a call-in required 10 minutes prior to the start of the conference call.  The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer.  A copy of the company's quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on August 7, 2014 and at www.sedar.com by the start of business on August 8, 2014.  A taped replay of the conference call will also be made available starting at 11:00 p.m. on August 7, 2014 for seven days.  The number for replay is (855) 859-2056, Conference ID 3091591.  The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Audio only streaming of the conference call available at http://www.media-server.com/m/p/bw8knbrh

Linamar Corporation (TSX:LNR) is a diversified global manufacturing Company of highly engineered products powering vehicles, motion, work and lives. The Company is made up of 2 operating segments - the Powertrain/Driveline segment and the Industrial segments which are further divided into 4 key divisions - Manufacturing, Driveline, Industrial Commercial Energy ("ICE") and Skyjack, all world leaders in the design, development and production of highly engineered products.  The Company's Manufacturing and Driveline divisions focus on precision metallic components, modules and systems for engine, transmission and driveline systems designed for passenger vehicle markets.  The ICE group concentrates on similar products for on and off highway vehicle, energy and other industrial markets.  The Company's Skyjack division is noted for its innovative, high quality mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 18,000 employees in 44 manufacturing locations, 5 R&D centers and 15 sales offices in 12 countries in North America, Europe and Asia, Linamar generated sales of $3.6 billion in 2013. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com.

(signed)           (signed)
             
Frank Hasenfratz            Linda Hasenfratz
Chairman of the Board            Chief Executive Officer

Guelph, Ontario
May 7, 2014 

SOURCE: Linamar Corporation

For further information:

For further information regarding this release please contact Linda Hasenfratz at (519) 836-7550.


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