Martinrea International Inc. (TSX : MRE), a diversified and global
automotive supplier engaged in the design, development and
manufacturing of highly engineered, value-added Lightweight
Structures and Propulsion Systems, today announced that it has
declared a quarterly cash dividend of $0.05 per share payable to
shareholders of record on July 15, 2020, on or about July 25, 2020.
In addition, the Company announced that it had
amended its lending agreements with its banking syndicate to
provide enhanced financial covenant flexibility on a present and go
forward basis. The amendments in essence provide that the
Company’s calculations of its most basic financial covenant, the
Net Debt:LTM EBITDA ratio, for the next four quarterly
calculations, would exclude EBITDA from the second quarter of 2020
and instead will be based on the annualized total of the remaining
three quarters (i.e., the sum of the three quarters divided by
three fourths). Simply stated, the impact of the COVID-19
related shutdown of the industry, and most of the Company’s
operations, occurring during the second quarter of 2020, would be
ignored for the purpose of financial covenant calculations under
the Company’s lending arrangements.
Rob Wildeboer, Martinrea’s Executive Chairman,
stated: “The declaration of our dividend underscores our
confidence in the future of the company, the restart of our
operations and our long term view of the industry. Our
shareholders have been very supportive of our team at
Martinrea and we thank them for their continued confidence in
us. We also want to thank our lending partners for their
support, and on working with us on a very good solution to provide
us with future financial flexibility, as we take advantage of
opportunities to invest in and grow our business. We have
always viewed our lenders as partners of our company, and I believe
that relationship has been mutual for many years, as this
shows. There will be opportunities for us to grow over time
coming out of the crisis, as a financially strong industry
player. Our second quarter was, as we believe is the case for
most participants in our industry, quite frankly, brutal—the worst
quarter from a financial point of view in our history. While
the second quarter is nearly over, inclusive of the recently
acquired assets from Metalsa, quarterly sales will likely be down
by approximately 55% year-over-year, our decremental year-over-year
adjusted operating income margin will likely approximate
30% (about 25% if we exclude the Metalsa assets)
and we may have some restructuring costs and non-cash asset
write-downs for the quarter in light of the significant reduction
in volumes and current industry production projections. We
ultimately responded quickly and aggressively to the COVID-19
related shutdowns, but the reality is that it is impossible to make
money when we are not producing and shipping parts. However,
we have started producing again in North America and Europe in the
past several weeks, and production is ramping up nicely.
China is operating at normal production rates based on customer
orders. Subject to dealing with the continued COVID-19
pandemic, potential lockdown concerns, and overall industry
volumes, we look forward to improving sales and profits in the
second half of the year and beyond.”
Pat D’Eramo, Martinrea’s President and Chief
Executive Officer, stated: “We are successfully restarting
our operations globally. The first few weeks of the restart
were challenging for many in the industry, as customers, suppliers
and employees worked to smooth out operations; however, we are now
seeing production volumes stabilize and increase. During the
shutdown, we were very busy improving our company everywhere.
We swiftly implemented cost reduction actions, enhanced our
liquidity position, and enhanced business performance through our
operational excellence and lean approach. Our lean teams were
busy in many of our plants, improving processes that will benefit
us going forward. We did a deep dive into streamlining our
functional and manufacturing activities. I believe that
coming out of this crisis we will be able to achieve historical
levels of production while operating our business more efficiently
and with fewer resources, based on restructuring actions taken at
our recently acquired Metalsa assets as well as our existing
offices and operating facilities. I anticipate a total
workforce reduction in the range of 7%, with increased productivity
and efficiency. We will be a stronger and more competitive
supplier as a result, and that is good news for our people.
Over the long term it is critical to job security and opportunity
to be as competitive as we can be. I want to thank our people
for their support today and throughout this COVID-19 crisis.
You have been great, and together we will have a great
future.”
ABOUT MARTINREA
Martinrea is a leader in the development and
production of quality metal parts, assemblies and modules, fluid
management systems, and complex aluminum products focused primarily
on the automotive sector. Martinrea operates in 57 locations
in Canada, the United States, Mexico, Brazil, Germany, Slovakia,
Spain, China, South Africa and Japan.
Martinrea’s vision is making lives better by
being the best supplier we can be in the products we make and the
services we provide. The Company’s mission is to make people’s
lives better by: delivering outstanding quality products and
services to our customers; providing meaningful opportunity, job
satisfaction, and job security for our people; providing superior
long-term investment returns to our stakeholders; and being
positive contributors to our communities. For more
information on Martinrea, please visit www.martinrea.com. Follow
Martinrea on Twitter and Facebook.
FORWARD-LOOKING INFORMATION
Special Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements within the meaning of applicable Canadian securities
laws including statements related to the growth or expectations of,
improvements in, expansion of and/or guidance or outlook as to the
expected impact of or duration of the COVID-19 pandemic, or as a
result of any current or future government actions, on the
Company’s financial position, its business and operations, on its
employees, on the automotive industry, or on the business of any
OEM or suppliers, the timing of, status and the expected restart
and ramp up of operations, production volumes, the Company’s
current and future strategy, priorities and response related to
COVID-19; the expected economic impact resulting from COVID-19, the
type of factors affecting the economic impact, including
expectations as to revenue, sales, profit, adjusted operating
income margin, restructuring costs and non-cash asset
write-downs, the potential effects or issues
relating to a prolonged pandemic or lockdown(s), including the
financial impact on the Company, its business or operations and
global impact, the growth of the Company, the strength,
productivity, effectiveness, efficiency and competitiveness of the
Company, including post-COVID-19 and restructuring the Metalsa
acquired assets, pursuit of its strategies (including investing in
the business), the ability to grow the business and serve customers
as a financially strong company, as well as other forward-looking
statements. The words “continue”, “expect”, “anticipate”,
“estimate”, “may”, “will”, “should”, “views”, “intend”, “believe”,
“plan”, “outlook” and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are
based on estimates and assumptions made by the Company in light of
its experience and its perception of historical trends, current
conditions and expected future developments, as well as other
factors that the Company believes are appropriate in the
circumstances, such as expected sales and industry production
estimates, current foreign exchange rates (FX), timing of product
launches and operational improvements during the period and current
Board approved budgets. Certain forward-looking financial
assumptions are presented as non-IFRS information, and we do not
provide reconciliation to IFRS for such assumptions. Many
factors could cause the Company’s actual results, performance or
achievements to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
the following factors, some of which are discussed in detail in the
Company’s most recent Management Discussion and Analysis (including
the Covid-19 pandemic) and Annual Information Form and other public
filings which can found at www.sedar.com:
- North American and global economic and political conditions and
epidemics or pandemics;
- the highly cyclical nature of the automotive industry and the
industry’s dependence on consumer spending and general economic
conditions;
- the Company’s dependence on a limited number of significant
customers;
- financial viability of suppliers;
- the Company’s reliance on critical suppliers and on suppliers
for components and the risk that suppliers will not be able to
supply components on a timely basis or in sufficient
quantities;
- competition;
- the increasing pressure on the Company to absorb costs related
to product design and development, engineering, program management,
prototypes, validation and tooling;
- increased pricing of raw materials and commodities;
- outsourcing and insourcing trends;
- the risk of increased costs associated with product warranty
and recalls together with the associated liability;
- product development and technological change;
- the Company’s ability to enhance operations and manufacturing
techniques;
- dependence on key personnel;
- limited financial resources/uncertainty of future
financing/banking;
- risks associated with the integration of acquisitions;
- risks associated with private or public investment in
technology companies;
- the risks associated with joint ventures;
- costs associated with rationalization of production
facilities;
- launch and operational costs;
- labour relations matters;
- trade restrictions;
- changes in governmental regulations or laws including any
changes to trade;
- litigation and regulatory compliance and investigations;
- quote and pricing assumptions;
- currency risk;
- fluctuations in operating results;
- internal controls over financial reporting and disclosure
controls and procedures;
- environmental regulation and climate change;
- the impact of climate, political, social and economic risks,
natural disasters and pandemics in the countries in which we
operate or sell to, or from which we source production;
- a shift away from technologies in which the Company is
investing;
- competition with low cost countries;
- the Company’s ability to shift its manufacturing footprint to
take advantage of opportunities in emerging markets;
- risks of conducting business in foreign countries, including
China, Brazil and other markets;
- potential tax exposures;
- a change in the Company’s mix of earnings between jurisdictions
with lower tax rates and those with higher tax rates, as well as
the Company’s ability to fully benefit from tax losses;
- under-funding of pension plans;
- the cost of post-employment benefits;
- impairment charges;
- cybersecurity threats;
- the potential volatility of the Company’s share price; and
- dividends.
These factors should be considered carefully,
and readers should not place undue reliance on the Company’s
forward-looking statements. The Company has no intention and
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
The common shares of Martinrea trade on The
Toronto Stock Exchange under the symbol “MRE”.
For further information, please contact:
Fred Di TostoChief Financial OfficerMartinrea
International Inc.3210 Langstaff RoadVaughan, Ontario L4K
5B2
Tel: |
416-749-0314 |
Fax: |
289-982-3001 |
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