Magna Q3 Earnings Beat Estimates

Zacks

Magna International Inc.’s (MGA) adjusted earnings per share of $1.53 in the third quarter of 2013 improved 35.4% from $1.13 in the year-ago quarter and outpaced the Zacks Consensus Estimate of $1.33. Net income increased 32.8% to $352 million from $265 million in the year-ago quarter.

On a reported basis, the company reported profit of $319 million or $1.39 per share compared with $390 million or $1.66 a share in the third quarter of 2012.

Revenues went up 12.5% to $8.34 billion in the reported quarter, beating the Zacks Consensus Estimate of $8.26 billion. The increase was driven by improvement in North American, European and Rest of World (:ROW) production sales and higher tooling, engineering and Complete Vehicle Assembly sales.

Vehicle production rose 4% to 3.8 million units in North America and 1% to 4.4 million units in Europe. Adjusted operating income increased 26.5% to $439 million in the quarter from $347 million in the year-ago quarter.

Segment Details

Revenues from External Production Sales (comprising North America, Europe and ROW units) went up 13.5% to $7 billion in the reported quarter.

Revenues from North America increased 11% to $4 billion, driven by product launches, positive impact of acquisitions and increased production, partly offset by adverse impact of currency translations, price concessions and production stoppage for some programs.

Revenues from Europe went up 18% to $2.4 billion in the period. The year-over-year improvement was attributable to the launch of new programs and impact of acquisitions and increase in sales value in the U.S.

Revenues from ROW augmented 16% to $574 million driven by the launch of new programs, primarily in China and Brazil, partly offset by decrease in sales value in the U.S and price concessions.

Revenues from the Complete Vehicle Assembly segment went up 10% to $680 million in the quarter, with a 16% rise in assembly volumes to 33,818 units.

Revenues from Tooling, Engineering & Other expanded 6% to $695 million in the quarter.

Financial

Magna International had $1.1 billion in cash and cash equivalents as of Sep 30, 2013, compared with $1.4 billion as of Sep 30, 2012. The company had long-term debt of $295 million as of Sep 30, 2013, compared with $258 million as of Sep .30, 2012.

In the first nine months of 2013, the company’s cash flow from operations increased to $1.3 billion compared with $1.1 billion a year ago. Capital expenditures declined 11.3% to $706 million in the period compared with $796 million in the first nine months of 2012.

Dividend & Share Repurchase

On Nov 5, 2103 the board of directors declared a quarterly dividend of 32 cents per share. The dividend is payable on Dec 13, 2013 to shareholders of record as of Nov 29, 2013.

The board of directors approved Magna’s plans to purchase up to 12 million of common shares, which is about 5.4% of the public float. This repurchase program is subject to approval from the Toronto Stock Exchange and the New York Stock Exchange.

Outlook

For full-year 2013, Magna expects revenues between $28.1 billion and $28.7 billion in the External Production segment. Complete Vehicle Assembly sales are projected in the range of $3 billion to $3.2 billion.

For 2013, total revenue of the company is expected between $33.9 billion and $34.8 billion. Operating margin is expected to be around 5.9% with a tax rate of 22.5%. Capital expenditures are expected to be about $1.3 billion.

Magna International, based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, apart from engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers (OEMs) of cars and light trucks. The company currently carries a Zacks Rank #2 (Buy).

Other stocks worth considering in the same industry are Denso Corp. (DNZOY), Federal-Mogul Corp. (FDML) and Gentex Corp. (GNTX). All carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on MGA
Read the Full Research Report on GNTX
Read the Full Research Report on FDML
Read the Full Research Report on DNZOY


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