Martinrea International Inc. Releases First Quarter 2012: Record Earnings

TORONTO, ONTARIO--(Marketwire -05/08/12)- Martinrea International Inc. (MRE.TO) announced today the release of its financial results for the first quarter ended March 31, 2012.

Martinrea is a leader in the production and development of quality metal parts, assemblies and modules, fluid management systems and complex aluminum products focused primarily on the automotive sector. Martinrea currently employs over 10,000 skilled and motivated people in 37 plants in Canada, the United States, Mexico, Brazil and Europe. All amounts in this Press Release are in Canadian dollars, unless otherwise stated; and all tabular amounts are in thousands of Canadian dollars, except earnings per share and number of shares. Additional information about the Company, including the Company's Management Discussion and Analysis of Operating Results and Financial Position for the quarter ended March 31, 2012 ("MD&A") dated as of May 8, 2012, the Company's unaudited interim consolidated financial statements for the quarter ended March 31, 2012 (the "unaudited consolidated interim financial statements") and the Company's Annual Information Form for the year ended December 31, 2011, can be found at www.sedar.com.

Non-IFRS Measures

The Company now reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-IFRS financial measures and ratios in this Press Release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to the other financial measures determined in accordance with IFRS. Non-IFRS measures referred to in the analysis include "adjusted net earnings", and "adjusted earnings per share on a basic and diluted basis" and are defined in the Tables A and B under "Adjustments to Net Income" of this Press Release.

Results of Operations

  REVENUE ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 March 31, 2011 Change % Change ---------------------------------------------------------------------------- North America $ 568,366 $ 430,433 137,933 32.0% Europe 153,281 748 152,533 - Rest of World 14,007 - 14,007 - ---------------------------------------------------------------------------- Revenue $ 735,654 $ 431,181 304,473 70.6% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to First Quarter 2011 comparison

The Company's revenues for the first quarter of 2012 increased by $304.5 million or 70.6% to $735.7 million as compared to $431.2 million for the first quarter of 2011. The increase was partially due to $191.3 million in incremental revenue resulting from the inclusion of Martinrea Honsel in the consolidated financial results of the Company effective July 29, 2011, which caused sales in both the Company's Europe and Rest of World operating segments to increase significantly year-over-year. Included in the $137.9 million increase in revenue generated in North America was $24.0 million related to the operations of the Company's plant in Queretaro, Mexico which formed part of the Honsel acquisition. The remainder of the increase in revenue in North America was due to improved production volumes in North American light vehicle platforms, an increase in tooling revenue relating to upcoming new programs which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer, and the impact of exchange rates on the translation of U.S. dollar denominated revenue, which had a positive impact on revenue for the first quarter of 2012 of $5.1 million as compared to the first quarter of 2011.

Overall tooling revenue increased by $40.1 million from $11.8 million for the first quarter of 2011 to $51.9 million for the first quarter of 2012, $5.5 million of which was generated by Martinrea Honsel.

  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 December 31, 2011 Change % Change ---------------------------------------------------------------------------- North America $ 568,366 $ 542,262 26,104 4.8% Europe 153,281 150,838 2,443 1.6% Rest of World 14,007 21,727 (7,720) (35.5%) ---------------------------------------------------------------------------- Revenue $ 735,654 $ 714,827 20,827 2.9% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to Fourth Quarter 2011 comparison

The Company's revenues for the first quarter of 2012 increased by $20.8 million or 2.9% to $735.7 million as compared to $714.8 million for the fourth quarter of 2011. The increase was primarily due to an increase in tooling revenue in North America and slightly improved quarter-over-quarter production volumes in both the North America and Europe operating segments, offset by a decrease in production volumes in Brazil which resulted in revenue in the Rest of World operating segment to decrease by $7.7 million, and the translation of Euro denominated revenue, which negatively impacted revenue for the first quarter of 2012 by approximately $7.4 million.

Overall tooling revenue increased by $22.0 million from $29.9 million for the fourth quarter of 2011 to $51.9 million for the first quarter of 2012.

Overall North American OEM vehicle production for the first quarter of 2012 increased by approximately 14% as compared to the fourth quarter of 2011. The increase in revenue in the Company's North American operating segment for the first quarter of 2012 over the fourth quarter of 2011 lagged behind overall North American vehicle production due generally to sales mix. The Company experienced quarter-over-quarter increases in revenues on the following customer platforms: GM Theta; GMT 800/900; Chrysler LX/LY; GM Global Delta; Chrysler RS/RT; Nissan FFL; Chrysler DR/DS; and GM Zeta. Increases on the above platforms were offset by the roll off of one-time business with Ford to manufacture fuel straps for the F-150 and decreases on the following platforms: Ford CD1-3; GM Sigma; Global Epsilon; Ford C1; Ford P2/D3; Ford U222-U228; and the Orion bus frame.

  GROSS MARGIN ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 March 31, 2011 Change % Change ---------------------------------------------------------------------------- Gross margin $ 80,309 $ 42,438 37,871 89.2% % of revenue 10.9% 9.8% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to First Quarter 2011 comparison

The gross margin percentage for the first quarter of 2012 of 10.9% increased by 1.1% as compared to the gross margin percentage for the first quarter of 2011 of 9.8%. The Company's gross margin for the first quarter of 2012 was positively impacted by the addition of the acquired operations of Martinrea Honsel. Excluding the operations of Honsel and tooling revenue, which increased significantly year-over-year and typically earns low or no margins for the Company, Martinrea's gross margin percentage for the first quarter of 2012 would have been 11.8%, an increase over 10.1% realized in the first quarter of 2011. This increase was primarily due to increased gross margin as a result of higher light vehicle production volumes and productivity and efficiency improvements at certain North American operating facilities. Martinrea's gross margin for the first quarter of 2012, excluding the operations of Martinrea Honsel, would have been higher if not for $1.2 million of pre-operating costs at the Company's new facility in Silao, Mexico and launch activity at the Company's Shelbyville, Kentucky facility where the Company is currently ramping up for a significant program launch for Ford's C520 program, which negatively impacted gross margin for the quarter by approximately $1.7 million.

The Company's Shelbyville facility, approximating one million square feet, represents about 20% of the Company's square footage in North America and had a revenue run rate of about $50 million per year in the first quarter of 2012. A total of approximately $200 million in anticipated annualized business related to Ford's C520 program is in the process of being launched at this facility. The new work will greatly expand throughput and capacity utilization at Shelbyville, and is expected to turn a very large plant with negative gross margin and earnings and current ramp up costs into a positive gross margin and earnings contributor by the third quarter of 2012. This Ford C520 business consists of approximately $100 million in value added internally produced components and $100 million in components purchased from other suppliers that will be integrated with internally produced components to produce finished welded assemblies. The gross margins on components purchased from other suppliers are typically lower than for value added work, although return on capital is higher. After the launch of the Ford C520 program in Shelbyville, approximately 25% of Martinrea's business excluding Martinrea Honsel will involve integrator or assembly work.

  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Three months ended March 31, ended December 2012 31, 2011 Change % Change ---------------------------------------------------------------------------- Gross margin $ 80,309 $ 78,703 1,606 2.0% % of revenue 10.9% 11.0% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to Fourth Quarter 2011 comparison

Gross margin percentage for the first quarter of 2012 of 10.9% decreased slightly by 0.1% as compared to the gross margin percentage for the fourth quarter of 2011 of 11.0%. Excluding tooling revenue, which increased significantly quarter-over quarter and typically earns no or low margins for the Company, gross margin percentage for the first quarter of 2012 increased by 0.3% to 11.8% from 11.5% for the fourth quarter of 2011. This increase was primarily due to productivity and efficiency improvements at certain North American facilities. The increase in gross margin percentage for the first quarter of 2012 would have been higher if not for pre-operating costs at the Company's new facility in Silao, Mexico which increased by $0.4 million quarter-over-quarter, launch activity at the Company's Shelbyville, Kentucky facility, where the Company is currently ramping up for a significant program launch for Ford's C520 program, which increased by $0.3 million quarter-over-quarter, and a decline in gross margin percentage in Brazil where the Company experienced a significant drop in sales volume as previously noted.

  ADJUSTMENTS TO NET INCOME (ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)

Adjusted net earnings excludes certain unusual and other items, as set out in the following tables and described in the notes thereto. Management uses adjusted earnings as a measurement of operating performance of the Company and believes that, in conjunction with IFRS measures, it provides useful information about the financial performance and condition of the Company.

  TABLE A ---------------------------------------------------------------------------- For the three For the three months ended months ended March 31, 2012 March 31, 2011 ------------------ ------------------- (a) (b) (a)-(b) Change ---------------------------------------------------------------------------- NET EARNINGS (A) 23,055 14,015 9,040 Add back - Unusual Items: Employee related severance costs (2) 846 - 846 Other restructuring costs (2) 1,318 - 1,318 Add back - Other Items: Transaction and integration costs associated with the Honsel acquisition recorded as SG&A (3) 581 - 581 ---------------------------------------------------------------------------- TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX 2,745 - 2,745 Tax impact of above items (528) - (528) Non-controlling interest on above items, after tax (535) - (535) ---------------------------------------------------------------------------- TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) 1,682 - 1,682 ---------------------------------------------------------------------------- ADJUSTED NET EARNINGS (A + B) 24,737 14,015 10,722 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Number of Shares Outstanding - Basic ('000) 82,907 83,290 Adjusted Basic Earnings Per Share 0.30 0.17 Number of Shares Outstanding - Diluted ('000) 83,591 84,915 Adjusted Diluted Earnings Per Share 0.30 0.17 ---------------------------------------------------------------------------- TABLE B ---------------------------------------------------------------------------- For the three For the three months ended months ended March 31, 2012 December 31, 2011 (a-b) -------------------------------------- (a) (b) Change ---------------------------------------------------------------------------- NET EARNINGS (A) 23,055 18,509 4,546 Add back - Unusual Items: Impairment of property, plant and equipment and intangible assets (1) - 435 (435) Employee related severance costs (2) 846 2,948 (2,102) Other restructuring costs (2) 1,318 901 417 Add back - Other Items: Transaction and integration costs associated with the Honsel acquisition recorded as SG&A (3) 581 1,561 (980) ---------------------------------------------------------------------------- TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX 2,745 5,845 (3,100) Tax impact of above items (528) (1,543) 1,015) Non-controlling interest in above items, after tax (535) (2,957) 2,422 ---------------------------------------------------------------------------- TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) 1,682 1,345 337 ---------------------------------------------------------------------------- ADJUSTED NET EARNINGS (A + B) 24,737 19,854 4,883 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Number of Shares Outstanding - Basic ('000) 82,907 83,183 Adjusted Basic Earnings Per Share 0.30 0.24 Number of Shares Outstanding - Diluted ('000) 83,591 83,222 Adjusted Diluted Earnings Per Share 0.30 0.24 ----------------------------------------------------------------------------

(1) Impairment of Property, Plant and Equipment ("PP&E") and Intangible Assets

Impairment tests were conducted on PP&E and intangible assets at December 31, 2011. In addition, as required by IFRS, the Company evaluated all previously recorded impairment charges for potential reversal. Based on this analysis, incremental impairment charges were recorded which were partially offset by the reversal of certain previously recorded impairment charges resulting in a net impairment charge of $0.4 million during the three months ended December 31, 2011. The reversal of previously recorded impairment charges under the requirements of IFRS in 2011 was primarily due to the significant improvements in North American vehicle production from 2009 and the benefits from the restructuring activities conducted during 2009 and 2010 which included the relocation of plant and equipment and the corresponding customer business to cost competitive facilities.

(2) Employee Related Severance and Other Restructuring Costs

As part of the acquisition of Honsel, a certain level of restructuring was planned at the Company's German facility in Meschede. The restructuring efforts commenced immediately after the closing of the acquisition and, as a result, $11.4 million of employee related severance was recognized during the year ended December 31, 2011 of which $1.4 million was recognized during the fourth quarter of 2011. An additional $0.6 million of employee related severance was recognized during the first quarter of 2012. The majority of the restructuring costs expected to be incurred at this German facility will be in the nature of employee related severance as the Company rationalizes the overhead cost structure of the facility and improves the efficiency of the operations. The Company anticipates that additional employee related severance will be incurred at the facility during the remainder of 2012.

In addition, during the fourth quarter of 2011, the Company began the process of closing one of its small operating facilities in Mexico. The existing business and equipment of this facility will be moved to other Company facilities in Mexico including a new facility the Company opened in Silao, Mexico in 2011. Restructuring costs relating to this closure during the fourth quarter of 2011 totaled $2.4 million consisting primarily of employee related severance ($1.5 million) and the dismantling and transporting of PP&E between Company facilities ($0.9 million). An additional $1.5 million of restructuring costs was recognized during the first quarter of 2012 consisting primarily of employee related severance ($0.2 million) and the dismantling and transporting of PP&E between Company facilities ($1.3 million).

At this time, the Company does not expect to incur any further significant restructuring costs with the exception of the settlement of the Windsor pension and OPEB plans which the Company will continue to fund over the next two years, the windup of the Martinrea Fabco Hot Stampings pension plan, the completion of the closure of the small operating facility in Mexico and any restructuring required relating to the acquired assets of Honsel (as discussed above), which, at this point in time, the Company believes will be limited to employee related severance as the Company rationalizes the overhead cost structure and improves the efficiency of the operations in Meschede, Germany.

(3) Transaction and Integration Costs Associated with the Acquisition of Honsel

On July 29, 2011, the Company closed the purchase of the assets of Honsel to form the Martinrea Honsel Group. Martinrea joined with Anchorage in the transaction and, consequently, owns 55% of the Martinrea Honsel Group with Anchorage owning the remaining 45%. The Company expensed $9.7 million in transaction and integration costs related to the acquisition during the year ended December 31, 2011 of which $1.6 million was expensed during the fourth quarter of 2011. An additional $0.6 million of integration costs was expensed during the first quarter of 2012. At this time, the Company does not expect to incur any further significant transaction and integration costs related to the acquired assets of Martinrea Honsel.

  NET EARNINGS (ATTIBUTABLE TO EQUITY HOLDERS OF THE COMPANY) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 March 31, 2011 Change % Change ---------------------------------------------------------------------------- Net earnings $ 23,055 $ 14,015 9,040 64.5% Adjusted net earnings $ 24,737 $ 14,015 10,722 76.6% Earnings per common share Basic $ 0.28 $ 0.17 Diluted $ 0.28 $ 0.17 Adjusted earnings per common share Basic $ 0.30 $ 0.17 Diluted $ 0.30 $ 0.17 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to First Quarter 2011 comparison

Net earnings for the first quarter of 2012 of $23.1 million increased by $9.0 million from $14.0 million for the first quarter of 2011. Excluding unusual and other items incurred during first quarter of 2012 as explained in Table A under "Adjustments to Net Income", the net earnings for the first quarter of 2012 improved to $24.7 million or $0.30 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $14.0 million or $0.17 per share, on a basic and diluted basis, for the first quarter of 2011.

The net earnings and adjusted net earnings for the first quarter of 2012, as compared to the first quarter of 2011, were positively impacted by the addition of Martinrea Honsel to the consolidated financial results of the Company, an increase in customer production volumes in North America and productivity and efficiency improvements at certain North American facilities. The positive impact was offset by launch activity costs during the quarter predominantly at the Company's Shelbyville, Kentucky facility and pre-operating costs at the Company's new facility in Silao, Mexico.

  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 December 31, 2011 Change % Change ---------------------------------------------------------------------------- Net earnings $ 23,055 $ 18,509 4,546 24.6% Adjusted net earnings $ 24,737 $ 19,854 4,883 24.6% Earnings per common share Basic $ 0.28 $ 0.22 Diluted $ 0.28 $ 0.22 Adjusted earnings per common share Basic $ 0.30 $ 0.24 Diluted $ 0.30 $ 0.24 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to Fourth Quarter 2011 comparison

Net earnings for the first quarter of 2012 of $23.1 million increased by $4.5 million from net earnings of $18.5 million for the fourth quarter of 2011. Excluding unusual and other items incurred during these two quarters, as explained in Table B under "Adjustments to Net Income", net earnings for the first quarter of 2012 improved to $24.7 million or $0.30 per share, on a basic and diluted basis, as compared to net earnings of $19.9 million or $0.24 per share, on a basic and diluted basis, for the fourth quarter of 2011. The increase can be attributed to a gross margin expansion in the Company's North American operations resulting from productivity and efficiency improvements at certain operating facilities, slightly higher customer production volumes in both North America and Europe, and a quarter-over-quarter decrease in SG&A expense as previously noted. Overall earnings during the first quarter of 2012 were negatively impacted by a decrease in light vehicle production volumes in Brazil which resulted in a quarter-over-quarter decrease in operating income in the Rest of World operating segment.

  CAPITAL EXPENDITURES ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended March 31, 2012 March 31, 2011 Change % Change ---------------------------------------------------------------------------- Capital Expenditures $ 34,233 $ 25,075 9,158 36.5% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to First Quarter 2011 comparison

Capital expenditures increased by $9.2 million to $34.2 million in the first quarter of 2012 from $25.1 million in the first quarter of 2011. This increase is primarily attributed to incremental capital expenditures relating to Martinrea Honsel which amounted to $7.7 million.

  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Three months ended % March 31, 2012 December 31, 2011 Change Change ---------------------------------------------------------------------------- Capital Expenditures $ 34,233 $ 47,498 (13,265) (27.9%) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First Quarter 2012 to Fourth Quarter 2011 comparison

Capital expenditures decreased by $13.3 million to $34.2 million in the first quarter of 2012 from $47.5 million in the fourth quarter of 2011. The decrease can be attributed to the launch of new programs in 2012 for which the majority of capital expenditures were incurred in previous quarters. Capital expenditures incurred in both the quarters are primarily related to the purchase of new program equipment in response to newly awarded business scheduled to launch over the next two years and capital for a new plant the Company has recently opened in Silao, Mexico.

Nick Orlando, Martinrea's Chief Executive Officer, stated: "I am very pleased with our first quarter results. We experienced record revenues, profits and earnings per share. We continued to work on operational improvements at all plant locations and launches at several plants. One launch of particular importance is our launch at Shelbyville, which commenced several weeks ago and is ramping up. There are the usual challenges experienced with a major launch, but we are working through them. We are pleased to announce that we have won incremental business awards totaling $75 million annualized since January 1, 2012. This business consists of $50 million of new metal forming work for Ford on its Edge and MKX platforms to be manufactured in Oakville (launching in 2013), $15 million of metal forming work for BMW on the next generation X6 and new X4 vehicle in North America (launching in 2014) and the takeover of an aluminum engine block for PSA for one of our plants in Germany which will generate $10 million of annualized sales starting early in the third quarter of 2012."

Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Revenues for the first quarter, excluding $52 million in tooling revenues, were approximately $684 million which was just short of the low end of our quarterly sales guidance as previously provided due mainly to softness in revenues at Martinrea Honsel's operating facility in Brazil. North American revenues for the first quarter of 2012, excluding tooling revenue, amounted to $521 million, up slightly from $518 million during the fourth quarter of 2011. The quarter-over-quarter increase in revenues in North America lagged behind overall North American OEM vehicle production, which increased by approximately 14% quarter-over-quarter, due generally to sales mix and the completion of one-time takeover work during the fourth quarter of 2011 as further discussed in our MD&A. In the first quarter of 2012 our adjusted earnings per share was $0.30, after factoring out Honsel related integration costs and other restructuring costs, up from $0.24 in the fourth quarter of 2011 and $0.17 in the first quarter of 2011, after adjustments and on a diluted basis, and in line with our quarterly earnings guidance as previously provided. Our first quarter results from the Martinrea Honsel assets were accretive to earnings, after factoring out unusual and other items, and amounted to approximately $0.06 of earnings per share for the quarter, slightly lower than our previous quarter due mainly to some softness in Brazil. Our first quarter results from Martinrea Classic amounted to approximately $0.24 of earnings per share, after factoring out unusual and other items, up significantly from $0.17 per share earned in the fourth quarter of 2011 due mainly to productivity and efficiency improvements at certain North American operating facilities and a decrease in SG&A expense. We did experience some launch costs at the Shelbyville facility and pre-operating costs in Silao which negatively impacted earnings in the quarter but these should disappear over time."

Mr. Di Tosto added: "In addition, we saw gross margin for the quarter, excluding tooling revenue, at 11.8%, an increase over both the previous quarter and comparative quarter of 2011. We expect gross margin to continue to improve and approach historical levels as we launch a significant backlog of business over the next 24 months and production volumes continue to improve in North America. In our second quarter of 2012, we anticipate revenues (excluding tooling revenues) will range from $690 million to $710 million, and we believe our earnings per share after adjustments will range from $0.29 - $0.33 per share."

Rob Wildeboer, Martinrea's Executive Chairman, stated: "We are very positive about our prospects for the rest of 2012 and beyond, where we anticipate our earnings to increase consistent with previous guidance. We repeat our statements that we believe, based on where we sit today, that 2012 will be our best year to date by far from a financial point of view, subject to market conditions. Based on our assumptions of volumes, interest rates and our outlook, we are budgeting for consolidated revenues approaching $3 billion in 2012, and earnings, including our interest in Martinrea Honsel, should range somewhere between $1.05 and $1.25 per share, absent unusual items in each case. In 2013, we anticipate higher production sales; as well as improved gross margins and EBITDA margins across the board as the impact of higher throughput and efficiencies are felt, and we are anticipating in our budgets that our earnings per share for the year will grow to the $1.30 to $1.50 range, based on current assumptions. Underlying our optimism to some extent is the fact we have much product to launch, and the macroeconomic outlook involving automotive in North America in particular is positive. In sum, there remains pent up demand for light cars and trucks in North America. We believe the North American auto industry is in a growth phase, and certainly sales volumes in the U.S. this year to date have been much more robust than a year ago. There is still room to grow over time. While Europe has faced some headwinds, it is noted that much of the Martinrea Honsel business is in the form of product put in vehicles which have a healthy export market, like Jaguar. Our customers everywhere seem to be doing well. In terms of our financial position at Martinrea, we continue to have a strong balance sheet, with the capability, we believe, to take advantage of opportunities, whether in terms of expanding and taking on new work, or making complementary acquisitions".

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 related to the Company's expectations as to the financial impact of the new launch at the Shelbyville plant, gross margin percentage and expectations on future sales, revenue, earnings per share and capital expenditures (including of Martinrea Honsel), the launching of new metal forming and fluid systems programs, anticipated growth in the automotive industry, the opportunity to increase sales, broad geographic penetration, and the nature and duration of the economic recession to the continuation of monitoring, managing and rationalization of expenses, the Company's expectations regarding the amount of restructuring expenses to be expensed (including Martinrea Honsel) and the windup of the Hot Stampings pension plan, the Company's statements on operations and product launches, the Company's view on the financial viability of its customers, the Company's views on the long term outlook of the automotive industry and corresponding increased sales and production including of the amount of business of Martinrea Honsel in export markets, the Company's statements of its intention for growth over time (organically or through acquisition), including of the Martinrea Honsel business, the Company's statement on the success of the Martinrea Honsel Acquisition and optimism for the future and the Company's ability to capitalize on opportunities in the automotive industry, as well as other forward-looking statements. The words "continue", "expect", "anticipate", "estimate", "may", "will", "should", "views", "intend", "believe", "plan" 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. 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 Annual Information Form and other public filings which can be found at www.sedar.com:

  -- North American and global economic and political conditions; -- 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; -- Martinrea'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; -- outsourcing and in-sourcing trends; -- competition with low cost countries; -- the risk of increased costs associated with product warranty and recalls together with the associated liability; -- the Company's ability to enhance operations and manufacturing techniques; -- dependence on key personnel; -- limited financial resources; -- risks associated with the integration of acquisitions; -- costs associated with rationalization of production facilities; -- the potential volatility of the Company's share price; -- changes in governmental regulations or laws including any changes to the North American Free Trade Agreement; -- labour disputes; -- litigation; -- currency risk; -- fluctuations in operating results; -- internal controls over financial reporting and disclosure controls and procedures; -- environmental regulation; -- a shift away from technologies in which the Company is investing; -- 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; -- the Company's ability to shift its manufacturing footprint to take advantage of opportunities in growing markets; -- risks of conducting business in foreign countries, including China, Brazil and other growing markets; -- under-funding of pension plans; and -- the cost of post-employment benefits.

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, except as required by law.

A conference call to discuss those results will be held on Wednesday, May 9 at 8:00 a.m. (Toronto time) which can be accessed by dialing 416-340-8410 or toll free 1-866-225-2055. Please call 10 minutes prior to the start of the conference call.

If you have any teleconferencing questions, please call Andre La Rosa at (416) 749-0314.

There will also be a rebroadcast of the call available by dialing 1-800-408-3053 (conference id 4555837#). The rebroadcast will be available until May 23, 2012.

The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".

  Martinrea International Inc. Condensed Consolidated Balance Sheets (in thousands of Canadian dollars) (unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Note March 31, 2012 December 31, 2011 ---------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 22,644 $ 26,505 Trade and other receivables 3 500,446 386,776 Inventories 4 272,760 248,588 Prepaid expenses and deposits 8,815 8,224 Income taxes recoverable 11,244 11,056 Current portion of promissory note 2,263 2,263 ---------------------------------------------------------------------------- TOTAL CURRENT ASSETS 818,172 683,412 ---------------------------------------------------------------------------- Property, plant and equipment 5 626,695 616,592 Deferred income tax assets 68,827 72,715 Intangible assets 6 48,290 42,397 Promissory note 2,437 2,378 ---------------------------------------------------------------------------- TOTAL NON-CURRENT ASSETS 746,249 734,082 ---------------------------------------------------------------------------- TOTAL ASSETS $ 1,564,421 $ 1,417,494 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES Bank Indebtedness $ 13,718 $ - Trade and other payables 7 496,612 427,072 Provisions 8 9,679 12,956 Income taxes payable 4,938 3,724 Current portion of long-term debt 9 18,949 17,928 ---------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 543,896 461,680 ---------------------------------------------------------------------------- Long-term debt 9 291,273 245,317 Pension and other post- retirement benefits 52,163 53,795 Deferred income tax liabilities 41,622 40,119 Provisions 8 2,787 3,149 Other financial liability 2 75,646 71,236 ---------------------------------------------------------------------------- TOTAL NON-CURRENT LIABILITIES 463,491 413,616 ---------------------------------------------------------------------------- TOTAL LIABILITIES 1,007,387 875,296 ---------------------------------------------------------------------------- EQUITY Share capital 11 675,340 674,568 Notes receivable for share capital 11 - (602) Contributed surplus 11 44,933 44,165 Other equity 2 (75,646) (71,236) Accumulated other comprehensive loss (16,680) (8,330) Accumulated deficit (146,014) (169,006) ---------------------------------------------------------------------------- TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 481,933 469,559 Non-controlling interest 75,101 72,639 ---------------------------------------------------------------------------- TOTAL EQUITY 557,034 542,198 ---------------------------------------------------------------------------- TOTAL LIABILITIES AND EQUITY $ 1,564,421 $ 1,417,494 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See accompanying notes to the interim condensed consolidated financial statements. On behalf of the Board: "Robert Wildeboer" Director ---------------------------- "Suleiman Rashid" Director ---------------------------- Martinrea International Inc. Condensed Consolidated Statements of Operations (in thousands of Canadian dollars, except per share amounts) (unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Three months ended ended Note March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- SALES $ 735,654 $ 431,181 ---------------------------------------------------------------------------- Cost of sales (excluding depreciation of property, plant and equipment) (639,816) (378,729) Depreciation of property, plant and equipment (production) (15,529) (10,014) ---------------------------------------------------------------------------- Total cost of sales (655,345) (388,743) ---------------------------------------------------------------------------- GROSS MARGIN 80,309 42,438 ---------------------------------------------------------------------------- Research and development costs (3,328) (2,258) Selling, general and administrative (34,266) (17,706) Depreciation of property, plant and equipment (non-production) (1,066) (721) Amortization of customer contracts and relationships (1,578) (1,091) Restructuring and integration costs 13 (2,164) - Loss on disposal of property, plant and equipment (38) (4) ---------------------------------------------------------------------------- OPERATING INCOME 37,869 20,658 ---------------------------------------------------------------------------- Finance costs (3,756) (1,431) Other finance income and expenses 365 259 ---------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 34,478 19,486 Income tax expense 10 (8,369) (5,512) ---------------------------------------------------------------------------- NET INCOME FOR THE PERIOD 26,109 13,974 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Non-controlling interest (3,054) 41 ---------------------------------------------------------------------------- NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY $ 23,055 $ 14,015 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per share 12 $ 0.28 $ 0.17 Diluted earnings per share 12 $ 0.28 $ 0.17 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See accompanying notes to the interim condensed consolidated financial statements. Martinrea International Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands of Canadian dollars) (unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Three months ended ended March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- NET INCOME FOR THE PERIOD $ 26,109 $ 13,974 Other comprehensive income (loss), net of tax: Foreign currency translation differences for foreign operations (8,942) (9,197) Defined benefit plan actuarial gains / (losses) (63) 1,640 ---------------------------------------------------------------------------- Other comprehensive loss, net of tax (9,005) (7,557) ---------------------------------------------------------------------------- TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 17,104 6,417 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Attributable to: Equity holders of the Company 14,642 6,549 Non-controlling interest 2,462 (132) ---------------------------------------------------------------------------- TOTAL COMPREHENSIVE INCOME FOR THE PERIOD $ 17,104 $ 6,417 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See accompanying notes to the interim condensed consolidated financial statements. Martinrea International Inc. Condensed Consolidated Statements of Changes in Equity (in thousands of Canadian dollars) (unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity attributable to equity holders of the Company -------------------------------------------------------------- Notes receivable Cumulative Share for share Contributed Other translation capital capital surplus equity account ---------------------------------------------------------------------------- Balance at December 31, 2010 $ 682,495 $ (2,700) $ 41,241 $ - $ (18,822) ---------------------------------------------------------------------------- Net income for the period - - - - - Compensation expense related to stock options - - 570 - - Exercise of employee stock options 499 - (40) - - Repurchase of common shares (206) - - - - Other comprehensive income, net of tax - -------------- Actuarial gains - - - - - Foreign currency translation differences - - - - (9,197) ---------------------------------------------------------------------------- Balance at March 31, 2011 682,788 (2,700) 41,771 - (28,019) ---------------------------------------------------------------------------- Net income for the period - - - - - Compensation expense related to stock options - - 2,394 - - Contribution from non- controlling interest - Honsel acquisition - - - - - Acquired non- controlling interest - Honsel acquisition - - - - - Fair value of put option granted to non- controlling interest (note 2) - - - (71,236) - Repayment of notes receivable - 2,098 - Repurchase of common shares (8,220) - - - - Other comprehensive income, net of tax - -------------- Actuarial losses - - - - - Foreign currency translation differences - - - - 19,689 ---------------------------------------------------------------------------- Balance at December 31, 2011 674,568 (602) 44,165 (71,236) (8,330) ---------------------------------------------------------------------------- Net income for the period - - - - - Compensation expense related to stock options - - 976 - - Fair value adjustment of put option granted to non- controlling interest - - - (4,410) - Repayment of notes receivable - 602 - - - Exercise of employee stock options 772 - (208) - - Other comprehensive income, net of tax -------------- Actuarial losses - - - - - Foreign currency translation differences - - - - (8,350) ---------------------------------------------------------------------------- Balance at March 31, 2012 $ 675,340 $ - $ 44,933 $(75,646) (16,680) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity attributable to equity holders of the Company --------------------------------- Non- Accumulated controlling Total deficit Total interest equity ---------------------------------------------------------------------------- Balance at December 31, 2010 $ (214,028) $ 488,186 $ 922 $ 489,108 ---------------------------------------------------------------------------- Net income for the period 14,015 14,015 (41) 13,974 Compensation expense related to stock options - 570 - 570 Exercise of employee stock options - 459 - 459 Repurchase of common shares (19) (225) - (225) Other comprehensive income, net of tax -------------- Actuarial gains 1,640 1,640 - 1,640 Foreign currency translation differences - (9,197) - (9,197) ---------------------------------------------------------------------------- Balance at March 31, 2011 (198,392) 495,448 881 496,329 ---------------------------------------------------------------------------- Net income for the period 40,515 40,515 1,761 42,276 Compensation expense related to stock options - 2,394 - 2,394 Contribution from non- controlling interest - Honsel acquisition - - 67,924 67,924 Acquired non- controlling interest - Honsel acquisition - - 5,415 5,415 Fair value of put option granted to non- controlling interest (note 2) - (71,236) - (71,236) Repayment of notes receivable - 2,098 - 2,098 Repurchase of common shares 1,115 (7,105) - (7,105) Other comprehensive income, net of tax -------------- Actuarial losses (12,244) (12,244) - (12,244) Foreign currency translation differences - 19,689 (3,342) 16,347 ---------------------------------------------------------------------------- Balance at December 31, 2011 (169,006) 469,559 72,639 542,198 ---------------------------------------------------------------------------- Net income for the period 23,055 23,055 3,054 26,109 Compensation expense related to stock options - 976 - 976 Fair value adjustment of put option granted to non- controlling interest - (4,410) - (4,410) Repayment of notes receivable - 602 - 602 Exercise of employee stock options - 564 - 564 Other comprehensive income, net of tax -------------- Actuarial losses (63) (63) - (63) Foreign currency translation differences (8,350) (592) (8,942) ---------------------------------------------------------------------------- Balance at March 31, 2012 $ (146,014) $ 481,933 $ 75,101 $ 557,034 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See accompanying notes to the interim condensed consolidated financial statements. Martinrea International Inc. Condensed Consolidated Statements of Cash Flows (in thousands of Canadian dollars) (unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Three months ended ended March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- CASH PROVIDED BY (USED IN): OPERATING ACTIVITIES: Net Income for the period $ 26,109 $ 13,974 Adjustments for: Depreciation of property, plant and equipment 16,595 10,735 Amortization of customer contracts and relationships 1,578 1,091 Amortization of development costs 397 - Accretion of interest on promissory note (59) (133) Unrealized losses / (gains) on foreign exchange forward contracts 369 (280) Finance costs 3,756 1,431 Income tax expense 8,369 5,512 Loss on disposal of property, plant and equipment 38 4 Stock-based compensation 976 570 Pension and other post-retirement benefits expense 713 654 Contributions made to pension and other post-retirement benefits (1,980) (1,419) ---------------------------------------------------------------------------- 56,861 32,139 Changes in non-cash working capital items: Trade and other receivables (117,932) (83,386) Inventories (26,588) (23,560) Prepaid expenses and deposits (591) (967) Trade, other payables and provisions 69,835 35,362 Income taxes payable / recoverable - (76) ---------------------------------------------------------------------------- (18,415) (40,488) Interest paid (3,521) (1,217) Income taxes paid (2,076) (2,164) ---------------------------------------------------------------------------- NET CASH PROVIDED IN OPERATING ACTIVITIES (24,012) (43,869) ---------------------------------------------------------------------------- FINANCING ACTIVITIES: Increase in bank indebtedness 13,718 15,760 Repurchase of common shares - (225) Receipt of payment on notes receivable for share capital 602 - Exercise of employee stock options 564 459 Increase in long-term debt 55,494 30,369 Repayment of long-term debt (7,047) (3,322) ---------------------------------------------------------------------------- NET CASH PROVIDED IN FINANCING ACTIVITIES 63,331 43,041 ---------------------------------------------------------------------------- INVESTING ACTIVITIES: Purchase of property, plant and equipment (34,233) (25,075) Capitalized development costs (8,413) (1,420) Proceeds on disposal of property, plant and equipment 90 47 ---------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (42,556) (26,448) ---------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents (624) 1,249 ---------------------------------------------------------------------------- DECREASE IN CASH AND CASH EQUIVALENTS (3,861) (26,027) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 26,505 26,027 ---------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,644 $ - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See accompanying notes to the interim condensed consolidated financial statements.