Tesma International Inc. earnings up 60%
1 June 2000
Tesma International Inc. earnings up 60%
CONCORD, ON, June 1 /CNW-PRN/ - Tesma International Inc.
today announced record third quarter sales, income and earnings
per share for the period ended April 30, 2000.
Three Months Ended Nine Months Ended
April 30 April 30
2000 1999 2000 1999
(Canadian dollars in millions,
except per share figures)
Sales $303.7 $251.7 $849.9 $647.5
Income before income taxes $ 38.5 $ 24.9 $102.6 $ 62.2
Net income $ 24.9 $ 15.5 $ 65.4 $ 38.6
Operating cash flow $ 42.8 $ 24.5 $107.9 $ 55.0
Basic earnings per share $ 0.86 $ 0.54 $ 2.28 $ 1.35
Fully diluted earnings per share $ 0.83 $ 0.52 $ 2.18 $ 1.30
Weighted average number of shares
outstanding on a fully diluted
basis (in millions) 30.2 30.1 30.2 30.1
The third quarter of fiscal 2000 represents Tesma's 19th consecutive
quarter (on a comparative year-over-year basis) of record sales and operating
income.
Sales for the quarter increased by 21% over the prior year to $303.7
million. This increase reflects the sales generated by new products and
production programs launched over the past twelve months, a 27% increase in
our North American content per vehicle to $45, increased sales to our export
markets of Australia and South America and a moderate increase in vehicle
production volumes in North America which were up 1.4% over the comparable
period last year. The gains were somewhat offset by the strengthening of the
Canadian dollar versus the Euro and U.S. dollar. Year-to-date sales increased
by 31% to $849.9 million, compared to $647.5 million last year.
Income before income taxes increased by 55% to a record $38.5 million,
compared to $24.9 million in the third quarter of fiscal 1999. This increase
is attributed to the Company's new business, operating efficiencies and higher
sales volumes as a result of our increased content per vehicle and higher
North American production volumes. Net income for the quarter of $24.9 million
was also a record high and compares to $15.5 million a year ago. Year-to-date
net income was $65.4 million compared to $38.6 million a year ago.
Tesma's fully diluted earnings per share for the third quarter of fiscal
2000 increased by 60% to $0.83 from $0.52 last year. Year-to-date fully
diluted earnings per share increased by 68% to $2.18 from $1.30 last year.
Cash provided from operations was $42.8 million in the third quarter, an
increase of $18.3 million over fiscal 1999. Net investment activities for the
quarter included $21.1 million for fixed and other asset additions, primarily
related to new business which will be launched over the next twelve months.
Year-to-date cash generated from operations was $107.9 million, compared to
$55.0 million a year ago.
As we outlined in our 1999 annual report, management is committed to
increasing shareholder value through a focus on operational excellence, a
strong balance sheet and superior financial results. Our quarter end balance
sheet is even stronger than at July 31, 1999 with net cash of $85.9 million
and a return on funds employed (ROFE) of 35.0% for the year versus 24.8% a
year ago. We are pleased with our continued strong financial performance and
with the recognition we are receiving from our customers for our operational
excellence.
In May, Tesma was honoured by General Motors, our largest customer, at
their 1999 Supplier of the Year awards presentation. These prestigious awards
have been presented annually for the past 8 years to GM's best global
suppliers. The award winners are selected by a global team of executives from
purchasing, engineering, manufacturing and logistics who identify suppliers
with superior performance in the areas of Quality, Service, Technology and
Price. This year Tesma captured two such awards out of 181 awards presented to
suppliers from 22 countries.
The Tesma Board of Directors today declared a dividend in respect of the
third quarter of fiscal 2000 of $0.16 per share on the Class A Subordinate
Voting and Class B shares payable on July 14, 2000 to shareholders of record
on June 30, 2000.
Tesma is a global supplier of highly-engineered engine, transmission and
fueling systems and components for the automotive industry, focusing on
Innovation, Engineering and Performance. Tesma employs over 4,000 employees in
North America, Europe and Asia in 21 manufacturing facilities and two research
centres.
Tesma will hold a conference call to discuss its third quarter 2000
results on Thursday, June 1, 2000 at 1:30 p.m. EST. The numbers for this call
are 416-641-6670 (local/overseas) or 1-800-379-4140 (North America), with call-
in required 10 minutes prior to the start of the conference call. The
conference call will be chaired by Anthony Dobranowski. A taped replay of the
conference call will also be made available from 3:00 p.m. on June 1, 2000
until 12:00 midnight on June 15, 2000. The numbers for the replay are 416-626-
4100, reference number 14933905 (local/overseas) or 1-800-558-5253, reference
number 14940146 (North America).
This press release may contain forward looking statements within the
meaning of applicable securities legislation. Such statements involve certain
risks and uncertainties which may cause actual results or objectives to be
materially different from those expressed or implied herein. These factors
include the Company's financial performance, changes in the economic and
competitive markets in which the Company competes, relationships with
customers and other factors as set out in the Company's Form 40-F for its
fiscal year ended July 31, 1999 and subsequent SEC filings.
TESMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian dollars in thousands)
(Unaudited)
As at As at
April 30, 2000 July 31, 1999
ASSETS
Cash $130,528 $ 78,582
Accounts receivable 163,795 134,395
Inventories 76,827 76,043
Prepaid expenses and other 10,119 9,813
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381,269 298,833
Fixed assets 291,482 276,297
Other assets 29,427 32,173
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$702,178 $607,303
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $44,643 $30,618
Accounts payable 88,656 78,654
Accrued salaries and wages 33,364 25,108
Other accrued liabilities 47,936 41,854
Income taxes payable 14,634 5,673
Long-term debt due within one year 8,989 10,029
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238,222 191,936
Long-term debt 77,347 82,340
Deferred income taxes 32,992 29,538
SHAREHOLDERS' EQUITY
Class A Subordinate Voting Shares 183,903 180,265
Class B Shares 2,583 2,583
Retained earnings 174,980 120,595
Currency translation adjustment (7,849) 46
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353,617 303,489
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$702,178 $607,303
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
April 30 April 30
2000 1999 2000 1999
Sales $303,672 $251,711 $849,930 $647,514
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Cost of goods sold 229,081 195,560 643,665 502,954
Depreciation and amortization 11,569 9,578 33,395 25,263
Selling, general and
administrative 19,931 17,269 56,039 47,098
Interest (net) 687 1,265 3,352 1,810
Affiliation fees and other
charges 3,902 3,111 10,877 8,177
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Income before income taxes 38,502 24,928 102,602 62,212
Income taxes 13,616 9,395 37,163 23,605
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 24,886 15,533 65,439 38,607
Retained earnings, beginning
of period 154,701 96,168 120,595 77,085
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (4,607) (1,996) (11,054) (5,987)
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Retained earnings, end of
period $174,980 $109,705 $174,980 $109,705
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Earnings per Class A
Subordinate Voting Share
or Class B Share
Basic $0.86 $0.54 $2.28 $1.35
Fully diluted $0.83 $0.52 $2.18 $1.30
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Average number of Class A
Subordinate Voting Shares
and Class B Shares
outstanding (in millions)
Basic 28.8 28.5 28.7 28.5
Fully diluted 30.2 30.1 30.2 30.1
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
April 30 April 30
2000 1999 2000 1999
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES
Net income $24,886 $ 15,533 $ 65,439 $ 38,607
Items not involving
current cash flows 14,193 10,579 39,104 27,146
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39,079 26,112 104,543 65,753
Changes in non-cash
working capital 3,766 (1,659) 3,363 (10,717)
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42,845 24,453 107,906 55,036
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INVESTING ACTIVITIES
Fixed asset additions (20,740) (10,130) (57,328) (52,475)
Purchase of subsidiaries - - (800) (44,785)
Increase in other assets (172) (1,057) (1,316) (4,595)
Proceeds from disposition
of fixed and other assets (144) 66 2,214 880
Cash acquired on purchase
of subsidiaries - (3) - 3,863
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(21,056) (11,124) (57,230) (97,112)
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FINANCING ACTIVITIES
Increase (decrease) in bank
indebtedness 4,516 (11,384) 13,615 31,535
Issues of long-term debt - 232 1,377 4,004
Repayments of long-term debt (1,293) (10,773) (4,627) (12,851)
Issuance of Class A
Subordinate Voting Shares 2,483 - 3,638 262
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (4,607) (1,996) (11,054) (5,987)
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1,099 (23,921) 2,949 16,963
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Effect of exchange rate
changes on cash (291) (1,444) (1,679) (1,292)
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Net increase (decrease) in 22,597 (12,036) 51,946 (26,405)
cash during the period
Cash, beginning of period 107,931 29,629 78,582 43,998
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Cash, end of period $130,528 $ 17,593 $130,528 $ 17,593
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NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
The Company currently operates in one industry segment, the automotive
powertrain business, designing and manufacturing parts and assemblies
primarily for the automotive OEMs or their Tier 1 powertrain component
manufacturers.
The Company operates internationally and its manufacturing facilities are
arranged geographically to match the requirements of the Company's customers
in each market. Each manufacturing facility has the capability to offer many
different powertrain parts and assemblies as the technological processes
employed can be used to make many different parts and assemblies.
Additionally, specific marketing and distribution strategies are required in
each geographic region. The Company currently operates in four geographic
segments of which only two are reportable segments. The accounting policies
for the segments are the same as those described in Note 1 to the July 31,
1999 consolidated financial statements and intersegment sales are accounted
for at prices which approximate fair value.
Executive management assesses the performance of each segment based on
income before income taxes as the management of income tax expense is
centralized.
Nine months ended North European Other Total
April 30, 2000 American Automotive
Automotive
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(Canadian dollars in thousands)
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Total Sales $664,595 $155,019 $35,255 $854,869
Intersegment sales $ 2,844 $ 2,095 $ - $ 4,939
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Sales to external
customers $661,751 $152,924 $35,255 $849,930
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Income before income taxes $ 86,938 $ 12,862 $ 2,802 $102,602
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Fixed assets, net $197,437 $ 50,329 $43,716 $291,482
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Fixed asset additions $ 35,797 $ 14,435 $ 7,096 $ 57,328
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Goodwill, net $ 18,186 $ 1,790 $ - $ 19,976
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Nine months ended
April 30, 1999
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Total Sales $480,106 $163,049 $ 8,263 $651,418
Intersegment sales $ 1,437 $ 2,467 $ - $ 3,904
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Sales to external
customers $478,669 $160,582 $ 8,263 $647,514
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Income before income taxes $ 50,722 $ 11,659 $ (169) $ 62,212
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Fixed assets, net $179,765 $ 47,642 $39,526 $266,933
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Fixed asset additions $ 40,123 $ 11,813 $ 539 $ 52,475
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Goodwill, net $ 18,290 $ 2,135 $ - $ 20,425
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