TORONTO, May 02, 2024 (GLOBE NEWSWIRE) -- 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 the release of its financial results for the first quarter ended March 31, 2024, and declared a quarterly cash dividend of $0.05 per share. FIRST-QUARTER HIGHLIGHTS Total sales of $1,323.9 million, up 1.5% year-over-year. Diluted net earnings per share of $0.56 and Adjusted Net Earnings per Share(1) of $0.62. Adjusted Operating Income Margin(1) of 6.0%. Adjusted EBITDA(1) of $162.8 million. First-quarter results improved significantly quarter over quarter. Free Cash Flow(1) (excluding principal payments of IFRS-16 lease liabilities) was ($1.4) million, inclusive of a normal seasonal build in non-cash working capital, a significant improvement over ($31.5) million generated in the first quarter of 2023. Net debt-to-Adjusted EBITDA(1) ratio, excluding the impact of IFRS 16, ended the quarter at 1.51x. New business awards of approximately $30 million in annualized sales at mature volumes; the Company was also awarded replacement business worth $150 million in annualized sales at mature volumes with various customers. Quarterly cash dividend of $0.05 per share declared. 1 The Company prepares its financial statements in accordance with IFRS Accounting Standards. However, the Company considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Company. These measures, which the Company believes are widely used by investors, securities analysts and other interested parties in evaluating the Company's performance, 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 financial measures determined in accordance with IFRS. Non-IFRS measures, included anywhere in this press release, include "Adjusted Net Income", "Adjusted Net Earnings per Share (on a basic and diluted basis)", "Adjusted Operating Income", "Adjusted EBITDA", "Free Cash Flow", "Free Cash-Flow (after IFRS 16 lease payments)" and "Net Debt". The relevant IFRS financial measure, as applicable, and a reconciliation of certain non-IFRS financial measures to measures determined in accordance with IFRS are contained in the Company's Management Discussion and Analysis for the three months ended March 31, 2024 and in this press release. OVERVIEW Pat D'Eramo, Chief Executive Officer, stated: "Our first quarter financial results were solid, and a notable improvement over the prior quarter as we bounced back from the disruptions caused by the UAW strike and Tier 2 supplier issue we faced in the fourth quarter. We continue to perform at a high level operationally. Industry headwinds from supply shortages, inflationary cost pressures, and tight labour market conditions continue to improve, vehicle production volumes had a good start to the year despite the slower-than-expected ramp-up in electric vehicle platforms across the industry, and a number of our core platforms experienced growth in production volumes quarter over quarter. Commercial negotiations aimed at offsetting inflationary cost pressures and volume shortfalls on certain programs continue, and I am happy with the progress our team is making on this front." He added: "I am pleased to announce that we have been awarded new business representing $30 million in annualized sales at mature volumes, consisting of $20 million in Lightweight Structures and $10 million in Propulsion Systems. In addition, we were awarded replacement business in both Lightweight Structures and Propulsion Systems worth approximately $150 million in annualized sales at mature volumes with a variety of customers." Fred Di Tosto, President and Chief Financial Officer, stated: "We are pleased with our operational and financial performance in the first quarter. Adjusted EBITDA(1) of $162.8 million was near record levels, and Adjusted Operating Income Margin(1) of 6.0% returned to a level consistent with where we were prior to the disruptions from the UAW strike and Tier 2 supplier issue that impacted the fourth quarter. Sales for the first quarter, excluding tooling sales of $66.4 million, were $1,257.5 million, and diluted net earnings per share and Adjusted Net Earnings per Share(1) were $0.56 and $0.62 respectively. Free Cash Flow(1) (excluding principal payments of IFRS-16 lease liabilities) of ($1.4) million improved significantly year over year. We expect another solid year of Free Cash Flow(1) in 2024, with the bulk of it being generated in the back half of the year, similar to 2023." He continued: "Net Debt(1) (excluding IFRS-16 lease liabilities) increased by approximately $74 million quarter over quarter, to $856.5 million, reflecting our Free Cash Flow(1) profile for the quarter, as well as funding an investment in Equispheres Inc., cash restructuring costs, our regular dividend payment, and significant share buyback activity during the quarter. Our Net Debt to Adjusted EBITDA(1) ratio (excluding the impact of IFRS 16) ended the quarter at 1.51x, inline with our long-term target range of 1.5x or better." Rob Wildeboer, Executive Chairman, stated: "As Pat and Fred outlined, we continue to perform well operationally, our balance sheet is in great shape, and we are executing on our capital allocation priorities. We repurchased 1,353,500 shares for cancellation under our normal course issuer bid (NCIB) during the quarter at a cost of $15.9 million. We have renewed our NCIB for another year, and our intention is to continue to buy back stock at these price levels. We also funded an investment in Equispheres Inc. for $8.0 million. Equispheres is a leading-edge company developing innovative technologies for the production of advanced materials, including high-performance aluminum powder for additive manufacturing applications. Our relationship with Equispheres is expected to enable us to introduce increasingly complex and sophisticated products to our customers, thereby advancing our Project BreakThrough strategy. On behalf of the executive management team, we would like to thank our people for their hard work in delivering a solid quarterly performance, as well as our shareholders and other stakeholders for their continued support." RESULTS OF OPERATIONS 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 three months ended March 31, 2024 ("MD&A"), the Company's interim condensed consolidated financial statements for the three months ended March 31, 2024 (the "interim financial statements") and the Company's Annual Information Form for the year ended December 31, 2023 can be found at www.sedarplus.ca.    OVERALL RESULTS Results of operations may include certain items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Company results. In addition to IFRS measures, management uses non-IFRS measures in the Company's disclosures that it believes provide the most appropriate basis on which to evaluate the Company's results. The following table sets out certain highlights of the Company's performance for the three months ended March 31, 2024 and 2023. Refer to the Company's interim financial statements for the three months ended March 31, 2024 for a detailed account of the Company's performance for the periods presented in the table below.   Three months ended March 31, 2024   Three months ended March 31, 2023   $ Change   % Change Sales $ 1,323,913     $ 1,303,889     20,024     1.5 % Gross Margin   172,537       167,386     5,151     3.1 % Operating Income   72,932       75,177     (2,245 )   (3.0 %) Net Income for the period   43,650       48,171     (4,521 )   (9.4 %) Net Earnings per Share - Basic and Diluted $ 0.56     $ 0.60     (0.04 )   (6.7 %) Non-IFRS Measures*               Adjusted Operating Income $ 79,187     $ 75,177     4,010     5.3 % % of Sales   6.0 %     5.8 %         Adjusted EBITDA   162,830       152,504     10,326     6.8 % % of Sales   12.3 %     11.7 %         Adjusted Net Income   48,097       43,597     4,500     10.3 % Adjusted Net Earnings per Share - Basic and Diluted $ 0.62     $ 0.54     0.08     14.8 % *Non-IFRS Measures The Company prepares its interim financial statements in accordance with IFRS Accounting Standards. However, the Company considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Company. These measures, which the Company believes are widely used by investors, securities analysts and other interested parties in evaluating the Company's performance, 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 financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted Net Income", "Adjusted Net Earnings per Share (on a basic and diluted basis)", "Adjusted Operating Income", "Adjusted EBITDA", "Free Cash Flow", "Free Cash Flow (after IFRS 16 lease payments)", and "Net Debt". The following tables provide a reconciliation of IFRS "Net Income" to Non-IFRS "Adjusted Net Income", "Adjusted Operating Income" and "Adjusted EBITDA":   Three months ended March 31, 2024   Three months ended March 31, 2023 Net Income $ 43,650   $ 48,171   Adjustments, after tax*   4,447     (4,574 ) Adjusted Net Income $ 48,097   $ 43,597   *Adjustments are explained in the "Adjustments to Net Income" section of this Press Release   Three months ended March 31, 2024   Three months ended March 31, 2023 Net Income $ 43,650     $ 48,171   Income tax expense   13,918       12,079   Other finance income   (5,443 )     (224 ) Share of loss of equity investments   634       1,378   Finance expense   20,173       19,046   Adjustments, before tax*   6,255       (5,273 ) Adjusted Operating Income $ 79,187     $ 75,177   Depreciation of property, plant and equipment and right-of-use assets   81,037       74,672   Amortization of development costs   2,494       2,613   Loss on disposal of property, plant and equipment   112       42   Adjusted EBITDA $ 162,830     $ 152,504   *Adjustments are explained in the "Adjustments to Net Income" section of this Press Release SALES Three months ended March 31, 2024 to three months ended March 31, 2023 comparison   Three months ended March 31, 2024   Three months ended March 31, 2023   $ Change   % Change North America $ 963,943     $ 973,992     (10,049 )   (1.0 %) Europe   334,010       303,470     30,540     10.1 % Rest of the World   31,762       33,882     (2,120 )   (6.3 %) Eliminations   (5,802 )     (7,455 )   1,653     22.2 % Total Sales $ 1,323,913     $ 1,303,889     20,024     1.5 % The Company's consolidated sales for the first quarter of 2024 increased by $20.0 million or 1.5% to $1,323.9 million as compared to $1,303.9 million for the first quarter of 2023. The total increase in sales was driven by a year-over-year increase in the Europe operating segment, partially offset by year-over-year decreases in North America and the Rest of the World. Sales for the first quarter of 2024 in the Company's North America operating segment decreased by $10.0 million or 1.0% to $963.9 million from $974.0 million for the first quarter of 2023. The decrease was due to lower year-over-year OEM production volumes on certain light vehicle platforms, including the Ford Mustang Mach E, General Motors' Equinox/Terrain, and Mercedes' new electric vehicle platform (EVA2); programs that ended production during or subsequent to the first quarter of 2023, specifically the Dodge Charger/Challenger and Chevrolet Bolt; and a decrease in tooling sales of $33.0 million, which are typically dependent of the timing of tooling construction and final acceptance by the customer. These negative factors were partially offset by the launch and ramp up of new programs during or subsequent to the first quarter of 2023, including General Motors' new electric vehicle platform (BEV3), a Toyota/Lexus SUV, and a transmission for the ZF Group; and higher year-over-year OEM production volumes on certain other light vehicle platforms, including the Ford Escape and General Motors' large pick-up truck and SUV platform. Overall first quarter industry-wide OEM light vehicle production volumes in North America increased by approximately 1% year-over-year. Sales for the first quarter of 2024 in the Company's Europe operating segment increased by $30.5 million or 10.1% to $334.0 million from $303.5 million for the first quarter of 2023. The increase was due to an increase in tooling sales of $30.8 million, which are typically dependent of the timing of tooling construction and final acceptance by the customer; higher year-over-year OEM production volumes on certain platforms, including aluminum engine blocks for Jaguar Land Rover, Mercedes and Ford; and the impact of foreign exchange on the translation of Euro denominated production sales, which had a positive impact on overall sales for the first quarter of 2024 of $5.0 million. These positive factors were partially offset by lower year-over-year production volumes of certain other light vehicle platforms, including the Mercedes' new electric vehicle platform (EVA2) and Lucid Air. Overall industry-wide first quarter OEM light vehicle production volumes in Europe decreased by approximately 3% year-over-year. Sales for the first quarter of 2024 in the Company's Rest of the World operating segment decreased by $2.1 million or 6.3% to $31.8 million from $33.9 million for the first quarter of 2023. The decrease was largely driven by programs that came with the operations acquired from Metalsa in China that ended production during or subsequent to the first quarter of 2023; partially offset by the launch and ramp up of new programs during or subsequent to the first quarter of 2023, specifically the BMW 5-series in China, and an increase in tooling sales of $4.2 million. Overall tooling sales increased by $2.1 million (including outside segment sales eliminations) to $66.4 million for the first quarter of 2024 from $64.3 million for the first quarter of 2023. GROSS MARGIN Three months ended March 31, 2024 to three months ended March 31, 2023 comparison   Three months ended March 31, 2024   Three months ended March 31, 2023   $ Change   % Change Gross margin $ 172,537     $ 167,386     5,151   3.1 % % of Sales   13.0 %     12.8 %         The gross margin percentage for the first quarter of 2024 of 13.0% increased as a percentage of sales by 0.2% as compared to the gross margin percentage for the first quarter of 2023 of 12.8%. The increase in gross margin as a percentage of sales was generally due to: productivity and efficiency improvements at certain operating facilities and other improvements; and contribution from overall higher production sales volume. These factors were partially offset by: a negative sales mix, including additional depreciation expense from recent new program investments; an unfavourable impact from a year-over-year change in foreign exchange rates in Mexico; and operational inefficiencies at certain operating facilities. Overall market related inflationary pressures on labour, material and energy costs, along with offsetting commercial settlements, were generally stable for the quarter on a year-over-year basis. ADJUSTMENTS TO NET INCOME Adjusted Net Income excludes certain items as set out in the following table and described in the notes thereto. Management uses Adjusted Net Income 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 Three months ended March 31, 2024 to three months ended March 31, 2023 comparison   Three months ended March 31, 2024   Three months ended March 31, 2023   $ Change NET INCOME $ 43,650     $ 48,171     $ (4,521 )             Adjustments:           Restructuring costs (1)   6,255       -       6,255   Net gain on disposal of equity investments (2)   -       (5,273 )     5,273   ADJUSTMENTS, BEFORE TAX $ 6,255     $ (5,273 )   $ 11,528               Tax impact of adjustments   (1,808 )     699       (2,507 ) ADJUSTMENTS, AFTER TAX $ 4,447     $ (4,574 )   $ 9,021               ADJUSTED NET INCOME $ 48,097