Magna International Inc. (MGA) reported adjusted earnings per share of $2.52 for the fourth quarter of 2014, surpassing the Zacks Consensus Estimate of $2.24. Also, earnings per share improved 8.2% from $2.33 in the fourth quarter of 2013.
Revenues went up 2.4% year over year to $9.4 billion in the reported quarter, surpassing the Zacks Consensus Estimate of $9 billion. The year-over-year increase came on the back of increased production sales in North America and Asia, tooling, engineering and other sales, partially offset by Rest of World (“ROW”), complete vehicle assembly sales and European production sales.
Meanwhile, vehicle production rose 5% to 4.23 million units in North America and 3% to 5.06 million units in Europe. Operating income increased 31.7% to $677 million in the reported quarter from $514 million in the year-ago quarter.
2014 Performance
Magna International’s adjusted earnings increased 26% to $8.93 per share for full-year 2014 from $7.23 in 2013, exceeding the Zacks Consensus Estimate of $8.77. Revenues for full-year 2014 rose 5.2% to $36.6 billion from $34.8 billion in 2013. Revenues surpassed the Zacks Consensus Estimate of $36.4 billion.
Segment Details
Revenues from the External Production segment (comprising North America, Europe, Asia and ROW units) went up 1.9% year over year to $7.69 billion in the reported quarter.
Sales in North America increased 8% to $4.7 billion, driven by product launches. Revenues from Europe declined 8% year over year to $2.4 billion in the fourth quarter due to lower production volumes, decrease in content on certain programs and a drop in U.S dollar sales. Revenues from Asia surged 13% to $451 million in the reported quarter. The improvement is attributable to increased production and benefits from new launches in China. Revenues from ROW decreased 10% to $169 million due to lower U.S. dollar sales and production volumes.
Revenues at the Complete Vehicle Assembly segment totaled $721 million, down 9% from $788 million a year ago. Also, Assembly volumes declined 10% to 32,965 units.
Revenues from the Tooling, Engineering & Other segment increased 17% to $986 million in the quarter under review.
Financial
Magna International had $1.25 billion in cash and cash equivalents as of Dec 31, 2014, compared with $1.55 billion as of Dec 31, 2013. The company had long-term debt of $995 million as of Dec 31, 2014, as against $332 million as of Dec 31, 2013.
In 2014, Magna International’s cash flow from operations increased to $2.79 billion from $2.57 billion a year ago. On the other hand, capital expenditures rose to $1.59 billion in the year from $1.17 million in 2013.
Stock Split
The board of Magna International has approved a two-for-one stock split of its common stock. The stock split will be implemented as stock dividend. As a result, shareholders will receive one additional share of the company for each share they possess. The stock dividend will be paid on Mar 25, 2015, to shareholders on record as of Mar 11. Meanwhile, the company is not assigning any monetary value to the dividend.
Dividend
The company’s board of directors declared a 16% increase in quarterly dividend to 44 cents per share. After the two-for-one stock split, the dividend will be 22 cents per share. The dividend is payable on Mar 27 to shareholders on record as of Mar 13, 2014.
Outlook
For full-year 2015, Magna International projects revenues for the External Production segment in the band of $28.2–$29.5 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.2–2.5 billion.
For 2015, total revenue of the company is expected between $33.1 billion and $34.8 billion. Operating margin is projected at around 7% with a tax rate of 25% to 26%, while capital expenditures are anticipated to be in the range of $1.4–$1.6 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 of cars and light trucks. The company currently carries a Zacks Rank #3 (Hold).
Other well-performing stocks in the same industry include Superior Industries International, Inc. (SUP), Wabash National Corp. (WNC) and Allison Transmission Holdings, Inc. (ALSN), all sporting a Zacks Rank #1 (Strong Buy).
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