Air Canada’s stock traded more than 10 per cent higher after it announced a share buyback program, an earnings beat and a higher earnings outlook.
The positives come despite a disruptive third quarter that saw pilot contract negotiations come down to the wire, creating uncertainty for travellers and helping push down both revenue and passenger volumes.
The new contract with pilots, which includes a cumulative 42 per cent wage hike over four years, is expected to put pressure on expenses next year, but chief executive Michael Rousseau said it was an achievement to reach a deal without having to go through a pilot strike.
“I am proud that we concluded a mutually beneficial agreement without significant disruption to customers and with a contained revenue impact,” he said on an earnings call Friday.
The potential for travel disruptions offset a longer-term growth trend to see passenger volumes fall 0.1 per cent, while revenue was down four per cent to $6.11 billion.
“We saw multiple weeks of softer booking volumes as some customers postponed or cancelled their itineraries while others chose to fly with other carriers,” said Mark Galardo, executive vice-president of revenue and network planning, on the call.
Profits were also impacted by competitive market pressure, along with lower demand to France because of the Olympics, but Galardo said overall the airline saw sustained strong international demand in the quarter.
The airline reported a profit of $2.04 billion, up from $1.25 billion in the same quarter last year, though that was significantly boosted by a one-time $1.15 billion income tax recovery in the quarter.
On an adjusted basis, Air Canada says it earned $2.57 per diluted share, down from an adjusted profit of $3.41 per diluted share a year earlier.
The adjusted profit was well above the $1.58 per diluted share expected by analysts, according to LSEG Data & Analytics.
The profit beat came in above consensus on fuel and costs, noted RBC analyst James McGarragle.
The airline has also slightly boosted its earnings expectations for 2024, with adjusted earnings before interest, taxes, depreciation and amortization expected to total about $3.5 billion, up from earlier guidance for between $3.1 billion and $3.4 billion.
Air Canada also announced a share buyback program covering about 10 per cent of outstanding shares, which it said was to counter some of the share dilution the airline went through during the pandemic.
The combination of news helped push up Air Canada’s stock by $1.90, or 10.07 per cent, to $20.77 in mid-morning trading on the Toronto Stock Exchange.
In its outlook, the airline said it now expects its capacity measured by available seat miles for 2024 to be up about five per cent from 2023 compared with earlier expectations for growth of 5.5 to 6.5 per cent.
Galardo said the reduction was because of a combination of supply chain pressures, aircraft availability and geopolitical pressures, while the airline will be watching to see whether other factors push down demand.
“Although demand is strong, we’ll be watching the effects from rising hotel costs and foreign exchange which may impact the coming winter season.”
Air Canada also said it now expects its adjusted cost per available seat mile to be up about two per cent from 2023, compared with earlier expectations for growth of 2.5 to 3.5 per cent.
This report by The Canadian Press was first published Nov. 1, 2024.
Companies in this story: (TSX:AC)
Ian Bickis, The Canadian Press
Diversification is a cornerstone of a sound investment strategy. At its simplest, the concept is often likened to the adage “Don’t put all your eggs in one basket”. Investing in different types of assets (like stock, bonds, real estate, different industries, and geographic regions helps to reduce the overall risk of an investment portfolio. Most Canadian investors use investment funds to diversify their portfolios and mitigate investment risks. However, a June 2024 study by Vanguard highlighted a common bias among Canadian investors: a preference for domestic stocks, known as home bias.
Investing in a market that feels familiar is not a trend unique to Canada. Home bias is a global phenomenon. But the overreliance on investments from a single country can be limiting. Home bias can expose a portfolio to assets that are dependent on common factors — including the political, economical, and technological stability of the country. This is where diversifying internationally can be beneficial.
October is Investor Education Month, the perfect time to reassess your strategies and deepen your understanding of fundamental investment concepts like diversification. Before investing beyond Canada, ensure you learn and understand all your options and consider how diversification can benefit your investment portfolio.
The Canadian market is known for its stability, resilience, and strong regulatory oversight. However, investing exclusively in Canada can come with limitations. The Canadian stock market is relatively small. According to a 2023 global equity market study by the Securities Industry and Financial Markets Association (SIFMA), Canada accounted for only 2.7 per cent of world capital markets. This means that over 97 per cent of the world’s investment opportunities are located outside Canadian borders. Investing in international markets can provide Canadian investors with an opportunity to benefit from the size and scale of the global economy.
Canada is the ninth-largest economy in the world, with key industries like manufacturing of products such as paper, technology and automobiles and natural resources including mining, oil and gas and agriculture playing a critical role in the country’s economy. This industrial focus is strongly reflected in Canada’s capital market. As of August 2024, almost half of the S&P TSX Composite Index — which includes the largest companies listed on Canada’s primary stock exchange — is mainly comprised of two sectors: financial institutions, such as banks, and energy, including oil and gas resources. Similarly, the Canadian Securities Exchange Composite Index is dominated by life sciences, followed by mining.
Due to this concentration in Canadian public equity markets, investors who invest solely in their home country may miss out on opportunities in sectors that are growing more significantly in other countries. By diversifying internationally, Canadian investors can gain exposure to other sectors that are driving global economic growth and innovation.
Many Canadian companies have a strong tradition of paying consistent dividends, which may appeal to investors seeking a steady income. However, the capital markets in some developing nations, commonly referred to as emerging markets, often offer attractive opportunities due to their rapid economic growth and potential for higher returns. In fact, a Goldman Sachs report suggests that these emerging markets are projected to overtake the U.S. by 2030. In a June 2024 paper, Franklin Templeton highlighted that emerging economies have become more resilient and less vulnerable to fluctuations. It is important to remember that emerging markets do carry increased investment risks — including political instability, regulatory uncertainty, lack of liquidity and currency volatility. Before investing in these markets, consider talking to a registered financial advisor who understands your risk tolerance, your investment goals and time horizon.
Diversification is a powerful tool for managing risk and potentially enhancing returns. While investing in Canada offers home-country advantages, such as familiarity with local companies and favourable tax treatment, investing across diverse geographies can help build a more resilient portfolio that is better equipped to weather market fluctuations. By taking a long-term view and exploring opportunities in different geographic regions, investors can embrace a holistic approach to diversification and potentially reap its rewards.
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Published Nov 01, 2024 • 18 minute read
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AURORA, Ontario, Nov. 01, 2024 (GLOBE NEWSWIRE) — Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the third quarter ended September 30, 2024.
Please click HERE for full third quarter MD&A and Financial Statements.
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Reported | ||||||||||||
| Sales | $ | 10,280 | $ | 10,688 | $ | 32,208 | $ | 32,343 | ||||
| Income from operations before income taxes | $ | 700 | $ | 538 | $ | 1,161 | $ | 1,296 | ||||
| Net income attributable to Magna International Inc. | $ | 484 | $ | 394 | $ | 806 | $ | 942 | ||||
| Diluted earnings per share | $ | 1.68 | $ | 1.37 | $ | 2.81 | $ | 3.29 | ||||
| Non-GAAP Financial Measures(1) | ||||||||||||
| Adjusted EBIT | $ | 594 | $ | 615 | $ | 1,640 | $ | 1,680 | ||||
| Adjusted diluted earnings per share | $ | 1.28 | $ | 1.46 | $ | 3.72 | $ | 4.15 | ||||
| All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars | ||||||||||||
| (1) Adjusted EBIT and Adjusted diluted earnings per share are Non-GAAP financial measures that have no standardized meaning under U.S. GAAP, and as a result may not be comparable to the calculation of similar measures by other companies. Further information and a reconciliation of these Non-GAAP financial measures is included in the back of this press release. | ||||||||||||
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“We continue to mitigate industry headwinds including lower production volumes in each of our core regions. Our ongoing initiatives and results to date reinforce our conviction in our free cashflow outlook this year and beyond. As we continuously seek to optimize value creation, we are resuming share repurchases in the fourth quarter – ahead of our prior plan.” – Swamy Kotagiri, Magna’s Chief Executive Officer |
THREE MONTHS ENDED SEPTEMBER 30, 2024
We posted sales of $10.3 billion for the third quarter of 2024, a decrease of 4% from the third quarter of 2023. The lower sales largely reflects a 4% decrease in global light vehicle production, including 6% lower production in each of North America and China and a 2% decline in Europe. In addition, sales were negatively impacted by the end of production of certain programs, and divestitures, net of acquisitions, partially offset by the launch of new programs and customer price increases to recover certain higher production input costs.
Adjusted EBIT decreased to $594 million in the third quarter of 2024 compared to $615 million in the third quarter of 2023. This mainly reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, and lower equity income. These were partially offset by higher net favourable commercial items, continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, lower net engineering costs, including spending related to our electrification and active safety businesses and the negative impact of the UAW labour strike during the third quarter of 2023.
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Income from operations before income taxes increased to $700 million for the third quarter of 2024 compared to $538 million in the third quarter of 2023, which includes Other (income) expense, net(2) items and Amortization of acquired intangibles totaling ($160) million and $28 million in the third quarters of 2024 and 2023, respectively. The most significant item in either period was the positive impact of recognizing $196 million of Fisker deferred revenue as the associated agreements were cancelled in the third quarter of 2024. Excluding Other (income) expense, net and Amortization of acquired intangibles from both periods, income from operations before income taxes decreased $26 million in the third quarter of 2024 compared to the third quarter of 2023, largely reflecting the decrease in Adjusted EBIT.
Net income attributable to Magna International Inc. was $484 million for the third quarter of 2024 compared to $394 million in the third quarter of 2023, which includes Other (income) expense, net(2), after tax and Amortization of acquired intangibles totaling $(115) million and $25 million in the third quarters of 2024 and 2023, respectively. Excluding Other (income) expense, net, after tax and Amortization of acquired intangibles from both periods, net income attributable to Magna International Inc. decreased $50 million in the third quarter of 2024 compared to the third quarter of 2023.
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Diluted earnings per share were $1.68 in the third quarter of 2024, compared to $1.37 in the comparable period. Adjusted diluted earnings per share were $1.28, down $0.18 from $1.46 for the third quarter of 2023, including $0.10 due to a higher income tax rate.
In the third quarter of 2024, we generated cash from operations before changes in operating assets and liabilities of $785 million and used $58 million in operating assets and liabilities. Investment activities for the third quarter of 2024 included $476 million in fixed asset additions, $115 million in investments, other assets and intangible assets and $1 million in private equity investments.
(2) Other (income) expense, net is comprised of Fisker Inc. [“Fisker”] related impacts (restructuring and impairment of assembly and production assets, the impairment of Fisker warrants, and the recognition of previously deferred revenue), revaluations of certain public company warrants and equity investments, restructuring activities and gain on business combination, during the three and nine months ended September 30, 2023 & 2024. A reconciliation of these Non-GAAP financial measures is included in the back of this press release.
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NINE MONTHS ENDED SEPTEMBER 30, 2024
We posted sales of $32.2 billion for the nine months ended September 30, 2024, compared to $32.3 billion for the nine months ended September 30, 2023, a period in which global light vehicle production decreased 1%.
Adjusted EBIT was $1.64 billion for the nine months ended September 30, 2024 compared to $1.68 billion for the nine months ended September 30, 2023. This reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, reduced earnings on lower assembly volumes, acquisitions, net of divestitures, during or subsequent to the first nine months of 2023, and lower equity income. These were partially offset by continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, higher net favourable commercial items, and lower net engineering costs, including spending related to our electrification and active safety businesses.
During the nine months ended September 30, 2024, income from operations before income taxes was $1.16 billion, net income attributable to Magna International Inc. was $806 million and diluted earnings per share were $2.81, decreases of $135 million, $136 million, and $0.48, respectively, each compared to the first nine months of 2023.
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During the nine months ended September 30, 2024, Adjusted diluted earnings per share decreased 10% to $3.72, compared to the first nine months of 2023.
During the nine months ended September 30, 2024, we generated cash from operations before changes in operating assets and liabilities of $2.06 billion and invested $333 million in operating assets and liabilities. Investment activities for the first nine months of 2024 included $1.47 billion in fixed asset additions, a $410 million increase in investments, other assets and intangible assets and $22 million in public and private equity investments.
RETURN OF CAPITAL
During the three months ended September 30, 2024, we paid $138 million in dividends.
Our Board of Directors declared a third quarter dividend of $0.475 per Common Share, payable on November 29, 2024 to shareholders of record as of the close of business on November 15, 2024.
OTHER MATTERS
Subject to the approval by the Toronto Stock Exchange, our Board of Directors approved a new Normal Course Issuer Bid (“NCIB”) to purchase up to approximately 28.5 million of our Common Shares, representing approximately 10% of our public float of Common Shares. This NCIB is expected to commence on or about November 7, 2024 and will terminate one year later.
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SEGMENT SUMMARY
| ($Millions unless otherwise noted) | For the three months ended September 30, | ||||||||||||||||||
| Sales | Adjusted EBIT | ||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||
| Body Exteriors & Structures | $ | 4,038 | $ | 4,354 | $ | (316 | ) | $ | 273 | $ | 358 | $ | (85 | ) | |||||
| Power & Vision | 3,837 | 3,745 | 92 | 279 | 221 | 58 | |||||||||||||
| Seating Systems | 1,379 | 1,529 | (150 | ) | 51 | 70 | (19 | ) | |||||||||||
| Complete Vehicles | 1,159 | 1,185 | (26 | ) | 27 | (5 | ) | 32 | |||||||||||
| Corporate and Other | (133 | ) | (125 | ) | (8 | ) | (36 | ) | (29 | ) | (7 | ) | |||||||
| Total Reportable Segments | $ | 10,280 | $ | 10,688 | $ | (408 | ) | $ | 594 | $ | 615 | $ | (21 | ) | |||||
| For the three months ended September 30, | |||||||||||||||||||
| Adjusted EBIT as a percentage of sales |
|||||||||||||||||||
| 2024 | 2023 | Change | |||||||||||||||||
| Body Exteriors & Structures | 6.8 | % | 8.2 | % | (1.4 | )% | |||||||||||||
| Power & Vision | 7.3 | % | 5.9 | % | 1.4 | % | |||||||||||||
| Seating Systems | 3.7 | % | 4.6 | % | (0.9 | )% | |||||||||||||
| Complete Vehicles | 2.3 | % | (0.4 | )% | 2.7 | % | |||||||||||||
| Consolidated Average | 5.8 | % | 5.8 | % | 0.0 | % | |||||||||||||
| ($Millions unless otherwise noted) | For the nine months ended September 30, | ||||||||||||||||||
| Sales | Adjusted EBIT | ||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||
| Body Exteriors & Structures | $ | 12,932 | $ | 13,333 | $ | (401 | ) | $ | 912 | $ | 1,024 | $ | (112 | ) | |||||
| Power & Vision | 11,605 | 10,530 | 1,075 | 575 | 437 | 138 | |||||||||||||
| Seating Systems | 4,289 | 4,618 | (329 | ) | 156 | 174 | (18 | ) | |||||||||||
| Complete Vehicles | 3,784 | 4,337 | (553 | ) | 74 | 81 | (7 | ) | |||||||||||
| Corporate and Other | (402 | ) | (475 | ) | 73 | (77 | ) | (36 | ) | (41 | ) | ||||||||
| Total Reportable Segments | $ | 32,208 | $ | 32,343 | $ | (135 | ) | $ | 1,640 | $ | 1,680 | $ | (40 | ) | |||||
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| For the nine months ended September 30, | ||||||||||
| Adjusted EBIT as a percentage of sales |
||||||||||
| 2024 | 2023 | Change | ||||||||
| Body Exteriors & Structures | 7.1 | % | 7.7 | % | (0.6 | )% | ||||
| Power & Vision | 5.0 | % | 4.2 | % | 0.8 | % | ||||
| Seating Systems | 3.6 | % | 3.8 | % | (0.2 | )% | ||||
| Complete Vehicles | 2.0 | % | 1.9 | % | 0.1 | % | ||||
| Consolidated Average | 5.1 | % | 5.2 | % | (0.1 | )% | ||||
For further details on our segment results, please see our Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements.
2024 OUTLOOK
We first disclose a full-year Outlook annually in February, with quarterly updates. The following Outlook is an update to our previous Outlook in August 2024.
Updated 2024 Outlook Assumptions
| Current | Previous | ||
| Light Vehicle Production (millions of units) | |||
| North America | 15.4 | 15.7 | |
| Europe | 16.9 | 17.1 | |
| China | 28.9 | 29.0 | |
| Average Foreign exchange rates: 1 Canadian dollar equals 1 euro equals |
U.S. $0.736 U.S. $1.088 |
U.S. $0.733 U.S. $1.080 |
Updated 2024 Outlook
| Current | Previous | ||
| Segment Sales | |||
| Body Exteriors & Structures | $16.8 – $17.2 billion | $17.3 – $17.9 billion | |
| Power & Vision | $15.1 – $15.4 billion | $15.3 – $15.7 billion | |
| Seating Systems | $5.6 – $5.8 billion | $5.5 – $5.8 billion | |
| Complete Vehicles | $5.2 – $5.4 billion | $4.9 – $5.2 billion | |
| Total Sales | $42.2 – $43.2 billion | $42.5 – $44.1 billion | |
| Adjusted EBIT Margin(3) | 5.4% – 5.5% | 5.4% – 5.8% | |
| Equity Income (included in EBIT) | $80 – $105 million | $100 – $130 million | |
| Interest Expense, net | Approximately $220 million | Approximately $220 million | |
| Income Tax Rate(4) | Approximately 23% | Approximately 22% | |
| Adjusted Net Income attributable to Magna(5) | $1.45 – $1.55 billion | $1.5 – $1.7 billion | |
| Capital Spending | $2.2 – $2.3 billion | $2.3 – $2.4 billion | |
| Notes: (3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales. Refer to the reconciliation of Non-GAAP financial measures in the back of this press release for further information. (4) The Income Tax Rate has been calculated using Adjusted EBIT and is based on current tax legislation. (5) Adjusted Net Income attributable to Magna represents Net Income excluding Other expense, net and amortization of acquired intangible assets, net of tax. |
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Our Outlook is intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Although considered reasonable by Magna as of the date of this document, the 2024 Outlook above and the underlying assumptions may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth herein. The risks identified in the “Forward-Looking Statements” section below represent the primary factors which we believe could cause actual results to differ materially from our expectations.
Key Drivers of Our Business
Our operating results are primarily dependent on the levels of North American, European, and Chinese car and light truck production by our customers. While we supply systems and components to every major original equipment manufacturer (“OEM”), we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are also important drivers of our results.
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OEM production volumes are generally aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: labour disruptions; free trade arrangements and tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory frameworks; and other factors.
Overall vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing, and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels and thus production volumes include: vehicle affordability; interest rates and/or availability of credit; fuel and energy prices; relative currency values; uncertainty as to consumer acceptance of EVs; government subsidies to consumers for the purchase of low- and zero-emission vehicles; and other factors.
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NON-GAAP FINANCIAL MEASURES RECONCILIATION
Effective July 1, 2023, we revised our calculations of Adjusted EBIT and Adjusted diluted earnings per share to exclude the amortization of acquired intangible assets. Revenue generated from acquired intangible assets is included within revenue in determining net income attributable to Magna. We believe that excluding the amortization of acquired intangible assets from these Non-GAAP measures helps management and investors in understanding our underlying performance and improves comparability between our segmented results of operations and our peers.
The historical presentation of these Non-GAAP measures within this press release has also been updated to reflect the revised calculations.
| Adjusted EBIT
The following table reconciles net income to Adjusted EBIT: |
|||||||||||||||
| THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net Income | $ | 508 | $ | 417 | $ | 862 | $ | 988 | |||||||
| Add: | |||||||||||||||
| Amortization of acquired intangible assets | 28 | 32 | 84 | 57 | |||||||||||
| Interest expense, net | 54 | 49 | 159 | 103 | |||||||||||
| Other (income) expense, net | (188 | ) | (4 | ) | 236 | 224 | |||||||||
| Income taxes | 192 | 121 | 299 | 308 | |||||||||||
| Adjusted EBIT | $ | 594 | $ | 615 | $ | 1,640 | $ | 1,680 | |||||||
| Adjusted EBIT as a percentage of sales (“Adjusted EBIT margin”)
Adjusted EBIT as a percentage of sales is calculated in the table below: |
|||||||||||||||
| Sales | $ | 10,280 | $ | 10,688 | $ | 32,208 | $ | 32,343 | |||||||
| Adjusted EBIT | $ | 594 | $ | 615 | $ | 1,640 | $ | 1,680 | |||||||
| Adjusted EBIT as a percentage of sales | 5.8 | % | 5.8 | % | 5.1 | % | 5.2 | % | |||||||
| Adjusted diluted earnings per share
The following table reconciles net income attributable to Magna International Inc. to Adjusted diluted earnings per share: |
|||||||||||||||
| Net income attributable to Magna International Inc. | $ | 484 | $ | 394 | $ | 806 | $ | 942 | |||||||
| Add (deduct): | |||||||||||||||
| Amortization of acquired intangible assets | 28 | 32 | 84 | 57 | |||||||||||
| Other (income) expense, net | (188 | ) | (4 | ) | 236 | 224 | |||||||||
| Tax effect on Amortization of acquired intangible assets and Other (income) expense, net | 45 | (3 | ) | (57 | ) | (34 | ) | ||||||||
| Adjusted net income attributable to Magna International Inc. | $ | 369 | $ | 419 | $ | 1,069 | $ | 1,189 | |||||||
| Diluted weighted average number of Common Shares outstanding during the period (millions): | 287.3 | 286.8 | 287.2 | 286.6 | |||||||||||
| Adjusted diluted earnings per shares | $ | 1.28 | $ | 1.46 | $ | 3.72 | $ | 4.15 | |||||||
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Certain of the forward-looking financial measures above are provided on a Non-GAAP basis. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. To do so would be potentially misleading and not practical given the difficulty of projecting items that are not reflective of on-going operations in any future period. The magnitude of these items, however, may be significant.
This press release together with our Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements are available in the Investor Relations section of our website at www.magna.com/company/investors and filed electronically through the System for Electronic Document Analysis and Retrieval + (SEDAR+) which can be accessed at http://www.sedarplus.ca as well as on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which can be accessed at www.sec.gov.
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We will hold a conference call for interested analysts and shareholders to discuss our third quarter ended September 30, 2024 results on Friday, November 1, 2024 at 8:00 a.m. ET. The conference call will be chaired by Swamy Kotagiri, Chief Executive Officer. The number to use for this call from North America is 1-800-715-9871. International callers should use 1-646-307-1963. Please call in at least 10 minutes prior to the call start time. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call as well as our financial review summary will be available on our website Friday prior to the call.
TAGS
Quarterly earnings, financial results, vehicle production
INVESTOR CONTACT
Louis Tonelli, Vice-President, Investor Relations
louis.tonelli@magna.com │ 905.726.7035
MEDIA CONTACT
Tracy Fuerst, Vice-President, Corporate Communications & PR
tracy.fuerst@magna.com │ 248.761.7004
TELECONFERENCE CONTACT
Nancy Hansford, Executive Assistant, Investor Relations
nancy.hansford@magna.com │ 905.726.7108
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OUR BUSINESS (6)
Magna is more than one of the world’s largest suppliers in the automotive space. We are a mobility technology company built to innovate, with a global, entrepreneurial-minded team of over 175,000(7) employees across 343 manufacturing operations and 107 product development, engineering and sales centres spanning 28 countries. With 65+ years of expertise, our ecosystem of interconnected products combined with our complete vehicle expertise uniquely positions us to advance mobility in an expanded transportation landscape.
For further information about Magna (NYSE:MGA; TSX:MG), please visit www.magna.com or follow us on social.
(6) Manufacturing operations, product development, engineering and sales centres include certain operations accounted for under the equity method.
(7) Number of employees includes over 162,000 employees at our wholly owned or controlled entities and over 13,000 employees at certain operations accounted for under the equity method.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”). Any such forward-looking statements are intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, strategic objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “assume”, “believe”, “intend”, “plan”, “aim”, “forecast”, “outlook”, “project”, “potential”, “estimate”, “target” and similar expressions suggesting future outcomes or events to identify forward-looking statements. The following table identifies the material forward-looking statements contained in this document, together with the material potential risks that we currently believe could cause actual results to differ materially from such forward-looking statements. Readers should also consider all of the risk factors which follow below the table:
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| Material Forward-Looking Statement | Material Potential Risks Related to Applicable Forward-Looking Statement |
| Light Vehicle Production |
|
| Total Sales Segment Sales |
|
| Adjusted EBIT Margin, Free Cash Flow, Net Income Attributable to Magna, and Ability to Repurchase Shares |
|
| Equity Income |
|
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Forward-looking statements are based on information currently available to us and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. While we believe we have a reasonable basis for making any such forward-looking statements, they are not a guarantee of future performance or outcomes. In addition to the factors in the table above, whether actual results and developments conform to our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation:
Macroeconomic, Geopolitical and Other Risks
Risks Related to the Automotive Industry
Strategic Risks
Customer-Related Risks
Supply Chain Risks
Manufacturing/Operational Risks
|
Pricing Risks
Warranty/Recall Risks
Climate Change Risks
IT Security/Cybersecurity Risks
Acquisition Risks
Other Business Risks
Legal, Regulatory and Other Risks
|
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In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forward-looking statement. Additionally, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements, including the risks, assumptions and uncertainties above which are:
Readers should also consider discussion of our risk mitigation activities with respect to certain risk factors, which can be also found in our Annual Information Form. Additional information about Magna, including our Annual Information Form, is available through the System for Electronic Data Analysis and Retrieval + (SEDAR+) at www.sedarplus.ca, as well as on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which can be accessed at www.sec.gov.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/a3c24fc7-ed94-4873-98d6-72f35aea9f9f
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Conditional on the completion of the Acquisition, Excellon will enter into agreements (i) with Adar to provide for consideration in the form of a 1.0% net smelter returns royalty (0.5% of which may be repurchased for US$1.5 million) (the ” Royalty “) and a 5% to 8% zinc and lead metals stream (the ” Stream ” and together with the Royalty, the ” Deferred Contingency Payments “), payable on the successful restart of the Mallay Mine, and (ii) with Adar and another party to sell up to a 49% interest in the Tres Cerros Exploration Property (the ” Back In Right “) at a back-in option exercise price of 1.5x attributable historical exploration expenditures incurred.
Excellon has arranged approximately $3.8 million (US$2.725 million) to fund the upfront cash payments and for working capital during the Realization Proceedings, as further described below. On completion of the Acquisition, Excellon will focus on restarting the Mallay Mine, with the goal of returning the Company to a silver-producer status.
Mallay Silver Mine Highlights
Past producing mine, built and operated by Buenaventura, with US$115 million historical investment. 1
Fully permitted to restart production, existing infrastructure includes working mill, operational water treatment plant, adit and ramp access to the mine, significant underground development and active workforce.
Historical Reserves 2 of 2.67 Moz AgEq @ 626 g/t AgEq and Historical Inferred Resources 2 of 4.57 Moz AgEq @ 564 g/t AgEq.
Excellon to review off-take prepay facilities and other non-equity alternatives for mine restart.
Current mineralized inventory is believed to be sufficient for the basis of a three-year mine plan, the expected six-month restart period includes mine rehabilitation and mill controls upgrade.
Significant opportunities to expand mineralized inventory through extension of historically mined veins down dip and along strike.
Excellon has an experienced operating team, capable of delivering a mine restart.
Notes:
1) Source: Compañía de Minas Buenaventura S.A.A.
2) Historical estimates based on historical audit completed in December 2018 by Geomineria S.A., an independent resource auditor in Peru. Mineral inventories have been worked on in accordance with the standards, procedures and technical specifications approved by Compañía de Minas Buenaventura S.A.A. for all its units, which are described in the “V Geology Workshop 2014 – Chap. Mineral Inventory Manual”, in the 2016 Sampling Manual, 2016 Quality Control Manuals and 2017 Geological Modeling and Resource Estimation Procedures of Compañía de Minas Buenaventura S.A.A.; and adapting them to international standards such as the JORC Code or similar. Following closing of the transaction, Excellon will update the resources to become NI 43-101 compliant.
Tres Cerros Exploration Property Highlights
Bulk tonnage potential. Area of interest is a 3 km x 0.5 km gold-silver mineralized corridor near, but not related to, the Mallay Mine.
Large-scale, classic high sulphidation target. Coincident IP/resistivity anomalies indicative of deep (300m) sulphides overlain by oxide zone +100m thick.
Several drill targets identified, access by truck – no helicopters required.
Large exploration package (~110km 2 ) in a region which boasts numerous significant current and historic mines.
Benefits to Excellon Shareholders
Fully permitted, near-term silver producing asset in an established mining-friendly jurisdiction.
Acquisition of US$115 million in historical infrastructure investment for total purchase consideration of approximately US$2.5 million in cash 3 and shares 3 plus the Deferred Contingency Payments.
Minera CRC will be acquired free of existing debt, upon completion of the Realization Proceedings.
Deferred Contingency Payments are structured to provide a smaller payout stream over a longer period of time, ensuring maximum financial buffer during the sensitive periods of a mine startup.
Termination fee of US$2.5 million paid to Excellon if the shares and debt of Minera CRC are sold to an alternative party.
Notes:
3) Includes US$1.25 million cash plus shares to be issued as purchase consideration, valued at Excellon share price prior to announcement.
Shawn Howarth, President and CEO of Excellon, commented, “Mallay represents an exciting opportunity to return Excellon to silver producer status as early as mid-2025. This highly accretive transaction benefits Excellon shareholders, as the agreement with Adar resolves the existing debt burden on the asset, paving a clear path for value creation. Excellon’s operational expertise sets the foundation for a highly collaborative and productive partnership. Upon closing the transaction, our immediate focus will be on mine rehabilitation, finalizing restart plans, conducting near-mine drilling to extend mineralization and mine life, and demonstrating the robust economics of the mine.”
Laurence (Laurie) Curtis, Chairman of Excellon, commented, “Excellon and the team worked hard to reach a comprehensive agreement aimed at revitalizing the Mallay Mine, after a prolonged period of downtime. With strong momentum in the metals market, we are confident this project is positioned for substantial success and renewed operational strength.”
Transaction Details
The Agreement provides for Excellon acquiring, subject to the satisfaction of certain conditions, the Minera Shares and certain indebtedness of Minera CRC (the ” Minera Securities “) from Adar in exchange for (i) cash payments to Adar in the aggregate amount of US$1,250,000 (the ” Upfront Payments “) within 30 days to fund expenses incurred by Adar pursuant to the Realization Proceedings and advances by Adar to Minera CRC; and (ii) such number of Common Shares (the ” Consideration Shares “) that is equal to 12.9% of the issued and outstanding Common Shares on a basic, non-diluted basis excluding the completion of the Capital Raise (as defined below). Any portion of such Upfront Payments that is not spent by Adar prior to closing of the Acquisition will remain with Minera CRC. If Adar does not acquire the Minera Securities in the Realization Proceedings and instead receives repayment of indebtedness owed to Adar by the parent company of Minera CRC, Adar will pay Excellon a termination fee of US$2.5 million. In the event the Acquisition is completed, Excellon is required to deploy at least US$6.5 million from the Capital Raise and the Debt Raise toward commencing mining operations at the mining unit and processing plant owned by Minera CRC. The Consideration Shares will be subject to a contractual 12-month hold period. The completion of the Acquisition is conditional on, among other things, execution of definitive agreements in respect of the Royalty and the Stream, execution of the Back In Right Agreement (as defined below), Excellon completing a financing, other than the concurrent financings described below, of at least US$4,500,000 (the ” Capital Raise “), Excellon executing a committed debt facility in an amount no less than US$3,000,000 (the ” Debt Raise “), Minera CRC having indebtedness not more than US$1,000,000 at closing, receipt of regulatory and stock exchange (including Toronto Stock Exchange) approvals (including shareholder approval of the Acquisition and the Capital Raise as will be required by the requirements of the Toronto Stock Exchange), and Adar acquiring the Minera Securities in the Realization Proceedings. The proceeds of the Capital Raise and the Debt Raise will be used for the purpose of commencing mining operations following completion of the Acquisition and is not part of the consideration for the Acquisition. The outside date to complete the Acquisition is February 27, 2025, which may be extended by 30 days by Excellon up to four times by making a cash payment in the amount of US$250,000 to Adar for each such 30 day extension. Each such extension payment will be set-off against deliveries required to be made by Excellon pursuant to the Stream.
In connection with the completion of the Acquisition, Excellon will enter into agreements to provide for the Royalty, the Stream and the Back In Right as follows:
The Royalty: 1% net smelter returns royalty payable in respect of products produced from the Mallay and Tres Cerros properties. Excellon will have the right to purchase one-half of the Royalty for US$1.5 million within 18 months of commencement of commercial production.
The Stream: Excellon will have an obligation to deliver 5% of all zinc and lead produced, until a maximum of 2 million pounds of each of zinc and lead, respectively, has been delivered (the ” Initial Zinc and Lead Delivery Obligation “). Thereafter Excellon will have an obligation to deliver 8% of all zinc lead produced, until a maximum of 10 million pounds of each of zinc and lead, respectively, has been delivered. All deliveries of zinc and lead will be subject to certain costs incurred by Excellon. Excellon has the right to purchase the Stream for cancellation for (i) US$18 million up to the first anniversary of the commencement of commercial production, and (ii) US$15 million after completion of the Initial Zinc and Lead Delivery Obligation, provided that the Stream buy back right will expire on the third anniversary of the commencement of commercial production.
The Back In Right: Pursuant to the Back In Right Agreement, Adar will have an option to acquire a 32% interest in the Tres Cerros Exploration Property and a third party will have an option to acquire a 17% interest in the Tres Cerros Exploration Property, in each case until the date that is 120 days after Excellon delivers a preliminary economic assessment in respect of the Tres Cerros Exploration Property based on a minimum of 15,000 metres of exploratory drilling and which indicates inferred resources in the form of gold equivalent ounces of at least 500,000 ounces. The Back In Right option exercise price will be 1.5x of attributable historical exploration expenditures incurred following completion of the Acquisition (” Qualifying Expenditures “). During the Back In Right term, Excellon will be the operator of the Tres Cerros Exploration Property and will have an obligation to incur an aggregate of US$7.5 million in Qualifying Expenditures as follows: (i) US$ 1 million in year 1, (ii) US$2.5 million in year 2, and (iii) US$4 million in year 3. If either party exercises their respective Back In Right, the parties will enter into a joint venture agreement, the form of which will be settled in connection with the Back In Right Agreement.
Concurrent Financings
In connection with the Acquisition, Excellon is also pleased to announce that it has entered into agreements with respect to a non-brokered private placement offering (the ” Unit Offering “) of up to 19,500,000 units of the Company (” Units “) at a price of $0.105 per Unit for aggregate gross proceeds of up to $2,047,500 (approximately US$1,475,000), and a non-brokered private placement offering (the ” Note Offering ” and together with the Unit Offering, the ” Offerings “) of US$1,250,000 aggregate principal amount of unsecured non-convertible promissory notes of the Company (” Notes “). The aggregate offering size is approximately $3.8 million (US$2.725 million).
Each Unit will be comprised of one Common Share and one half of one common share purchase warrant of the Company (each whole warrant, a ” Warrant “). Each Warrant will entitle the holder thereof to acquire one Common Share at a price of $0.15 per Common Share for a period of 24 months from the closing date of the Unit Offering.
The Notes will mature on the date that is 18 months following the closing date of the Notes Offering (the ” Maturity Date “). On the Maturity Date, any outstanding principal amount of the Notes plus any accrued and unpaid interest thereon shall be repaid by the Company in cash. The Notes will bear interest at a rate of 10% per annum. Interest on the principal amount outstanding under the Notes will accrue during the period commencing on the closing date of the Notes Offering until the Maturity Date and will be payable in cash on the Maturity Date, subject to earlier prepayment or exercise of the Tres Cerros Prepayment Election (as defined below).
If, following the issuance of the Notes and prior to the Maturity Date, the Acquisition is completed, the holder of the Notes will be able to elect to direct that the principal amount of the Notes plus any accrued and unpaid interest thereon be applied as a prepayment against a portion of the purchase price payable by the holder to exercise its Back In Right pursuant to a back in right agreement (the ” Back In Right Agreement “) to be entered into in connection with the Acquisition (the ” Tres Cerros Prepayment Election “).
If, following the issuance of the Notes and prior to the Maturity Date, the Acquisition is not completed on or before the outside date for completion of the Acquisition, the Company will be required, within 30 calendar days following expiry of such outside date, to prepay in cash any outstanding principal amount of the Notes plus any accrued and unpaid interest thereon.
The Company may elect, at any time, to prepay in cash any or all of the principal amount of the Notes plus any accrued and unpaid interest on such principal amount being prepaid.
The Company intends to use the net proceeds of the Offerings to fund acquisition costs, including upfront cash payments in respect thereof, and for working capital and general corporate purposes.
The Unit Offering is anticipated to close on or about November 8, 2024, and is subject to satisfaction of certain conditions, including, but not limited to, the receipt of all necessary regulatory and other approvals, including the approval of the Toronto Stock Exchange (” TSX “). The Note Offering is anticipated to close on or about November 1, 2024, and is subject to satisfaction of certain conditions, including, but not limited to, the receipt of all necessary regulatory and other approvals.
The securities will be offered: (a) by way of private placement in each of the provinces of Canada pursuant to applicable exemptions from the prospectus requirements under applicable Canadian securities laws; (b) in the United States or to, or for the account or benefit of, U.S. persons, by way of private placement pursuant to the exemptions from the registration requirements provided for under the United States Securities Act of 1933, as amended (the ” U.S. Securities Act “); and (c) in jurisdictions outside of Canada and the United States on a private placement or equivalent basis. The securities to be issued pursuant to the Offerings will be subject to a four-month hold period in Canada pursuant to applicable Canadian securities laws.
The securities offered have not been, nor will they be, registered under the U.S. Securities Act, or any state securities law, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an exemption from such registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy in the United States nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
Mallay Property
The Mallay Property, located in Peru, is comprised of the concessions encompassing the past-producing Mallay Mine and the Tres Cerros Exploration Property.
Mallay Mine
The Mallay Mine was constructed by Compañía de Minas Buenaventura S.A.A. (” Buenaventura “) at a cost of US$115 million, commenced production in 2012 and operated consistently until early 2018. Average annual production by Buenaventura (2013 to 2017) was 1.3 million ounces silver, 9,100 tonnes zinc and 6,600 tonnes lead (source: Buenaventura company reports). Historical Mineral Reserves and Mineral Resources (JORC compliant) at the time the mine was placed on care-and-maintenance (Table 1) were calculated at metals prices of US$18.00/oz Ag, US$2,250/t Pb and US$2,600/lb Zn. Following closing of the Acquisition, Excellon intends to update the resource calculation to become NI 43-101 compliant, taking into account not only updated metals prices, but additional extension drilling Excellon anticipates to undertake, demonstrating the continued extension of current mineralized zones.
Table 1: Historical Mineral Resource Estimate (As at December 31, 2018; JORC Compliant)
Figure 1: Mallay Mine Processing Facilities and Surface Infrastructure
To view an enhanced version of this graphic, please visit:
Bennett Jones LLP is acting as legal advisor to Excellon. Cassels Brock & Blackwell LLP is acting as legal advisor to Adar.
Excellon’s vision is to realize opportunities through the acquisition of advanced development or producing assets with further potential to gain from an experienced management team for the benefit of our employees, communities and shareholders. The Company is advancing a portfolio of gold, silver and base metals assets including Kilgore, an advanced gold exploration project in Idaho; and Silver City, a high-grade epithermal silver district in Saxony, Germany with 750 years of mining history and little modern exploration.
Additional details on Excellon’s properties are available at .
Westgold Resources’ September quarter was defined by its $1.4 billion merger with Karora, but it wasn’t the only milestone welcomed by the gold miner.
On August 1 Westgold completed its merger with Karora that saw the companies transformed into a 400,000 ounce per year producer.
This firmly cemented Westgold as a mid-tier gold company, and one of Australia’s top five producers.
On August 6, Westgold commenced trading on the Toronto Stock Exchange and had joined the ranks of S&P’s ASX200 by September.
The operating results for this quarter mark a transition in scale for Westgold and include three months of gold production from the Murchison operations in Western Australia, but only two months’ production from the Southern Goldfields mines, which include the Beta Hunt and Higginsville mines.
The expanded business delivered a record 77,369oz at $2422/oz, generating $29 million in net mine cashflow.
“Our focus post-merger has been to rapidly identify, then address key risks and opportunities across the Southern Goldfields operations,” Westgold managing director Wayne Bramwell said.
“Early activities include deploying additional safety and operational management to supplement the site teams and expedite remedial maintenance and upgrades in basic mine infrastructure (water, ventilation, power).
“These changes have had immediate positive impact on mine outputs at both Beta Hunt and Higginsville late in the quarter and will see productivity improve as each area is addressed.”
Westgold is currently on track to achieve its 2024–25 financial year guidance, with the Bluebird – South Junction project, part of the Murchison operations, expected to ramp up to a run rate of over one million tonnes per year.
Beta Hunt currently delivers a run rate of over two million tonnes per year and mining is commencing at Great Fingall.
“Westgold now has an extensive, pipeline of projects with a landholding of more than 3200km2 across two of Australia’s most prolific gold regions,” Bramwell said.
“Drilling will unlock value and as planned we have rapidly mobilised additional drills to Beta Hunt and prioritised targets across Higginsville.”
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All financial figures are in Canadian dollars unless otherwise noted
CALGARY, Alberta, Oct. 31, 2024 (GLOBE NEWSWIRE) — Gibson Energy Inc. (TSX:GEI) (“Gibson” or the “Company”) announced today that it has agreed to issue $350 million of 4.45% senior unsecured notes due November 12, 2031 (the “Notes”).
The offering is expected to close on November 12, 2024, subject to customary closing conditions. Gibson will use the net proceeds from the offering as well as cash on hand to fund the redemption at par of its 5.80% medium term notes due July 2026 in the principal amount of $350 million (the “2026 Notes”).
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The Notes are being offered in Canada on a private placement and agency basis through a syndicate of agents led by RBC Capital Markets and CIBC Capital Markets, as well as BMO Capital Markets, in reliance upon exemptions from the prospectus requirements under applicable securities laws.
Redemption of $350 Million of Medium Term Notes Due 2026
Gibson will deliver a notice of redemption to registered holders of the 2026 Notes, conditional upon the completion of the offering. The redemption date will be November 12, 2024. The 2026 Notes will be redeemed at par plus accrued and unpaid interest in accordance with the terms of the indenture under which the 2026 Notes were issued.
This news release does not constitute an offer to sell or the solicitation of an offer to buy the notes in any jurisdiction in which such an offer, solicitation or sale would be unlawful. The Notes have not been approved or disapproved by any regulatory authority. The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any securities laws of any state of the United States and may not be offered, sold or delivered in the United States or to, or for the account or benefit of, United States persons.
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About Gibson
Gibson is a leading liquids infrastructure company with its principal businesses consisting of the storage, optimization, processing, and gathering of liquids and refined products. Headquartered in Calgary, Alberta, the Company’s operations are located across North America, with core terminal assets in Hardisty and Edmonton, Alberta, Ingleside and Wink, Texas, and a facility in Moose Jaw, Saskatchewan.
Gibson shares trade under the symbol GEI and are listed on the Toronto Stock Exchange. For more information, visit www.gibsonenergy.com.
Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking information and statements (collectively, “forward-looking statements”) including, but not limited to, statements concerning the completion of the offering, the anticipated use of the proceeds from the issuance of the Notes, the redemption of the 2026 Notes and the expected timing of the completion of the offering and the redemption of the 2026 Notes. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential” and “capable” and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release. The Company does not undertake any obligations to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in “Forward-Looking Information” and “Risk Factors” included in the Company’s Annual Information Form and Management’s Discussion and Analysis, each dated February 20, 2024, as filed on SEDAR+ and available on the Gibson website at www.gibsonenergy.com.
For further information, please contact:
Investor Relations:
(403) 776-3077
investor.relations@gibsonenergy.com
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Kinaxis Inc. KXS-T executive chair Robert Courteau signalled Thursday that the Ottawa supply chain software company’s board is open to receiving takeover bids as part of a continuing strategy review.
Mr. Courteau said on a conference call with analysts the board “has not closed the door to any path” stemming from the process led by Goldman Sachs to provide it with financial advice, but added “there have not been any material developments.” When pressed by an analyst whether that meant the board was open to engaging with buyers, Mr. Courteau responded: “We’re following a process here to create value for the company. I think my comments stand.”
Mr. Courteau’s statements amount to a subtle but notable shift in tone from when Kinaxis said in September it had hired Goldman. At the time the company stated the board “strongly believes that execution of its strategic plan is the best path to maximize shareholder value.” That was met by a rebuke from some investors, who pushed the board to explore a potential sale.
A slew of Canadian software vendors have recently left the public markets amid a prolonged, slump in valuations, including nine of the 20 technology companies that went public on the Toronto Stock Exchange in 2020 and 2021. Two more, Lightspeed Commerce Inc. LSPD-T and Dye & Durham Ltd. DND-T, are exploring sales.
But it was otherwise evident during the third-quarter results call that Kinaxis’s leaders are more focused on improving its sluggish performance. Kinaxis increased its forecast adjusted operating profit margin for 2024 to between 20 per cent and 22 per cent, a one percentage point upward shift to both numbers, following recent cost-cutting efforts. The company aims to move that up to 25 per cent.
Kinaxis kept its prior top-line guidance, forecasting 2024 revenue of between US$483-million and US$495-million, up from US$427-million in 2023, and subscription software sales growth of 15 per cent to 17 per cent, from US$265.1-million last year.
Kinaxis said it has appointed supply chain software veteran executive Mark Morgan as president of commercial operations, and that it is pursuing partnerships with systems integrators to drive sales. Kinaxis is looking to increase prices selectively given its strong competitive positioning and recent addition of artificial-intelligence products, executives said on the call.
Chief financial officer Blaine Fitzgerald added Kinaxis should benefit from a forecast 14-per-cent increase in 2025 corporate spending on software, according to market research firm Gartner Inc. IT-N Kinaxis also said it would buy back up to 5 per cent of its stock over the next year.
“The entire board is focused on adding value,” Mr. Courteau said. “We’ve taken a number of decisive actions over the last six months, which have benefited Kinaxis and will add value to the company in the near and midterm to the benefit of all shareholders.”
The changes include the impending retirement of chief executive officer John Sicard at the end of 2024 and the unexpected departure of chief sales officer Claire Rychlewski, announced in August. A search for a new CEO is continuing. Kinaxis in May announced its first staff cut since going public 10 years ago.
Kinaxis has been a stalwart of Canada’s software scene for 40 years, boasting blue-chip clients such as Volvo AB and Pfizer Inc. PFE-N But revenue growth has slowed in the past two years. Like other vendors to large enterprises, Kinaxis has been hurt by higher interest rates and economic uncertainty, as clients throttle or stretch out spending. Some analysts believe Kinaxis didn’t invest in or execute on sales growth as effectively as it could have.
Kinaxis reported revenue of US$121.5-million for the quarter ended Sept. 30, up 12 per cent from the same period a year earlier, slightly below analyst expectations, while revenue from subscription software of US$78.6-million was up 16 per cent, slightly ahead of analyst forecasts.
The company’s adjusted operating earnings came in at US$30-million, up 32 per cent year-over-year and well ahead of analyst expectations of US$24.5-million. The adjusted earnings, which are a non-GAAP measure (meaning not in accordance with generally accepted accounting principles), excluded US$3.2-million Kinaxis spent on what it called business transformation activities, financial advice and shareholder communications.
Annualized recurring revenue stood at US$347-million at quarter’s end, up 12 per cent year-over-year, compared with 16-per-cent growth in the two preceding quarters. Profit was US$6.8-million, down from US$7.4-million a year earlier.
The results were “a continuation of what we’ve seen in the last year,” said National Bank of Canada Financial Markets analyst Richard Tse. “The broad market is still a bit challenging” for enterprise software vendors. “I don’t think this is specific to Kinaxis.” Otherwise, he said, Kinaxis had been “diligent” in pursuing savings and revenue growth as “they wait to see the market turn.”
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Published Oct 31, 2024 • 5 minute read
TORONTO — Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) is pleased to announce the closing today of its previously announced private placement of a US$2 million secured convertible note (the “Note”) to BeatBox Beverages (“BeatBox”), Flow’s long-term co-packing partner of ready-to-drink alcohol beverages.
“The closing of this financing marks a significant step in our strategic partnership with BeatBox. BeatBox is a valued co-pack partner and the proceeds from the Note will help Flow add two lines at our Aurora production facility. Both Flow and BeatBox are scaling rapidly and we are very pleased to be deepening our relationship as both organizations pursue innovation and sustainability in the North American beverage industry,” said Nicholas Reichenbach, Founder and Chief Executive Officer of Flow.
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The Note matures on October 25, 2029, bears interest at the rate of 10% per annum, which interest is payable quarterly in arrears, and is secured against the assets of Flow. The principal amount of the Note is convertible at any time at BeatBox’s option into subordinate voting shares of Flow (the “Shares”) at a conversion price of $1.00 per share. Flow can force the conversion of the principal amount of the Note if, at any time during the period which is one year from issuance and ending on the maturity date, the volume weighted average price of the Shares on the Toronto Stock Exchange is greater than $1.50 per Share for any five consecutive trading days.
The Company will use the proceeds from the issuance of the Note to fund the leaseholds and equipment necessary to expand capacity at Flow’s Aurora production facility.
The Company amended terms of its manufacturing agreement with BeatBox (the “Agreement”) on August 1, 2024, with the term of the Agreement extending from five to six years and the minimum total revenue under the Agreement increasing from $115 million to $213 million. Due to the increased production capacity requirements under the Agreement, Flow will be adding two production lines at its Aurora production facility. This expansion is to satisfy the increased demand for co-manufacturing from BeatBox, in addition to other co-manufacturing agreements recently announced, and to accommodate anticipated growth in the Flow brand.
The Note and the Shares issuable upon any conversion thereof are subject to a statutory four-month and one-day hold period under applicable Canadian securities laws, expiring on February 26, 2025.
About Flow
Flow is one of the fastest-growing premium water companies in North America. Founded in 2014, Flow’s mission since day one has been to reduce environmental impacts by providing sustainably sourced natural mineral spring water in the most sustainable product formats. Today, the brand is B-Corp Certified with a best-in-class score of 126.5, offering a diversified line of health and wellness-oriented beverage products: original mineral spring water, award-winning organic flavours and sparkling mineral spring water in sizes ranging from 300-ml to 1-litre. All products contain naturally occurring electrolytes and essential minerals and support Flow’s overarching purpose to “bring wellness to the world through the positive power of water.” Flow beverage products are available at retailers in Canada and the United States, and online at flowhydration.com.
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For more information on Flow, please visit Flow’s investor relations site at: investors.flowhydration.com.
About BeatBox
BeatBox is the “Original Party Punch”, offering fun and nostalgic flavors in a sustainable and resealable package. With a deep passion for live music, its community of super fans, and creating fun, BeatBox has become the brand that’s bringing the party to the alcohol industry.
The journey began in 2012 in the live music capital of the world, Austin, TX, and the energy was contagious. So much so that BeatBox secured the largest investment in Shark Tank history from Mark Cuban, who “invested in BeatBox because at heart I’m a 25-year-old and saw that this is going to be a party phenomenon.”
BeatBox quickly built a team of beverage leaders helping to define a new category of “Party Punch.” BeatBox has an impressive roster of investors from the music and entertainment industry, including Mark Cuban, Rob Dyrdek, Party Favor, Louis The Child, Good Times Ahead, and many more.
BeatBox has become one of the fastest growing brands in the alcohol industry and the drink of choice for Millennial and Gen Z drinkers. Its passion for music, and connection to its consumers, has also made it the fastest growing and most engaged alcohol brand on social media. Like Mark said, “This is a company that sells fun, and if anyone ever asks what this brand is all about, tell them that BeatBox Brings the Party!”
For more information on BeatBox, please visit BeatBox’s website at: beatboxbeverages.com.
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (“Forward-Looking Statements”). The Forward-Looking Statements contained in this press release relate to future events or Flow’s future plans, operations, strategy, performance or financial position and are based on Flow’s current expectations, estimates, projections, beliefs and assumptions. Such Forward-Looking Statements have been made by Flow in light of the information available to it at the time the statements were made and reflect its experience and perception of historical trends. All statements and information other than historical fact may be forward‐looking statements. Such Forward‐Looking Statements are often, but not always, identified by the use of words such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “expect”, “believe”, “anticipate”, “estimate”, “will”, “potential”, “proposed” and other similar words and expressions.
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Forward-Looking Statements are based on certain expectations and assumptions and are subject to known and unknown risks and uncertainties and other factors, many of which are beyond Flow’s control, that could cause actual events, results, performance and achievements to differ materially from those anticipated in these Forward-Looking Statements. Forward-Looking
Statements are provided for the purposes of assisting the reader in understanding Flow and its business, operations, prospects, and risks at a point in time in the context of historical and possible future developments, and the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-Looking Statements should not be read as guarantees of future performance or results. Readers are cautioned not to place undue reliance on these Forward-Looking Statements, which speak only as of the date of this press release. Unless otherwise noted or the context otherwise indicates, the Forward-Looking Statements contained herein are provided as of the date hereof, and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any Forward-Looking Statements as a result of new information or future events, or for any other reason.
This press release should be read in conjunction with the management’s discussion and analysis and consolidated financial statements and notes thereto as at and for the three and nine months ended July 31, 2024. Additional information about Flow is available on the Company’s profile on SEDAR+ at www.sedar.com, including the Company’s Annual Information Form for the year ended October 31, 2023 dated January 29, 2024.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241031549002/en/
Contacts
Trent MacDonald, Chief Financial Officer
1-844-356-9426
investors@flowhydration.com
Investors:
Marc Charbin
investors@flowhydration.com
Media:
Natasha Koifman
nk@nkpr.net
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