In this week’s Tuesday Ticker, a Canadian parts manufacturer has reported higher earnings despite falling sales, a replacement parts distributor’s directors have suspended a strategic review and a refinish coatings supplier has reported lower sales.
Margin gains
Aurora, Ont.-based automotive parts manufacturer Magna International reported higher third-quarter earnings on Oct. 30, despite a 4% decline in sales to US$10.1 billion.
Adjusted earnings per share increased 38% to US$1.83. Lower vehicle production and divestitures reduced sales, while productivity improvements supported higher margins.
“Magna’s strong third-quarter results demonstrate that disciplined execution and operational improvements are driving higher earnings, margins and cash generation,” said chief executive officer Swamy Kotagiri in a press release.
Directors approved a new share repurchase program covering up to 10% of the public float over 12 months. Dividends and share repurchases totalled US$658 million during the quarter.
Management maintained the midpoint of its annual adjusted earnings forecast and increased its free cash flow forecast.
Magna shares closed at $88.91 on the Toronto Stock Exchange on Oct. 30, down $1.40, or 1.55%, from the previous close.
Parts pressure
Antioch, Tenn.-based replacement parts distributor LKQ reported a third-quarter loss of US$24 million on Oct. 29, compared with earnings of US$178 million a year earlier.
Revenue declined 5.1% to US$3.3 billion. Results included US$111 million in non-cash impairment charges, while adjusted earnings per share fell to US$0.50 from US$0.84.
Chief financial officer Rick Galloway attributed European weakness to problems implementing an enterprise resource planning system in Germany and lower volumes in the United Kingdom and Benelux.
“North America performed in line with expectations despite a softer demand environment,” Galloway said in a press release.
Directors suspended the strategic review, including the proposed sale of the Specialty division, to allow incoming management to assess the business.
The results followed the Oct. 23 announcement that Salvatore Abbate would become president and chief executive officer effective Dec. 15. Management also withdrew its annual financial guidance on Oct. 23.
LKQ shares closed at US$18.10 on Nasdaq on Oct. 29, up 5.29% from the previous close.
Refinish retreat
Philadelphia-based paint and coatings manufacturer Axalta Coating Systems reported a 2% decline in third-quarter refinish sales on Oct. 29, with lower European volumes reducing sales to US$504 million.
Across the business, sales increased 2% to US$1.3 billion. Net income declined to US$95 million from US$110 million, primarily because of higher merger and acquisition expenses.
“Axalta delivered another quarter of revenue growth, strong cash generation and robust profitability despite a more challenging operating environment,” said president and chief executive officer Chris Villavarayan in a press release.
Adjusted earnings per share declined 6% to US$0.63. Lower Performance Coatings volumes and higher raw material and freight costs weighed on adjusted earnings.
Mobility Coatings sales, covering coatings for new vehicles, increased 7% to US$493 million. Commercial vehicle coatings sales rose 24%, supported by higher North American Class 8 truck production.
Axalta shares closed at US$33.61 on the New York Stock Exchange on Oct. 29, down 2.97% from the previous close.
