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Press release from Marketwire

Martinrea International Inc. Releases Third Quarter Results: Growing Revenues and Profitability and Announces Commencement of Normal Course Issuer Bid

Monday, November 14, 2011

Martinrea International Inc. Releases Third Quarter Results: Growing Revenues and Profitability and Announces Commencement of Normal Course Issuer Bid17:09 EST Monday, November 14, 2011TORONTO, ONTARIO--(Marketwire - Nov. 14, 2011) - Martinrea International Inc. (TSX:MRE), a leader in the production of quality metal parts, assemblies and modules and fluid management systems focused primarily on the automotive sector, announced today the release of its financial results for the third quarter ended September 30, 2011. Martinrea also announced today that it is commencing a normal course issuer bid for up to 4,161,317 common shares of the Company, representing approximately up to 5% of Martinrea's issued and outstanding common shares.Martinrea currently employs over 10,000 skilled and motivated people in 37 plants in Canada, the United States, Mexico and Europe. 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 quarter ended September 30, 2011 ("MD&A") dated as of November 14, 2011, the Company's unaudited interim consolidated financial statements for the quarter ended September 30, 2011 (the "unaudited consolidated interim financial statements") and the Company's Annual Information Form for the financial year ended December 31, 2010, can be found at www.sedar.com. Non-GAAP Measures The Company now reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-GAAP financial measures and ratios in this Press Release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures 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 the other financial measures determined in accordance with IFRS. Non-GAAP measures referred to in the analysis include "adjusted net earnings", and "adjusted earnings per share on a basic and diluted basis" and are defined in the Tables A and B under "Adjustments to Net Income" of this Press Release. Results of Operations The comparative amounts in the analysis below have been adjusted to reflect the impact from the Company's transition to IFRS effective January 1, 2010. REVENUEThree months ended September 30, 2011Three months ended September 30, 2010Change% ChangeNorth America$440,773$394,47746,29611.7%Europe113,873610113,263-Rest of World17,690-17,690-Revenue$572,336$395,087177,24944.9%Third Quarter 2011 to Third Quarter 2010 comparisonThe Company's revenues for the third quarter of 2011 increased by $177.2 million or 44.9% to $572.3 million as compared to $395.1 million for the third quarter of 2010. The increase was primarily due to $146.6 million in incremental revenue resulting from the inclusion of Honsel in the consolidated financial results of the Company effective July 29, 2011, which led to sales in both the Company's Europe and Rest of World operating segments to increase significantly year-over-year. Included in the $46.3 million increase in revenue generated in North America was $15.5 million related to the operations of the Company's plant in Queretaro, Mexico which formed part of the Honsel acquisition. The remainder of the increase in revenue in North America was due to improved production volumes in North American light vehicle platforms, the launch of new programs during 2011 and an increase in tooling revenue relating to upcoming new programs which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer. Tooling revenue increased by $15.6 million from $20.7 million for the third quarter of 2010 to $36.3 million for the third quarter of 2011, $6.7 million of which was generated by the acquired assets of Honsel. The overall increase in revenue in the third quarter of 2011 as compared to the third quarter of 2010 would have been higher had it not been negatively impacted by a reduction in the translation of U.S. dollar denominated revenue of approximately $19.3 million. Three months ended September 30, 2011Three months ended June 30, 2011Change% ChangeNorth America$440,773$473,723(32,950)(7.0%)Europe113,873864113,009-Rest of World17,690-17,690-Revenue$572,336$474,58797,74920.6%Third Quarter 2011 to Second Quarter 2011 comparison The Company's revenues for the third quarter of 2011 increased by $97.7 million or 20.6% to $572.3 million as compared to $474.6 million for the second quarter of 2011. Revenue for the third quarter of 2011 was positively impacted by $146.6 million in incremental revenue resulting from the inclusion of Honsel in the consolidated financial results of the Company effective July 29, 2011, which led to sales in both the Company's Europe and Rest of World operating segments to increase significantly quarter-over-quarter. Included in revenue generated in North America for the three months ended September 30, 2011 was $15.5 million related to the operations of the Company's plant in Queretaro, Mexico which formed part of the Honsel acquisition. Excluding the revenue generated by the Company's plant in Queretaro, Mexico, North American revenue would have decreased by $48.5 million. The decrease in North American revenue was predominantly due to the seasonal softness in production volumes in North American light vehicle platforms and a decrease in tooling revenue of approximately $9.7 million. North American light vehicle production volumes are typically lower during the third quarter of any given year due to customer summer shutdowns common to the automotive industry. The Company experienced quarter-over-quarter decreases in revenue on several North American vehicle platforms, the most significant of which include Chevrolet Equinox, Chrysler Challenger/Charger, Chevrolet Cruze, GM Pick ups, Dodge Ram, Ford Fusion and Fiat 500.Tooling revenue decreased by $3.0 million from $39.3 million for the second quarter of 2010 to $36.3 million for the third quarter of 2011, $6.7 million of which was generated by the acquired assets of Honsel. The overall increase in revenue in the third quarter of 2011 as compared to the second quarter of 2011 would have been lower had it not been positively impacted by an increase in the translation of U.S. dollar denominated revenue of approximately $1.3 million.GROSS MARGINThree months ended September 30, 2011Three months ended September 30, 2010Change% ChangeGross margin$62,339$38,11924,22063.5%% of revenue10.9%9.6%Third Quarter 2011 to Third Quarter 2010 comparisonThe gross margin percentage for the third quarter of 2011 of 10.9% increased by 1.3% as compared to the gross margin percentage for the third quarter of 2010 of 9.6%. Excluding the one time items recorded as cost of sales in the third quarter of 2010 as explained in Table A under "Adjustments to Net Income", the gross margin percentage for the third quarter of 2011 increased to 10.9% from 9.7% for the third quarter of 2010. The Company's gross margin for the third quarter of 2011 was positively impacted by the addition of the acquired operations of Honsel. Excluding the operations of Honsel, Martinrea's gross margin percentage for the third quarter of 2011 would have been 9.5%, a slight decrease over the third quarter of 2010, on account of a significant increase in tooling revenue, which typically earns low or no margins for the Company, $0.7 million of pre-operating costs at the Company's new facility in Silao, Mexico and an increase in launch activity during the quarter predominantly at the Company's Shelbyville, Kentucky facility which negatively impacted earnings and gross margin during the quarter by approximately $1.8 million. Excluding these items and the negative impact tooling revenue has on gross margin percentage, the Company's gross margin percentage for the third quarter of 2011, without Honsel, would have been approximately 10.7% on account of higher North American light vehicle production volumes.The Company's Shelbyville facility, approximating one million square feet, represents about 20% of the Company's square footage in North America and presently has a revenue run rate of about $50 million per year. A total of approximately $200 million in anticipated business related to Ford's C520 program is expected to launch at this facility in early 2012. The new work, when launched, will greatly expand throughput and capacity utilization at Shelbyville, and is expected to turn a very large plant with negative gross margin and earnings and current ramp up costs into a positive gross margin and earnings contributor by the Spring of 2012. This Ford C520 business consists of approximately $100 million in value added internally produced components and $100 million in components purchased from other suppliers that will be integrated with internally produced components to produce finished welded assemblies. The gross margins on components purchased from other suppliers are typically lower than for value added work, although return on capital is higher. After the launch of the Ford C520 program in Shelbyville, over 25% of Martinrea's business will involve integrator or assembly work.Three months ended September 30, 2011Three months ended June 30, 2011Change% ChangeGross margin$62,339$49,99212,34724.7%% of revenue10.9%10.5%Third Quarter 2011 to Second Quarter 2011 comparisonGross margin percentage for the third quarter of 2011 of 10.9% increased by 0.4 % as compared to the gross margin percentage for the second quarter of 2011 of 10.5%. The Company's gross margin for the third quarter of 2011 was positively impacted by the addition of the acquired operations of Honsel. Excluding the operations of Honsel, Martinrea's gross margin percentage for the third quarter of 2011 would have been 9.5%, a decrease over the second quarter of 2010 as a result of lower absorption of overheads from the seasonal softness in production volumes in North American light vehicle platforms. As discussed above, the gross margin percentage for the third quarter of 2011 was further negatively impacted by pre-operating costs at the Company's new facility in Silao, Mexico which increased by $0.5 million quarter-over-quarter and an increase in launch activity at the Company's Shelbyville, Kentucky facility, where the Company is currently ramping up for a significant program launch in early 2012 for Ford's C520 program, which negatively impacted earnings and gross margin during the current quarter by approximately $1.8 million. Excluding these items and the negative impact tooling revenue has on gross margin percentage, the Company's gross margin percentage for the third quarter of 2011, without Honsel, would have been approximately 10.7%.ADJUSTMENTS TO NET INCOME(ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)Results of operations during the third quarter ended September 30, 2011 and the 2010 comparative period include certain unusual items. The Company believes that it is useful to set out in detail these unusual and other items as they are non-recurring in nature and thus the Company's past financial results may not be indicative of future results.TABLE AFor the three months endedSeptember 30, 2011For the three months endedSeptember 30, 2010(a)CanadianIFRS(b)(a)-(b)IFRSGAAPAdjustmentIFRSChangeNET EARNINGS (A)6,4545,7461,2516,997(543)Add back - Unusual Items:Employee Related Severance Costs (1)9,974250-2509,724Other Restructuring Costs (2)-5,223-5,223(5,223)Other Restructuring Costs – Period costs and pension expense recorded as cost of sales for facilities closed during restructuring (2)-307-307(307)Other Restructuring Costs – Period costs recorded as SG&A expense for facilities closed during restructuring (2)-142-142(142)Add back - Other Items:Transaction and integration costs associated with the acquisition of Honsel recorded as SG&A (3)6,728---6,728TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX16,7025,922-5,92210,780Tax impact of above items (4)(51)(1,530)-(1,530)1,479Non-controlling Interest from impact of above items(6,780)---(6,780)TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B)9,8714,392-4,3925,479ADJUSTED NET EARNINGS (A + B)16,32510,1381,25111,3894,936Number of Shares Outstanding – Basic ('000)83,17983,326Adjusted Basic Earnings Per Share0.200.14Number of Shares Outstanding – Diluted ('000)83,70884,279Adjusted Diluted Earnings Per Share0.200.14TABLE BFor the three months endedSeptember 30, 2011For the three months endedJune 30, 2011(a)(b)(a-b Change)NET EARNINGS (A) - Per IFRS6,45415,546(9,092)Add back - Unusual Items:Employee Related Severance Costs (1)9,974-9,974Add back - Other Items:Transactions and integration costs associated with the acquisition of Honsel recorded as SG&A (3)6,7281,4365,292TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX16,7021,43615,266Tax impact of above items (4)(51)(359)308Non-controlling Interest from impact of above items(6,780)-(6,780)TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B)9,8711,0778,794ADJUSTED NET EARNINGS (A + B)16,32516,623(298)Number of Shares Outstanding – Basic ('000)83,17983,276Adjusted Basic Earnings Per Share0.200.20Number of Shares Outstanding – Diluted ('000)83,70883,977Adjusted Diluted Earnings Per Share0.200.201. Employee Related SeveranceAs part of the acquisition of Honsel, a certain level of restructuring was planned at the Company's German facility in Meschede. The restructuring efforts commenced immediately after the closing of the acquisition and, as a result, $10 million of employee related severance was recognized during the third quarter of 2011. The majority of the restructuring costs expected to be incurred will be in the nature of employee related severance as the Company rationalizes the overhead cost structure of the facility and improves the efficiency of the operations. The Company anticipates that additional employee related severance will be incurred at the facility over the course of the next twelve months. During the third quarter of 2010, the Company incurred severance costs of $0.3 million relating primarily to cost cutting programs aimed at realigning and increasing the efficiency of the Company's operations. 2. Other Restructuring CostsIn response to the significant decline in vehicle production volumes beginning in 2008, the Company undertook certain initiatives to prepare for a profitable and sustainable future. In so doing, certain restructuring activities were executed throughout 2009 and 2010. These initiatives included strict cost reduction measures across the entire organization, consolidation and closure of certain facilities and the rationalization of excess capacity at certain facilities achieved by moving equipment and programs between facilities.Other restructuring costs during the third quarter of 2010 relate primarily to the cessation of manufacturing operations at the Company's Windsor, Ontario facility on June 30, 2010. Other restructuring costs include directly attributable facility and right-sizing costs and costs relating to the dismantling and transportation of PP&E between the Company's facilities. At this time, the Company does not expect to incur any further significant restructuring costs with the exception of the funding of the Windsor pension and OPEB plans which the Company will continue to fund over the next two years, the windup of the Martinrea Fabco Hot Stampings pension plan at some point in the future and any restructuring required relating to the acquired assets of Honsel (as discussed above), which, at this point in time, the Company believes will be limited to employee related severance as the Company rationalizes the overhead cost structure and improves the efficiency of the operations in Meschede, Germany.3. Transaction and Integration Costs Associated with the Acquisition of HonselOn July 29, 2011, the Company closed the previously announced purchase of the assets of Honsel to form the Martinrea Honsel Group. Martinrea joined with Anchorage in the transaction and, consequently, owns 55% of the Martinrea Honsel Group with Anchorage owning the remaining 45%. The Company expensed $6.7 million in transaction and integration costs related to the acquisition during the third quarter of 2011. 4. Tax Impact of AdjustmentsThe tax impact of the above discussed adjustments to earnings for the third quarter of 2011 is negligible due to the majority of the transaction and integration costs being non-deductible for tax purposes and the fact that a deferred tax asset related to the losses created by the employee related severance incurred at the facility in Meschede, Germany did not meet the recognition criteria for accounting purposes.INCOME TAXESThe effective income tax rate on pre-tax earnings was 47.3% for the third quarter of 2011 compared to 28.9% for the third quarter of 2010 and 28.7% for the second quarter of 2011. The effective income tax rate for the third quarter of 2011 increased predominantly as a result of the transaction and integration costs associated with the acquisition of Honsel, the majority of which are non-deductible for tax purposes, and an increase in losses not benefited in Europe, offset by a favourable mix of earnings and the expiration of a statute limitation period in North America during the quarter.NET EARNINGS(ATTIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)Three months ended September 30, 2011Three months ended September 30, 2010Change% ChangeNet Earnings$6,454$6,997(543)(7.8%)Adjusted net earnings$16,325$11,3894,93643.3%Earnings per common shareBasic$0.08$0.08Diluted$0.08$0.08Adjusted earnings per common shareBasic$0.20$0.14Diluted$0.20$0.14Third Quarter 2011 to Third Quarter 2010 comparisonNet earnings for the third quarter of 2011 of $6.5 million decreased by $0.5 million from $7.0 million for the third quarter of 2010. Excluding one time items incurred during these two quarters as explained in Table A under "Adjustments to Net Income", the net earnings for the third quarter of 2011 improved to $16.3 million or $0.20 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $11.4 million or $0.14 per share, on a basic and diluted basis, for the third quarter of 2010. The adjusted net earnings for the third quarter of 2011 were positively impacted mainly by the addition of Honsel to the consolidated financial results of the Company and an increase in customer production volumes in North America. The positive impact was offset by an increase in launch activity during the quarter predominantly at the Company's Shelbyville, Kentucky facility and pre-operating costs at the Company's new facility in Silao, Mexico. Excluding these items, adjusted net earnings for the third quarter of 2011 would have been higher by approximately $1.7 million or $0.02 per share.Three months ended September 30, 2011Three months ended June 30, 2011Change% ChangeNet Earnings$6,454$15,546(9,092)(58.5%)Adjusted net earnings$16,325$16,623(298)(1.8%)Earnings per common shareBasic$0.08$0.19Diluted$0.08$0.19Adjusted earnings per common shareBasic$0.20$0.20Diluted$0.20$0.20Third Quarter 2011 to Second Quarter 2011 comparisonNet earnings for the third quarter of 2011 of $6.5 million decreased by $9.1 million from $15.5 million for the second quarter of 2011. Excluding one time items incurred during these two quarters as explained in Table B under "Adjustments to Net Income", the net earnings for the third quarter of 2011 remained consistent at $16.3 million or $0.20 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $16.6 million or $0.20 per share, on a basic and diluted basis, for the second quarter of 2011. The adjusted net earnings for the third quarter of 2011 were positively impacted by the addition of Honsel to the consolidated financial results of the Company. The positive impact was offset by a decrease in North American production revenues resulting from the seasonal softness in production volumes in North American light vehicle platforms. The Company's net earnings for the third quarter of 2011 were further negatively impacted by an increase in launch activity during the quarter predominantly at the Company's Shelbyville, Kentucky facility and pre-operating costs at the Company's new facility in Silao, Mexico. Excluding these items, adjusted net earnings for the third quarter of 2011 would have been higher by approximately $1.7 million or $0.02 per share.CAPITAL EXPENDITURESThree months ended September 30, 2011Three months ended September 30, 2010Change% ChangeCapital Expenditures$47,889$23,12124,768107.1%Third Quarter 2011 to Third Quarter 2010 comparisonCapital expenditures increased by $24.8 million to $47.9 million in the third quarter of 2011 from $23.1 million in the third quarter of 2010. Capital expenditures incurred in the third quarter of 2011 are primarily related to the purchase of new program equipment in response to newly awarded business scheduled to launch over the next two years and capital for a new plant the Company will be opening in Silao, Mexico during 2011.Three months ended September 30, 2011Three months ended June 30, 2011Change% ChangeCapital Expenditures$47,889$29,00618,88365.1%Third Quarter 2011 to Second Quarter 2011 comparisonCapital expenditures increased by $18.9 million from $29.0 million in the second quarter of 2011 to $47.9 million in the third quarter of 2011 mainly on account of general timing of capital expenditures and progress payments to capital suppliers. Capital expenditures incurred in both the quarters of 2011 are primarily related to the purchase of new program equipment in response to newly awarded business scheduled to launch over the next two years and capital for a new plant the Company will be opening in Silao, Mexico during 2011. NORMAL COURSE ISSUER BID Martinrea announced today that it is commencing a normal course issuer bid for up to 4,161,317 common shares of the Company, representing approximately up to 5% of Martinrea's issued and outstanding common shares.Martinrea believes that repurchasing its shares may be a good use of funds, as it reduces dilution from stock issuances, distributes cash to shareholders and reflects its view that current share prices do not adequately reflect their value in relation to its business prospects.The Company's normal course issuer bid is expected to commence on or about November 17, 2011 and terminate on November 16, 2012, unless earlier terminated by the Company. Common shares purchased under the normal course issuer bid will be cancelled. The price that Martinrea will pay for any such common shares will be the market price at the time of acquisition. Management of Martinrea will determine the actual number of common shares that may be purchased and the timing of any such purchases, subject to compliance with TSX rules. The maximum number of common shares that may be purchased on a daily basis, other than block purchase exceptions, will be 27,582 common shares. Martinrea has 83,226,350 common shares issued outstanding as at November 14, 2011. The bid has been approved by the TSX, and shall be effected through the facilities of the TSX.In the preceding twelve-month period, the Company repurchased 778,000 common shares for a total consideration of approximately $5.66 million (or a volume weighted average price of $7.2786 per share). Paradigm Capital Inc. will conduct the bid on behalf of the Company.Nick Orlando, Martinrea's Chief Executive Officer, stated: "Our third quarter was a strong quarter for our company in many ways. We had record third quarter revenues, we were solidly profitable, and we successfully completed the acquisition of the aluminum manufacturing assets from Honsel AG in late July that I believe will prove to be our best acquisition to date. Our operations in North America are improving and we are getting ready for some major launches in 2012. After many years of building an infrastructure of plants throughout North America we are now ready to grow profit margins and generate cash flow that will enhance shareholder value. Our Martinrea Honsel operations have already been accretive for us, and the plants in Spain, Mexico and Brazil are already prospering since the acquisition. Our German based operations are profitable but they still require some work to enhance their competitive position. We are working with our people everywhere to turn Martinrea Honsel into a powerhouse for aluminum automotive parts. There is strong customer demand for our engine block, transmission castings and structural parts products and we are very excited. We have been actively quoting our aluminum products since the acquisition and we have already been awarded new business including a 2.3 litre engine block for Ford Europe ($25 million in 2014), incremental volume on the Chrysler Phoenix V6 engine block ($14 million in September 2012 that is installed on the Grand Cherokee, Chrysler Minivan and other Chrysler vehicles), and a cylinder head for Volvo's new VEP4 car engine program ($24 million in 2014). Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Our record third quarter revenues of $572 million included approximately $147 million from the Martinrea Honsel assets, which also contributed to our adjusted earnings. In the quarter our earnings per share was $0.20, after factoring out Honsel related transaction and integration costs and severance provisions. Our third quarter results from the Martinrea Honsel assets were accretive to earnings, after factoring out these adjustments and amounted to approximately $0.06 of earnings per share for the quarter, a very strong contribution to the profitability of the Company by all accounts. In addition we continue to see some gross margin improvement in our North American operations on a year over year basis, which should improve further as we launch a significant amount of business in Shelbyville in the first quarter of next year, and as we start to fill our Silao facility. The new work at Shelbyville will greatly expand the capacity utilization and throughput of the plant, which represents over 20% of our factory space in North America. We did experience some launch costs at the Shelbyville facility and pre-operating costs in Silao which negatively impacted earnings in the quarter by $0.02 per share, but these should disappear over time. Gross margins at Martinrea Honsel were higher than gross margins in the pre-existing Martinrea operations, which shows we are off to a good start there, although there is some work to do in Germany. In our fourth quarter, which is approximately 50% complete, we anticipate revenues will settle between $660 million to $690 million, subject to the usual year end adjustments of our customers, and we believe our earnings per share after adjustments, which includes the Martinrea Honsel results, will range from $0.21-$0.25 per share."Rob Wildeboer, Martinrea's Executive Chairman, stated: "We are optimistic about our prospects with both our traditional business and our Martinrea Honsel operations. While at present there are many macroeconomic and political factors affecting our world and our markets, which have really affected investor confidence and market stock multiples and prices, the reality as we see it is that the automotive business is doing relatively well for us. North American volumes, which impact by far the bulk of our business, should hold steady or increase in 2012. The trend line in volume in general is up over time, for several reasons. For example, the present scrap rate still exceeds the sales rate; the average age of vehicles is significantly higher than in recent years; financing is generally available and at decent pricing; and production and sales volumes are still low by historical standards. In sum, there is pent up demand in the marketplace. These general trends support volume growth over time. At the same time, we have product to launch in 2012, especially at Shelbyville, which should help our revenues and throughput. We believe, based on where we sit today, that 2012 will be our best year to date by far from a financial point of view, subject to market conditions. Looking ahead to 2012, based on our assumptions of volumes, interest rates and our outlook, we are budgeting for consolidated revenues approaching $3 billion, and earnings, including our interest in Martinrea Honsel, should range somewhere between $1.05 and $1.25 per share, absent unusual items in each case. Capital expenditures at Martinrea without Martinrea Honsel, which were $47 million in our third quarter and will again be about $40 million in our fourth quarter, reflecting investment in plant and equipment, will likely return to an average of $20-25 million per quarter in 2012. Martinrea Honsel is well-financed by equity, and we anticipate most capital expenditures there will be financed from our present investment, cash flow and financing facilities to be put in place if needed for growth prospects. In 2013, we anticipate higher production sales; as well as improved gross margins and EBITDA margins across the board as the impact of higher throughput and efficiencies are felt, and we are anticipating in our budgets that our earnings per share for the year will grow to the $1.30 to $1.50 range, based on current assumptions. Forward-Looking Information Special Note Regarding Forward-Looking Statements This Press Release contains forward-looking statements within the meaning of applicable Canadian securities laws including related to the Company's expectations as to the financial impact of the new launch at the Shelbyville plant, gross margin percentage and expectations on future revenue, earnings per share and capital expenditures (including of Martinrea Honsel), the launching of new metal forming and fluid systems programs, anticipated growth in the automotive industry in emerging markets, future investments in leading edge technology, equipment and processes, the opportunity to increase sales, broad geographic penetration, and the nature and duration of the economic recession to the continuation of monitoring, managing and rationalization of expenses, the Company's expectations regarding the amount of restructuring expenses to be expensed (including of Martinrea Honsel), the Company's statements on operations and product launches, the Company's expectation regarding the financing of future capital expenditures, the Company's view on the financial viability of its customers, the Company's views on the long term outlook of the automotive industry and availability of credit for automotive purchases, and corresponding increased sales and production including the effect of the acquisition of Honsel AG assets, the Company's statements of its intention for growth over time, including of the Martinrea Honsel business, the Company's statement on the success of the Martinrea Honsel Acquisition and optimism for the future, the Company's ability to capitalize on opportunities in the automotive industry and the Company's statements regarding the Normal Course Issuer Bid, as well as other forward-looking statements. The words "continue", "expect", "anticipate", "estimate", "may", "will", "should", "views", "intend", "believe", "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, some of which are discussed in detail in the Company's Annual Information Form and other public filings which can be found at www.sedar.com:North American and global economic and political conditions; the highly cyclical nature of the automotive industry and the industry's dependence on consumer spending and general economic conditions; the Company's dependence on a limited number of significant customers, which have experienced and may continue to face severe financial challenges; financial viability of suppliers; Martinrea's reliance on suppliers for components and the risk that suppliers will not be able to supply components on a timely basis or in sufficient quantities; competition; the increasing pressure on the Company to absorb costs related to product design and development, engineering, program management, prototypes, validation and tooling; increased pricing of raw materials; outsourcing and in-sourcing trends; competition with low cost countries; the risk of increased costs associated with product warranty and recalls together with the associated liability; the Company's ability to enhance operations and manufacturing techniques; dependence on key personnel; limited financial resources; risks associated with the integration of acquisitions including the assets of Honsel AG; costs associated with rationalization of production facilities; the potential volatility of the Company's share price; changes in governmental regulations or laws including any changes to the North American Free Trade Agreement; labour disputes; litigation; currency risk; fluctuations in operating results; internal controls over financial reporting and disclosure controls and procedures; environmental regulation; under-funding of pension plans; and the cost of post-employment benefits. These factors should be considered carefully, and readers should not place undue reliance on the Company's forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, except as required by law.A conference call to discuss those results will be held on Tuesday, November 15, 2011 at 8:00 a.m. (Toronto time) which can be accessed by dialing 416-340-8410 or toll free 1-866-225-2055. Please call 10 minutes prior to the start of the conference call. If you have any teleconferencing questions, please call Andre La Rosa at (416) 749-0314.There will also be a rebroadcast of the call available by dialing 1-800-408-3053 (conference id 4555837#). The rebroadcast will be available until November 29, 2011. The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".Martinrea International Inc.Consolidated Balance Sheets(in thousands of Canadian dollars) (unaudited)NoteSeptember 30, 2011December 31, 2010ASSETSCash and cash equivalents$56,004$26,027Trade and other receivables3428,845250,404Inventories4255,420145,614Prepaid expenses and deposits13,1074,401Income taxes recoverable7,4225,255Current portion of promissory note84,7045,994TOTAL CURRENT ASSETS765,502437,695Property, plant and equipment5624,632402,771Deferred income tax assets77,10168,088Intangible assets650,57514,735Promissory note84,8364,641TOTAL NON-CURRENT ASSETS757,144490,235TOTAL ASSETS$1,522,646$927,930LIABILITIESBank Indebtedness$13,359$-Trade and other payables9482,613251,427Provisions1014,1394,339Income taxes payable4,3015,627Current portion of long-term debt1124,87890,072TOTAL CURRENT LIABILITIES539,290351,465Long-term debt11241,30413,062Pension and other post-retirement benefits42,95144,108Provisions1034,060-Deferred income tax liabilities45,95530,187TOTAL NON-CURRENT LIABILITIES364,27087,357TOTAL LIABILITIES903,560438,822EQUITYShare capital14677,362682,495Note receivable for share capital14(775)(2,700)Contributed surplus1443,16841,241Accumulated other comprehensive income (loss)6,491(18,822)Accumulated deficit(181,169)(214,028)TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY545,077488,186Non-controlling interest74,009922TOTAL EQUITY619,086489,108TOTAL LIABILITIES AND EQUITY$1,522,646$927,930See accompanying notes to the interim consolidated financial statements.On behalf of the Board:"Robert Wildeboer"Director"Suleiman Rashid"DirectorMartinrea International Inc.Consolidated Statements of Operations(in thousands of Canadian dollars, except per share amounts) (unaudited)Three months endedThree months endedNine months endedNine months endedNoteSeptember 30, 2011September 30, 2010September 30, 2011September 30, 2010(Note 25)(Note 25)SALES$572,336$395,087$1,478,104$1,194,959Cost of sales (excluding depreciation of property, plant and equipment)(495,514)(346,251)(1,288,240)(1,045,041)Depreciation of property, plant and equipment (production)(14,483)(10,717)(35,093)(30,886)Total cost of sales(509,997)(356,968)(1,323,333)(1,075,927)GROSS MARGIN62,33938,119154,771119,032Research and development costs16(2,732)(1,547)(7,022)(4,769)Selling, general and administrative(36,117)(18,278)(77,182)(54,448)Depreciation of property, plant and equipment (non-production)(1,008)(735)(2,522)(2,038)Amortization of customer contracts and relationships(2,018)(1,137)(4,178)(3,408)Net impairment charge on property, plant and equipment7---(437)Restructuring and integration costs19(9,974)(5,473)(9,974)(11,252)Gain (loss) on disposal of property, plant and equipment71(112)6710,492OPERATING INCOME10,56110,83753,96053,172Finance costs(2,961)(1,369)(5,899)(4,322)Other finance income and expenses184454381,139596INCOME BEFORE INCOME TAXES8,0459,90649,20049,446Income tax expense13(3,807)(2,859)(15,538)(12,390)NET INCOME FOR THE PERIOD4,2387,04733,66237,056Non-controlling interest2,216(50)2,359130NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY$6,454$6,997$36,021$37,186Basic earnings per share15$0.08$0.08$0.43$0.45Diluted earnings per share15$0.08$0.08$0.43$0.44See accompanying notes to the interim consolidated financial statements.Martinrea International Inc.Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars) (unaudited)Three months endedThree months endedNine months endedNine months endedSeptember 30, 2011September 30, 2010September 30, 2011September 30, 2010(Note 25)(Note 25)NET INCOME FOR THE PERIOD$4,238$7,047$33,662$37,056Other comprehensive income (loss), net of tax:Foreign currency translation differences for foreign operations38,994(10,488)27,420(8,323)Defined benefit plan actuarial losses(3,720)(4,972)(3,892)(12,018)Other comprehensive income (loss), net of tax35,274(15,460)23,528(20,341)TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD39,512(8,413)57,19016,715Attributable to:Equity holders of the Company39,515(8,219)57,44216,680Non-controlling interest(3)(194)(252)35TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD$39,512$(8,413)$57,190$16,715See accompanying notes to the interim consolidated financial statements.Martinrea International Inc.Consolidated Statements of Changes in Equity(in thousands of Canadian dollars) (unaudited)Equity attributable to equity holders of the CompanyNotesreceivableCumulativeNon-Sharefor shareContributedtranslationAccumulatedcontrollingTotalCapitalcapitalSurplusaccountdeficitTotalinterestequityBalance at January 1, 2010$683,057$(2,700)$37,393$-$(263,415)$454,335$1,259$455,594Net Income for the period----37,18637,186(130)37,056Compensation expense related to stock options--2,818--2,818-2,818Other comprehensive incomeActuarial losses----(12,018)(12,018)-(12,018)Foreign currency translation differences---(8,323)-(8,323)1(8,322)Balance at September 30, 2010683,057(2,700)40,211(8,323)(238,247)473,9981,130475,128Net Income for the period----15,57415,574(208)15,366Compensation expense related to stock options--1,059--1,059-1,059Exercise of employee stock options101-(29)--72-72Repurchase of common shares(663)---(63)(726)-(726)Other comprehensive incomeActuarial gains----8,7088,708-8,708Foreign currency translation differences---(10,499)-(10,499)-(10,499)Balance at December 31, 2010682,495(2,700)41,241(18,822)(214,028)488,186922489,108Net Income for the period----36,02136,021(2,359)33,662Compensation expense related to stock options--1,967--1,967-1,967Contribution from Minority Shareholder - Honsel acquisition------67,92467,924Acquired non-controlling interest - Honsel acquisition------5,4155,415Repayment of notes receivable-1,925---1,925-1,925Exercise of employee stock options499-(40)--459-459Repurchase of common shares(5,632)---730(4,902)-(4,902)Other comprehensive incomeActuarial losses----(3,892)(3,892)-(3,892)Foreign currency translation differences---25,313-25,3132,10727,420Balance at September 30, 2011$677,362$(775)$43,168$6,491$(181,169)$545,077$74,009$619,086See accompanying notes to the interim consolidated financial statements.Martinrea International Inc.Consolidated Statements of Cash Flows(in thousands of Canadian dollars) (unaudited)Three months endedThree months endedNine months endedNine months endedSeptember 30, 2011September 30, 2010September 30, 2011September 30, 2010CASH PROVIDED BY (USED IN):OPERATING ACTIVITIES:Net Income for the period$4,238$7,047$33,662$37,056Adjustments for:Depreciation of property, plant and equipment15,49111,45237,61532,924Amortization of customer contracts and relationships2,0181,1374,1783,408Amortization of development costs179-199-Net impairment charge on property, plant and equipment---437Amortization of deferred financing costs16467486211Accretion of interest on promissory note(136)(236)(405)(236)Unrealized losses / (gains) on foreign exchange forward contracts1,963(360)1,471(227)Income tax expense3,8072,85915,53812,390(Gain) / Loss on disposal of property, plant and equipment(71)112(67)(10,492)Stock-based compensation8277701,9672,818Pension and other post-retirement benefits6842451,480(2,131)Contributions made to pension and other post-retirement benefits(3,068)(2,693)(8,631)(8,415)26,09620,40087,49367,743Changes in non-cash working capital items:Trade and other receivables(52,919)(18,499)(132,821)(82,735)Inventories(22,276)(13,500)(43,702)(24,095)Prepaid expenses and deposits(6,888)277(8,706)(541)Trade, other payables and provisions59,62415,021108,25050,806Income taxes payable / recoverable(7,178)(343)(7,351)1,388(3,541)3,3563,16312,566Interest paid(2,221)(1,127)(5,077)(4,341)Income taxes received (paid) - net2,625(2,586)(3,659)(70)NET CASH PROVIDED / (USED) IN OPERATING ACTIVITIES(3,137)(357)(5,573)8,155FINANCING ACTIVITIES:Increase in bank indebtedness13,3595,06013,3595,060Repurchase of common shares(3,462)-(4,902)-Contribution from Minority Shareholder67,924-67,924-Repayment of note receivable1,925-1,925-Exercise of employee stock options--459-Increase in long-term debt113,30915,000157,46631,000Repayment of long-term debt(13,372)(3,355)(19,867)(11,017)NET CASH PROVIDED IN FINANCING ACTIVITIES179,68316,705216,36425,043INVESTING ACTIVITIES:Purchase of property, plant and equipment(47,889)(23,121)(101,970)(55,927)Acquisition of Honsel (note 2)(130,529)-(130,529)-Proceeds from sale of Nuremberg facility - assets held for sale (note 2)54,904-54,904-Promissory note (net of principal repayments)--1,500(12,637)Development costs(5,108)-(7,269)-Proceeds on disposal of property, plant and equipment75-12213,807NET CASH USED IN INVESTING ACTIVITIES(128,547)(23,121)(183,242)(54,757)Effect of foreign exchange rate changes on cash and cash equivalents2,6391,1642,428(1,210)INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS50,638(5,609)29,977(22,769)CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD5,3665,60926,02722,769CASH AND CASH EQUIVALENTS, END OF PERIOD$56,004$-$56,004$-See accompanying notes to the interim consolidated financial statements.FOR FURTHER INFORMATION PLEASE CONTACT: Nick OrlandoMartinrea International Inc.President and Chief Executive Officer(416) 749-0314(289) 982-3001 (FAX)3210 Langstaff Road,Vaughan, Ontario, L4K 5B2