BRANTFORD, ONTARIO -- (Marketwire) -- 11/14/12 -- Wescast Industries Inc. (TSX: WCS.A) today reported 2012 third quarter sales of $72.6 million and a net loss of $4.0 million.
(In thousands of Canadian dollars, except per share amounts) Three Months Ended Nine Months Ended September October 2, September October 2, 30, 2012 2011 30, 2012 2011 ------------ ------------ ------------ ------------ Sales 72,633 67,449 224,169 210,466 Gross profit 2,534 386 14,080 15,423 Net loss (3,960) (700) (4,882) (419) Diluted net loss per share (0.30) (0.05) (0.37) (0.03) Cash derived from operations 3,999 7,185 16,037 2,833
-- The Company reported consolidated sales of $72.6 million, an increase of 7.7% compared to the $67.4 million reported in the third quarter of 2011, reflecting higher sales generated in North America and lower sales in Europe and Asia. -- The Company's third quarter results were significantly impacted by the continued decline in the European automotive market, where vehicle production volumes were down approximately 7.7% compared to the third quarter of 2011. The European market experienced a vehicle sales decline of 7.2% in the first nine months of 2012 and industry estimates predict a 10% decline for all of 2012, the largest annual decline since 1993. -- The expansion of the Company's stainless steel facility in Stratford, Ontario is progressing well with additional programs continuing to launch in 2012. The facility generated sales of $7.4 million in the third quarter of 2012, compared to $1.5 million generated in the same period last year. -- The Company reported gross profit of $2.5 million for the third quarter compared to gross profit of $0.4 million in 2011. The higher gross profit was primarily due to increased sales in North America and the Company recorded a curtailment loss of $1.2 in the third quarter of 2011. There was no such curtailment loss recorded in 2012. Offsetting the increased North American gross profit was the effect of the continued decline in the European automotive market, as discussed above, which had a negative impact on the Company's gross profit in Europe and Asia with respect to certain shipments from China to Europe. -- The Company reported a third quarter net loss of $4.0 million. The net loss per share on a diluted basis was $0.30. -- Included in the net loss was share-based payments expense of $1.3 million compared to a recovery of $0.2 million in the same period last year. Also, foreign exchange translation losses of $0.2 million were recorded in the third quarter of 2012 compared to gains of $3.9 million in the same period last year. The combined negative impact of share- based payments expense and foreign exchange on the diluted net loss per share for the quarter was $0.11, compared to a positive impact of $0.31 in the third quarter of 2011. -- At the end of the third quarter the Company had 80 parts in launch phase. The Company continues to increase production of parts using new materials and continues to ramp up its new machining facility in Michigan as well as its stainless steel facility in Stratford. The launch phase negatively impacts short-term operating performance. However, management believes that this level of launch activity is indicative of significant sales and gross profit growth in the future.
In connection with its previously-announced acquisition by Sichuan Bohong Industry Co., Ltd. ("Bohong") of China, Bohong exercised its right under the arrangement agreement for the transaction to extend the deadline for it to obtain financing for its acquisition of Wescast until November 28, 2012 (previously reported as November 30, 2012) by paying another $2 million deposit to Wescast in the third quarter. Wescast does not intend to provide any further update about the proposed acquisition until the earlier of (i) Wescast being provided with Bohong's definitive financing documents with China Development Bank and confirmation that Bohong has waived its closing financing condition and (ii) November 29, 2012, or until it otherwise determines that further disclosure is appropriate or required.
The Company's entire quarterly financial statements and Management's Discussion and Analysis will be available at www.sedar.com on November 14, 2012.
Wescast Industries Inc. is a global automotive parts supplier that primarily designs, engineers, casts, machines and assembles high quality engineered exhaust system components, including exhaust manifolds, turbocharger housings and integrated turbomanifolds, as well as various other components for the car and light truck markets. The Company supplies to a diversified group of global original equipment manufacturers ("OEMs") and Tier 1 customers in North America, Europe, Asia, Africa, South America and Australia. The Company employs approximately 2,200 people in its regionally-based operations and sales and design centres in Canada, the United States, Hungary, China, Germany, Japan, the United Kingdom and France.
Learn more at www.wescast.com.
Forward Looking Statements
The contents of this news release contain statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking statements based on certain assumptions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements may include financial and other projections as well as statements regarding Wescast's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "estimate", "intend", "plan", "forecast", "project" and "believe" or other similar words and phrases (including negative variations) are intended to identify forward-looking statements. Persons reading this news release are cautioned that such statements are only predictions, and that Wescast's actual future results or performance may be materially different.
This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties principally relate to the risks associated with the automotive industry and include, but are not limited to: the result of Wescast's strategic alternative review and consummation of any transaction, our operating and/or financial performance, including the effect of new accounting standards on our reported financial results, fluctuations in interest rates, changes in consumer and business confidence levels, consumers' personal debt levels, vehicle prices, the extent and nature of purchasing or leasing incentive campaigns offered by automotive manufacturers, environmental emission regulations, fuel prices and availability, the continuation and extent of outsourcing by automotive manufacturers, changes in raw material and other input costs, our ability to continue to meet customer specifications relating to product performance, cost, quality, delivery and service, industry cyclicality or seasonality, trade and/or labour issues or disruptions, customer pricing pressures, pricing concessions and cost absorptions, actual levels of program production volumes by our customers compared to original expectations, including program cancellations or delays, dependence on certain engine programs and the market success and consumer acceptance of the vehicles into which such powertrain products are installed, our relationship with and dependence on certain customers, currency exposure, failures in implementing Wescast's strategy, technological developments by Wescast's competitors and customers, government and regulatory policies and changes in the competitive environment in which Wescast operates.
Wescast does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by law.
Wescast Industries Inc.
Chief Financial Officer