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Martinrea International Inc. Releases First Quarter Results and Announces Dividend

Record Quarterly Revenues, Improving Operations

TORONTO, ONTARIO -- (Marketwired) -- 05/15/14 -- 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 first quarter ended March 31, 2014, record quarterly revenues, improving operations and a quarterly dividend.

HIGHLIGHTS


--  Record Quarterly Revenues 
--  Quarter-over-Quarter Operational and Margin Improvement 
--  Record Quarter for Martinrea Honsel 
--  Profitability Increasing in Second Quarter 
--  Dividend Announced

OVERVIEW

Nick Orlando, Martinrea's President and Chief Executive Officer, stated: "We are highly focused on improving our operations everywhere, including in our metal plants in the United States, which are showing improvement in the first quarter and year to date. The first quarter results are tempered somewhat because of launch costs from several launches and the issues we experienced at our Hopkinsville plant late last year which carried over into the first quarter, but we are making progress. Many of our plants, whether doing fluids, metallic, aluminum or assembly work, are performing very well financially. In terms of new business won since our last release just a few weeks ago, we have won approximately $40 million in incremental annualized business including $25 million in incremental volume on Daimler's next generation AMG V8 engine block starting in 2016, $10 million of incremental content on Ford's CD4.3 platform in both China and North America starting in 2016 and $5 million of business for the Company's Rollstar plant for Chrysler on its minivan line starting in 2016."

Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Revenues for our first quarter, excluding tooling revenues, were approximately $838 million, within the range of our previously announced sales guidance, and a record quarter for us. In the first quarter, our adjusted earnings per share, on a basic and diluted basis, was $0.21, after adjusting for relatively low unusual items in the nature of non-insured litigation costs, and within our recently announced quarterly guidance. The Martinrea Honsel operations contributed $0.12 per share to our first quarter results, a record contribution for us. The Martinrea Honsel operations benefitted from higher revenues, resulting from higher customer demand in Europe in the first quarter, in particular in our German operations. As a result of the strong performance of Martinrea Honsel, the value of the put option on the Company's balance sheet increased by $31 million during the quarter to $186 million at March 31, 2014, demonstrating the significant increase in value we have brought to that asset. While Martinrea Honsel is expected to continue to contribute strongly to our overall business, we anticipate that the next several quarters will contribute less earnings than the first quarter, as volumes will be somewhat lower and as we enter into a period of higher launch activity on business previously won and announced."

Rob Wildeboer, Martinrea's Executive Chairman, stated: "While 2013 overall was a good year for us, we believe 2014 will be better overall. In our first quarter we started to see operational and financial improvements from the previous quarter. Most of our businesses are doing well-our aluminum and fluids businesses had strong quarters; our assembly operations are doing well; and many of our metallic plants are meeting or exceeding budget. Certain U.S. metallic plants are making the necessary improvements to operations that will improve margin. Our second quarter is expected to generate revenues for the quarter (excluding tooling revenues) in the range of $860 to $890 million and we believe our earnings per share will be in the range of 27 to 31 cents per share, one of the best quarters in our history from a financial point of view. Most of the profit improvement will come from our Martinrea Classic operations. Our Martinrea Honsel operations are anticipated to generate earnings per share in the range of 7 to 9 cents for the quarter. In summary, the future looks good for us. We are making good progress and are addressing our issues; our profitability overall is improving; our financial position is strong; we have a committed and strong independent board of directors and a dedicated team at the company focused on the future; and we will continue to improve."

RESULTS OF OPERATIONS

Martinrea currently employs over 13,000 skilled and motivated people in 38 plants in Canada, the United States, Mexico, Brazil, Europe, and China. 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 first quarter ended March 31, 2014 ("MD&A") dated as of May 15, 2014, the Company's unaudited interim condensed consolidated financial statements for the first quarter ended March 31, 2014 (the "unaudited consolidated financial statements") and the Company's Annual Information Form for the financial year ended December 31, 2013, can be found at www.sedar.com.

Non-IFRS Measures

The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-IFRS 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-IFRS 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 Table A under "Adjustments to Net Income" of this Press Release.

Revenue

Three months ended March 31, 2014 to three months ended March 31, 2013 comparison


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three months   Three months                     
                             ended March    ended March                     
                                31, 2014       31, 2013  $ Change  % Change 
----------------------------------------------------------------------------
North America                  $ 663,664      $ 610,531    53,133       8.7%
Europe                           183,653        141,811    41,842      29.5%
Rest of World                     17,176         16,780       396       2.4%
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Revenue                        $ 864,493      $ 769,122    95,371      12.4%
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The Company's consolidated revenues for the first quarter of 2014 increased by $95.4 million or 12.4% to $864.5 million as compared to $769.1 million for the first quarter of 2013. Revenues increased year-over-year across all operating segments.

Revenues for the first quarter of 2014 in the Company's North America operating segment increased by $53.1 million or 8.7% to $663.7 million from $610.5 million for the first quarter of 2013. The increase was due to an overall increase in North American OEM light vehicle production, in particular year-over-year increased production volumes on the GM Equinox/Terrain, Ford Fusion and Ford Escape, three of the Company's largest platforms, the launch of new programs during or subsequent to the first quarter of 2013, including GM's full size pick-up trucks, Chevrolet Impala and BMW X5, and the impact of foreign exchange on the translation of U.S. denominated production revenue, which had a positive impact on revenue for the first quarter of 2014 of $45.3 million. The increase in revenue was partially offset by a $29.1 million decrease in tooling revenues, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer.

Revenues for the first quarter of 2014 in the Company's Europe operating segment, comprised predominately of the European operations of Martinrea Honsel, increased by $41.8 million or 29.5% to $183.7 million from $141.8 million for the first quarter of 2013. The increase was due to the launch of new incremental aluminum business with Jaguar Land Rover including the sub-frame and shock towers for the new Range Rover Sport; an overall year-over-year increase in European OEM light vehicle production; a $6.1 million increase in tooling revenues; an $18.7 million benefit from the impact of foreign exchange on the translation of Euro denominated production revenue; and year-over-year increased production revenues in the Company's plant in Slovakia, which continues to ramp-up and launch its backlog of business.

Revenues for the first quarter of 2014 in the Company's Rest of World operating segment, currently comprised of the Brazilian operations of Martinrea Honsel and a facility in China in its early stages, increased by $0.4 million or 2.4% to $17.2 million from $16.8 million for the first quarter of 2013. The increase can be attributed to the launch of the Company's first product in China for the Ford CD4 program, which began to ramp up at the end of the second quarter of 2013, partially offset by a year-over-year decrease in production volumes in Brazil, the impact of foreign exchange on the translation of Brazilian Real denominated production revenue, which had a negative impact on revenue for the first quarter of 2014 of $0.8 million, and a year-over-year decrease in tooling revenue of $0.8 million.

Overall tooling revenue decreased by $23.8 million from $50.7 million for the first quarter of 2013 to $26.9 million for the first quarter of 2014.

Gross Margin

Three months ended March 31, 2014 to three months ended March 31, 2013 comparison


                                                                            
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                            Three months   Three months                     
                             ended March    ended March                     
                                31, 2014       31, 2013  $ Change  % Change 
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Gross margin                   $  87,479      $  75,715    11,764      15.5%
% of revenue                        10.1%           9.8%                    
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The gross margin percentage for the first quarter of 2014 of 10.1% increased as a percentage of revenue by 0.3% as compared to the gross margin percentage for the first quarter of 2013 of 9.8%. The increase in gross margin as a percentage of revenue was generally due to:


--  higher capacity utilization from an overall increase in year-over-year
    production revenues including the launch of new programs subsequent or
    during the first quarter of 2013 (as noted above); 
--  productivity and efficiency improvements at certain operating
    facilities, in particular the Martinrea Honsel operations in Germany; 
--  improved pricing on certain long-term customer contracts in the
    operations of Martinrea Honsel; and 
--  a decrease in tooling revenue which typically earns low or no margins
    for the Company.

These factors were partially offset by:


--  an increase in integrator or assembly work which typically generates
    lower margins as a percentage of revenue, although return on capital
    tends to be higher; 
--  program specific launch costs related to new programs that recently
    launched or are set to launch and ramp up over the next few quarters
    including the BMW X5, Ford Transit, Ford 2.3 L aluminum engine block,
    Chrysler 200 and Lincoln MKC; and 
--  operational inefficiencies at certain operating facilities, in
    particular, Hopkinsville, Kentucky (see below).

The performance of the Company's operating facility in Hopkinsville, Kentucky continued to be impacted by launch costs and other operational expenses stemming from the operational issues experienced by the facility during the fourth quarter of 2013. The issues were rooted in serious equipment failures on two of the plant's large tonnage presses which has resulted in incremental premium costs as the facility deals with new program launches, customer-requested engineering changes, which have impacted productivity, and the overall ramp-up in production volumes being experienced in the automotive industry. The presses are currently operational but are not performing at optimal levels. Upgrades to the presses are planned during the 2014 summer and December holiday shutdowns in order to reduce the risk of any further failures and improve the performance of the presses. Notwithstanding the planned upgrades, progress is being made at improving efficiencies at this facility and costs are expected to subside, and margins improve, as operational improvements are made. The facility is focused on cost reduction and improving efficiency with the objective of expanding margin.

In addition to the expected productivity and efficiency improvements at certain operating facilities, in particular in Hopkinsville, Kentucky (as noted above), gross margin is expected to be positively impacted by incremental new business as the Company continues to work through the launch of a significant backlog of business over the next 36 months including the following awarded programs in addition to the programs referred to above: the next wave of Ford CD4 in Europe and North America, GM Omega aluminum engine cradle, GM 31XX (Traverse, SRX), Jaguar LandRover aluminum swivel bearing, Ford Transit, Nissan aluminum I4 engine block, Daimler aluminum transmission casing and engine cradle for the VW Golf.

Adjustments To Net Earnings

(Attributable to Equity Holders of the Company)

Adjusted net earnings exclude certain unusual items, as set out in the table below and described in the notes thereto. Management uses adjusted earnings as a measurement of operating performance of the Company and believes that, in conjunction with IFRS measures, it provides useful information about the financial performance and condition of the Company.


TABLE A                                                                     
                                                                            
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                                 Three months   Three months                
                                        ended          ended                
                               March 31, 2014 March 31, 2013           (a-b)
                               ------------------------------               
                                           (a)            (b)        Change 
----------------------------------------------------------------------------
                                                                            
NET EARNINGS (A)                      $16,691        $19,888        $(3,197)
                                                                            
Add back - Unusual Items:                                                   
External legal and forensic                                                 
 accounting costs related to                                                
 litigation (1)                         1,153              -          1,153 
                                                                            
                                                                            
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TOTAL UNUSUAL ITEMS BEFORE TAX         $1,153              -         $1,153 
Tax impact of above item                 (288)             -           (288)
                                                                            
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TOTAL UNUSUAL ITEMS AFTER TAX                                               
 (B)                                     $865              -           $865 
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ADJUSTED NET EARNINGS (A + B)         $17,556        $19,888        $(2,332)
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Number of Shares Outstanding -                                              
 Basic ('000)                          84,480         83,757                
Adjusted Basic Net Earnings Per                                             
 Share                                  $0.21          $0.24                
Number of Shares Outstanding -                                              
 Diluted ('000)                        85,044         84,364                
Adjusted Diluted Net Earnings                                               
 Per Share                              $0.21          $0.24                
                                                                            
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(1) External Legal and Forensic Accounting Costs Related to Litigation

As previously disclosed, on September 26, 2013, a former director of the Company filed a statement of claim against the Company making certain allegations against the Company, certain directors and officers, and two Martinrea suppliers. Supervision of the litigation has been delegated to a Special Committee of the Board. Legal counsel has been retained to advise the Special Committee with respect to litigation and legal matters. The Special Committee has retained PricewaterhouseCoopers LLP as its independent financial experts to provide such financial and accounting advice and forensic services as the Special Committee may deem appropriate.

In addition, the Company and certain of its officers and directors have been served with a Notice of Action and Statement of Claim that was filed in Windsor, Ontario by an alleged shareholder (the "Statement of Claim"). In the Statement of Claim, the plaintiff seeks, among other things: an order certifying the proceeding as a class proceeding; a declaration that the defendants made negligent misrepresentations in the time period from March 6, 2006 to December 18, 2013 by representing that the Company's financial statements were prepared in accordance with GAAP and/or IFRS; an order granting leave to amend the claim to assert causes of action under the secondary market liability provisions of the Securities Act (Ontario); and special and general damages and costs of notice in the class action in the sum of $100 million.

The costs added back for adjusted net income purposes reflects the legal and forensic accounting costs incurred by the Company in relation to these matters that are not covered by insurance (recorded in SG&A expense). Further amounts related to the costs expensed to date may be recovered from the Company's insurance providers upon completion of their review of the costs incurred.


Net Earnings                                                                
----------------------------------------------------------------------------
(Attributable to Equity Holders of the Company)                             
                                                                            
Three months ended March 31, 2014 to three months ended March 31, 2013      
comparison                                                                  
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             Three months   Three months                    
                              ended March    ended March                    
                                 31, 2014       31, 2013 $ Change % Change  
----------------------------------------------------------------------------
Net Earnings                    $  16,691      $  19,888   (3,197)   (16.1%)
Adjusted net earnings           $  17,556      $  19,888   (2,332)   (11.7%)
Net Earnings per common                                                     
 share                                                                      
  Basic                         $    0.20      $    0.24                    
  Diluted                       $    0.20      $    0.24                    
Adjusted Net Earnings per                                                   
 common share                                                               
  Basic                         $    0.21      $    0.24                    
  Diluted                       $    0.21      $    0.24                    
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----------------------------------------------------------------------------

Net earnings, before adjustments, for the first quarter of 2014 decreased by $3.2 million to $16.7 million from $19.9 million for the first quarter of 2013. Excluding $1.2 million in external legal and forensic accounting costs related to litigation incurred during the first quarter of 2014, as explained in Table A under "Adjustments to Net Earnings", the net earnings for the first quarter of 2014 decreased to $17.6 million or $0.21 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $19.9 million or $0.24 per share, on a basic and diluted basis, for the first quarter of 2013.

The net earnings for the first quarter of 2014, as compared to the first quarter of 2013, were negatively impacted by the following:


--  program specific launch costs related to new programs that recently
    launched or are set to launch and ramp up over the next few quarters
    including the BMW X5, Ford Transit, Ford 2.3 L aluminum engine block,
    Chrysler 200 and the Lincoln MKC; 
--  lower margins as a result of operational inefficiencies at certain
    operating facilities, in particular, Hopkinsville, Kentucky (as
    discussed above). 
--  year-over-year increases in SG&A expense as previously discussed,
    research and development expense as a result of increased amortization
    of development costs and, finance expense related to increased levels of
    debt used to sustain the increased capital related to new product
    launches; and 
--  a year-over-year decrease in net foreign exchange gain to a net foreign
    exchange loss during the quarter (included in Other Finance Income and
    Expense in the Interim Condensed Consolidated Statement of Operations).

These factors were partially offset by the following:


--  higher margins from an overall increase in year-over-year production
    revenues including the launch of new programs subsequent to or during
    the first quarter 2013, in particular as it relates to the Martinrea
    Honsel operations; 
--  productivity and efficiency improvements at certain operating
    facilities, in particular the Martinrea Honsel operations in Germany; 
--  improved pricing on certain long-term customer contracts in Martinrea
    Honsel; and 
--  a lower effective tax rate due generally to mix of earnings and the
    utilization of tax losses in Martinrea Honsel not previously benefitted.

The contribution of Martinrea Honsel to net earnings for the first quarter of 2014, after factoring in the interest costs incurred by Martinrea International on the debt issued to finance the acquisition and operations of Martinrea Honsel, increased to $0.12 per share from $0.04 per share in the first quarter of 2013. The increase was generally due to the addition of new incremental aluminum business with Jaguar LandRover, generally higher production volumes in Europe, improved pricing on certain long term customer contracts and ongoing productivity, efficiency improvements at certain facilities, in particular in Germany, and a lower effective tax rate resulting from the utilization of tax losses not previously benefitted.

Additions to Property, Plant and Equipment

Three months ended March 31, 2014 to three months ended March 31, 2013 comparison


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             Three months   Three months                    
                              ended March    ended March                    
                                 31, 2014       31, 2013 $ Change % Change  
----------------------------------------------------------------------------
Additions to Property,                                                      
 Plant and Equipment            $  37,051      $  56,705  (19,654)   (34.7%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Additions to property, plant and equipment decreased by $19.7 million to $37.1 million in the first quarter of 2014 from $56.7 million in the first quarter of 2013. Additions as a percentage of revenue decreased to 4.3% for the first quarter of 2014 compared to 7.4% for the first quarter of 2013. Despite the decrease, while capital expenditures are made to refurbish or replace assets consumed in the normal course of business and for productivity improvements, a large portion of the investment in the first quarter of 2014 continues to be for manufacturing equipment for programs launching over the next 24 months.

DIVIDEND

A cash dividend of $0.03 per share has been declared by the Board of Directors payable to shareholders of record on June 30, 2014 on or about July 15, 2014.

CONFERENCE CALL DETAILS

A conference call to discuss these results will be held on Friday, May 16, 2014 at 8:00 a.m. (Toronto time) which can be accessed by dialing (416) 340-8410 or toll free (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 (905) 694-9451 or (800) 408-3053 (conference id 7928718#). The rebroadcast will be available until May 30, 2014.

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 expectations and guidance as to revenue and gross margin percentage (and earnings per share), expansion of or improvements in gross margin, including due to positive impact from launches, statements as to the growth of the Company and pursuit of its strategies, the launching of new metal forming and fluid systems programs including expectations as to the financial impact of launches, the Company's expectations as to the contribution of Martinrea Honsel to the Company's business, statements as to the progress and expectations of operational and productivity improvements and operational and productivity efficiencies, the Company's expectations regarding the future amount and type of restructuring expenses to be expensed, statements as to the reduction of costs, including the expectation of a reduction in costs and inefficiencies and stabilization of and operational improvements at the Hopkinsville plant and expectations as to the continued operation of and successful upgrades to the presses, the Company's views on the long term outlook of the automotive industry and economic recovery, the Company's ability to capitalize on opportunities in the automotive industry and the successful integration of acquisitions, statements as to the recovery of litigation related expenses from insurance providers, and 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; 
--  financial viability of suppliers; 
--  the Company's reliance on critical suppliers and 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 insourcing trends; 
--  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; 
--  costs associated with rationalization of production facilities; 
--  launch costs; 
--  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; 
--  a shift away from technologies in which the Company is investing; 
--  competition with low cost countries; 
--  the Company's ability to shift its manufacturing footprint to take
    advantage of opportunities in emerging markets; 
--  risks of conducting business in foreign countries, including China,
    Brazil and other growing markets; 
--  potential tax exposure; 
--  a change in the Company's mix of earnings between jurisdictions with
    lower tax rates and those with higher tax rates, as well as the
    Company's ability to fully benefit from tax losses; 
--  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, whether as a result of new information, future events or otherwise, except as required by law.

The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".


Martinrea International Inc.                                                
Interim Condensed Consolidated Balance Sheets                               
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                 March 31,     December 31, 
                                        Note          2014             2013 
----------------------------------------------------------------------------
ASSETS                                                                      
Cash and cash equivalents                      $    43,185      $    56,224 
Trade and other receivables                4       654,971          541,598 
Inventories                                5       329,961          302,810 
Prepaid expenses and deposits                       14,726           13,128 
Income taxes recoverable                             3,998            3,727 
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TOTAL CURRENT ASSETS                             1,046,841          917,487 
----------------------------------------------------------------------------
Property, plant and equipment              6       887,202          847,548 
Deferred income tax assets                         110,270          100,156 
Intangible assets                          7        62,754           59,640 
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TOTAL NON-CURRENT ASSETS                         1,060,226        1,007,344 
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TOTAL ASSETS                                   $ 2,107,067      $ 1,924,831 
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LIABILITIES                                                                 
Trade and other payables                   8   $   686,950      $   597,591 
Provisions                                 9         5,230            6,362 
Income taxes payable                                20,485           22,530 
Current portion of long-term debt         10        51,204           37,276 
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TOTAL CURRENT LIABILITIES                          763,869          663,759 
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Long-term debt                            10       455,809          434,501 
Pension and other post-retirement                                           
 benefits                                           51,139           45,270 
Deferred income tax liabilities                     76,108           73,051 
Other financial liability                  3       185,664          154,239 
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TOTAL NON-CURRENT LIABILITIES                      768,720          707,061 
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TOTAL LIABILITIES                              $ 1,532,589      $ 1,370,820 
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EQUITY                                                                      
Capital stock                             12       689,975          689,975 
Contributed surplus                                 44,963           44,853 
Other equity                               3      (185,664)        (154,239)
Accumulated other comprehensive income              52,452           26,085 
Accumulated deficit                               (131,415)        (142,376)
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TOTAL EQUITY ATTRIBUTABLE TO EQUITY                                         
 HOLDERS OF THE COMPANY                            470,311          464,298 
Non-controlling interest                           104,167           89,713 
----------------------------------------------------------------------------
TOTAL EQUITY                                       574,478          554,011 
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TOTAL LIABILITIES AND EQUITY                   $ 2,107,067      $ 1,924,831 
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See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

On behalf of the Board:

"Robert Wildeboer" Director

"Suleiman Rashid" Director


Martinrea International Inc.                                                
Interim Condensed Consolidated Statements of Operations                     
(in thousands of Canadian dollars, except per share amounts) (unaudited)    
----------------------------------------------------------------------------
                                                                            
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                                              Three months     Three months 
                                                     ended            ended 
                                      Note  March 31, 2014   March 31, 2013 
----------------------------------------------------------------------------
SALES                                           $  864,493       $  769,122 
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Cost of sales (excluding depreciation                                       
 of property, plant and equipment)                (752,883)        (672,332)
Depreciation of property, plant and                                         
 equipment (production)                            (24,131)         (21,075)
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Total cost of sales                               (777,014)        (693,407)
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GROSS MARGIN                                        87,479           75,715 
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Research and development costs                      (4,642)          (4,168)
Selling, general and administrative                (43,331)         (34,803)
Depreciation of property, plant and                                         
 equipment (non-production)                         (1,464)          (1,474)
Amortization of customer contracts                                          
 and relationships                                    (343)            (486)
Loss on disposal of property, plant                                         
 and equipment                                        (140)            (111)
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OPERATING INCOME                                    37,559           34,673 
----------------------------------------------------------------------------
                                                                            
Finance expense                                     (5,179)          (4,683)
Other finance income (expense)                        (222)             983 
----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                          32,158           30,973 
                                                                            
Income tax expense                      11          (5,499)          (7,468)
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NET INCOME FOR THE PERIOD                       $   26,659       $   23,505 
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Non-controlling interest                            (9,968)          (3,617)
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NET INCOME ATTRIBUTABLE TO EQUITY                                           
 HOLDERS OF THE COMPANY                         $   16,691       $   19,888 
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Basic earnings per share                13      $     0.20       $     0.24 
Diluted earnings per share              13      $     0.20       $     0.24 
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See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                            
                                                                            
Martinrea International Inc.                                                
Interim Condensed Consolidated Statements of Comprehensive Income           
(in thousands of Canadian dollars) (unaudited)                              
----------------------------------------------------------------------------
                                                                            
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                                               Three months     Three months
                                                      ended            ended
                                             March 31, 2014   March 31, 2013
----------------------------------------------------------------------------
                                                                            
NET INCOME FOR THE PERIOD                      $     26,659     $     23,505
Other comprehensive income, net of tax:                                     
 Items that may be reclassified to net                                      
  income                                                                    
 Foreign currency translation differences                                   
  for foreign operations                             30,853           12,470
 Items that will not be reclassified to                                     
  net income                                                                
 Actuarial gains (losses) from the                                          
  remeasurement of defined benefit plans             (3,195)           1,111
----------------------------------------------------------------------------
Other comprehensive income, net of tax               27,658           13,581
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD      $     54,317     $     37,086
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----------------------------------------------------------------------------
                                                                            
Attributable to:                                                            
 Equity holders of the Company                       39,863           32,086
 Non-controlling interest                            14,454            5,000
----------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD      $     54,317     $     37,086
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                            
                                                                            
Martinrea International Inc.                                                
Interim Condensed Consolidated Statements of Changes in Equity              
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                              Equity attributable to equity holders of the  
                                                Company                     
                           -------------------------------------------------
                                                                            
                                                                            
                                                                 Cumulative 
                              Capital  Contributed      Other   translation 
                                stock      surplus     equity       account 
----------------------------------------------------------------------------
Balance at December 31,                                                     
 2012                        $675,606      $46,897  $ (87,100)     $(22,001)
----------------------------------------------------------------------------
Net income for the period           -            -          -             - 
Compensation expense                                                        
 related to stock options           -          315          -             - 
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest               -            -     (3,963)            - 
Purchase of non-controlling                                                 
 interest (note 2)                               -          -             - 
Exercise of employee stock                                                  
 options                        9,438       (2,321)         -             - 
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial gains from the                                                   
  remeasurement of defined                                                  
  benefit plans                     -            -          -             - 
 Foreign currency                                                           
  translation differences           -            -          -        11,087 
----------------------------------------------------------------------------
Balance at March 31, 2013     685,044       44,891    (91,063)      (10,914)
----------------------------------------------------------------------------
Net income (loss) for the                                                   
 period                             -            -          -             - 
Compensation expense                                                        
 related to stock options           -        1,297          -             - 
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest               -            -    (63,176)            - 
Dividends ($0.09 per share)         -            -          -             - 
Exercise of employee stock                                                  
 options                        4,931       (1,335)         -             - 
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial gains from the                                                   
  remeasurement of defined                                                  
  benefit plans                     -            -          -             - 
 Foreign currency                                                           
  translation differences           -            -          -        36,999 
----------------------------------------------------------------------------
Balance at December 31,                                                     
 2013                         689,975       44,853   (154,239)       26,085 
----------------------------------------------------------------------------
Net income for the period           -            -          -             - 
Compensation expense                                                        
 related to stock options           -          110          -             - 
Dividends ($0.03 per share)         -            -          -             - 
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest               -            -    (31,425)            - 
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial losses from the                                                  
  remeasurement of defined                                                  
  benefit plans                     -            -          -             - 
 Foreign currency                                                           
  translation differences           -            -          -        26,367 
----------------------------------------------------------------------------
Balance at March 31, 2014    $689,975      $44,963  $(185,664)     $ 52,452 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

                                                                            
                                                                            
Martinrea International Inc.                                                
Interim Condensed Consolidated Statements of Changes in Equity              
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             Equity attributable to                         
                             equity holders of the                          
                                    Company                                 
                           --------------------------                       
                                                                            
                                                                            
                                                             Non-           
                              Accumulated             controlling     Total 
                                  deficit      Total     interest    equity 
----------------------------------------------------------------------------
Balance at December 31,                                                     
 2012                           $(155,721)  $457,681     $ 66,240  $523,921 
----------------------------------------------------------------------------
Net income for the period          19,888     19,888        3,617    23,505 
Compensation expense                                                        
 related to stock options               -        315            -       315 
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest                   -     (3,963)           -    (3,963)
Purchase of non-controlling                                                 
 interest (note 2)                 (2,880)    (2,880)      (1,928)   (4,808)
Exercise of employee stock                                                  
 options                                -      7,117            -     7,117 
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial gains from the                                                   
  remeasurement of defined                                                  
  benefit plans                     1,111      1,111            -     1,111 
 Foreign currency                                                           
  translation differences               -     11,087        1,383    12,470 
----------------------------------------------------------------------------
Balance at March 31, 2013        (137,602)   490,356       69,312   559,668 
----------------------------------------------------------------------------
Net income (loss) for the                                                   
 period                            (2,938)    (2,938)      17,362    14,424 
Compensation expense                                                        
 related to stock options               -      1,297            -     1,297 
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest                   -    (63,176)           -   (63,176)
Dividends ($0.09 per share)        (7,588)    (7,588)           -    (7,588)
Exercise of employee stock                                                  
 options                                -      3,596            -     3,596 
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial gains from the                                                   
  remeasurement of defined                                                  
  benefit plans                     5,752      5,752            -     5,752 
 Foreign currency                                                           
  translation differences               -     36,999        3,039    40,038 
----------------------------------------------------------------------------
Balance at December 31,                                                     
 2013                            (142,376)   464,298       89,713   554,011 
----------------------------------------------------------------------------
Net income for the period          16,691     16,691        9,968    26,659 
Compensation expense                                                        
 related to stock options               -        110            -       110 
Dividends ($0.03 per share)        (2,535)    (2,535)           -    (2,535)
Change in fair value of put                                                 
 option granted to non-                                                     
 controlling interest                   -    (31,425)           -   (31,425)
Other comprehensive income,                                                 
 net of tax                                                                 
 Actuarial losses from the                                                  
  remeasurement of defined                                                  
  benefit plans                    (3,195)    (3,195)           -    (3,195)
 Foreign currency                                                           
  translation differences               -     26,367        4,486    30,853 
----------------------------------------------------------------------------
Balance at March 31, 2014       $(131,415)  $470,311     $104,167  $574,478 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                           
                                                                           
Martinrea International Inc.                                               
Interim Condensed Consolidated Statements of Cash Flows                    
(in thousands of Canadian dollars) (unaudited)                             
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                              Three months    Three months 
                                                     ended           ended 
                                                 March 31,       March 31, 
                                                      2014            2013 
---------------------------------------------------------------------------
CASH PROVIDED BY (USED IN):                                                
OPERATING ACTIVITIES:                                                      
Net Income for the period                       $   26,659      $   23,505 
Adjustments for:                                                           
 Depreciation of property, plant and                                       
  equipment                                         25,595          22,549 
 Amortization of customer contracts and                                    
  relationships                                        343             486 
 Amortization of development costs                   2,104           1,545 
 Accretion of interest on promissory note                -             (30)
 Unrealized losses (gains) on foreign                                      
  exchange forward contracts                         2,535            (228)
 Finance costs                                       5,179           4,683 
 Income tax expense                                  5,499           7,468 
 Loss on disposal of property, plant and                                   
  equipment                                            140             111 
 Stock-based compensation                              110             315 
 Pension and other post-retirement benefits                                
  expense                                            1,167           1,202 
 Contributions made to pension and other                                   
  post-retirement benefits                          (1,028)         (2,468)
---------------------------------------------------------------------------
                                                    68,303          59,138 
Changes in non-cash working capital items:                                 
 Trade and other receivables                       (95,491)        (88,525)
 Inventories                                       (16,423)          2,843 
 Prepaid expenses and deposits                      (1,111)          3,480 
 Trade, other payables and provisions               69,431          36,927 
---------------------------------------------------------------------------
                                                    24,709          13,863 
 Interest paid (excluding capitalized                                      
  interest)                                         (4,712)         (3,731)
 Income taxes paid                                 (12,242)         (4,741)
---------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES       $    7,755      $    5,391 
---------------------------------------------------------------------------
                                                                           
FINANCING ACTIVITIES:                                                      
 Dividends paid                                     (2,535)              - 
 Increase in long-term debt                         36,953          51,498 
 Repayment of long-term debt                       (10,191)         (5,856)
 Exercise of employee stock options                      -           7,117 
---------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES       $   24,227      $   52,759 
---------------------------------------------------------------------------
                                                                           
INVESTING ACTIVITIES:                                                      
 Purchase of property, plant and                                           
  equipment(i)                                     (42,823)        (56,705)
 Capitalized development costs                      (3,411)         (3,122)
 Proceeds on disposal of property, plant                                   
  and equipment                                        593              28 
 Purchase of non-controlling interest (note                                
  2)                                                     -          (4,808)
---------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES           $  (45,641)     $  (64,607)
---------------------------------------------------------------------------
                                                                           
Effect of foreign exchange rate changes on                                 
 cash and cash equivalents                             620          (1,351)
---------------------------------------------------------------------------
                                                                           
DECREASE IN CASH AND CASH EQUIVALENTS              (13,039)         (7,808)
CASH AND CASH EQUIVALENTS, BEGINNING OF                                    
 PERIOD                                             56,224          29,422 
---------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD        $   43,185      $   21,614 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                                                            
(i) As at March 31, 2014, $7,444 (December 31, 2013 - $13,216) of purchases 
of property, plant and equipment remain unpaid.                             
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

Contacts:
Martinrea International Inc.
Fred Di Tosto
Chief Financial Officer
(416) 749-0314
(289) 982-3001 (FAX)

Martinrea International Inc.
3210 Langstaff Road
Vaughan, Ontario L4K 5B2

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