Magellan Aerospace Corporation Announces Financial Results

Magellan Aerospace Corporation (“Magellan” or the “Corporation”) released its financial results for the first quarter of 2020. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:

		Three month period ended March 31
Expressed in thousands of Canadian dollars, except per share amounts		2020		2019		Change
Revenues		238,813		269,884		(11.5%)
Gross Profit		36,772		42,821		(14.1%)
Net Income		20,074		20,409		(1.6%)
Net Income per Share		0.34		0.35		(2.9%)
EBITDA		41,543		40,493		2.6%
EBITDA per Share		0.71		0.70		1.4%

This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Corporation with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied. The Corporation assumes no future obligation to update these forward-looking statements except as required by law.

This news release presents certain non-IFRS financial measures to assist readers in understanding the Corporation's performance. Non-IFRS financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”). Throughout this news release, reference is made to EBITDA (defined as net income before interest, income taxes, depreciation and amortization), which the Corporation considers to be an indicative measure of operating performance and a metric to evaluate profitability. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to net income (loss) or cash flows as determined in accordance with IFRS. As there is no standardized method of calculating this measure, the Corporation’s EBITDA may not be directly comparable with similarly titled measures used by other companies.

1. Overview
A summary of Magellan’s business and significant updates

Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, Magellan designs, engineers, and manufactures aeroengine and aerostructure components for aerospace markets, advanced products for defence and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services.

Magellan operates substantially all of its activities in one reportable segment, Aerospace, which is viewed as one segment by the chief operating decision-makers for the purpose of resource allocations, assessing performance and strategic planning. The Aerospace segment includes the design, development, manufacture, repair and overhaul, and sale of systems and components for defence and civil aviation.

Business Update
Magellan announced on April 16, 2020 that it would provide Black Brant sounding rocket motors to The German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt e.V. or “DLR”) that is estimated to generate revenue of up to $9.4 million over the term of the agreement. Under the terms of this agreement, the DLR will purchase Black Brant rocket motors over a three-year period and may exercise options to purchase certain additional hardware items from Magellan’s facility in Winnipeg, Manitoba.

For additional information, please refer to the “Management’s Discussion and Analysis” section of the Corporation’s 2019 Annual Report available on www.sedar.com.

2. Results of Operations
A discussion of Magellan’s operating results for the first quarter ended March 31, 2020

The Corporation reported revenue in the first quarter of 2020 of $238.9 million, a $31.0 million decrease from the first quarter of 2019 revenue of $269.9 million. Gross profit and net income for the first quarter of 2020 were $36.8 million and $20.1 million, respectively, in comparison to gross profit of $42.8 million and net income of $20.4 million for the first quarter of 2019.

Consolidated Revenue

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019		Change
Canada		94,243		90,701		3.9%
United States		64,718		84,819		(23.7%)
Europe		79,852		94,364		(15.4%)
Total revenues		238,813		269,884		(11.5%)

Revenues in Canada increased 3.9% in the first quarter of 2020 compared to the corresponding period in 2019, primarily due to increased volumes particularly in the casting business.

Revenues in the United States decreased by 23.7% in the first quarter of 2020 when compared to the first quarter of 2019 largely due to volume decreases for single aisle aircraft, specifically the Boeing 737 MAX, offset in part by favourable foreign exchange impact due to the strengthening of the United States dollar against the Canadian dollar.

European revenues in the first quarter of 2020 decreased 15.4% when compared to the corresponding period in 2019 primarily driven by decreased production rates for single aisle and wide-body aircraft and lower repair and overhaul revenues. On a constant currency basis, revenues in the first quarter of 2020 in Europe decreased 16.4% compared to the same period in 2019.

Gross Profit

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019		Change
Gross profit		36,772		42,821		(14.1%)
Percentage of revenues		15.4%		15.9%

Gross profit of $36.8 million for the first quarter of 2020 was $6.0 million lower than the $42.8 million gross profit for the first quarter of 2019, and gross profit as a percentage of revenues was 15.4% for the first quarter of 2020 decreased from 15.9% recorded in the same period in 2019. The gross profit in the current quarter was primarily impacted by volume decreases and unfavourable product mix.

Administrative and General Expenses

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019		Change
Administrative and general expenses		15,676		15,300		2.5%
Percentage of revenues		6.6%		5.7%

Administrative and general expenses as a percentage of revenues of 6.6% for the first quarter of 2020 were higher than the same period of 2019. Administrative and general expenses increased $0.4 million or 2.5% to $15.7 million in the first quarter of 2020 compared to $15.3 million in the corresponding quarter of 2019 mainly due to higher maintenance and amortization costs related to the new ERP system and the additional costs related to new businesses acquired in 2019.

Other

	Three month period
	ended March 31
Expressed in thousands of dollars		2020			2019
Foreign exchange (gain) loss		(5,785	)		453
Loss (gain) on disposal of property, plant and equipment		19			(85	)
Other		(172	)		190
Total other (income) expenses		(5,938	)		558

Other income for the first quarter of 2020 included a $5.8 million foreign exchange gain compared to a $0.5 million loss in the first quarter of the prior year. The movements in balances denominated in the foreign currencies and the fluctuations of the foreign exchange rates impact the net foreign exchange gain or loss recorded in a quarter.

Interest Expense

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019
Interest on bank indebtedness and long-term debt		66		(40	)
Accretion charge for borrowings, lease liabilities and long-term debt		814		545
Discount on sale of accounts receivable		320		563
Total interest expense		1,200		1,068

Total interest expense of $1.2 million in the first quarter of 2020 was slightly higher than the first quarter of 2019 mainly due to higher accretion charge on lease liabilities offset in part by the lower discount on sale of accounts receivables.

Provision for Income Taxes

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019
Expense of current income taxes		2,047		2,805
Expense of deferred income taxes		3,713		2,681
Total expense of income taxes		5,760		5,486
Effective tax rate		22.3%		21.2%

Income tax expense for the three months ended March 31, 2020 was $5.8 million, representing an effective income tax rate of 22.3% compared to 21.2% for the same period of 2019. The change in effective tax rate and current and deferred income tax expenses year over year was primarily due to the change in mix of income across the different jurisdictions in which the Corporation operates.

3. Selected Quarterly Financial Information
A summary view of Magellan’s quarterly financial performance

		2020								2019						2018
Expressed in millions of dollars, except per share amounts		Mar 31		Dec 31		Sep 30		Jun 30		Mar 31		Dec 31		Sep 30		Jun 30
Revenues		238.8		246.7		235.6		264.1		269.9		254.4		226.5		241.2
Income before taxes		25.8		11.7		19.6		27.8		25.9		38.5		23.4		29.8
Net Income		20.1		9.4		15.8		21.7		20.4		29.5		18.6		23.5
Net Income per share
Basic and diluted		0.34		0.16		0.27		0.37		0.35		0.51		0.32		0.40
EBITDA1		41.5		27.9		34.1		42.7		40.5		50.7		35.5		41.8

¹ EBITDA is not an IFRS financial measure. Please see the “Reconciliation of Net Income to EBITDA” section for more information.

Revenues and net income reported in the quarterly financial information were impacted by the movements in the Canadian dollar relative to the United States dollar and British pound, when the Corporation translates its foreign operations to Canadian dollars. Further, the movements in the United States dollar relative to the British pound impact the Corporation’s United States dollar exposures in its European operations. During the periods reported, the average quarterly exchange rate of the United States dollar relative to the Canadian dollar fluctuated between a high of 1.3442 in the first quarter of 2020 and a low of 1.2912 in the second quarter of 2018. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from a high of 1.7567 in the second quarter of 2018 to a low of 1.6280 in the third quarter of 2019. The average quarterly exchange rate of the British pound relative to the United States dollar reached its high of 1.3605 in the second quarter of 2018 and hit a low of 1.2327 in the third quarter of 2019.

Revenue for the first quarter of 2020 of $238.8 million was lower than that in the first quarter of 2019. The average quarterly exchange rate of the United States dollar relative to the Canadian dollar in the first quarter of 2020 was 1.3442 versus 1.3292 in the same period of 2019. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from 1.7315 in the first quarter of 2019 to 1.7185 during the current quarter. The average quarterly exchange rate of the British pound relative to the United States dollar decreased from 1.3027 in the first quarter of 2019 to 1.2805 in the current quarter. Had the foreign exchange rates remained at levels experienced in the first quarter of 2019, reported revenues in the first quarter of 2020 would have been lower by $1.9 million.

As discussed above, net income reported in the quarterly information was also impacted by the foreign exchange movements. In the fourth quarter of 2018, the Corporation recorded a net gain of $9.7 million related to prior acquisitions. The fourth quarter of 2019 was impacted by volume decrease in Europe, production inefficiencies in certain of our operating divisions and an accrual recorded in relation to the wind-down of the A380 program.

4. Reconciliation of Net Income to EBITDA
A description and reconciliation of certain non-IFRS measures used by management

In addition to the primary measures of earnings and earnings per share (basic and diluted) in accordance with IFRS, the Corporation includes EBITDA (earnings before interest expense, income taxes and depreciation and amortization) in this quarterly statement. The Corporation has provided this measure because it believes this information is used by certain investors to assess financial performance and that EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation’s principal business activities prior to consideration of how these activities are financed and how the results are taxed in the various jurisdictions. Each of the components of this measure are calculated in accordance with IFRS, but EBITDA is not a recognized measure under IFRS, and the Corporation’s method of calculation may not be comparable with that of other companies. Accordingly, EBITDA should not be used as an alternative to net income as determined in accordance with IFRS or as an alternative to cash provided by or used in operations.

	Three month period
	ended March 31
Expressed in thousands of dollars		2020		2019
Net income		20,074		20,409
Interest		1,200		1,068
Taxes		5,760		5,486
Depreciation and amortization		14,509		13,530
EBITDA		41,543		40,493

EBITDA in the first quarter of 2020 increased $1.1 million or 2.6% to $41.5 million in comparison to $40.5 million in the same quarter of 2019 mainly as a result of higher depreciation and amortization expense, taxes and interest, offset by slightly lower net income.

5. Liquidity and Capital Resources
A discussion of Magellan’s cash flow, liquidity, credit facilities and other disclosures

The Corporation’s liquidity needs can be met through a variety of sources including cash on hand, cash provided by operations, short-term borrowings from its credit facility and accounts receivable securitization program, and long-term debt and equity capacity. Principal uses of cash are for operational requirements, capital expenditures and dividend payments. Based on current funds available and expected cash flow from operating activities, management believes that the Corporation has sufficient funds available to meet its liquidity requirements at any point in time. However, if cash from operating activities is lower than expected or capital projects exceed current estimates, or if the Corporation incurs major unanticipated expenses, it may be required to seek additional capital in the form of debt or equity or a combination of both.

Cash Flow from Operations

	Three month period
	ended March 31
Expressed in thousands of dollars		2020			2019
Increase in trade receivables		(29,933	)		(22,706	)
Increase in contract assets		(6,713	)		(11,736	)
Increase in inventories		(13,549	)		(2,062	)
Increase in prepaid expenses and other		(4,421	)		(2,826	)
(Decrease) increase in accounts payable, accrued liabilities and provisions		(2,834	)		12,374
Changes to non-cash working capital balances		(57,450	)		(26,956	)
Cash (used in) provided by operating activities		(18,992	)		8,056

For the three months ended March 31, 2020, the Corporation used $19.0 million from operating activities, compared to $8.1 million generated in the first quarter of 2019. The quarter over quarter change in non-cash working capital balances was attributable to unfavourable changes in accounts payable, accrued liabilities and provisions due to timing of purchases and payments, increases in trade receivables which resulted from timing of production and billing, and higher inventories related to the timing of material purchases and schedule changes. This was offset partially by favourable changes in contract assets from the timing of production and billing related to products transferred over time.

Investing Activities

	Three month period
	ended March 31
Expressed in thousands of dollars		2020			2019
Business combination, net of cash acquired		-			(2,661	)
Purchase of property, plant and equipment		(4,210	)		(9,507	)
Proceeds of disposal of property plant and equipment		-			235
Increase in intangible and other assets		(1,728	)		(6,066	)
Change in restricted cash		(1,246	)		-
Cash used in investing activities		(7,184	)		(17,999	)

Investing activities used $7.2 million cash for the first quarter of 2020 compared to $18.0 million cash used in the same quarter of the prior year, a reduction of $10.8 million primarily due to lower level of investment in property, plant and equipment and intangibles.

Financing Activities

	Three month period
	ended March 31
Expressed in thousands of dollars		2020			2019
Decrease in debt due within one year		(2,997	)		(6,884	)
Decrease in long-term debt		(592	)		(647	)
Lease liability payments		(1,758	)		(901	)
Decrease in long-term liabilities and provisions		(255	)		(35	)
Increase in borrowings, net		29			-
Common share dividend		(6,112	)		(5,821	)
Cash used in financing activities		(11,685	)		(14,288	)

The Corporation has a Bank Credit Facility Agreement with a syndicate of lenders, of which there were no drawings under as of March 31, 2020. The Bank Credit Facility Agreement provides for a multi-currency global operating credit facility to be available to Magellan in a maximum aggregate amount of $75 million. The Bank Credit Facility Agreement also includes a $75 million uncommitted accordion provision, which provides Magellan with the option to increase the size of the operating credit facility to $150 million. Under the terms of the Bank Credit Facility Agreement, the operating credit facility expires on September 13, 2021. Any extensions of the operating credit facility are subject to mutual consent of the lenders and the Corporation.

The Corporation used $11.7 million in the first quarter of 2020 mainly for the payment of common share dividends and lease liabilities, and the repayment of debt due within one year and long-term debt.

As at March 31, 2020, the Corporation had contractual commitments to purchase $6.8 million of capital assets.

Dividends
During the first quarter of 2020, the Corporation declared and paid quarterly cash dividends of $0.105 per common shares representing an aggregating dividend payment of $6.1 million.

Subsequent to March 31, 2020, the Corporation announced that its Board of Directors had declared a quarterly cash dividend on its common shares of $0.105 per common share. The dividend will be payable on June 30, 2020 to shareholders of record at the close of business on June 16, 2020.

Outstanding Share Information
The authorized capital of the Corporation consists of an unlimited number of preference shares, issuable in series, and an unlimited number of common shares. As at May 5, 2020, 58,209,001 common shares were outstanding and no preference shares were outstanding.

6. Financial Instruments
A summary of Magellan’s financial instruments

Derivative Contracts
The Corporation operates internationally, which gives rise to a risk that its income, cash flows and shareholders’ equity may be adversely impacted by fluctuations in foreign exchange rates. Currency risk arises because the amount of the local currency receivable or payable for transactions denominated in foreign currencies may vary due to changes in exchange rates and because the non-Canadian dollar denominated financial statements of the Corporation’s subsidiaries may vary on consolidation into the reporting currency of Canadian dollars. The Corporation from time to time may use derivative financial instruments to help manage foreign exchange risk with the objective of reducing transaction exposures and the resulting volatility of the Corporation’s earnings. The Corporation does not trade in derivatives for speculative purposes. Under these contracts the Corporation is obligated to purchase specified amounts at predetermined dates and exchange rates. These contracts are matched with anticipated cash flows in United States dollars. The counterparties to the foreign currency contracts are all major financial institutions with high credit ratings. As at March 31, 2020, there were no foreign exchange contracts outstanding.

Off Balance Sheet Arrangements
The Corporation does not have any off-balance sheet arrangements that have or reasonably are likely to have a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. As a result, the Corporation is not exposed materially to any financing, liquidity, market or credit risk that could arise if it had engaged in these arrangements.

7. Related Party Transactions
A summary of Magellan’s transactions with related parties

For the three month period ended March 31, 2020, the Corporation had no material transactions with related parties as defined in IAS 24, Related Party Disclosures.

8. Risk Factors
A summary of risks and uncertainties facing Magellan

The Corporation manages a number of risks in each of its businesses in order to achieve an acceptable level of risk without hindering the ability to maximize returns. Management has procedures to help identify and manage significant operational and financial risks.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown.

As an emerging risk, the duration and full financial effect of the COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions, the Corporation’s business continuity plan and other mitigating measures. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 pandemic may materially and adversely affect the Corporation’s operations, financial results and condition in future periods are also subject to significant uncertainty. Therefore, uncertainty about judgments, estimates and assumptions made by management during the preparation of the Corporation’s consolidated financial statements related to potential impacts of the COVID-19 outbreak on revenue, expenses, assets, liabilities, and note disclosures could result in a material adjustment to the carrying value of the asset or liability affected.

The Corporation’s customers and supply chain in the commercial aerospace sector were negatively affected in the first quarter. The Corporation will continue to closely monitor the COVID-19 situation and should the duration, spread or intensity of the pandemic further develop in 2020, the supply chain and customer demand will likely be further affected. These factors may further impact the Corporation’s operating plan, its liquidity and cash flows.

For more information in relation to the risks inherent in Magellan’s business, reference is made to the information under “Risk Factors” in the Corporation’s Management’s Discussion and Analysis for the year ended December 31, 2019 and to the information under “Risks Inherent in Magellan’s Business” in the Corporation’s Annual Information Form for the year ended December 31, 2019, which have been filed with SEDAR at www.sedar.com.

9. Outlook
The outlook for Magellan’s business in 2020

Air travel has not experienced such a significant decline in its passenger volumes as it has witnessed year to date in 2020 since 9/11. It is reported that 66% of the global commercial aircraft fleet, approximately 19,350 aircraft, have been grounded by airlines while the world attempts to slow the spread of the COVID-19 outbreak. Various original equipment manufacturers (OEM’s) and supply chain companies temporarily suspended manufacturing operations due to the pandemic, some of whom have since restarted or are about to restart manufacturing with reduced workforces.

The greatest impact of COVID-19 on the aerospace market is expected to be on commercial aircraft programs. Airlines have already begun deferring new aircraft orders and announcing fleet reductions through early retirements of older aircraft. There have also been some new order cancelations. Responding to the rapidly changing market conditions, certain OEM’s have issued lower interim aircraft and engine build rates with additional guidance from these and other OEM’s anticipated in the second quarter of 2020.

Although defence markets are not expected to be significantly impacted due to the pandemic, there are growing concerns over potential supply chain and logistics disruptions. Notwithstanding these concerns, programs that were previously constrained by supply chain capacity issues may be able to utilize excess capacity made available by commercial program declines.

There remains to be limited market visibility during this very dynamic period. Any estimate of the length and severity of market impact is subject to significant uncertainty. The Corporation will continue to closely monitor the COVID-19 situation and reassess its operating plan as program updates become available.

Due to the ongoing COVID-19 pandemic and the impact it is having on the commercial aerospace market and associated lower aircraft demand and production rates, Magellan is reviewing all its operations and implementing cost reduction initiatives and production efficiencies, to ensure that our plants remain competitive.

Magellan’s businesses currently continue manufacturing operations as permitted by local and state government authorities. The Corporation is in contact with the public health authorities, governments and other agencies where we have operations, and with authorities around the world, to ensure Magellan is aligned with current guidance regarding COVID-19. The Corporation remains committed to preventing the spread of the virus, providing a safe environment for our workforce, and in the process, protecting the continuity of our business.

Additional Information
Additional information relating to Magellan Aerospace Corporation, including the Corporation’s annual information form, can be found on the SEDAR web site at www.sedar.com.

Forward Looking Statements
This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Corporation with respect to its performance, business and future events. Such statements are subject to a number of uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied. These forward looking statements can be identified by the words such as "anticipate", "continue", "estimate", "forecast", “expect”, "may", "project", "could", "plan", "intend", "should", "believe" and similar words suggesting future events or future performance. In particular there are forward looking statements contained under the heading "Overview" which outlines certain expectations for future operations. These statements assume the continuation of the current regulatory and legal environment; the continuation of trends for passenger airliner and defence production and are subject to the risks contained herein and outlined in our annual information form. The Corporation assumes no future obligation to update these forward-looking statements except as required by law.

MAGELLAN AEROSPACE CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)		Three month period ended March 31
(expressed in thousands of Canadian dollars, except per share amounts)		2020			2019
Revenues		238,813			269,884
Cost of revenues		202,041			227,063
Gross profit		36,772			42,821
Administrative and general expenses		15,676			15,300
Other		(5,938	)		558
Income before interest and income taxes		27,034			26,963
Interest		1,200			1,068
Income before income taxes		25,834			25,895
Income taxes
Current		2,047			2,805
Deferred		3,713			2,681
		5,760			5,486
Net income		20,074			20,409
Other comprehensive income
Other comprehensive income (loss) that may be reclassified to profit and loss in subsequent periods:
Foreign currency translation		34,178			(6,710	)
Items not to be reclassified to profit and loss in subsequent periods:
Actuarial (loss) income on defined benefit pension plans, net of taxes		(4,759	)		239
Total comprehensive income, net of taxes		49,493			13,938
Net income per share
Basic and diluted		0.34			0.35

MAGELLAN AEROSPACE CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited)		March 31		December 31
(expressed in thousands of Canadian dollars)		2020		2019
Current assets
Cash		32,430		69,637
Restricted cash		1,315		─
Trade and other receivables		214,148		177,801
Contract assets		87,936		77,967
Inventories		217,606		196,823
Prepaid expenses and other		26,489		21,127
		579,924		543,355
Non-current assets
Property, plant and equipment		451,866		439,102
Right-of-use assets		45,688		44,692
Investment properties		2,230		2,180
Intangible assets		67,191		65,373
Goodwill		35,839		34,137
Other assets		9,409		8,770
Deferred tax assets		1,929		3,556
		614,152		597,810
Total assets		1,194,076		1,141,165
Current liabilities
Accounts payable and accrued liabilities and provisions		153,991		151,907
Debt due within one year		46,755		48,144
		200,746		200,051
Non-current liabilities
Long-term debt		6,335		6,876
Lease liabilities		40,459		39,794
Borrowings subject to specific conditions		24,304		24,098
Other long-term liabilities and provisions		26,590		20,289
Deferred tax liabilities		36,385		34,181
		134,073		125,238
Equity
Share capital		254,440		254,440
Contributed surplus		2,044		2,044
Other paid in capital		13,565		13,565
Retained earnings		526,114		516,911
Accumulated other comprehensive income		59,717		25,539
Equity attributable to equity holders of the Corporation		855,880		812,499
Non-controlling interest		3,377		3,377
Total equity		859,257		815,876
Total liabilities and equity		1,194,076		1,141,165

MAGELLAN AEROSPACE CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited)		Three month period ended March 31
(expressed in thousands of Canadian dollars)		2020			2019
Cash flow from operating activities
Net income		20,074			20,409
Amortization/depreciation of intangible assets, right-of-use assets and property, plant and equipment		14,509			13,530
Loss (Gain) on disposal of property, plant and equipment		19			(85	)
Gain on disposal of joint venture investment		─			(881	)
Increase (decrease) in defined benefit plans		116			(154	)
Accretion of financial liabilities		814			545
Deferred taxes		3,062			1,818
Income on investments in joint ventures		(136	)		(170	)
Changes to non-cash working capital		(57,450	)		(26,956	)
Net cash (used in) provided by operating activities		(18,992	)		8,056
Cash flow from investing activities
Business combination, net of cash acquired		─			(2,661	)
Purchase of property, plant and equipment		(4,210	)		(9,507	)
Proceeds from disposal of property, plant and equipment		─			235
Increase in intangible and other assets		(1,728	)		(6,066	)
Change in restricted cash		(1,246	)		─
Net cash used in investing activities		(7,184	)		(17,999	)
Cash flow from financing activities
Decrease in debt due within one year		(2,997	)		(6,884	)
Decrease in long-term debt		(592	)		(647	)
Lease liability payments		(1,758	)		(901	)
Decrease in long-term liabilities and provisions		(255	)		(35	)
Increase in borrowings, net		29			─
Common share dividend		(6,112	)		(5,821	)
Net cash used in financing activities		(11,685	)		(14,288	)
Decrease in cash during the period		(37,861	)		(24,231	)
Cash at beginning of the period		69,637			63,316
Effect of exchange rate differences		654			(622	)
Cash at end of the period		32,430			38,463

 

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