{"id":455405,"date":"2021-03-10T19:42:18","date_gmt":"2021-03-11T00:42:18","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=455405"},"modified":"2021-03-10T19:42:18","modified_gmt":"2021-03-11T00:42:18","slug":"magellan-aerospace-corporation-announces-financial-results-and-director-resignation","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/magellan-aerospace-corporation-announces-financial-results-and-director-resignation\/","title":{"rendered":"Magellan Aerospace Corporation Announces Financial Results and Director Resignation"},"content":{"rendered":"

<\/p>\n

Magellan Aerospace Corporation Announces Financial Results and Director Resignation<\/b><\/p>\n

TORONTO–(BUSINESS WIRE<\/a>)–Magellan Aerospace Corporation (\u201cMagellan\u201d or the \u201cCorporation\u201d) released its financial results for the fourth quarter of 2020. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period ended
\n
<\/b>December 31<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

Twelve month period ended
\n
<\/b>December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of Canadian dollars, except per share amounts\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2020<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2019<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

Change<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2020<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2019<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

Change<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nRevenues\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n180,057\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n246,678\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(27.0%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n744,414\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n1,016,219\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(26.7%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGross Profit\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n11,634\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n33,973\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(65.8%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n96,491\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n156,958\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(38.5%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet Income\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(22,875)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n9,409\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(343.1%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n3,313\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n67,381\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(95.1%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet Income per Share\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(0.40)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.16\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(350.0%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.06\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n1.16\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(94.8%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdjusted EBITDA\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n11,544\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n27,928\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(58.7%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n100,436\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n145,221\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(30.8%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdjusted EBITDA per Share\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n0.20\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.48\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(58.3%)\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n1.73\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n2.49\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(30.5%)\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\n
\n

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. <\/b><\/p>\n

\n\u00a0\n<\/p>\n

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 (\u201cGAAP\u201d). Throughout this news release, reference is made to EBITDA (defined as net income before interest, income taxes, depreciation and amortization) and Adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, goodwill impairment and restructuring), which the Corporation considers to be indicative measures of operating performance and a metric to evaluate profitability. EBITDA and Adjusted EBITDA are not generally accepted earnings measures and should not be considered as alternatives 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\u2019s EBITDA and Adjusted EBITDA may not be directly comparable with similarly titled measures used by other companies. <\/b><\/p>\n<\/td>\n<\/tr>\n<\/table>\n

1. Overview
\n
<\/b>A summary of Magellan\u2019s business and significant updates\n<\/p>\n

\nMagellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries and controlled entity, Magellan 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 the supply of spare parts as well as performing repair and overhaul services.\n<\/p>\n

\nMagellan 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.\n<\/p>\n

Business Update<\/b><\/p>\n

\nOn December 10, 2020, Magellan announced the delivery of the 200th set of F-35 Lightning II horizontal stabilizer assemblies under an agreement with BAE Systems. Magellan and BAE Systems have been working together to produce horizontal stabilizers for the global F-35 program since 2009. Both companies have since made significant investment in facilities, technologies and training to ensure the successful delivery of these flight-critical assemblies to the F-35 prime contractor Lockheed Martin. The horizontal stabilizers produced at Magellan are major assemblies on the Conventional Takeoff and Landing (CTOL) variant of the F-35. Magellan is targeting to produce more than 1,000 ship sets of horizontal tail assemblies over the life of the F-35 program along with various other metallic and composite components.\n<\/p>\n

\nOn January 14, 2021, the Corporation announced that Raytheon Missiles & Defense (\u201cRaytheon\u201d) awarded the Corporation a contract for the supply of complex missile fin components. These heat-tolerant surface control assemblies will be manufactured at Magellan\u2019s facility in Middletown, Ohio, with deliveries starting in 2021 and continuing through 2024. The value of this agreement is approximately $61.4 million. Magellan has participated in the Standard Missile (\u201cSM\u201d) program for more than 20 years, supplying dorsal fins for various configurations, including the SM-3 and SM-6. These defensive missiles provide area defence to the U.S. Military against theater ballistic missiles, aircraft and cruise missiles.\n<\/p>\n

\nOn February 8, 2021, Magellan announced the signing of a Memorandum of Understanding (\u201cMOU\u201d) with General Electric Aviation Canada (\u201cGE Canada\u201d) for the purpose of exploring an arrangement whereby GE Canada would support Magellan in establishing and delivering a Canadian-based sustainment solution for the GE F414-GE-400 engine, which powers Boeing\u2019s F\/A-18 Block III Super Hornet fighter jet. This initiative is in support of Boeing\u2019s proposal to provide the Block III Super Hornet as a solution for Canada\u2019s Future Fighter Capability Project (\u201cFFCP\u201d). Under the MOU, with the selection of the Super Hornet for the FFCP, GE Canada and Magellan would develop an appropriate and competitive sustainment solution for Canada which would provide all aircraft engine sustainment services for the Royal Canadian Air Force on their F414 engine fleet. The in-country depot level sustainment support for the engines includes onsite maintenance, repair and overhaul support services, technical services, and engineering support and would be performed in Magellan\u2019s facility in Mississauga, Ontario for the life of the program.\n<\/p>\n

\nOn March 5, 2021, the Honourable William G. Davis, P.C., C.C., Q.C., former premier of Ontario, resigned as a member of the Board of Directors of the Corporation due to personal reasons. Mr. Davis served as a member of the Board since 1989 and has made tremendous contribution to Magellan over the years. His vast experience in regulatory and governmental affairs and in community and industry relations was a great asset to the Board.\n<\/p>\n

Impact of COVID-19<\/b><\/p>\n

\nIn March 2020, due to the worsening public health crisis associated with the novel coronavirus (\u201cCOVID-19\u201d), the World Health Organization (\u201cWHO\u201d) declared COVID-19 a global pandemic. Governments worldwide, including those countries in which Magellan operates, enacted emergency measures to combat the spread of the virus. These measures, which included the implementation of travel bans, self-imposed quarantine periods and social distancing, caused a material disruption to businesses globally resulting in an economic slowdown and decreased demand in the aerospace industry. Governments and central banks reacted with significant monetary and fiscal interventions designed to stabilize economic conditions; however, the long-term success of these interventions is not yet determinable.\n<\/p>\n

\nIn the fourth quarter of 2020, the continued disruption to air travel and commercial activities, particularly within the aerospace and commercial airline industries negatively impacted global supply, demand and distribution capabilities. In particular, the significant decrease in air travel resulting from the COVID-19 pandemic is adversely affecting Magellan\u2019s customers and their demand for the Corporation\u2019s products and services. The situation remains dynamic and the ultimate duration and magnitude of the impact on the economy and the financial effect on the Corporation remains unknown at this time.\n<\/p>\n

Financial impacts<\/i><\/p>\n

\nThe current challenging economic climate may have material adverse impact on Magellan including, but not limited to significant declines in revenue in addition to what Magellan experienced in 2020 as the Corporation\u2019s customers are concentrated in the aerospace industry; impairment charges to the Corporation\u2019s property, plant and equipment, intangible assets and goodwill due to declines in revenue and cash flows; and restructuring charges as Magellan aligns its structure and personnel to the dynamic environment. Estimates and judgements made in the preparation of financial statements are increasingly difficult and subject to a higher degree of measurement uncertainty during this volatile period.\n<\/p>\n

\nMagellan has implemented measures to align its cost structure and maximize cash preservation during the current market conditions, including headcount reductions and re-balancing work force; elimination of all non-essential travel, entertaining and other discretionary spending; and reductions to the 2020 capital expenditure plan. The Corporation also applied and received the Canada Emergency Wage Subsidy (\u201cCEWS\u201d) for its Canadian employees. The carrying value of the Corporation\u2019s long-lived assets are reviewed for indications of impairment at the end of each reporting period. For long-lived assets that have an indefinite life such as goodwill, the Corporation performs an annual impairment test. For the year ended December 31, 2020, the Corporation recorded an impairment charge of $12.0 million.\n<\/p>\n

\n2021 will be challenging for Magellan\u2019s revenue on a year over year basis as COVID-19 continues to impact aircraft production rates over the short and medium term and flying hours of aircraft. In response to this impact, Magellan implemented cost savings initiatives in 2020 designed to reduce operating costs. In the fourth quarter of 2020, a restructuring plan was announced as part of the Corporation\u2019s strategy to reorganize its European operations resulting in the closure of its Bournemouth manufacturing facilities in the United Kingdom, which will result in the Corporation incurring a restructuring charge relating to the closure of approximately $8.0 million of which $5.6 million was recorded in 2020. Magellan will continue to operate its treatments center in Bournemouth. Magellan continues to actively monitor the COVID-19 situation and reassesses its operating plan as program updates become available.\n<\/p>\n

Operational impacts<\/i><\/p>\n

\nDuring this pandemic, the aerospace manufacturing industry, in the jurisdictions the Corporation operates in, has been classified as an \u201cessential service\u201d. As a result, the Corporation\u2019s operations remained open, but at reduced levels of activity during 2020.\n<\/p>\n

\nTo manage the additional safety risks presented by COVID-19, Magellan implemented standardized tools and templates to keep its employees safe and well informed. Magellan has implemented additional safety, sanitization and physical distancing procedures, including remote work sites where possible and ceased all non-essential business travel. Magellan\u2019s procedures are designed to align with recommendations from the WHO, the United States\u2019 Centers for Disease Control and Prevention, and applicable federal, state and provincial government health authorities.\n<\/p>\n

Liquidity<\/i><\/p>\n

\nDuring 2020, Magellan improved its overall liquidity position despite the challenges posed by COVID-19. The Corporation ended the year with a cash balance of $113.9 million and $70.5 million of available borrowing capacity under Magellan\u2019s operating credit facility, providing the Corporation with $184.4 million of total liquidity as compared with $138.9 million at December 31, 2019. The credit facility agreement also includes a $75 million uncommitted accordion provision that provides the Corporation with the option to increase the size of the operating credit facility to $150 million. Magellan expects that cash provided by operations, cash on hand and its sources of financing will be sufficient to meet the Corporation\u2019s debt obligations and fund committed and future capital expenditures.\n<\/p>\n

\nFor additional information, please refer to the \u201cManagement\u2019s Discussion and Analysis\u201d section of the Corporation\u2019s 2020 Annual Report available on www.sedar.com<\/a>.\n<\/p>\n

2. Results of Operations
\n
<\/b>A discussion of Magellan\u2019s operating results for fourth quarter ended December 31, 2020\n<\/p>\n

Consolidated revenue in the fourth quarter of 2020 was $180.1 million, a $66.6 million decrease from the fourth quarter of 2019 of $246.7 million. The Corporation reported gross profit and net loss of $11.6 million and $22.9 million for the fourth quarter of 2020 in comparison to gross profit of $34.0 million and net income of $9.4 million for the fourth quarter of 2019. <\/span><\/p>\n

Consolidated Revenue<\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCanada\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

84,733<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n93,423\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(9.3%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

338,883<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n366,565\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(7.6%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nUnited States\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

46,181<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n78,407\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(41.1%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

202,284<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n322,970\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(37.4%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEurope\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

49,143<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n74,848\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(34.3%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

203,247<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n326,684\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(37.8%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal revenues\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

180,057<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n246,678\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(27.0%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

744,414<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n1,016,219\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(26.7%)\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nIn the fourth quarter of 2020, the COVID-19 pandemic caused disruption to air travel and commercial activities, particularly within the aerospace and commercial airline industries, have negatively impacted global supply, demand and distribution capabilities. As a result there was a decrease to the demand for the Corporation\u2019s aerospace products and services that led to lower revenues. Revenues in Canada decreased 9.3% in the fourth quarter of 2020 in comparison to the same period in 2019 primarily due to decreased volumes in proprietary and casting products, partially offset by higher volumes in a number of defence programs.\n<\/p>\n

\nRevenues in United States decreased by 41.1% in the fourth quarter of 2020 when compared to the fourth quarter of 2019, largely due to volume decreases for both single aisle, specifically the Boeing 737 MAX, and wide-body aircraft.\n<\/p>\n

\nEuropean revenues decreased 34.3% in the third quarter of 2020 compared to the corresponding period in 2019 primarily driven by build rate reductions for both single aisle and wide-body aircraft.\n<\/p>\n

Gross Profit<\/b><\/p>\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGross profit\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

11,634<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n33,973\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(65.8%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

96,491<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n156,958\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(38.5%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPercentage of revenues\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6.5%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n13.8%\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

13.0%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n15.4%\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nGross profit of $11.6 million for the fourth quarter of 2020 was $22.3 million lower than the fourth quarter of 2019 gross profit of $34.0 million, and gross profit as a percentage of revenues of 6.5% for the fourth quarter of 2020 was lower than the fourth quarter of 2019 of 13.8%. The lower gross profit in the current quarter when compared to the same quarter in 2019 was primarily driven by decreased volumes in a number of commercial programs, offset in part by cost reductions and recognition of $1.0 million in subsidies from the CEWS program.\n<\/p>\n

Administrative and General Expenses<\/b><\/p>\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nChange\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdministrative and general expenses\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,371<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n15,527\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(20.3%)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

52,075<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n62,312\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n(16.4%)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPercentage of revenues\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6.9%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n6.3%\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

7.0%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n6.1%\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nAdministrative and general expenses as a percentage of revenues of 6.9% for the fourth quarter of 2020 were 0.6% higher than the same period of 2019. Administrative and general expenses decreased $3.2 million to $12.4 million in the fourth quarter of 2020 compared to $15.5 million in the fourth quarter of 2019 mainly due to lower discretionary expenses, lower salary and related expenses and cost reductions across the majority of the expense categories to align with current business volumes.\n<\/p>\n

Restructuring<\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nWorkforce reduction\n<\/p>\n

\nClosure costs\n<\/p>\n

\nImpairment of property, plant and equipment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

653<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6,916<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nClosure costs\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,236<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,236<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nImpairment of property, plant and equipment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2,385<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2,385<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

Restructuring<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6,274<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,537<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nDuring the fourth quarter of 2020, Magellan announced a restructuring plan that will reorganize its European operations resulting in the closure of its Bournemouth manufacturing facilities in the United Kingdom. As a result, a total of $5.6 million was expensed during the fourth quarter of 2020.\n<\/p>\n

Goodwill impairment<\/b><\/p>\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGoodwill impairment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

Goodwill impairment<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nCOVID-19 resulted in reduced production rates implemented by commercial aircraft manufacturers and reduced flying hours by operators. Due to the projected slow recovery of the aerospace market and the resulting depressed customer demand for products and services provided by one of our CGUs, the Corporation recorded a goodwill impairment charge of $12.0 million.\n<\/p>\n

Other <\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nForeign exchange loss\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,409<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n5,150\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

1,138<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n1,874\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nLoss on disposal of property, plant and equipment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

182<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n50\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

117<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n32\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nOther\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n332\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(172)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n3,112\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal other\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,591<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n5,532\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

1,083<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n5,018\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nFor the fourth quarter of 2020, the Corporation recorded a $3.4 million foreign exchange loss compared to a $5.1 million foreign exchange loss in the same period of 2019, mainly driven by the movements in balances denominated in foreign currencies and the fluctuations of the foreign exchange rates.\n<\/p>\n

Interest Expense<\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nInterest on bank indebtedness and long-term debt\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

80<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n55\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

305<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n101\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAccretion charge for borrowings, lease liabilities and long-term debt\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

676<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n661\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,129<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2,478\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDiscount on sale of accounts receivable\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

191<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n498\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

924<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2,053\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal interest expense\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

947<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n1,214\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

4,358<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n4,632\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nTotal interest expense of $0.9 million in the fourth quarter of 2020 was lower than the fourth quarter of 2019 amount of $1.2 million mainly due to lower discount on sale of accounts receivables.\n<\/p>\n

Provision for Income Taxes<\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCurrent income tax expense\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

4,498<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(1,047)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

7,140<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n6,105\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDeferred income tax expense\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(5,218)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n3,338\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,939<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n11,510\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncome tax (recovery) expense\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(720)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2,291\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

11,079<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n17,615\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEffective tax rate\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3.1%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n19.6%\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

77.0%<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n20.7%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nIncome tax recovery for the three months ended December 31, 2020 was $0.7 million, representing an effective income tax rate of 3.1% compared to 19.6% 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 an unfavourable impact of the prior year reversal of certain tax assets due to changes in estimates and changes in mix of income and loss across the different jurisdictions in which the Corporation operates.\n<\/p>\n

3. Selected Quarterly Financial Information
\n
<\/b>A summary view of Magellan\u2019s quarterly financial performance\n<\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2020<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

2019<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in millions of dollars,\n<\/p>\n

\nexcept per share amounts\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

Dec 31<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nSep 30\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nJun 30\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nMar 31\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nDec 31\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nSep 30\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nJun 30\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\nMar 31\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nRevenues\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

180.1<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n163.4\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n162.2\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n238.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n246.7\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n235.6\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n264.1\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n269.9\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncome before taxes\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

(23.6)<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n2.2\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n10.0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n25.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n11.7\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n19.6\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n27.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n25.9\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet Income\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

(22.9)<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n6.1\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n20.1\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n9.4\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n15.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n21.7\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n20.4\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet Income per share\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nBasic and diluted\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

(0.40)<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.00\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.10\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.34\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.16\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.27\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.37\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n0.35\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEBITDA1<\/sup><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

(6.8)<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n16.3\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n24.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n41.5\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n27.9\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n34.1\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n42.7\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n40.5\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdjusted EBITDA1<\/sup><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

11.5<\/b><\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n21.8\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n25.5\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n41.5\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n27.9\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n34.1\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n42.7\n<\/p>\n<\/td>\n

\u00a0<\/td>\n\n

\n40.5\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

1<\/sup> EBITDA and Adjusted EBITDA are not IFRS financial measures. Please see the \u201cReconciliation of Net Income to EBITDA and Adjusted EBITDA\u201d section for more information.\n<\/p>\n

\nRevenues 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\u2019s 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 1.3859 in the second quarter of 2020 and a low of 1.3176 in the fourth quarter of 2020. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from its high of 1.7315 in the first quarter of 2019 to its lowest rate of 1.6280 in the fourth quarter of 2019. The average quarterly exchange rate of the British pound relative to the United States dollar reached its high of 1.3205 in the fourth quarter of 2020 and hit a low of 1.2327 in the third quarter of 2019.\n<\/p>\n

\nRevenue for the fourth quarter of 2020 of $180.1 million was lower than that in the fourth quarter of 2019. The average quarterly exchange rate of the United States dollar relative to the Canadian dollar in the fourth quarter of 2020 was 1.3176 versus 1.3200 in the same period of 2019. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from 1.7004 in the fourth quarter of 2019 to 1.7207 during the current quarter. The average quarterly exchange rate of the British pound relative to the United States dollar strengthened from 1.2882 in the fourth quarter of 2019 to 1.3205 in the current quarter. Had the foreign exchange rates remained at levels experienced in the fourth quarter of 2019, reported revenues in the fourth quarter of 2020 would have been higher by $1.1 million.\n<\/p>\n

\nAs discussed above, net income reported in the quarterly information was impacted by the foreign exchange movements. The fourth quarter of 2019 was impacted by volume decreases in Europe, production inefficiencies in certain operating divisions and an accrual recorded in relation to the wind-down of the A380 program. Results for the second, third and fourth quarter of 2020 were impacted by volume decreases in a number of commercial programs due to COVID-19. During the third quarter of 2020, Magellan implemented cost savings initiatives designed to reduce operating costs by re-balancing its workforce and recognized severance costs of $5.6 million. A $3.4 million cost recovery was recorded against cost of sales as a result of the cancellation of A320neo program in the third quarter of 2020. In the fourth quarter of 2020, the Corporation committed to a plan to restructure its manufacturing divisions in Europe due to a decrease in demand as a result of a deterioration in economic conditions stemming from COVID-19, and recognized $5.6 million restructuring charge including a $2.4 million impairment cost related to assets made obsolete as a result of the plan. Further, a $12.0 million goodwill impairment charge was recorded in the fourth quarter of 2020. The Corporation recognized $8.6 million, $10.4 million and $1.0 million in respect of the government subsidy relating to the CEWS program in the second, third and fourth quarter respectively, and reduced the expense that the subsidy is intended to offset.\n<\/p>\n

4. Reconciliation of Net Income to EBITDA and Adjusted EBITDA
\n
<\/b>A description and reconciliation of certain non-IFRS measures used by management\n<\/p>\n

\nIn 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) and Adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, and restructuring) in this quarterly statement. The Corporation has provided these measures because it believes this information is used by certain investors to assess financial performance and that EBITDA and Adjusted EBITDA are useful supplemental measures as they provide an indication of the results generated by the Corporation\u2019s 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 these measures is calculated in accordance with IFRS, but EBITDA and Adjusted EBITDA are not recognized measures under IFRS, and the Corporation\u2019s method of calculation may not be comparable with that of other companies. Accordingly, EBITDA and Adjusted 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.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet income\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(22,875)<\/b><\/p>\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n9,409\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

3,313<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n67,381\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdd back:\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nInterest\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

947<\/b><\/p>\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n1,214\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

4,358<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n4,632\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTaxes\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(720)<\/b><\/p>\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2,291\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

11,079<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n17,615\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDepreciation and amortization\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

15,872<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n15,014\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

57,103<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n55,593\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEBITDA\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(6,776)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n27,928\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

75,853<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n145,221\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdd back:\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nRestructuring\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6,274<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,537<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGoodwill impairment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

12,046<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAdjusted EBITDA\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

11,544<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n27,928\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

100,436<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n145,221\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n<\/table>\n

\nAdjusted EBITDA decreased $16.4 million or 58.8% to $11.5 million for the fourth quarter of 2020, compared to $27.9 million in the fourth quarter of 2019 mainly as a result of lower net income driven by volume reductions, lower taxes and interest, offset in part by higher depreciation and amortization, and the add-back of $6.3 million restructuring and $12.0 million goodwill impairment charges recorded in the fourth quarter of 2020.\n<\/p>\n

5. Liquidity and Capital Resources
\n
<\/b>A discussion of Magellan\u2019s cash flow, liquidity, credit facilities and other disclosures\n<\/p>\n

\nThe Corporation\u2019s 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, repurchase common shares 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.\n<\/p>\n

Cash Flow from Operations<\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease in accounts receivable\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

20,417<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n11,413\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

64,398<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n12,183\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease (increase) in contract assets\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6,563<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n13,655\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

7,336<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(12,870)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease (increase) in inventories\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

9,696<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(3,755)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(16,803)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(21,096)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease (increase) in prepaid expenses and other\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6,245<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2,803\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

8,299 <\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(1,124)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease in accounts payable, accrued\n<\/p>\n

\nliabilities and provisions\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(17,048)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(8,302)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(41,475)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(3,974)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nChanges in non-cash working capital balances\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

25,873<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n15,814\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

21,755<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(26,881)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCash provided by operating activities\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

32,931<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n43,000\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

105,970<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n104,205\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n<\/table>\n

\nFor the three months ended December 31, 2020 the Corporation generated $32.9 million from operating activities, compared to $43.0 million in the fourth quarter of 2019, mainly driven by a favourable working capital change offset by lower net income. The favourable movement of non-cash working capital balances was largely due to decreases in accounts receivable from lower revenues; lower contract assets from the timing of production and billing related to products transferred over time; decreases in inventories driven by volume reductions and reduced material purchases; and lower prepaid expenses, offset in part by decreases in accounts payable, accrued liabilities and provisions primarily driven by lower level of purchases and timing of payments.\n<\/p>\n

Investing Activities<\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nBusiness combination, net of cash acquired\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(2,858)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(5,519)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPurchase of property, plant and equipment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(11,599)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(17,152)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(24,575)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(51,820)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nProceeds from disposal of property, plant and equipment\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

70<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

177<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n388\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease (increase) in intangible and other assets\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

1,279<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n826\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(1,417)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(5,301)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCash used in investing activities\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(10,250)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(19,184)\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(25,815)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(62,252)\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n<\/table>\n

\nInvesting activities used $10.3 million in cash for the fourth quarter of 2020 compared to $19.2 million in the same quarter of the prior year, a reduction of $8.9 million primarily due to lower levels of investment in property, plant and equipment.\n<\/p>\n

Financing Activities<\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

Three month period<\/b><\/p>\n<\/td>\n

\n

Twelve Month period<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n

\n

ended December 31<\/b><\/p>\n<\/td>\n<\/tr>\n

\n

\nExpressed in thousands of dollars\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n

\n\n

2020<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2019\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncrease (decrease) in debt due within one year\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

9,520<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n6,175\n<\/p>\n<\/td>\n

\n\n

285<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(1,720)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecrease in long-term debt\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(307)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(2,063)\n<\/p>\n<\/td>\n

\n\n

(754)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(4,124)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nLease liability payments\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(1,917)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(1,215)\n<\/p>\n<\/td>\n

\n\n

(6,970)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(3,972)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncrease (decrease) in long-term liabilities and provisions\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

341<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n112\n<\/p>\n<\/td>\n

\n\n

(545)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(44)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncrease (decrease) in borrowings subject to specific conditions, net\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

6 <\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n\n

37<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(803)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCommon share repurchases\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(1,361)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n

\n\n

(3,407)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n\u2500\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCommon share dividend\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

(6,055)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(6,112)\n<\/p>\n<\/td>\n

\n\n

(24,372)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(23,575)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCash generated (used) in financing activities\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

227<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(3,103)\n<\/p>\n<\/td>\n

\n\n

(35,726)<\/b><\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(34,238)\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n<\/tr>\n<\/table>\n

\nThe Corporation has a Bank Credit Facility Agreement with a syndicate of lenders, under which there were no drawings as of September 30, 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.\n<\/p>\n

\nThe Corporation used $0.2 million in financing activities in the fourth quarter of 2020 mainly to repay long-term debt, lease liabilities, dividends, and for the repurchase common shares, offset by cash proceeds from sales of account receivables.\n<\/p>\n

\nAs at December 31, 2020, the Corporation had made contractual commitments to purchase $4.1 million of capital assets.\n<\/p>\n

Dividends <\/b><\/p>\n

\nIn 2020, the Corporation paid quarterly dividends on its common shares of $0.105 per common share, representing an aggregate dividend payment of $24.4 million.\n<\/p>\n

\nSubsequent to December 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 March 31, 2021 to shareholders of record at the close of business on March 19, 2021.\n<\/p>\n

Normal Course Issuer Bid<\/b><\/p>\n

\nOn May 25, 2020, the Toronto Stock Exchange (\u201cTSX\u201d) accepted the Corporation\u2019s intention to commence a normal course issuer bid (\u201cNCIB\u201d) which allows the Corporation to repurchase up to 2,910,450 of the Corporation\u2019s issued and outstanding common shares in the open market or otherwise permitted by the TSX. Common shares purchased by the Corporation are cancelled. The program commenced on May 27, 2020 and will terminate on May 26, 2021, or on such earlier date as the Corporation completes its purchase pursuant to the NCIB. During the three-month period ended December 31, 2020, 190,350 common shares were purchased for cancellation for $1.4 million at a volume weighted average price paid of $7.15 per share.\n<\/p>\n

Outstanding Share Information <\/b><\/p>\n

\nThe 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 March 5, 2021, 57,729,106 common shares were outstanding and no preference shares were outstanding.\n<\/p>\n

6. Financial Instruments
\n
<\/b>A summary of Magellan\u2019s financial instruments\n<\/p>\n

Derivative Contracts<\/b><\/p>\n

\nThe Corporation operates internationally, which gives rise to a risk that its income, cash flows and shareholders\u2019 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\u2019s 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\u2019s 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 December 31, 2020, there were no foreign exchange contracts outstanding.\n<\/p>\n

Off Balance Sheet Arrangements<\/b><\/p>\n

\nThe 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.\n<\/p>\n

7. Related Party Transactions
\n
<\/b>A summary of Magellan\u2019s transactions with related parties\n<\/p>\n

\nFor the three and twelve month periods ended December 31, 2020, the Corporation had no material transactions with related parties as defined in IAS 24 Related Party Disclosures<\/i>.\n<\/p>\n

8. Risk Factors
\n
<\/b>A summary of risks and uncertainties facing Magellan\n<\/p>\n

\nThe 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.\n<\/p>\n

The ongoing COVID-19 pandemic, the rapidly evolving reactions of governments, private sector participants and the public to the pandemic and\/or the associated economic impact of the pandemic and the reactions to it have had and will continue to have an effect on the Corporation\u2019s business, operations, revenues, financial condition, results of operations and growth prospects for a period of time that remains uncertain.<\/span><\/i><\/p>\n

\nThe extent and duration of the COVID-19 pandemic, the reactions of governments, private sector participants and the public to the pandemic and the associated disruption to business and commerce generally, and the extent to which these will continue to affect the Corporation\u2019s business, financial condition and results of operation in particular will all depend on future developments which are highly uncertain and many of which are outside the control of the Corporation and cannot be predicted with confidence. Such developments include the ultimate geographic spread, intensity and duration of the pandemic (including the possibility of further waves), new information which may emerge concerning the severity of COVID-19, the effectiveness and intensity of measures to contain COVID-19 or address its impact (including the expediency of countries\u2019 vaccination programs), short- and longer-term changes in consumer travel patterns or travel restrictions imposed by governments and the other economic impacts of the pandemic and the reactions to it. For example, the Corporation has experienced or may experience or continue to experience:\n<\/p>\n