Magna International Inc. · TSX:MG
Magna International — Q4 2021 Earnings Presentation
56 slides from Magna International's earnings presentation, Feb 11, 2022
Slide 1: Q4 & Year End 2021 Results & 2022 Outlook
Q4 & Year End 2021 Results & 2022 Outlook February 11, 2022
Slide 2: Forward Looking Statements
Forward Looking Statements Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 2 Certain statements in this presentation constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements"). Any such forward - looking statements are intended to provide i
Slide 3: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 3 Forward - looking statements are based on information currently available to us and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions
Slide 4: Reminders
4 Reminders All amounts are in U.S. Dollars Today's discussion excludes the impact of other expense (income), net ("Unusual Items") "Organic", in the context of sales movements, means "excluding the impact of foreign exchange, acquisitions and divestitures" Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK
Slide 5: Agenda
5 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK Agenda 2021 Highlights and Q4 2021 Operating Results 2022 Outlook Financial Strategy
Slide 6: 2021 Highlights
2021 HIGHLIGHTS Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 6
Slide 7: Q4 2021 Performance Highlights
CONSOLIDATED SALES $9.1B Q4 2021 Performance Highlights Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 7 Continued Challenging Operating Environment in Q4 2021 ADJUSTED EBIT MARGIN % 5.6% ADJUSTED DILUTED EPS $1.30 FREE CASH FLOW 2 $729M 1 W eighted Growth over Market ( GoM ) compares organic sales grow
Slide 8: 2021 Accomplishments: People and Focus
2021 Accomplishments Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 8 Continuing to keep our employees safe during pandemic Increased focus on Diversity & Inclusion Launched a number of new education programs 5th Straight Year Named to Forbes "World's Best Employers" Focus People
Slide 9: 2021 Accomplishments: Operational Excellence
2021 Accomplishments Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 9 Committed to carbon neutrality targets - aligned with Paris Climate Accord Launched many Factory of the Future projects globally Managed through year - long supply chain challenges while minimizing disruption to OEM production Receive
Slide 10: 2021 Accomplishments: Growth
2021 Accomplishments Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 10 Continued weighted sales Growth over Market 1 in 2021: 4% Achieved above market sales growth 1 across all key regions Initial launches of new technologies in significant, growing addressable markets: • e - Drives • advanced driver as
Slide 11: 2021 Accomplishments: Innovation
2021 Accomplishments Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 11 Successful commercialization • New business: ̶ Complete ADAS system ̶ Primary and secondary e - Drives ̶ Driver Monitoring system ̶ Front Integration Panel ̶ FREEFORM Œ on four new vehicle programs • CES Best of Innovation Award for
Slide 12: 2021 Financial Results
2021 Financial Results Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 12 Significant Impacts from COVID - 19 in '20, Semi Shortages in '21 Adjusted EBIT Margin (%) 5.1% 5.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2020 2021 Consolidated Sales ($Billions) $32.6 $36.2 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.0
Slide 13: Q4 2021 Financial Results Reflect Industry Environment
Q4 2021 Financial Results Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 13 Reflect Industry Environment Q4 2021, Exceptional Q4 2020 Adjusted EBIT ($Millions) $1,095 $508 $0 $200 $400 $600 $800 $1,000 Q4'20 Q4'21 Consolidated Sales ($Billions) $10.6 $9.1 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.0 $2.0 $4.0 $
Slide 14: Q4 2021 vs Q3 2021 Sequential Sales
Q4 2021 vs Q3 2021 (Sequential) Financial Results Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 14 Key Factors • Higher global light vehicle production (+) • Launch of new programs (+) • Program mix ( - ) • Foreign currency translation: $119M ( - ) Q4'21 vs Q3'21 Production Global +21% North America +1
Slide 15: Q4 2021 vs Q3 2021 Sequential Adjusted EBIT
Q4 2021 vs Q3 2021 (Sequential) Financial Results Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 15 Key Factors • Increased earnings on $1.2B increase in sales (+) • Provision on engineering service contracts with automotive unit of Evergrande in Q3 '21 (+) • Government R&D incentives (+) • Higher comme
Slide 16: Q4 2021 Cash Flow and Investment Activities
Q4 2021 Cash Flow and Investment Activities Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 16 Free Cash Flow 1 ($Millions) $1,670 - $25 $729 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -$250 -$50 $150 $350 $550 $750 $950 $1,150 $1,350 $1,550 Q4'20 Q3'21 Q4'21 OTHER USES OF CASH Acquisition of Interest in LG - Magna
Slide 17: Annualized Dividend
Annualized Dividend 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 17 Increased Q4 Dividend for 12 th Straight Year 1 Based on Q4 run rate 0.50 0.55 0.64 0.76 0.88 1.00 1.12 1.32 1.46 1.60 1.72 1.80 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 Q4'10 Q4'11 Q4'1
Slide 18: 2022 Outlook
2022 OUTLOOK Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 18
Slide 19: Outlook Reflects Our Go Forward Strategy
Outlook Reflects Our Go Forward Strategy Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 19 Accelerate Deployment of Capital towards High - Growth Areas Drive Operational Excellence Unlock New Business Models and Markets
Slide 20: Overview of 2022 Outlook
Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 20 Overview of 2022 Outlook Headwinds Continued semiconductor chip supply constraints Inflationary input costs • Commodity • Labour • Energy, logistics and other Tailwinds Launching content on exciting new programs Increased business and opportunities in me
Slide 21: Overview of 2022 Outlook – Financial Metrics
SALES GROWTH Overview of 2022 Outlook – Financial Metrics Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 21 MARGIN EXPANSION INVESTING FOR GROWTH STRONG FREE CASH FLOW 1 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s p lu
Slide 22: Significant Content on BEV Launches Globally
22 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK Ford F - 150 Lightning Mercedes - Benz GLS SUV Cadillac Lyriq GMC Hummer BMW iX Mercedes - Benz EQE Significant Content on BEV Launches Globally Rivian R1S Volkswagen ID Buzz Fisker Ocean NIO ES7 Xpeng G9 Smart B - SUV Coming Soon North America Europ
Slide 23: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 23 Automotive Light Vehicle Production (millions of units) 2021 2022 2024 North America 13.1 15.2 17.5 Europe 16.0 18.5 21.2 China 24.5 24.2 29.0 U.S. Foreign Exchange Rates 2021 2022 2024 Cdn 0.798 0.800 0.800 Euro 1.183
Slide 24: Consolidated Outlook
CONSOLIDATED OUTLOOK Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 24
Slide 25: Consolidated Sales
Consolidated Sales Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 25 2020 2021 2022F 2024F • Higher light vehicle production (+) • Content growth (+) ̶ New technologies ̶ New facilities ̶ Launches • Impact of stronger U.S. dollar ( - ) • End of production on certain programs ( - ) • Dispositions, net of
Slide 26: Unconsolidated Sales
Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 26 2020 2021 2022F 2024F • Significant growth primarily driven by: ̶ E - mobility components (LG JV) ̶ Integrated e - Drives (HASCO JV) ̶ Seating systems 1 Sales at 100% for our unconsolidated entities 2 2020 excludes $1. 4 billion from Getrag JVs 1.5 Unwei
Slide 27: Consolidated Adjusted EBIT Margin %
Consolidated Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 27 2020 2021 2022F 2024F 2021 - 2022 • Contribution on higher sales (+) • Lower production inefficiencies from unpredictable OEM production schedules (+) • Operational Excellence initiatives (+) • Higher input costs ( -
Slide 28: Segment Outlook
SEGMENT OUTLOOK Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 28
Slide 29: Segment Sales & Adjusted EBIT Margin %
Segment Sales & Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 29 1 Excluding other expense (income), net 2 Organic Sales represents sales excluding acquisitions net of divestitures and FX movements BODY EXTERIORS & STRUCTURES 2020 2021 2022F 2024F 6.0 5.7 8.1 - 8.6 8.9 - 9.5 PO
Slide 30: Financial Strategy
FINANCIAL STRATEGY Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 30
Slide 31: Capital Allocation Principles
MAINTAIN STRONG BALANCE SHEET • Preserve liquidity and high investment grade credit ratings - Adj. debt to Adj. EBITDA ratio between 1.0 - 1.5x • Maintain flexibility to invest for growth INVEST FOR GROWTH • Organic and inorganic opportunities • Innovation RETURN CAPITAL TO SHAREHOLDERS Capital Allo
Slide 32: Capital Spending
Capital Spending Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 32 Increased Spending Reflects Investments for Growth 1 2022 to 2024 are based on the level of business reflected in our sales outlook ($Billions) 2017 2018 2019 2020 2021 2022F 2023F 2024F 1.9 1.4 % of Sales 1 5.1 3.7 1.1 1.4 3.5 ~1.8 3.5
Slide 33: Free Cash Flow Generation
Free Cash Flow 1 Generation Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 33 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s p lus settlement of a long - term receivable from a non - consolidated joint venture minus capit
Slide 34: In Summary
In Summary Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 34 Continued strong sales growth Margin expansion through outlook period Solid free cash flow generation Accelerating investments to support growth in megatrend areas % $ Executing Our Go Forward Strategy
Slide 35: Appendix - Q4 2021 Results
Appendix - Q4 - 2021 Results Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 35
Slide 36: Q4 2021 Reconciliation of Reported Results
Q4 2021 Reconciliation of Reported Results 36 REPORTED OTHER INCOME, NET EXCL. OTHER INCOME, NET Income Before Income Taxes $ 576 $ (90) $ 486 % of Sales 6.3% 5.3% Income Tax Expense $ 98 $ (17) $ 81 % of Pretax 17.0% 16.7% Income Attributable to Non - Controlling Interests $ (14) $ - $ (14) Net Inc
Slide 37: Q4 2020 Reconciliation of Reported Results
Q4 2020 Reconciliation of Reported Results 37 REPORTED OTHER EXPENSE, NET EXCL. OTHER EXPENSE, NET Income Before Income Taxes $ 973 $ 100 $ 1,073 % of Sales 9.2% 10.2% Income Tax Expense $ 223 $ (13) $ 210 % of Pretax 22.9% 19.6% Income Attributable to Non - Controlling Interests $ (12) $ - $ (12) N
Slide 38: Sales Performance vs Market (Q4)
Sales Performance vs Market 38 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM) Body Exteriors & Structures (18%) (15%) 6% Power & Vision (12%) (18%) 3% Seating Systems (7%) (17%) 4% Complete Vehicles (14%) (11%) 10% TOTAL SALES (14%) (15%) 6% Unweighted Production Growth
Slide 39: Sales Performance vs Market (Full Year)
Sales Performance vs Market 39 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM) Body Exteriors & Structures 7% 6% 5% Power & Vision 17% 5% 4% Seating Systems 10% (1%) (2%) Complete Vehicles 13% 8% 7% TOTAL SALES 11% 5% 4% Unweighted Production Growth 4% Weighted Production
Slide 40: Segment Impact on Adjusted EBIT % of Sales
Segment Impact on Adjusted EBIT % of Sales 40 ($Millions) SALES ADJUSTED EBIT ADJUSTED EBIT AS A PERCERTANGE OF SALES 4 th Quarter of 2020 $ 10,568 $ 1,095 10.4% Increase (Decrease) Related to: Body Exteriors & Structures $ (773) $ (375) (3.2%) Power & Vision $ (375) $ (188) (1.6%) Seating Systems $
Slide 41: Geographic Sales
Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 41 Geographic Sales Q4 2020 Q4 2021 NORTH AMERICA $5.0B $4.2B PRODUCTION (20%) EUROPE $4.8B $3.7B PRODUCTION (28%) ASIA $767M $1,169M PRODUCTION (13%) (China (10%)) REST OF WORLD $128M $100M S.A. PRODUCTION (14%) Q4 2021 vs Q4 2020
Slide 42: Leverage Ratio
($Millions) Leverage Ratio 42 LTM EBITDA $ 3,576 Lease Adjustment $ 320 Other $ (83) Adjusted EBITDA $ 3,813 Debt per Balance Sheet $ 3,993 Lease Liability per Balance Sheet $ 1,680 Other $ 218 Adjusted Debt $ 5,891 Adjusted Debt / Adjusted EBITDA (Q4 2021) 1.54x Q4 & FULL YEAR 2021 RESULTS + 2022 O
Slide 43: Capital Allocation Principles
Capital Allocation Principles Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 43 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q4 2021 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.
Slide 44: Segment Sales and Adjusted EBIT Margin
Segment Sales and Adjusted EBIT Margin Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 44 Q4 2020 Q4 2021 BODY EXTERIORS & STRUCTURES $4.39B $3.62B SALES ADJUSTED EBIT $543M $168M 12.4% 4.6% SEATING $1.39B $1.30B SALES ADJUSTED EBIT $85M $49M 6.1% 3.8% POWER & VISION $3.18B $2.80B SALES ADJUSTED EBIT
Slide 45: Appendix - Outlook
Appendix - Outlook Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 45
Slide 46: Financial Outlook
Financial Outlook 46 2022 2024 Sales: • Body Exteriors & Structures 16.2 – 16.8 19.6 – 20.6 • Power & Vision 11.9 – 12.3 14.3 – 14.9 • Seating Systems 5.4 – 5.7 6.2 – 6.6 • Complete Vehicles 5.8 – 6.1 5.0 – 5.5 Total Sales 38.8 – 40.4 44.6 – 47.1 Adjusted EBIT Margin % 1 6.0% – 6.4% 8.1% – 8.6% Equi
Slide 47: Body Exteriors & Structures Segment Sales
Segment Sales Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 47 • Higher light vehicle production • Composite liftgate technology continues to outgrow market • Battery enclosures business begins to ramp up '22 • Continued strong growth in China • Negative impact of stronger U.S. dollar 2020 2021 2022F 2
Slide 48: Body Exteriors & Structures Adjusted EBIT Margin
Segment Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 48 2020 2021 2022F 2024F 2021 to 2022 • Contribution on higher sales (+) • Lower production inefficiencies from unpredictable OEM production schedules (+) • Operational Excellence initiatives (+) • Disposition of loss - maki
Slide 49: Power and Vision Segment Sales
Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 49 POWER AND VISION Segment Sales 1 Sales at 100% for our unconsolidated entities 2 Organic Sales represents sales excluding acquisitions net of divestitures and FX movements • Higher light vehicle production • Content growth: ̶ ADAS sales CAGR of 30%+ ‘21
Slide 50: Power and Vision Adjusted EBIT Margin
Segment Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 50 2020 2021 2022F 2024F 2021 to 2022 • Contribution on higher sales (+) • Lower production inefficiencies from unpredictable OEM production schedules (+) • Operational Excellence initiatives (+) • Higher input costs ( - ) •
Slide 51: Seating Systems Segment Sales
Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 51 SEATING SYSTEMS Segment Sales 1 Sales at 100% for our unconsolidated entities 2 Organic Sales represents sales excluding acquisitions net of divestitures and FX movements • Higher light vehicle production • Content growth ̶ New programs and technologies
Slide 52: Seating Systems Adjusted EBIT Margin
Segment Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 52 2020 2021 2022F 2024F 2021 to 2022 • Contribution on higher sales (+) • Lower production inefficiencies from unpredictable OEM production schedules (+) • Operational Excellence initiatives (+) • Higher input costs ( - ) •
Slide 53: Complete Vehicles Segment Sales
2020 2021 2022F 2024F Segment Sales Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 53 • Overall vehicle assembly volumes relatively level • Launching Fisker Ocean in late ‘22 with value - added basis of accounting • End of production of BMW 5 Series (Graz) in '23 • Negative impact of stronger U.S. dolla
Slide 54: Complete Vehicles Adjusted EBIT Margin
Segment Adjusted EBIT Margin % 1 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK 54 2020 2021 2022F 2024F 2021 to 2022 • Government R&D incentives received ‘21 ( - ) • Lower commercial settlements ( - ) • Higher launch costs ( - ) • Increased input costs ( - ) • Lower margins on lower engineering sales (
Slide 55: Key 2022 Non-EV Launches
55 Q4 & FULL YEAR 2021 RESULTS + 2022 OUTLOOK Chevrolet Silverado (Oshawa) Jeep Wagoneer Honda CR - V Toyota Tundra Ford Maverick Alpha Romero Tonale Key 2022 Non - EV Launches BMW X1 Mercedes - Benz GLC BMW X5 North America Europe China
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