Magna International Inc. · TSX:MG
Magna International — Q2 2024 Earnings Presentation
38 slides from Magna International's earnings presentation, Aug 2, 2024
Slide 1: Second Quarter 2024 Results
Second Quarter 2024 August 2, 2024 Q2 2024 Results 1
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q2 2024 Results 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q2 2024 Results 3 Certain statements in this presentation and accompanying document constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") . Any such forward - looking statements are intended to provide i
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q2 2024 Results 4 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 and expected future develop
Slide 5: Reminders
Q2 2024 Results 5 Reminders All amounts are in U.S. Dollars. Effective July 1, 2023 we revised our calculation of Non - GAAP measures to exclude amortization of acquired intangible assets. The historical presentation of non - GAAP measures has also been updated to reflect the revised calculations. T
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q2 2024 Results 6
Slide 7: Key Takeaways
Q2, 2024 O perating performance largely in - line with our expectations Executing to our margin outlook • Operational excellence activities on track (+75 bps for '24 - '25) • Megatrend engineering spending reduction (additional $40M, ~$90M for '24) • Adjusted EBIT Margin range tightened (now 5.4% -
Slide 8: Executing Strategy in Current Market Dynamics
Q2 2024 Results 8 Executing Strategy in Current Market Dynamics Winning business on key programs across portfolio – Awarded hot - stamped door ring with Japan - based global OEM Commercializing innovations – Awarded reconfigurable seating systems with China - based OEM Operational Excellence – Focus
Slide 9: Executing Strategy in Current Market Dynamics
Q2 2024 Results 9 Divestitures of non - core facilities – Sale of metalforming operations in India ($190M '23 sales) Vertical integration of critical sub - systems – power module acquisition – Accelerates in - house development – Leverages combined technical and manufacturing competencies – Secures
Slide 10: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q2 2024 Results 10
Slide 11: Q2 2024 Performance Summary
Q2 2024 Performance Summary Q2 2024 Results 11 Consolidated Sales $11.0B Weighted GoM 1 of - 1% (+1% excl. Complete Vehicles) Level with Q2/23 Adjusted Diluted EPS $1.35 - 12% Free Cash Flow 2 $123M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%
Slide 12: Q2 2024 Financial Results
Q2 2024 Financial Results Q2 2024 Results 12 Weighted GoM 1 - 1% (+1% excl. Complete Vehicles) Consolidated Sales ($Millions) Level with Q2/23 2 Q2 2024 PRODUCTION Global 2% North America 1% Detroit - based - 5% Europe - 5% China 6% Magna Weighted 0% 1 Weighted Growth over Market (GoM) compares orga
Slide 13: Q2 2024 Financial Results: Adjusted EBIT & Margin
Q2 2024 Financial Results Q2 2024 Results 13 • Operational – Operational excellence activities driving productivity and efficiency improvements – Lower net engineering costs – Lower launch, engineering and other costs associated with assembly business – Higher net input costs ( - ) • Equity Income –
Slide 14: Q2 2024 Financial Results
Q2 2024 Financial Results Q2 2024 Results 14 ($Millions, unless otherwise noted) Q2 2023 Q2 2024 CHANGE Adjusted EBIT 616 577 (39) Interest Expense 34 54 (20) Adjusted Pre - Tax Income 582 523 (59) Adjusted Income Taxes (126) (119) 7 Income Attributable to Non - Controlling Interests (15) (15) - Adj
Slide 15: Q2 2024 Cash Flow and Investment Activities
Q2 2024 Cash Flow and Investment Activities Q2 2024 Results 15 Free Cash Flow 1 ($Millions) KEY SOURCES (USES) OF CASH Net Issuances (Repayment) of Debt 544 (416) Dividends paid (129) (134) ($Millions) Q2 2023 Q2 2024 Cash from Operations Before Changes in Operating Assets & Liabilities 879 681 Chan
Slide 16: Continued Financial Strength
Continued Financial Strength Q2 2024 Results 16 LEVERAGE RATIO (LTM, 30JUN24) ($M illions) Adjusted Debt 7,585 Adjusted EBITDA 3,982 Adjusted Debt / Adjusted EBITDA 1.90 TOTAL LIQUIDITY (30JUN24) ($M illions) Cash 999 Available Term & Operating Lines of Credit 2,652 Total Liquidity 3,651 Investment
Slide 17: Updated 2024 Outlook – Key Assumptions
Updated 2024 Outlook – Key Assumptions Q2 2024 Results 17 2023 MAY 2024 AUGUST 2024 Light Vehicle Production (millions of units) • North America 15.6 15.7 15.7 • Europe 17.4 17.4 17.1 • China 29.3 29.0 29.0 Foreign Exchange Rates • 1 CDN dollar equals USD 0.742 0.725 0.733 • 1 EURO equals USD 1.082
Slide 18: Updated 2024 Outlook
Updated 2024 Outlook Q2 2024 Results 18 Maintaining Sales and Narrowing Adjusted EBIT Margin Ranges ($Billions, unless otherwise noted) 2023 MAY 2024 AUGUST 2024 Total Sales 42.8 42.6 – 44.2 42.5 – 44.1 Adjusted EBIT Margin % 1 5.2% 5.4% – 6.0% 5.4% – 5.8% Equity Income 112M 120M – 150M 100M – 130M
Slide 19: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q2 2024 Results 19
Slide 20: Updated 2026 Outlook
Updated 2026 Outlook Q2 2024 Results 20
Slide 21: Updated 2026 Outlook
Updated 2026 Outlook Q2 2024 Results 21 Market Dynamics Lower BEV adoption | OEMs recalibrating portfolios | Geopolitical Uncertainty Complete Vehicle Assembly • No production of I neos Fusilier and Fisker Ocean programs • MB G - Class pass - through sales x Restructuring Complete Vehicles cost stru
Slide 22: Updated 2026 Outlook
Updated 2026 Outlook Q2 2024 Results 22 ($Billions, unless otherwise noted) FEBRUARY 2024 AUGUST 2024 Total Sales 48.8 – 51.2 44.0 – 46.5 Adjusted EBIT Margin % 1 7.0% – 7.7% 6.7% – 7.4% Equity Income (included in EBIT) 165M – 210M 125M – 170M Capital Spending ~1.9 1.6 – 1.8 Free Cash Flow 2 2.0+ 1.
Slide 23: Updated 2026 Outlook
Updated 2026 Outlook Q2 2024 Results 23 1 Includes $0.3B of Fisker systems production sales (in addition to $0.3B of complete v ehicle assembly sales) Consolidated Sales ($Billions) 48.8 - 51.2 44.0 - 46.5 1 7.0% - 7.7% 6.7% - 7.4% $3.4B - $3.9B • Operational excellence • Restructuring/ footprint •
Slide 24: Updated Capital Spending
Updated Capital Spending Q2 2024 Results 24 Expect Lower Capital Spending and CapEx /Sales Ratio 1 2024 to 2026 are based on mid - point of our CapEx and Sales outlook ~$100M associated with customer - funded CapEx 2.5 2.3 - 2.4 2024F 2025F 2026F 2023 2022 February 2024 August 2024 ($Billions) 1.7 %
Slide 25: Updated 2026 Outlook – Recap
Updated 2026 Outlook – Recap 25 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s m inus capital spending minus investment in other assets Q2 2024 Results Sales ( $44.0 - $46.5B) Updated to shifting new market reality Ac
Slide 26: 2024 Summary
2024 Summary Q2 operating performance largely in - line with our expectations Mitigating market challenges with a focus on Margin Expansion, Capital Discipline and FCF generation 2024 Outlook: • Maintaining Sales, narrowing Adjusted EBIT Margin • Lowering CapEx • Maintaining FCF 26 Solid Quarter, On
Slide 27: Magna – Forward. For all.
MA MAGNA Forward. For all.
Slide 28: Appendix
Appendix – Q2 2024 Results Q2 2024 Results 28
Slide 29: Q2 2024 Reconciliation of Reported Results
Q2 2024 Reconciliation of Reported Results Q2 2024 Results 29 Excluding: (1) Other Expense (Income), Net and (2) Amortization of Acquired Intangible Assets $Millions, except for share figures Reported (1) (2) Adjusted Income Before Income Taxes $ 427 $ 68 $ 28 $ 523 % of Sales 3.9% 4.8% Income Tax E
Slide 30: Q2 2023 Reconciliation of Reported Results
Q2 2023 Reconciliation of Reported Results Q2 2024 Results 30 Excluding: (1) Other Expense (Income), Net and (2) Amortization of Acquired Intangible Assets $Millions, except for share figures Reported (1) (2) Adjusted Income Before Income Taxes $ 483 $ 86 $ 13 $ 582 % of Sales 4.4% 5.3% Income Tax E
Slide 31: Sales Performance vs Market
Sales Performance vs Market Q2 2024 Results 31 Reported Organic 1 Performance vs Weighted Global Production (Weighted GoM) Body Exteriors & Structures (2%) (1%) (1%) Power & Vision 13% 7% 7% Seating Systems (9%) (8%) (8%) Complete Vehicles (19%) (18%) (18%) TOTAL SALES 0% (1%) (1%) Unweighted Produc
Slide 32: Segment Impact on Adjusted EBIT
Segment Impact on Adjusted EBIT % of Sales Q2 2024 Results 32 ($Millions) Sales Adjusted EBIT Adjusted EBIT as a Percentage of Sales 2 nd Quarter of 2023 $ 10,982 $ 616 5.6% Increase (Decrease) Related to: Body Exteriors & Structures $ (75) $ (53) (0.4%) Power & Vision $ 464 $ 74 0.4% Seating System
Slide 33: Geographic Sales
Geographic Sales Q2 2024 Results 33 Q2 2023 Q2 2024 Asia ASIA PRODUCTION 5% China Production 6% $1.25B $1.47B $0.00B $0.20B $0.40B $0.60B $0.80B $1.00B $1.20B $1.40B $1.60B $1.80B $2.00B $5.40B $5.50B $0.00B $1.00B $2.00B $3.00B $4.00B $5.00B $6.00B North America PRODUCTION 1% $4.36B $4.08B $0.0B $0
Slide 34: 2024 Segment Sales & Adjusted EBIT Margin
2024 Segment Sales & Adjusted EBIT Margin Q2 2024 Results 34 2023 May 2024 Outlook August 2024 Outlook Body Exteriors & Structures Sales $B 17.5 17.3 - 17.9 17.3 - 17.9 Adjusted EBIT Margin % 7.4% 7.4 - 8.0% 7.4 - 7.9% Power & Vision Sales $B 14.3 15.4 - 15.8 15.3 - 15.7 Adjusted EBIT Margin % 4.7%
Slide 35: Capital Allocation Principles
Capital Allocation Principles Q2 2024 Results 35 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q2 2024 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x LTM 30JUN24 1.90x • Main
Slide 36: Leverage Ratio
Leverage Ratio Q2 2024 Q2 2024 Results 36 ($Millions) LTM EBITDA $ 3,699 Credit Rating Agency Adjustments 283 Adjusted EBITDA $ 3,982 Debt per Balance Sheet $ 7,460 Credit Rating Agency Adjustments 125 Adjusted Debt $ 7,585 Adjusted Debt / Adjusted EBITDA Ratio (Q2 2024) 1.90x
Slide 37: Appendix – Updated 2026 Outlook
Appendix – Updated 2026 Outlook Q2 2024 Results 37
Slide 38: Updated 2026 Outlook – Key Assumptions
Updated 2026 Outlook – Key Assumptions Q2 2024 Results 38 Continuing to Explore Opportunities Not Included in Outlook FEBRUARY 2024 AUGUST 2024 Light Vehicle Production (millions of units) • North America 16.1 16.1 • Europe 17.3 17.3 • China 30.6 30.6 Foreign Exchange Rates • 1 CDN dollar equals USD