Magna International Inc. · TSX:MG
Magna International — Investor Presentation (January 2020)
42 slides from Magna International's investor presentation, Jan 16, 2020
Slide 1: 2020 Outlook
1 2020 OUTLOOK January 16, 2020
Slide 2: Forward Looking Statements
2 Forward Looking Statements We disclose "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") to provid e information about management's current expectations and plans. Such forward - looking statements may not be appropriate for othe r pur
Slide 3: Agenda
• Positioning for the Future • Reporting Segment and Consolidated Outlooks • Financial Strategy 3 Agenda
Slide 4: Positioning for the Future
4 POSITIONING FOR THE FUTURE
Slide 5: Electrification, Lightweighting, Autonomy, Smart Mobility
ORCES Electrification Lightweighting Autonomy Smart Mobility
Slide 6: Select Technologies Supporting Trends
Select Technologies Supporting Trends 6 Smart Access Reconfigurable Seating Battery Frames
Slide 7: Powertrain Electrification is Growing
7 Powertrain Electrification is Growing… Internal Combustion Engine (ICE) Micro Hybrid: ICE with 12V start/stop functionality & regeneration capability Mild Hybrid: ICE with 48V start/stop functionality, regeneration & boosting capability PHEV/HEV: ICE with high voltage eMachine , full electric driv
Slide 8: Positioned for Powertrain Electrification
Positioned for Powertrain Electrification Significant Booked eMobility Contracts 8 ICE & STOP - START HYBRID ELECTRIC
Slide 9: Positioned to Help Reduce Vehicle Weight
9 Positioned to Help Reduce Vehicle Weight Hot Stamping Casting Composite Liftgates
Slide 10: Autonomy Will Continue to Proliferate
Autonomy Will Continue to Proliferate Source: Magna Internal ADAS market forecast December 2019 10 Level 0 Level 1 Level 2 Level 3 Level 4 Level 5 57% 32% 28% 36% 28% 17% 5% 2% 5% 1% 2019 2030 2025 12% 34% 13% 30% REVISED
Slide 11: Magna's ADAS Hardware Building Blocks
Magna’s ADAS Hardware Building Blocks Radar LiDAR Domain Controller Single and Multi Camera Front Camera Ultrasonic Sensors 11
Slide 12: Positioned for Smart Mobility
Consumer Focused Vehicles Mobility Vehicles Providing Services Flexible Architecture Positioned for Smart Mobility Complete Vehicle Design, Engineering and Assembly 12 Body & Structure ADAS/Electronics/ Mechatronics Seating Powertrain
Slide 13: Reporting Segment Outlook
13 REPORTING SEGMENT OUTLOOK
Slide 14: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions 14 2019 November Outlook 2020 2022 Automotive Light Vehicle Production (millions of units) • North America 16.3 16.3 16.3 • Europe 21.4 20.8 21.6 U.S. Foreign Exchange Rates • Cdn 0.754 0.750 0.750 • Euro 1.120 1.100 1.100 • RMB 0.145 0.142 0.142 Acquisitions/Dive
Slide 15: Body Exteriors & Structures: Continued Solid Growth
Continued Solid Growth 15 2019F 2020F 2022F Sales ($Billions) • Growth in all key regions – strongest in Asia and North America • Lightweight technologies outgrowing market • Stronger U.S. dollar negatively impacts us • Emerging opportunities: – Battery frames for EVs – Active aerodynamics – ADAS se
Slide 16: Body Exteriors & Structures: Margins Expected to Improve
Solid M argins Expected to Improve 16 2019F 2020F 2022F Adjusted EBIT Margin 1 (%) 2019 to 2020 • Operational improvements (+) • Lower launch and new facility costs (+) • Lower scrap revenue ( - ) 2020 to 2022 • Contribution on higher sales (+) • Operational improvements (+) BODY EXTERIORS & STRUCTU
Slide 17: Power & Vision: Expect Further Growth
Expect Further Growth 17 2019F 2020F 2022F Sales ($Billions) • Strong growth in Asia and Europe • Growth driven by DCTs, mechatronics, electronics/ADAS and mirrors • Powertrain electrification a new growth driver – Hybrid DCTs • Stronger U.S. dollar negatively impacts us • Emerging opportunities: –
Slide 18: Power & Vision: Margin Improvement Anticipated
M argin Improvement Anticipated Through Outlook Period 18 2019F 2020F 2022F Adjusted EBIT Margin 1 (%) 2019 to 2020 • Lower engineering & other costs related to advanced ADAS programs (+) • No Lyft spending (+) • Operational improvements (+) • Lower commodity costs (+) 2020 to 2022 • Contribution on
Slide 19: Seating Systems: Further Growth Above Market
Further Growth Above Market 19 2019F 2020F 2022F Sales ($Billions) • Sales growth in all regions – strongest in Asia and Europe • High exposure to SUV/CUVs remains a positive • BMW 1 & 2 Series launching in Europe • Acquisition of Viza • Unconsolidated sales growing in Asia • Stronger U.S. dollar ne
Slide 20: Seating Systems: Margin Expansion Post-2020
Margin Expansion Post - 2020 20 2019F 2020F 2022F Adjusted EBIT Margin 1 (%) 2019 to 2020 • Lower launch costs and operational improvements (+) • New customer programs ( - ) • VIZA acquisition ( - ) • 2019 commercial settlements ( - ) 2020 to 2022 • Contribution on higher sales (+) • Operational imp
Slide 21: Complete Vehicles: Successful Program Launches Completed
Successful Program Launches Completed 21 2019F 2020F 2022F Sales ($Billions) • Largest contract manufacturer of vehicles and leader in turnkey engineering services • Enabler for Magna’s auto parts and systems business • All announced programs now launched in Europe • Stronger U.S. dollar negatively
Slide 22: Complete Vehicles: Anticipate Margin Improvement
22 2019F 2020F 2022F Adjusted EBIT Margin 1 (%) 2019 to 2020 • Operational efficiencies (+) 2020 to 2022 • Equity income from Chinese JV (+) COMPLETE VEHICLES 1 Excluding other expense (income), net 2 November 2019 Outlook 1.9 - 2.2 2.3 - 2.8 2.3 - 2.9 2 Equity Income ($M) 10 - 20 Anticipate Margin
Slide 23: Consolidated Outlook
MMAGNA CONSOLIDATED OUTLOOK
Slide 24: Magna's Consolidated Sales Continue to Grow
Magna’s Consolidated Sales Continue to Grow 24 2019F 2020F 2022F Magna Consolidated Sales ($Billions) • Higher growth in Europe and Asia creating more balanced geographic diversification • Stronger U.S. dollar, FP&C sale net of other M&A negatively impacts us 1 November 2019 Outlook 38.7 - 39.8 38.0
Slide 25: EBIT Margin: Auto Parts and Systems, Complete Vehicles
EBIT Margin % 1 25 2019F 2020F 2022F Auto Parts and Systems 2 (%) 1 Excluding other expense (income), net 2 Represents combined Body Exteriors & Structures, Power & Vision and Seating Systems 3 November 2019 Outlook 2019F 2020F 2022F Complete Vehicles (%) 6.9 - 7.2 7.4 - 7.8 8.5 - 9.0 3 % of Sales ~
Slide 26: Consolidated EBIT Margin
Consolidated EBIT Margin % 1 26 2019F 2020F 2022F 2019 - 2020 • Lower engineering and other costs related to advanced ADAS programs (+) • No Lyft spending (+) • Operational improvements (+) • Lower launch costs (+) • Lower scrap revenue ( - ) 2020 - 2022 • Net contribution on higher sales (+) • Lowe
Slide 27: Financial Strategy
MMAGNA FINANCIAL STRATEGY
Slide 28: Our Ongoing Financial Focus
• Unchanged capital allocation strategy – Maintain strong balance sheet, invest for growth and return capital to shareholders – Adjusted Debt to Adjusted EBITDA ratio of between 1.0 and 1.5x • Disciplined capital spending • Strong free cash flow generation • Continued dividend growth over time • Sha
Slide 29: Capital Allocation Principles Unchanged
Capital Allocation Principles Unchanged 29 • Preserve liquidity and high investment grade credit ratings • Maintain flexibility to invest for growth • Continued dividend growth over time • Repurchase shares with excess cash • Organic opportunities • Innovation • Acquisitions that fit product strateg
Slide 30: Relatively Level Capital Spending Through Outlook
Relatively Level Capital Spending Through Outlook Consistent with Previous Expectations 30 1 2019 to 2022 are based on the level of business reflected in our sales outlook Capital Spending ($Billions) 2016 2017 2018 2019F 2020F 2021F 2022F 1.8 1.9 1.7 ~1.6 % of Sales 1 ~5.25 5.12 4.04 3.80 - 4.20 ~1
Slide 31: Continued Strong Free Cash Flow Generation
Continued Strong Free Cash Flow Generation 31 1 Free Cash Flow is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets minu s c apital spending minus investment in other assets 2 November 2019 Outlook 2016 2017 2018 2019F 2020F 2021F 2022F 1.1 1.2 1.
Slide 32: Dividend Growth Remains a Priority
32 Dividend Growth Remains a Priority 1 Based on Q4 run rate 2 Subject to Board approval Increasing Dividends As Earnings Grow Annualized Dividend 1 ($ per share) Q410 Q411 Q412 Q413 Q414 Q415 Q416 Q417 Q418 Q419 0.64 0.76 0.88 1.00 1.12 1.32 14% CAGR 0.55 0.50 2 1.46
Slide 33: Proven Track Record of Returning Capital to Shareholders
33 Proven Track Record of Returning Capital to Shareholders Returned ~$1.7B in 2019 Dividends Share Repurchases $ 3.1 B $ 9.0 B 204 million shares Returned $ 12.1 B Since 2011 ~42% of 12/31/2010 shares outstanding 2011 - 2019
Slide 34: In Summary
• Continuing to drive sales growth • Improving margins throughout Outlook period • Expect ~$5.5 billion free cash flow generation (2020 - 2022) • Attractive valuation • Well positioned for future mobility In Summary 34
Slide 35: Driving Excellence. Inspiring Innovation.
EXCELLENCE. ING INNOVATION.
Slide 36: Appendix
MMAGNA APPENDIX
Slide 37: Financial Outlook (U.S. GAAP)
Financial Outlook 37 (U.S. GAAP) ($Billions, unless otherwise noted) 2020 2022 Sales: • Body Exteriors & Structures 16.0 – 16.8 17.5 – 18.5 • Power & Vision 10.7 – 11.3 11.5 – 12.3 • Seating Systems 5.7 – 6.1 6.3 – 6.8 • Complete Vehicles 6.0 – 6.4 5.7 – 6.4 Total Sales 38.0 – 40.0 40.5 – 43.5 EBIT
Slide 38: New Launches Ramping Up: North America
New Launches Ramping Up 38 Ford Escape Cadillac Escalade Mercedes - Benz GLE Coupe Ford Mustang Mach E Ford Maverick Jeep Grand Cherokee 3 - Row NORTH AMERICA Body Power & Vision Seating
Slide 39: New Launches Ramping Up: Europe
New Launches Ramping Up 39 Volkswagen Caddy BMW 2 - Series Porsche Taycan Cross Turismo Nissan Qashqai Mercedes - Benz GLA Volkswagen ID.4 EUROPE Body Power & Vision Seating
Slide 40: New Launches Ramping Up: Asia
New Launches Ramping Up 40 Mercedes - Benz GLB Ford Explorer BMW X2 Cadillac CT4 Geely 05 Chevy Blazer ASIA Body Power & Vision Seating
Slide 41: Powertrain Electrification by Region
Powertrain Electrification by Region 41 CHINA EUROPE USA Internal Combustion Engine (ICE) Micro Hybrid Mild Hybrid PHEV/HEV EV Source: Magna OEM Fleet Analysis December 2019 2019 2025 2030 37% 18 - 23% 7 - 11% 56% 53 - 59% 50 - 52% 14 - 23% 18 - 25% 7 - 14% 11 - 15% 13% 5 - 14% 78% 57 - 70% 58 - 59%
Slide 42: Driving Excellence. Inspiring Innovation.
JRIVING EXCELLENCE. INSPIRING INNOVATION.
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