Magna International Inc. · TSX:MG
Magna International — Q2 2023 Earnings Presentation
31 slides from Magna International's earnings presentation, Aug 4, 2023
Slide 1: Q2 - 2023 Results
Q2 - 2023 Results August 4, 2023
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q2 - 2023 RESULTS 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q2 - 2023 RESULTS 3 Certain statements in this document and related quarterly results conference call constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") . Any such forward - looking statements are int
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q2 - 2023 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 devel
Slide 5: Reminders
Q2 - 2023 RESULTS 5 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"
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q2 - 2023 RESULTS 6
Slide 7: Key Takeaways
Key Takeaways Q2 - 2023 RESULTS 7 Successfully completed acquisition of Veoneer Active Safety – Positions Magna as a global leader in Active Safety Q2 organic sales outperformed weighted industry production by 3% – 5% outgrowth excluding Complete Vehicles Strong Q2 operating performance – YoY: Adjus
Slide 8: Operating Environment
Operating Environment Q2 - 2023 RESULTS 8 • Experiencing incremental improvements – Reduced supply constraints, higher and less volatile OEM vehicle production – Resilient auto sales • Interlocking challenges impacting entire industry – Continuing elevated inflation, higher interest rates, macroecon
Slide 9: Operational Excellence Focus Driving Margin Expansion
Operational Excellence Focus 9 Driving Margin Expansion Consolidation and restructuring of management, SG&A and engineering functions Short and Mid - Term Acceleration of manufacturing plant restructuring and consolidation Repricing on underperforming programs Long - Term Accretive automation and pr
Slide 10: Completed Acquisition of Veoneer Active Safety
Completed Acquisition of Veoneer Active Safety Q2 - 2023 RESULTS 10 • Transaction closed on June 1 st • Broadens and complements our Active Safety portfolio • Business on - track with our expectations • Executing smooth integration and delivering synergies underway
Slide 11: Executing In Megatrend Product Areas
Q2 - 2023 RESULTS 11 • Awarded battery enclosure on Ford’s second - gen electric pick - up truck • Adding new capacity in Tennessee • Further strengthening our position in battery enclosures Executing In Megatrend Product Areas • Announced long - term supply agreement • Magna to integrate SiC techno
Slide 12: Winning Business Across Portfolio
Q2 - 2023 RESULTS 12 • Awarded truck frame and seats on Ford’s second - gen electric pick - up truck • Preceded by awards for outside mirrors and exteriors on same platform • Represents second seating program award for pick - up trucks in North America Winning Business Across Portfolio • Awarded new
Slide 13: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q2 - 2023 RESULTS 13
Slide 14: Q2 2023 Performance Highlights
Q2 2023 Performance Highlights Q2 - 2023 RESULTS 14 Consolidated Sales $11.0B Weighted GoM 1 of 3% (5% excl. Complete Vehicles) +17% Adjusted Diluted EPS $1.50 +81% Free Cash Flow 2 - $7M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%) after app
Slide 15: Q2 2023 Financial Results: Consolidated Sales
Q2 2023 Financial Results Q2 - 2023 RESULTS 15 Weighted GoM 1 3% (5% excl. Complete Vehicles) Consolidated Sales ($Millions) +17% 2 Q2 2023 PRODUCTION +15% Global +14% North America +13% Europe +21% China +14% Magna Weighted 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to ve
Slide 16: Q2 2023 Financial Results: Adjusted EBIT & Margin
Q2 2023 Financial Results Q2 - 2023 RESULTS 16 • Volumes, Performance & Other – Strong earnings on higher sales – Losses in our Russian facilities in Q2 2022 (+) – Acquisitions, net of divestitures ( - ) • Operational – Productivity and efficiency improvements – Higher tooling contribution – Higher
Slide 17: Q2 2023 Financial Results
Q2 2023 Financial Results Q2 - 2023 RESULTS 17 CHANGE Q2 2023 Q2 2022 ($Millions, unless otherwise noted) 245 603 358 Adjusted EBIT (14) 34 20 Interest Expense 231 569 338 Adjusted Pre - Tax Income (40) (124) (84) Adjusted Income Taxes (4) (15) (11) (Income) Attributable to Non - Controlling Interes
Slide 18: Q2 2023 Cash Flow and Investment Activities
Q2 2023 Cash Flow and Investment Activities Q2 - 2023 RESULTS 18 Free Cash Flow 1 ($Millions) OTHER SOURCES (USES) OF CASH 544 (31) Net Issues (Repayment) of Debt (1,475) - Purchase of Subsidiaries (3) (2) Public and Private Equity Investments (2) (212) Repurchase of Common Shares (129) (130) Divide
Slide 19: Continued Financial Strength
Continued Financial Strength Q2 - 2023 RESULTS 19 LEVERAGE RATIO (LTM, 30JUN23) ($M illions) 7,531 Adjusted Debt 3,441 Adjusted EBITDA 2.19 Adjusted Debt / Adjusted EBITDA TOTAL LIQUIDITY (30JUN23) ($M illions) 1,281 Cash 3,350 Available Term & Operating Lines of Credit 4,631 Total Liquidity Investm
Slide 20: Updated 2023 Outlook – Key Assumptions
Updated 2023 Outlook – Key Assumptions Q2 - 2023 RESULTS 20 AUGUST 2023 MAY 2023 2022 Light Vehicle Production (millions of units) 15.2 15.0 14.3 • North America 17.0 16.3 15.8 • Europe 26.2 26.2 26.4 • China Foreign Exchange Rates 0.746 0.748 0.769 • 1 CDN dollar equals USD 1.096 1.086 1.053 • 1 EU
Slide 21: Updated 2023 Outlook
Updated 2023 Outlook Q2 - 2023 RESULTS 21 Raised Outlook AUG. 2023 VEONEER ACTIVE SAFETY ALL OTHER MAY 2023 2022 ($Billions, unless otherwise noted) 41.9 – 43.5 1.0 0.7 40.2 – 41.8 37.8 Total Sales 4.8% – 5.2% (0.2%) 0.3% 4.7% - 5.1% 4.4% Adjusted EBIT Margin % 1,2 110M – 140M 15M 95M – 125M 89M Equ
Slide 22: In Summary
In Summary Q2 - 2023 RESULTS 22 Strong Q2 operating performance Continued progress on Go Forward Strategy through recent activities Raised outlook for 2023 Further sales growth over market
Slide 23: Appendix – Q2 2023 Results
Appendix – Q2 2023 Results Q2 - 2023 RESULTS 23
Slide 24: Q2 2023 Reconciliation of Reported Results Excl. Other Expense, Net
Q2 2023 Reconciliation of Reported Results Q2 - 2023 RESULTS 24 Excl. Other Expense, Net Other Expense, Net Reported Excluding Other Expense (Income), Net $Millions, except for share figures $ 569 $ 86 $ 483 Income Before Income Taxes 5.2% 4.4% % of Sales $ 124 $ (5) $ 129 Income Tax Expense 21.8% 2
Slide 25: Q2 2022 Reconciliation of Reported Results Excl. Other Expense, Net
Q2 2022 Reconciliation of Reported Results Q2 - 2023 RESULTS 25 Excl. Other Expense, Net Other Expense, Net Reported Excluding Other Expense (Income), Net $Millions, except for share figures $ 338 $ 426 $ (88) Income (Loss) Before Income Taxes 3.6% (0.9%) % of Sales $ 84 $ 27 $ 57 Income Tax Expense
Slide 26: Sales Performance vs Market Performance vs Weighted Global Production
Sales Performance vs Market Q2 - 2023 RESULTS 26 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported 2% 16% 15% Body Exteriors & Structures 4% 18% 20% Power & Vision 15% 29% 28% Seating Systems (7%) 7% 9% Complete Vehicles 3% 17% 17% TOTAL SALES 15% Unweighted Production Grow
Slide 27: Segment Impact on Adjusted EBIT % of Sales
Segment Impact on Adjusted EBIT % of Sales Q2 - 2023 RESULTS 27 Adjusted EBIT as a Percentage of Sales Adjusted EBIT Sales ($Millions) 3.8% $ 358 $ 9,362 2 nd Quarter of 2022 Increase (Decrease) Related to: 1.6% $ 201 $ 593 Body Exteriors & Structures 0.0% $ 25 $ 574 Power & Vision 0.5% $ 64 $ 350 S
Slide 28: Geographic Sales
Geographic Sales Q2 - 2023 RESULTS 28 Q2 2022 Q2 2023 Asia ASIA PRODUCTION 17% China Production 21% $4.6B $5.4B $0.0B $1.0B $2.0B $3.0B $4.0B $5.0B $6.0B $3.8B $4.4B $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B $4.5B $5.0B $947M $1,250M $000M $200M $400M $600M $800M $1000M $1200M $1400M
Slide 29: 2023 Segment Adjusted EBIT Margin
2023 Segment Adjusted EBIT Margin Q2 - 2023 RESULTS 29 Body Exteriors & Structures 2022 May 2023 Outlook August 2023 Outlook 5.3% 6.4 - 6.9% 6.9 - 7.4% 1.9% 2.9 - 3.4% 3.2 - 3.7% 4.0% 4.8 - 5.3% 4.1 - 4.6% 4.5% 1.4 - 1.9% 1.6 - 2.1% Seating Power & Vision Complete Vehicles
Slide 30: Capital Allocation Principles
Capital Allocation Principles Q2 - 2023 RESULTS 30 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q2 2023 • Preserve liquidity and high investment grade credit ratings Maintain Strong Balance Sheet 2.19x LTM 30JUN23 - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x • Ma
Slide 31: Magna – Forward. For all.
MA MAGNA Forward. For all.