Magna International Inc. · TSX:MG
Magna International — Q2 2022 Earnings Presentation
31 slides from Magna International's earnings presentation, Jul 29, 2022
Slide 1: Q2 2022 Results
Q2 2022 Results July 29, 2022
Slide 2: Forward Looking Statements
Forward Looking Statements Q2 - 2022 RESULTS 2 Certain statements in this document constitute "forward - looking information" or "forward - looking statements" (collectively, "for ward - looking statements"). Any such forward - looking statements are intended to provide information about management'
Slide 3: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q2 - 2022 RESULTS 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 and expected future devel
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" Q2 - 2022 RESULTS
Slide 5: Key Messages – Q2 2022
Key Messages – Q2 2022 Q2 - 2022 RESULTS 5 Q2 in line with our expectations, and reflective of continued industry challenges 1. Organic sales outgrowth versus weighted light vehicle production - Expected to continue in H2 2022 2. Modestly increased 2022 outlook for sales, despite stronger USD 3. Mak
Slide 6: Current Market Dynamics
Current Market Dynamics Q2 - 2022 RESULTS 6 Tailwinds Expect improving OEM vehicle production in H2 2022 New China economic stimulus Continued low dealer inventory levels Strong underlying auto demand Headwinds Ongoing supply constraints (incl. semiconductor chips) Input costs remain elevated Foreig
Slide 7: Q2 2022 Performance Highlights
CONSOLIDATED SALES $9.4B Weighted GoM 1 +4% Q2 2022 Performance Highlights Q2 - 2022 RESULTS 7 ADJUSTED EBIT MARGIN % 3.8% - 240 bps OTHER HIGHLIGHTS Paid out $130M in dividends ADJUSTED DILUTED EPS $0.83 - 41% FREE CASH FLOW 2 $52M Repurchased 3.5M shares for $212M 1 Weighted Growth over Market (Go
Slide 8: Magna Investor Event – May 2022
Magna Investor Event – May 2022 Q2 - 2022 RESULTS 8
Slide 9: Go-Forward Strategy
1. 2. 3. 1. 2. 3. Q2 - 2022 RESULTS Go - Forward Strategy Drive operational excellence Accelerate deployment of capital towards high - growth areas Unlock new business models and markets 9
Slide 10: Q2 2022 Financial Results
Q2 2022 Financial Results Q2 - 2022 RESULTS 10 Key Factors • Higher global light vehicle production and assembly volumes (+) • Launch of new programs (+) • Price increases to recover higher input costs (+) • Foreign currency translation: $629M ( - ) • Lower sales at facilities in Russia ( - ) • Dive
Slide 11: Q2 2022 Financial Results
Q2 2022 Financial Results Q2 - 2022 RESULTS 11 Adjusted effective tax rate of 24.9% vs 19.8% in Q2'21: • Lower favourable changes in reserves for uncertain tax positions ( - ) • Higher losses not benefitted in Europe ( - ) • Change in the mix of earnings (+) Adjusted Net Income Attributable to Magna
Slide 12: Q2 2022 Cash Flow and Investment Activities
Q2 2022 Cash Flow and Investment Activities Q2 - 2022 RESULTS 12 Free Cash Flow 1 ($Millions) $178 $52 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -$250 -$50 $150 $350 $550 $750 $950 Q2'21 Q2'22 OTHER USES OF CASH Net Repayment of Debt $31M Public and Private Equity Investments $2M Repurchase of Common Shares $
Slide 13: Continued Financial Flexibility
Continued Financial Flexibility Q2 - 2022 RESULTS 13 ($M) Estimated Future LTD Principal Repayments (12/31/21) ($M) $455 $692 $771 $651 $3 $1,437 2022 2023 2024 2025 2026 Thereafter LEVERAGE RATIO (LTM, 06/30/22) Adjusted Debt $5,275 Adjusted EBITDA $3,565 Adjusted Debt / Adjusted EBITDA 1.48 TOTAL
Slide 14: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions Q2 - 2022 RESULTS 14 2021 APRIL 2022 JULY 2022 Light Vehicle Production (millions of units) • North America 13.1 14.7 14.7 • Europe 16.0 16.4 16.4 • China 24.6 24.4 24.4 Foreign Exchange Rates • 1 CDN dollar equals USD 0.798 0.790 0.783 • 1 EURO equals USD 1.183 1
Slide 15: 2022 Outlook
2022 Outlook Q2 - 2022 RESULTS 15 2021 APRIL 2022 JULY 2022 Sales: • Body Exteriors & Structures 14.5 15.8 – 16.4 16.0 – 16.6 • Power & Vision 11.3 11.6 – 12.0 11.7 – 12.1 • Seating Systems 4.9 5.2 – 5.5 5.3 – 5.6 • Complete Vehicles 6.1 5.2 – 5.5 5.1 – 5.4 Total Sales 36.2 37.3 – 38.9 37.6 – 39.2 A
Slide 16: Free Cash Flow Expectations 2022
Free Cash Flow 1 Expectations Q2 - 2022 RESULTS 16 2022 ($Billions) 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 $0.7 - $0.9 $0.7 - $0.9 April 2022 Outlook July 2022 Outlook 1 Free Cash Flow is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets
Slide 17: In Summary
In Summary Q2 - 2022 RESULTS 17 • Organic sales outgrowth expected to continue • Continued focus on operational excellence, managing costs and customer recoveries • Making progress in our go - forward strategy In - Line Q2, Expect Stronger H2 2022 Results
Slide 18: Appendix – Q2 2022 Results
Appendix – Q2 2022 Results Q2 - 2022 RESULTS 18
Slide 19: Q2 2022 Reconciliation of Reported Results
Q2 2022 Reconciliation of Reported Results 19 REPORTED OTHER EXPENSE, NET EXCL. OTHER EXPENSE, NET Income (Loss) Before Income Taxes $ (88) $ 426 $ 338 % of Sales (0.9%) 3.6% Income Tax Expense $ 57 $ 27 $ 84 % of Pretax (64.8 %) 24.9% Income Attributable to Non - Controlling Interests $ (11) $ - $
Slide 20: Q2 2021 Reconciliation of Reported Results
Q2 2021 Reconciliation of Reported Results 20 REPORTED OTHER EXPENSE, NET EXCL. OTHER EXPENSE, NET Income Before Income Taxes $ 540 $ 6 $ 546 % of Sales 6.0% 6.0% Income Tax Expense $ 104 $ 4 $ 108 % of Pretax 19.3% 19.8% Income Attributable to Non - Controlling Interests $ (12) $ - $ (12) Net Incom
Slide 21: Sales Performance vs Market
Sales Performance vs Market 21 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM) Body Exteriors & Structures 8% 15% 7% Power & Vision 0% 7% (1%) Seating Systems 7% 16% 8% Complete Vehicles (6%) 7% (1%) TOTAL SALES 4% 12% 4% Unweighted Production Growth 2% Weighted Productio
Slide 22: Sales Performance vs Market
Sales Performance vs Market 22 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM) Body Exteriors & Structures 5% 10% 10% Power & Vision (2%) 2% 2% Seating Systems 6% 13% 13% Complete Vehicles (20%) (12%) (12%) TOTAL SALES (1%) 5% 5% Unweighted Production Growth (2%) Weighted
Slide 23: Geographic Sales
Q2 - 2022 RESULTS 23 Geographic Sales Q2 2021 Q2 2022 NORTH AMERICA $4.1B $4.6B PRODUCTION 14% EUROPE $4.1B $3.8B PRODUCTION (1%) ASIA $912M $947M ASIA PRODUCTION (2%) China Production (5%) REST OF WORLD $100M $122M S.A. PRODUCTION 14% Q2 2022 vs Q2 2021
Slide 24: 2022 Segment Adjusted EBIT Margin
2022 Segment Adjusted EBIT Margin Q2 - 2022 RESULTS 24 2021 April 2022 Outlook July 2022 Outlook BODY EXTERIORS & STRUCTURES 5.7% 6.0 - 6.5% 6.0 - 6.5% SEATING SYSTEMS 3.1% 3.4 - 3.9% 3.0 - 3.5% POWER & VISION 6.5% 4.5 - 5.0% 4.5 - 5.0% COMPLETE VEHICLES 4.7% 3.4 - 3.9% 3.8 - 4.3%
Slide 25: Capital Allocation Principles
Capital Allocation Principles Q2 - 2022 RESULTS 25 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q2 2022 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x LTM 6/30/22 1.48x • Ma
Slide 26: 2024 Financial Outlook
2024 Financial Outlook 1 Q2 - 2022 RESULTS 26 1 Forward - looking financial information for 2024 is based on outlook information and assumptions provided in our press release da ted February 11, 2022, and has not been updated 2 Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales ASSU
Slide 27: Segment Financial Performance
Segment Financial Performance Q2 - 2022 RESULTS 27 • Higher net input costs ( - ) • Operating inefficiencies & other costs at a facility in Europe ( - ) • Reduced earnings on lower sales at facilities in Russia ( - ) • Lower tooling contribution ( - ) • Favourable v alue - added tax settlement in Br
Slide 28: Segment Financial Performance – Power & Vision
• Launch of new programs (+) • Higher global light vehicle production (+) • Customer price increases to recover higher production costs (+) • Foreign currency translation: $195M ( - ) • Net customer price concessions ( - ) Segment Financial Performance Q2 - 2022 RESULTS 28 POWER & VISION $2.9 $2.9 Q
Slide 29: Segment Financial Performance – Seating
• Higher global light vehicle production (+) • Launch of new programs (+) • Customer price increases to recover higher production input costs (+) • Foreign currency translation: $84M ( - ) • Lower sales at facilities in Russia ( - ) • Net customer price concessions ( - ) Segment Financial Performanc
Slide 30: Segment Financial Performance – Complete Vehicles
• Weaker euro: $185M ( - ) • Higher vehicle assembly volumes: 1.5K units (+) • Favourable program mix (+) Segment Financial Performance Q2 - 2022 RESULTS 30 • Weaker euro: $7M ( - ) • Higher net input costs ( - ) • Unfavourable program mix ( - ) • Higher earnings on higher assembly volumes, net of c
Slide 31: AN macna
AN macna