Magna International Inc. · TSX:MG
Magna International — Q3 2024 Earnings Presentation
30 slides from Magna International's earnings presentation, Nov 1, 2024
Slide 1: Third Quarter 2024 Q3 2024 Results
Third Quarter 2024 November 1, 2024 Q3 2024 Results 1
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q3 2024 Results 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q3 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 informatio
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q3 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 developme
Slide 5: Reminders
Q3 2024 Results 5 Reminders All amounts are in U.S. Dollars. Today's discussion excludes the impact of other expense (income), net ("Unusual Items") and amortization of acquired intangible assets. Please refer to the reconciliation of Non-GAAP measures in our press release dated November 1, 2024 for
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q3 2024 Results 6
Slide 7: Key Takeaways: Solid Q3 2024 operating performance
Solid Q3, 2024 operating performance • 5.8% Adjusted EBIT margin, in-line with Q3, 2023 despite lower vehicle production Continue to expect 2024 margin expansion • Operational excellence initiatives remain on track (+75 bps for '24-'25) • Benefits of ongoing restructuring activities, reduced enginee
Slide 8: Q3 2024 Financial Snapshot
Q3 2024 Results 8 Q3 2024 Financial Snapshot Consolidated Sales $10.3B • Lower light vehicle production (LVP) in NA, EU and China, divestiture of India metalforming; offset by new program launches • +1% weighted sales GoM Adjusted EBIT $594M • Increase of $17M from Q2, 2024 despite lower sequential
Slide 9: Long-Term Capital Allocation Principles Unchanged
Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings ‒ Adj. debt to Adj. EBITDA ratio between 1.0-1.5x • Maintain investment flexibility Invest for Growth • Organic and inorganic opportunities • Innovation Return Capital to Shareholders • Continued dividend gro
Slide 10: Maintaining Strong Balance Sheet
Maintaining Strong Balance Sheet Q3 2024 Results 10 LEVERAGE RATIO (LTM, 30SEP24) ($Millions) Adjusted Debt 7,711 Adjusted EBITDA 3,999 Adjusted Debt / Adjusted EBITDA 1.93 TOTAL LIQUIDITY (30SEP24) ($Millions) Cash 1,061 Available Term & Operating Lines of Credit 2,672 Total Liquidity 3,733 Investm
Slide 11: Capital Allocation Normalizing with Increasing Shareholder Returns
Capital Allocation Normalizing with Increasing Shareholder Returns Q3 2024 Results 11 • 2013 to 2023: ‒ Capital Invested and Returned to Shareholders ~$35 billion Capital Invested through CapEx & Acquisitions, net of Divestitures ~$20 billion Acquisitions, net of Divestitures < $2B Capital Returned
Slide 12: Meaningfully Increasing Return of Capital to Shareholders
Q3 2024 Results 12 Meaningfully Increasing Return of Capital to Shareholders • Demonstrating confidence in expected free cash flow growth – Optimizing value creation • Normal Course Issuer Bid – Ability to purchase up to 10% of Magna’s public float, or over 28 million shares – Expires in November 20
Slide 13: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q3 2024 Results 13
Slide 14: Q3 2024 Performance Summary
Q3 2024 Performance Summary Q3 2024 Results 14 Consolidated Sales $10.3B Weighted Sales GoM1 of 1% (1% excl. Complete Vehicles) -4% Adjusted Diluted EPS $1.28 -12% Free Cash Flow2 $174M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%) after apply
Slide 15: Q3 2024 Financial Results
Q3 2024 Financial Results Q3 2024 Results 15 Weighted Sales GoM1 1% (1% excl. Complete Vehicles) Consolidated Sales ($Millions) -4% 2 Q3 2024 LV PRODUCTION Global -4% North America -6% Detroit-based -12% Europe -2% China -6% Magna Weighted -5% 1 Weighted Sales Growth over Market (GoM) compares organ
Slide 16: Q3 2024 Financial Results: Adjusted EBIT & Margin
Q3 2024 Financial Results Q3 2024 Results 16 • Discrete Items1 – Higher net favourable commercial items (+) – Higher net warranty costs (-) – Supply chain premiums, partially as a result of a supplier bankruptcy (-) • Operational – Operational excellence activities driving productivity and efficienc
Slide 17: Q3 2024 Financial Results
Q3 2024 Financial Results Q3 2024 Results 17 ($Millions, unless otherwise noted) Q3 2023 Q3 2024 CHANGE Sales 10,688 10,280 (408) Adjusted EBIT 615 594 (21) Interest Expense 49 54 (5) Adjusted Pre-Tax Income 566 540 (26) Adjusted Income Taxes (124) (147) (23) Income Attributable to Non-Controlling I
Slide 18: Q3 2024 Cash Flow and Investment Activities
Q3 2024 Cash Flow and Investment Activities Q3 2024 Results 18 Free Cash Flow1 ($Millions) KEY SOURCES (USES) OF CASH Net Repayment of Debt (135) (47) Public and Private Equity Investments (7) (1) Dividends paid (128) (138) ($Millions) Q3 2023 Q3 2024 Cash from Operations Before Changes in Operating
Slide 19: Updated 2024 Outlook – Key Assumptions
Updated 2024 Outlook – Key Assumptions Q3 2024 Results 19 2023 AUGUST 2024 NOVEMBER 2024 Light Vehicle Production (millions of units) • North America 15.6 15.7 15.4 • Europe 17.5 17.1 16.9 • China 29.2 29.0 28.9 Foreign Exchange Rates • 1 CDN dollar equals USD 0.742 0.733 0.736 • 1 EURO equals USD 1
Slide 20: Updated 2024 Outlook: Maintaining Free Cash Flow Range
Updated 2024 Outlook Q3 2024 Results 20 Maintaining Free Cash Flow Range ($Billions, unless otherwise noted) 2023 AUGUST 2024 NOVEMBER 2024 Total Sales 42.8 42.5 – 44.1 42.2 – 43.2 Adjusted EBIT Margin %1 5.2% 5.4% – 5.8% 5.4% – 5.5% Equity Income 112M 100M – 130M 80M – 105M Interest Expense 156M ~2
Slide 21: 2024 Summary
2024 Summary Solid Q3 operating performance Continued focus on margin expansion, capital discipline and FCF generation 2024 Outlook: • Reducing Sales range, reflecting lower LVP • Expect 5.4% - 5.5% Adjusted EBIT Margin • Lowering CapEx • Maintaining Free Cash Flow Planning to restart meaningful sha
Slide 22: Appendix
Appendix Q3 2024 Results 24
Slide 23: Q3 2024 Reconciliation of Reported Results
Q3 2024 Reconciliation of Reported Results Q3 2024 Results 25 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 $ 700 $ (188) $ 28 $ 540 % of Sales 6.8% 5.3% Income Ta
Slide 24: Q3 2023 Reconciliation of Reported Results
Q3 2023 Reconciliation of Reported Results Q3 2024 Results 26 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 $ 538 $ (4) $ 32 $ 566 % of Sales 5.0% 5.3% Income Tax
Slide 25: Sales Performance vs Market
Sales Performance vs Market Q3 2024 Results 27 Reported Organic1 Performance vs Weighted Global Production (Weighted GoM) Body Exteriors & Structures (7%) (6%) (1%) Power & Vision (2%) 2% 7% Seating Systems (10%) (10%) (5%) Complete Vehicles (2%) (3%) 2% TOTAL SALES (4%) (4%) 1% Unweighted Productio
Slide 26: Geographic Sales
Geographic Sales Q3 2024 Results 28 Q3 2023 Q3 2024 Asia ASIA PRODUCTION (4%) China Production (6%) $1.5B $1.6B $0.00B $0.20B $0.40B $0.60B $0.80B $1.00B $1.20B $1.40B $1.60B $1.80B $2.00B $5.4B $5.0B $0.0B $1.0B $2.0B $3.0B $4.0B $5.0B $6.0B North America PRODUCTION (6%) $3.9B $3.8B $0.0B $0.5B $1.
Slide 27: Segment Impact on Adjusted EBIT
Segment Impact on Adjusted EBIT % of Sales Q3 2024 Results 29 ($Millions) Sales Adjusted EBIT Adjusted EBIT as a Percentage of Sales 3rd Quarter of 2023 $ 10,688 $ 615 5.8% Increase (Decrease) Related to: Body Exteriors & Structures $ (316) $ (85) (0.6%) Power & Vision $ 92 $ 58 0.5% Seating Systems
Slide 28: 2024 Segment Sales & Adjusted EBIT Margin
2024 Segment Sales & Adjusted EBIT Margin Q3 2024 Results 30 2023 August 2024 Outlook November 2024 Outlook Body Exteriors & Structures Sales $B 17.5 17.3-17.9 16.8-17.2 Adjusted EBIT Margin % 7.4% 7.4-7.9% 7.3-7.6% Power & Vision Sales $B 14.3 15.3-15.7 15.1-15.4 Adjusted EBIT Margin % 4.7% 5.0-5.5
Slide 29: Capital Allocation Principles
Capital Allocation Principles Q3 2024 Results 31 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q3 2024 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0-1.5x LTM 30SEP24 1.93x • Mainta
Slide 30: Leverage Ratio Q3 2024
Leverage Ratio Q3 2024 Q3 2024 Results 32 ($Millions) LTM EBITDA $3,704 Credit Rating Agency Adjustments 295 Adjusted EBITDA $3,999 Debt per Balance Sheet $7,586 Credit Rating Agency Adjustments 125 Adjusted Debt $7,711 Adjusted Debt / Adjusted EBITDA Ratio (Q3 2024) 1.93x