Magna International Inc. · TSX:MG
Magna International — Q1 2021 Earnings Presentation
31 slides from Magna International's earnings presentation, May 6, 2021
Slide 1: Q1 2021 Earnings Presentation
Q1 2021 Earnings Presentation May 6, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements Q1 2021 Earnings - May 6, 2021 2 Certain statements in this document constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") . Any such forward - looking statements are intended to provide information abou
Slide 3: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) 3 Q1 2021 Earnings - May 6, 2021 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
Slide 4: Reminders
Q1 2021 Earnings - May 6, 2021 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”
Slide 5: Key Messages
5 Key Messages Q1 2021 Earnings - May 6, 2021 Strong Q1 performance despite ongoing industry supply challenges 1 Continued solid margins in part as a result of operational excellence 2 Strategic portfolio positions us for sales growth over market and strong free cash flow 3 Well - positioned to capt
Slide 6: Clear Go Forward Strategy to Drive Growth
Clear Go Forward Strategy to Drive Growth Q1 2021 Earnings - May 6, 2021 6 Accelerate Deployment of Capital towards High - Growth Areas Drive Operational Excellence Unlock New Business Models and Markets
Slide 7: Electrification program awards
Q1 2021 Earnings - May 6, 2021 7 • Up to 38% emission reduction • Unique cloud connectivity feature • Smart cruise control and eco routing • Class - leading performance in all - electric driving EtelligentReach Battery - electric drive system • 30% range extension • Combination of Next - Gen eDrive,
Slide 8: Structural Opportunities Expand with Electrification
Q1 2021 Earnings - May 6, 2021 8 Program Award Program Award Structural Opportunities Expand with Electrification Increasing In - Cabin Safety with Monitoring Establishing Team to Identify Vehicle Development Opportunities • Contributes to vehicle structure and safety • Steel, aluminum, and mult
Slide 9: Current Market Dynamics
Current Market Dynamics Q1 2021 Earnings - May 6, 2021 9 Recovering Global Auto Production Continued Shift to Light Trucks Relatively Weaker US$ Supply Constraints Higher Commodity Costs Ongoing COVID - 19 Challenges TAILWINDS HEADWINDS
Slide 10: Q1 2021 Performance Highlights
CONSOLIDATED SALES $10.2B Weighted Growth Over Market ( GoM ) 1 +3% Q1 2021 Performance Highlights Q1 2021 Earnings - May 6, 2021 10 ADJUSTED EBIT MARGIN % 7.6% +290 bps OTHER ACCOMPLISHMENTS Raised 2021 Outlook ADJUSTED DILUTED EPS $1.86 +116% FREE CASH FLOW 2 $414M +13% Returned $280M to sharehold
Slide 11: Q1 2021 Financial Results
11 Q1 2021 Financial Results Q1 2021 Earnings - May 6, 2021 Key Factors • Global light vehicle production (+) • Higher a ssembly volumes (+) • Foreign currency translation: $465M (+) • Launch of new programs (+) • Business combinations: $238M (+) • End of production of certain programs ( - ) • Net c
Slide 12: Q1 2021 Financial Results: Margin Impact By Segment
12 Q1 2021 Financial Results Q1 2021 Earnings - May 6, 2021 Margin Impact By Segment EBIT Margin Q1 2020 4.7% Body Exteriors & Structures 1.1% Power & Vision 1.3% Seating 0.1% Complete Vehicles - Corporate & Other 0.4% EBIT Margin Q1 2021 7.6% Adjusted effective tax rate of 23.3%, in line with expec
Slide 13: Segment Financial Performance: Body Exteriors & Structures
Segment Financial Performance Q1 2021 Earnings - May 6, 2021 13 • Earnings on higher sales (+) • Cost savings and operating efficiencies, including as a result of restructuring actions (+) • Lower net commodity costs (+) • Lower transactional FX gains ( - ) • Higher launch costs ( - ) • Net settleme
Slide 14: Segment Financial Performance: Power & Vision
• Higher global light vehicle production (+) • Consolidation of Getrag entities: $162M (+) • Foreign currency translation: $160M (+) • Launch of new programs (+) • Net customer price concessions ( - ) Segment Financial Performance Q1 2021 Earnings - May 6, 2021 14 • Earnings on higher sales (+) • Lo
Slide 15: Segment Financial Performance: Seating
• Acquisition of Hongli in China (+) • Launch of new programs: $76M (+) • Foreign currency translation: $30M (+) • Unfavourable production mix ( - ) • Net customer price concessions ( - ) Segment Financial Performance Q1 2021 Earnings - May 6, 2021 15 • Productivity and efficiency improvements at an
Slide 16: Segment Financial Performance: Complete Vehicles
• Higher vehicle assembly volumes (+9,100 units) • Higher euro: $155m (+) Segment Financial Performance Q1 2021 Earnings - May 6, 2021 16 • Earnings on higher assembly volumes, net of contractual fixed cost recoveries on certain programs (+) • Higher margins on engineering programs (+) • Favourable
Slide 17: Q1 2021 Cash Flows and Investment Activities
17 Q1 2021 Cash Flows and Investment Activities Q1 2021 Earnings - May 6, 2021 Free Cash Flow 1 ($Millions) +13% $366 $414 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0 50 100 150 200 250 300 350 400 450 Q1'20 Q1'21 USES OF CASH Private Equity Investments $3M Share Repurchases (1.8M Shares) $162M Dividends ($0.
Slide 18: Continued Financial Flexibility
Continued Financial Flexibility Q1 2021 Earnings - May 6, 2021 18 Improving Adjusted Debt to Adjusted EBITDA Q1’21 HIGHLIGHTS • Continued operational excellence and higher earnings driving strong cash generation • Extended maturity date on $2.6 billion of our revolving credit facility by two years t
Slide 19: 2021 Outlook Assumptions
2021 Outlook Assumptions Q1 2021 Earnings - May 6, 2021 19 FEBRUARY MAY Light Vehicle Production (millions of units) • North America 15.9 15.6 • Europe 18.5 18.5 • China 24.0 24.7 Foreign Exchange Rates • 1 CDN dollar equals USD 0.770 0.797 • 1 EURO equals USD 1.210 1.201 • 1 RMB equals USD 0.153 0.
Slide 20: 2021 Outlook
2021 Outlook Q1 2021 Earnings - May 6, 2021 20 $ Billions, Unless Otherwise Noted FEBRUARY MAY Sales: • Body Exteriors & Structures $16.5 – $17.1 $16.5 – $17.1 • Power & Vision $11.6 – $12.0 $12.0 – $12.4 • Seating Systems $5.8 – $6.1 $5.6 – $5.9 • Complete Vehicles $6.5 – $6.8 $6.7 – $7.0 Total Sal
Slide 21: Free Cash Flow Expectations
21 Free Cash Flow 1 Expectations Q1 2021 Earnings - May 6, 2021 2021 ($Billions) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 $1.4 - $1.6 $1.6 - $1.8 $5.5 - $6.0 February 2021 Outlook May 2021 Outlook 2021 - 2023 ($Billions) 1 Free Cash Flow is Cash from Operating Activities plus proceeds from no
Slide 22: 2021 Segment Adjusted EBIT Margin
2021 Segment Adjusted EBIT Margin 22 2020 February 2021 Outlook May 2021 Outlook BODY EXTERIORS & STRUCTURES 6.0% 8.6 - 9.1% 8.5 - 9.0% SEATING SYSTEMS 2.4% 5.8 - 6.3% 5.4 - 5.9% POWER & VISION 5.1% 7.2 - 7.7% 7.7 - 8.2% COMPLETE VEHICLES 5.1% 3.8 - 4.3% 4.1 - 4.6% Q1 2021 Earnings - May 6, 20
Slide 23: Summary – A Strong Start to 2021
Summary – A Strong Start to 2021 Q1 2021 Earnings - May 6, 2021 23 Weighted Sales Growth over Market 1 of 3% Margin Expansion of 290 bps Increased 2021 Outlook Free Cash Flow 2 Generation up 13% 1 Weighted Growth over Market ( GoM ) compares organic sales growth (%) to vehicle production change (%)
Slide 24: Appendix
Q1 2021 Earnings - May 6, 2021 24 Appendix
Slide 25: Secular Trends Driving Change
Secular Trends Driving Change Q1 2021 Earnings - May 6, 2021 25 Well - Positioned for Car of the Future x Enhanced e - Powertrain portfolio x Product range fills transition roadmap to EV x New EV business across all products x Full ADAS capability x Complete system expertise x Expanded collaboration
Slide 26: Q1 2021 Reconciliation of Reported Results
Q1 2021 Reconciliation of Reported Results Q1 2021 Earnings - May 6, 2021 26 EXCLUDING OTHER EXPENSE (INCOME), NET $ MILLIONS – EXCEPT PER SHARE FIGURES REPORTED OTHER INCOME, NET EXCL. OTHER INCOME, NET Income Before Income Taxes $ 805 $ (58) $ 747 % of Sales 7.9% 7.3% Income Tax Expense $ 183 $ (9
Slide 27: Sales Performance vs Market
Sales Performance vs Market 27 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM ) Body Exteriors & Structures 9% 6% - Power & Vision 25% 12% 6% Seating 3% (5%) (11%) Complete Vehicles 40% 28% 22% TOTAL SALES 18% 9% 3% Unweighted Production Growth 18% Weighted Production Gro
Slide 28: Geographic Sales
Geographic Sales 28 Q1 2020 Q1 2021 NORTH AMERICA $4.5B $4.6B PRODUCTION 0% EUROPE $3.9B $4.7B PRODUCTION 5% ASIA $331M $924M PRODUCTION 36% (China 87%) REST OF WORLD $110M $99M S.A. PRODUCTION 7% Q1 2021 vs Q1 2020 Q1 2021 Earnings - May 6, 2021
Slide 29: 2023 Financial Outlook
2023 Financial Outlook 1 Q1 2021 Earnings - May 6, 2021 29 1 We have not updated 2023 Outlook ranges from our February 19 th , 2021 press release 2 Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales Assumptions Light Vehicle Production (millions of units) • North America 16.3 • Europe
Slide 30: Capital Allocation Principles
Capital Allocation Principles Q1 2021 Earnings - May 6, 2021 30 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q1’21 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x LTM 03/31/2
Slide 31: Q1 2021 Earnings - May 6, 2021 31
Q1 2021 Earnings - May 6, 2021 31