Magna International Inc. · TSX:MG
Magna International — FY2023 Earnings Presentation
51 slides from Magna International's earnings presentation, Feb 9, 2024
Slide 1: Q4 & Full Year 2023 + 2024 Outlook
Q4 & Full Year 2023 + 2024 Outlook February 9, 2024
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q4 & FULL YEAR 2023 + 2024 OUTLOOK 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q4 & FULL YEAR 2023 + 2024 OUTLOOK 3 Certain statements in this document constitutes "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") . Any such forward - looking statements are intended to provide information
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q4 & FULL YEAR 2023 + 2024 OUTLOOK 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 expe
Slide 5: Reminders
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 5 Reminders All amounts are in U.S. Dollars. Effective July 1, 2023 we revised our calculation of Non - GAAP measures to exclude amortization of acquired intangible assets. The historical presentation of non - GAAP measures has also been updated to reflect the revi
Slide 6: Agenda
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 6 • 2023 Highlights and Q4 2023 Operating Results • 2024 Outlook • Financial Strategy Agenda
Slide 7: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q4 & FULL YEAR 2023 + 2024 OUTLOOK 7
Slide 8: 2023 Highlights
2023 Highlights Q4 & FULL YEAR 2023 + 2024 OUTLOOK 8
Slide 9: Q4 2023 Results: Strong Operating Results Throughout 2023
Q4 2023 Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 9 Strong Operating Results Throughout 2023 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s m inus capital spending minus investment in other assets 2 Versus Q4 2022 Co
Slide 10: 2023 Accomplishments
2023 Accomplishments Q4 & FULL YEAR 2023 + 2024 OUTLOOK 10 • Executed on Operational Excellence activities • 107 customer recognition awards • Committed to net zero by 2050 Operational Excellence • New business in core areas: ‒ Advanced front camera modules ‒ Battery enclosures ‒ E - Drives • Indust
Slide 11: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q4 & FULL YEAR 2023 + 2024 OUTLOOK 11
Slide 12: Q4 and 2023 Results
Q4 and 2023 Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 12
Slide 13: 2023 Financial Results
2023 Financial Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 13 Consolidated Sales ($Billions) $37.8 $42.8 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 2022 2023 +13% Adjusted EPS ($) $4.24 $5.49 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.00 $1.00 $2.00 $3.00 $4.00
Slide 14: Q4 2023 Financial Results
Q4 2023 Financial Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 14 Consolidated Sales ($Billions) $9.6 $10.5 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 Q4'22 Q4'23 +9% Adjusted EPS ($) $0.94 $1.33 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q4'22
Slide 15: Q4 2023 Financial Results: Consolidated Sales
Q4 2023 Financial Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 15 Weighted GoM - 2% (+1% excl. Complete Vehicles) Consolidated Sales ($Millions) +9% 1 Q4 2023 PRODUCTION 7% Global 5% North America - 11% Detroit - based 7% Europe 12% China 6% Magna Weighted 1 Includes customer recoveries of certain hig
Slide 16: Q4 2023 Financial Results: Adjusted EBIT
Q4 2023 Financial Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 16 • Operational – Operational excellence activities – Productivity and efficiency improvements – Higher tooling contribution • Volumes, Performance & Other – Earnings on higher sales – Impact of UAW strike ( - ) – Program changeover in Co
Slide 17: Q4 2023 Cash Flow and Investment Activities
Q4 2023 Cash Flow and Investment Activities Q4 & FULL YEAR 2023 + 2024 OUTLOOK 17 Free Cash Flow 1 ($Millions) OTHER SOURCES (USES) OF CASH (119) (22) Net Issues (Repayment) of Debt (29) (3) Business Combinations (2) (5) Repurchase of Common Shares (133) (126) Dividends Q4 2023 Q4 2022 ($Millions, u
Slide 18: Annualized Dividend Increased
Annualized Dividend 1 Q4 & FULL YEAR 2023 + 2024 OUTLOOK 18 Increased Q4 Dividend for 14 th Straight Year 0.50 0.55 0.64 0.76 0.88 1.00 1.12 1.32 1.46 1.60 1.72 1.80 1.84 1.90 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 Q4'10 Q4'11 Q4'12 Q4'13 Q4'14 Q4'15 Q
Slide 19: 2024 Outlook
2024 Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 19
Slide 20: Further Advancing Our Go-Forward Strategy
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 20 Further Advancing Our Go - Forward Strategy Accelerate Deployment of Capital towards High - Growth Areas Unlock New Business Models and Markets Drive Operational Excellence
Slide 21: Overview of 2024 Outlook
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 21 Tailwinds • Launching content on exciting new programs • Significant sales and Adjusted EBIT growth in megatrend areas • Continued traction in Operational Excellence – Contributing to margin expansion through outlook period Headwinds • Continuing net input cost
Slide 22: Overview of 2024 Outlook – Financial Metrics
Overview of 2024 Outlook – Financial Metrics Q4 & FULL YEAR 2023 + 2024 OUTLOOK 22 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s m inus capital spending minus investment in other assets 2 Includes ~$300M related to a
Slide 23: Rapid Megatrend Sales Growth through Outlook
Rapid Megatrend Sales Growth through Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 23 1 Powertrain electrification includes consolidated 48 - volt and high - voltage sales Sales 0% 20% 40% 60% 80% 100% 120% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 2022 2023 2024F 2025F 2026F ($Billions) (% of sales) 4.2 - 4
Slide 24: Consolidated Outlook
Consolidated Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 24
Slide 25: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions Q4 & FULL YEAR 2023 + 2024 OUTLOOK 25 Automotive Light Vehicle Production (millions of units) 2026 2024 2023 16.1 15.7 15.6 North America 17.3 17.4 17.5 Europe 30.6 28.3 28.6 China ~1% ('23 - '26) ~0% ('23 - '24) Weighted GLVP CAGR U.S. Foreign Exchange Rates 2026
Slide 26: Consolidated Sales
Consolidated Sales Q4 & FULL YEAR 2023 + 2024 OUTLOOK 26 ($Billions) • New and replacement program launches • Higher directed content on MB program (Complete Vehicles) • CV: Program EOPs, full - cost (BMW) versus value - add ( Fisker ) sales accounting • Acquisition of Veoneer Active Safety 43.8 - 4
Slide 27: Unconsolidated Sales
Unconsolidated Sales 1 Q4 & FULL YEAR 2023 + 2024 OUTLOOK 27 ($Billions) 1 Sales at 100% for our unconsolidated entities • Significant growth primarily driven by: – Electrification components and systems (LG - MGA JV) – Integrated e - Drives (HASCO - MGA JV) – Seating systems • CAGR of 8 - 9% ('23 -
Slide 28: Consolidated Adjusted EBIT Margin % (2024)
Consolidated Adjusted EBIT Margin % Q4 & FULL YEAR 2023 + 2024 OUTLOOK 28 • Volumes, performance & other – Contribution on higher sales • Operational – Operational Excellence activities – Productivity and efficiency improvements – H igher launch and facility costs associated with new programs ( - )
Slide 29: Consolidated Adjusted EBIT Margin % (2026)
Consolidated Adjusted EBIT Margin % Q4 & FULL YEAR 2023 + 2024 OUTLOOK 29 5.4 - 6.0% 7.0 - 7.7% Equity Income ($M) 120 - 150 165 - 210 • Volumes, performance & other – Contribution on higher sales – Higher labour costs ( - ) • Operational – Operational Excellence activities – Productivity and effici
Slide 30: Segment Outlook
Segment Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 30
Slide 31: Segment Sales & Adjusted EBIT Margin %
Segment Sales & Adjusted EBIT Margin % Q4 & FULL YEAR 2023 + 2024 OUTLOOK 31 2022 2023 2024F 2026F 5.3 7.4 7.4 - 8.0 8.3 - 9.0 2022 2023 2024F 2026F 2.0 3.6 3.1 - 3.7 4.5 - 5.2 2022 2023 2024F 2026F 4.2 4.7 5.5 - 6.1 7.8 - 8.5 2022 2023 2024F 2026F 4.5 2.2 1.2 - 1.8 2.1 - 2.8 Sales ($Billions) Adjus
Slide 32: Financial Strategy
Financial Strategy Q4 & FULL YEAR 2023 + 2024 OUTLOOK 32
Slide 33: Capital Allocation Principles
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 33 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings – Adj. debt to Adj. EBITDA ratio between 1.0 - 1.5x • Maintain flexibility to invest for growth Invest For Growth • Organic and inorganic opportunities • Innovation Retur
Slide 34: Continued Financial Strength
Continued Financial Strength Q4 & FULL YEAR 2023 + 2024 OUTLOOK 34 LEVERAGE RATIO (LTM, 31DEC23) ($M illions) 7,371 Adjusted Debt 3,905 Adjusted EBITDA 1.89 Adjusted Debt / Adjusted EBITDA TOTAL LIQUIDITY (31DEC23) ($M illions) 1,198 Cash 2,989 Available Term & Operating Lines of Credit 4,187 Total
Slide 35: Capital Spending
Capital Spending Q4 & FULL YEAR 2023 + 2024 OUTLOOK 35 Despite New Awards, We Expect CapEx /Sales Ratio To Decline As Planned 1 2024 to 2026 are based on mid - point of our sales outlook ($Billions) 1.7 2.5 ~2.5 4.4 % 5.8 % ~ 5.6 % Mid 4% Low 4% 2022 2023 2024F 2025F 2026F % of Sales 1 ~$400M increm
Slide 36: Free Cash Flow Generation
Free Cash Flow 1 Generation Q4 & FULL YEAR 2023 + 2024 OUTLOOK 36 FCF Accelerating As Earnings Grow and CapEx Declines 1 Free Cash Flow (FCF) is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other asset s m inus capital spending minus investment in other a
Slide 37: In Summary
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 37 In Summary Remain Confident in Executing Plan and Driving Strategy Continued organic sales growth over market • Megatrend sales to increase >$4B over 2023 - 2026 Further margin expansion, including through ongoing Operational Excellence activities Expect at leas
Slide 38: Q4 & FULL YEAR 2023 + 2024 OUTLOOK 38
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 38
Slide 39: Appendix – Q4 2023 Results
Appendix – Q4 2023 Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 39
Slide 40: Q4 2023 Reconciliation of Reported Results
Q4 2023 Reconciliation of Reported Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 40 Adjusted (2) (1) Reported Excluding: (1) Other Expense (Income), Net and (2) Amortization of Acquired and Intangible Assets $Millions, except for share figures $ 505 $ 31 $ 164 $ 310 Income Before Income Taxes 4.8% 3.0%
Slide 41: Q4 2022 Reconciliation of Reported Results
Q4 2022 Reconciliation of Reported Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 41 Excl. Other Expense, Net (2) (1) Reported Excluding: (1) Other Expense, Net (2) Restate $Millions, except for share figures $ 350 $ 11 $ 193 $ 146 Income Before Income Taxes 3.7% 1.5% % of Sales $ 64 $ 2 $ 27 $ 35 Incom
Slide 42: Sales Performance vs Market Performance (Q4 2023)
Sales Performance vs Market Q4 & FULL YEAR 2023 + 2024 OUTLOOK 42 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported (3%) 3% 4% Body Exteriors & Structures 5% 11% 25% Power & Vision (1%) 5% 6% Seating Systems (21%) (15%) (10%) Complete Vehicles (2%) 4% 9% TOTAL SALES 7% Unwe
Slide 43: Sales Performance vs Market Performance (2023)
Sales Performance vs Market Q4 & FULL YEAR 2023 + 2024 OUTLOOK 43 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported 1% 10% 9% Body Exteriors & Structures 5% 14% 21% Power & Vision 7% 16% 15% Seating Systems (5%) 4% 6% Complete Vehicles 2% 11% 13% TOTAL SALES 8% Unweighted P
Slide 44: Segment Impact on Adjusted EBIT
Segment Impact on Adjusted EBIT % of Sales Q4 & FULL YEAR 2023 + 2024 OUTLOOK 44 Adjusted EBIT as a Percentage of Sales Adjusted EBIT Sales ($Millions) 3.8% $ 367 $ 9,568 4 th Quarter of 2022 Increase (Decrease) Related to: 0.7% $ 80 $ 174 Body Exteriors & Structures 0.8% $ 115 $ 759 Power & Vision
Slide 45: Geographic Sales
Geographic Sales Q4 & FULL YEAR 2023 + 2024 OUTLOOK 45 Q4 2022 Q4 2023 $4.7B $4.9B $0.0B $1.0B $2.0B $3.0B $4.0B $5.0B $6.0B North America PRODUCTION 5% $3.7B $4.1B $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B $4.5B Europe PRODUCTION 7% $123M $141M $0M $20M $40M $60M $80M $100M $120M $1
Slide 46: Q4 2023 Financial Results
Q4 2023 Financial Results Q4 & FULL YEAR 2023 + 2024 OUTLOOK 46 CHANGE Q4 2023 Q4 2022 ($Millions, unless otherwise noted) 191 558 367 Adjusted EBIT 1 36 53 17 Interest Expense 155 505 350 Adjusted Pre - Tax Income 31 95 64 Adjusted Income Taxes 11 27 16 Income Attributable to Non - Controlling Inte
Slide 47: Capital Allocation Principles
Capital Allocation Principles Q4 & FULL YEAR 2023 + 2024 OUTLOOK 47 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q4 2023 • Preserve liquidity and high investment grade credit ratings Maintain Strong Balance Sheet 1.89x LTM 31DEC23 - Adj. debt / Adj. EBITDA ratio betwee
Slide 48: Leverage Ratio Q4 2023
Leverage Ratio Q4 2023 Q4 & FULL YEAR 2023 + 2024 OUTLOOK 48 ($Millions) $ 3,674 LTM EBITDA 231 Credit Rating Agency Adjustments $ 3,905 Adjusted EBITDA $ 7,223 Debt per Balance Sheet 148 Credit Rating Agency Adjustments $ 7,371 Adjusted Debt 1.89x Adjusted Debt / Adjusted EBITDA Ratio (Q4 2023)
Slide 49: Appendix - Outlook
Appendix - Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 49
Slide 50: Financial Outlook
Financial Outlook Q4 & FULL YEAR 2023 + 2024 OUTLOOK 50 2026 2024 ($Billions, unless otherwise noted) Sales: 19.6 – 20.6 17.4 – 18.0 • Body Exteriors & Structures 16.8 – 17.4 15.8 – 16.2 • Power & Vision 6.5 – 6.9 5.5 – 5.8 • Seating Systems 6.1 – 6.5 5.9 – 5.9 • Complete Vehicles 48.8 – 51.2 43.8 –
Slide 51: Q4 & FULL YEAR 2023 + 2024 OUTLOOK 51
Q4 & FULL YEAR 2023 + 2024 OUTLOOK 51