Magna International Inc. · TSX:MG
Magna International — Q3 2023 Earnings Presentation
29 slides from Magna International's earnings presentation, Nov 3, 2023
Slide 1: Q3 2023 Results
Q3 - 2023 Results November 3, 2023
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q3 - 2023 RESULTS 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q3 - 2023 RESULTS 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 about management
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q3 - 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
Q3 - 2023 RESULTS 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 revised calculations.
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q3 - 2023 RESULTS 6
Slide 7: Key Takeaways
Key Takeaways Q3 - 2023 RESULTS 7 Q3 organic sales outperformed weighted industry production by 2% ‒ 4% outgrowth excluding Complete Vehicles Strong Q3 operating performance ‒ YoY: Adjusted EBIT margin up 90 bps, Adjusted EPS up 33% Continued traction in operational excellence initiatives Rais
Slide 8: Operating Environment
Operating Environment Q3 - 2023 RESULTS 8 • Continued incremental improvements – Reduced supply constraints, higher and less volatile OEM vehicle production – Resilient auto sales • Interlocking challenges impacting entire industry – Continuing elevated labour inflation, higher interest rates, macro
Slide 9: Executing Go-Forward Strategy
Executing Go - Forward Strategy Q3 - 2023 RESULTS 9 1 Represents managed sales. Managed sales = consolidated sales + sales at 100% for unconsolidated entities. Includes both 48V hy brid + high voltage sales. 2. Drive operational excellence 1. Accelerate deployment of capital towards high - growth ar
Slide 10: Committed to Net-zero Goals
Committed to Net - zero 10 Goals 20% energy intensity reduction by 2027 100% Renewable Electricity 100% in Europe by 2025 100% Globally by 2030 SBTi 2030 near - term Commitment 42% reduction in scope 1 and 2 25% reduction in scope 3 SBTi 2050 net - zero Commitment 90% reduction in all 3 scopes Net -
Slide 11: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q3 - 2023 RESULTS 11
Slide 12: Q3 2023 Performance Highlights
Q3 2023 Performance Highlights Q3 - 2023 RESULTS 12 Consolidated Sales $10.7B Weighted GoM 1 of 2% (4% excl. Complete Vehicles) +15% Free Cash Flow 3 $23M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%) after applying Magna geo gra phic sales we
Slide 13: Q3 2023 Financial Results
Q3 2023 Financial Results Q3 - 2023 RESULTS 13 Weighted GoM 1 2% (4% excl. Complete Vehicles) Consolidated Sales ($Millions) +15% 2 Q3 2023 PRODUCTION +4% Global +7% North America +14% Europe - 2% China +8% Magna Weighted 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehic
Slide 14: Q3 2023 Financial Results
Q3 2023 Financial Results Q3 - 2023 RESULTS 14 • Operational – Productivity and efficiency improvements – Lower net engineering costs • Lower net input costs – Lower costs for energy and commodities – Customer recoveries – Higher labour costs • Volumes, Performance & Other – Strong earnings on highe
Slide 15: Q3 2023 Financial Results
Q3 2023 Financial Results Q3 - 2023 RESULTS 15 CHANGE Q3 2023 Q3 2022 ($Millions, unless otherwise noted) 163 615 452 Adjusted EBIT 1 (31) 49 18 Interest Expense 132 566 434 Adjusted Pre - Tax Income (14) 124 110 Adjusted Income Taxes (16) (23) (7) Income Attributable to Non - Controlling Interests
Slide 16: Q3 2023 Cash Flow and Investment Activities
Q3 2023 Cash Flow and Investment Activities Q3 - 2023 RESULTS 16 Free Cash Flow 1 ($Millions) OTHER SOURCES (USES) OF CASH (135) (10) Net Issues (Repayment) of Debt (7) (25) Public and Private Equity Investments - (180) Repurchase of Common Shares (128) (125) Dividends Q3 2023 Q3 2022 ($Millions, un
Slide 17: Continued Financial Strength
Continued Financial Strength Q3 - 2023 RESULTS 17 LEVERAGE RATIO (LTM, 30SEP23) ($M illions) 7,356 Adjusted Debt 3,647 Adjusted EBITDA 2.02 Adjusted Debt / Adjusted EBITDA TOTAL LIQUIDITY (30SEP23) ($M illions) 1,022 Cash 3,500 Available Term & Operating Lines of Credit 4,522 Total Liquidity Investm
Slide 18: Updated 2023 Outlook – Key Assumptions
Updated 2023 Outlook – Key Assumptions Q3 - 2023 RESULTS 18 NOVEMBER 2023 AUGUST 2023 2022 Light Vehicle Production (millions of units) 15.2 15.2 14.3 • North America 17.6 17.0 15.8 • Europe 27.1 26.2 26.4 • China Foreign Exchange Rates 0.743 0.746 0.769 • 1 CDN dollar equals USD 1.075 1.096 1.053 •
Slide 19: Updated 2023 Outlook
Updated 2023 Outlook Q3 - 2023 RESULTS 19 Raised Outlook, including UAW strike 2023 2022 November Acquired Intangibles Adjustment August Actual ($Billions, unless otherwise noted) 42.1 – 43.1 41.9 – 43.5 37.8 Total Sales 5.1% – 5.4% 0.1% 4.8% – 5.2% 4.5% Adjusted EBIT Margin % 1,2 125M – 150M 110M –
Slide 20: In Summary
In Summary Q3 - 2023 RESULTS 20 Strong Q3 operating performance Raised outlook for 2023 Continued confidence in future margin expansion Further sales growth over market %
Slide 21: Appendix – Q3 2023 Results
Appendix – Q3 2023 Results Q3 - 2023 RESULTS 21
Slide 22: Q3 2023 Reconciliation of Reported Results
Q3 2023 Reconciliation of Reported Results Q3 - 2023 RESULTS 22 Adjusted (2) (1) Reported Excluding: (1) Other Expense (Income), Net and (2) Amortization of Acquired and Intangible Assets $Millions, except for share figures $ 566 $ 32 $ (4) $ 538 Income Before Income Taxes 5.3% 5.0% % of Sales $ 124
Slide 23: Q3 2022 Reconciliation of Reported Results
Q3 2022 Reconciliation of Reported Results Q3 - 2023 RESULTS 23 Adjusted (2) (1) Reported Excluding: (1) Other Expense (Income), Net and (2) Amortization of Acquired and Intangible Assets $Millions, except for share figures $ 434 $ 11 $ 23 $ 400 Income Before Income Taxes 4.7% 4.3% % of Sales $ 110
Slide 24: Sales Performance vs Market Performance vs Weighted Global Production
Sales Performance vs Market Q3 - 2023 RESULTS 24 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported 1% 9% 10% Body Exteriors & Structures 6% 14% 29% Power & Vision 10% 18% 18% Seating Systems (17)% (9)% (2)% Complete Vehicles 2% 10% 15% TOTAL SALES 4% Unweighted Production G
Slide 25: Segment Impact on Adjusted EBIT % of Sales
Segment Impact on Adjusted EBIT % of Sales Q3 - 2023 RESULTS 25 Adjusted EBIT as a Percentage of Sales Adjusted EBIT Sales ($Millions) 4.9% $ 452 $ 9,268 3 rd Quarter of 2022 Increase (Decrease) Related to: 1.1% $ 131 $ 378 Body Exteriors & Structures 0.5% $ 97 $ 834 Power & Vision 0.2% $ 33 $ 234 S
Slide 26: Geographic Sales
Geographic Sales Q3 - 2023 RESULTS 26 Q3 2022 Q3 2023 Asia ASIA PRODUCTION - % China Production (2)% $4.7B $5.4B $0.0B $1.0B $2.0B $3.0B $4.0B $5.0B $6.0B $3.3B $3.9B $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B $4.5B $133M $148M $0M $20M $40M $60M $80M $100M $120M $140M $160M North Ame
Slide 27: 2023 Segment Adjusted EBIT Margin
2023 Segment Adjusted EBIT Margin 1 Q3 - 2023 RESULTS 27 Body Exteriors & Structures 2022 August 2023 Outlook November 2023 Outlook 5.3% 6.9 - 7.4% 7.1 - 7.4% 2.0% 3.3 - 3.8% 3.7 - 4.0% 4.2% 4.4 - 4.9% 4.6 - 4.9% 4.5% 1.6 - 2.1% 1.8 - 2.2% Seating Power & Vision Complete Vehicles 1 Excludes th
Slide 28: Capital Allocation Principles
Capital Allocation Principles Q3 - 2023 RESULTS 28 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q3 2023 • Preserve liquidity and high investment grade credit ratings Maintain Strong Balance Sheet 2.02x LTM 30SEP23 - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x • Ma
Slide 29: Magna – Forward. For all.
A MAGNA Forward. For all.