Magna International Inc. · TSX:MG
Magna International — Q1 2022 Earnings Presentation
32 slides from Magna International's earnings presentation, Apr 29, 2022
Slide 1: Q1 2022 Results
Q1 2022 Results April 29, 2022
Slide 2: Forward Looking Statements
Forward Looking Statements Q1 - 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.) Q1 - 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" Q1 - 2022 RESULTS
Slide 5: Key Messages – Q1 2022
Key Messages – Q1 2022 Q1 - 2022 RESULTS 5 Q1 outperformance in continued difficult industry environment – focusing on operational excellence, cost controls and customer recoveries 1. Organic sales outgrew weighted light vehicle production 2. Lowered outlook based on reduced industry production assu
Slide 6: Current Market Dynamics
Current Market Dynamics Q1 - 2022 RESULTS 6 Headwinds Ongoing supply constraints (incl. semiconductor chips) Economic impacts of Russia’s invasion of Ukraine Higher input costs COVID - 19 lock downs in China Tailwinds Continued low dealer inventory levels Strong underlying auto demand Megatrends dri
Slide 7: Q1 2022 Performance Highlights
CONSOLIDATED SALES $9.6B Weighted GoM 1 - 5% Q1 2022 Performance Highlights Q1 - 2022 RESULTS 7 ADJUSTED EBIT MARGIN % 5.3% - 230 bps OTHER HIGHLIGHTS Paid out $133M in dividends ADJUSTED DILUTED EPS $1.28 - 31% FREE CASH FLOW 2 ($99M) Repurchased 5.8m shares for $383M 1 Weighted Growth over Market
Slide 8: Updated 2022 Outlook – Key Factors
Updated 2022 Outlook – Key Factors Q1 - 2022 RESULTS 8 • Lowered global light vehicle production (“GLVP”) assumptions ̶ +3% year over year versus +6% in February outlook ̶ Europe production down 2.1M units ▪ 0.9M Russia – assumes no production for global OEMs ▪ 1.2M in Rest of Europe ̶ North America
Slide 9: Customer and Industry Recognition
Customer and Industry Recognition Q1 - 2022 RESULTS 9 Magna wins multiple GM supplier of the year awards for 2021 Multiple Magna innovations identified as finalists for the 2022 Automotive News PACE Awards
Slide 10: 2022 Investor Event – May 10, 2022
2022 Investor Event – May 10, 2022 • Update on go - forward strategy execution • On - road driving experiences and interactive displays showcasing new technologies • Location: M1 Concourse in Pontiac, Michigan Q1 - 2022 RESULTS 10
Slide 11: Q1 2022 Financial Results
Q1 2022 Financial Results Q1 - 2022 RESULTS 11 Key Factors • Lower global light vehicle production ( - ) • Lower assembly volumes ( - ) • Foreign currency translation: $311M ( - ) • Divestitures, net of acquisitions: $64M ( - ) • Customer price concessions ( - ) • Launch of new programs (+) • Price
Slide 12: Q1 2022 Financial Results
Q1 2022 Financial Results Q1 - 2022 RESULTS 12 Adjusted effective tax rate of 17.3% vs 23.3% in Q1, 2021: • Net favourable adjustments related to changes in tax laws • Favourable adjustments from temporal fx • Higher favourable impact from R&D credits Adjusted Net Income Attributable to Magna of $38
Slide 13: Q1 2022 Cash Flow and Investment Activities
Q1 2022 Cash Flow and Investment Activities Q1 - 2022 RESULTS 13 Free Cash Flow 1 ($Millions) $414 ($99) 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -$250 -$50 $150 $350 $550 $750 $950 Q1'21 Q1'22 OTHER USES OF CASH Net Repayment of Debt $328M Public and Private Equity Investments $2M Repurchase of Common Share
Slide 14: Continued Financial Flexibility
Continued Financial Flexibility Q1 - 2022 RESULTS 14 ($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, 03/31/22) Adjusted Debt $5,471 Adjusted EBITDA $3,529 Adjusted Debt / Adjusted EBITDA 1.55 TOTAL
Slide 15: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions Q1 - 2022 RESULTS 15 2021 FEBRUARY 2022 APRIL 2022 Light Vehicle Production (millions of units) • North America 13.1 15.2 14.7 • Europe 16.0 18.5 16.4 • China 24.6 24.2 24.4 Foreign Exchange Rates • 1 CDN dollar equals USD 0.798 0.800 0.790 • 1 EURO equals USD 1.1
Slide 16: 2022 Outlook
2022 Outlook Q1 - 2022 RESULTS 16 2021 FEBRUARY 2022 APRIL 2022 Sales: • Body Exteriors & Structures 14.5 16.2 – 16.8 15.8 – 16.4 • Power & Vision 11.3 11.9 – 12.3 11.6 – 12.0 • Seating Systems 4.9 5.4 – 5.7 5.2 – 5.5 • Complete Vehicles 6.1 5.8 – 6.1 5.2 – 5.5 Total Sales 36.2 38.8 – 40.4 37.3 – 38
Slide 17: Free Cash Flow Expectations
Free Cash Flow 1 Expectations Q1 - 2022 RESULTS 17 2022 ($Billions) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 $1.1 - $1.3 $0.7 - $0.9 February 2022 Outlook April 2022 Outlook 1 Free Cash Flow is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets plus se
Slide 18: In Summary
In Summary Q1 - 2022 RESULTS 18 • Focusing on Operational Excellence, Cost Controls and Customer Recoveries • Ongoing Investments to Drive Future Growth • Positioned for Growth and Free Cash Flow Generation as Markets Recover Q1 Outperformance Despite Industry Headwinds
Slide 19: Appendix – Q1 2022 Results
Appendix – Q1 2022 Results Q1 - 2022 RESULTS 19
Slide 20: Magna in Russia
Magna in Russia Q1 - 2022 RESULTS 20 • 2021 sales of $371 million (~1% of total sales) ̶ Substantively to Hyundai and Volkswagen • ~2,000 employees in 6 facilities • $440 million on balance sheet as at March 31, 2022 ̶ $160 million in net assets ̶ $280 million in deferred cumulative translation loss
Slide 21: Q1 2022 Reconciliation of Reported Results
Q1 2022 Reconciliation of Reported Results 21 REPORTED OTHER EXPENSE, NET EXCL. OTHER EXPENSE, NET Income Before Income Taxes $ 420 $ 61 $ 481 % of Sales 4.4% 5.0% Income Tax Expense $ 41 $ 42 $ 83 % of Pretax 9.8 % 17.3% Income Attributable to Non - Controlling Interests $ (15) $ - $ (15) Net Incom
Slide 22: Q1 2021 Reconciliation of Reported Results
Q1 2021 Reconciliation of Reported Results 22 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) $ 174 % of Pretax 22.7% 23.3% Income Attributable to Non - Controlling Interests $ (7) $ - $ (7) Net Inco
Slide 23: Sales Performance vs Market
Sales Performance vs Market 23 REPORTED ORGANIC 1 PERFORMANCE VS WEIGHTED GLOBAL PRODUCTION (Weighted GoM) Body Exteriors & Structures 1% 6% 13% Power & Vision (3%) (2%) 5% Seating Systems 6% 10% 17% Complete Vehicles (31%) (26%) (19%) TOTAL SALES (5%) (2%) 5% Unweighted Production Growth (7%) Weigh
Slide 24: Geographic Sales
Q1 - 2022 RESULTS 24 Geographic Sales Q1 2021 Q1 2022 NORTH AMERICA $4.6B $4.9B PRODUCTION (4%) EUROPE $4.7B $3.7B PRODUCTION (16%) ASIA $924M $1,040M PRODUCTION (3%) (China 3%) REST OF WORLD $99M $100M S.A. PRODUCTION (11%) Q1 2022 vs Q1 2021
Slide 25: 2022 Segment Adjusted EBIT Margin
2022 Segment Adjusted EBIT Margin Q1 - 2022 RESULTS 25 2021 February 2022 Outlook April 2022 Outlook BODY EXTERIORS & STRUCTURES 5.7% 8.1 - 8.6% 6.0 - 6.5% SEATING SYSTEMS 3.1% 3.9 - 4.4% 3.4 - 3.9% POWER & VISION 6.5% 5.0 - 5.5% 4.5 - 5.0% COMPLETE VEHICLES 4.7% 3.4 - 3.9% 3.4 - 3.9%
Slide 26: Capital Allocation Principles
Capital Allocation Principles Q1 - 2022 RESULTS 26 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q1 2022 Maintain Strong Balance Sheet • Preserve liquidity and high investment grade credit ratings - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x LTM 3/31/22 1.55x • Ma
Slide 27: 2024 Financial Outlook
2024 Financial Outlook 1 Q1 - 2022 RESULTS 27 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 28: Segment Financial Performance – Body Exteriors & Structures
Segment Financial Performance Q1 - 2022 RESULTS 28 • Higher input costs ( - ) • Inefficiencies & other costs at certain underperforming facilities ( - ) • Commercial settlements (+) • Divestitures, net of acquisitions (+) • Launch of new programs (+) • Price increases to recover higher input costs (
Slide 29: Segment Financial Performance – Power & Vision
• Lower global light vehicle production ( - ) • Foreign currency translation: $92M ( - ) • Net customer price concessions ( - ) • Launch of new programs (+) • Acquisition: $37M (+) Segment Financial Performance Q1 - 2022 RESULTS 29 • Higher input costs ( - ) • Higher electrification spending ( - ) •
Slide 30: Segment Financial Performance – Seating
• Launch of new programs (+) • Lower global light vehicle production ( - ) • Foreign currency translation: $54M ( - ) • Net customer price concessions ( - ) Segment Financial Performance Q1 - 2022 RESULTS 30 • Higher input costs ( - ) • Earnings on higher sales (+) • Lower launch costs (+) • Commerc
Slide 31: Segment Financial Performance – Complete Vehicles
• Lower vehicle assembly volumes ( - 15.4K units) • Weaker euro: $92M ( - ) • Favourable program mix (+) Segment Financial Performance Q1 - 2022 RESULTS 31 • Reduced earnings on lower assembly volumes, net of contractual fixed cost recoveries on certain programs ( - ) • Higher energy costs ( - ) • L
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