Magna International Inc. · TSX:MG
Magna International — Q1 2019 Earnings Presentation
30 slides from Magna International's earnings presentation, May 9, 2019
Slide 1: Q1 2019 Results Conference Call
Q1 2019 RESULTS CONFERENCE CALL 1 May 9, 2019
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Certain statements in this presentation constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") and are intended to provide information about management's current expectations and plans . Such forward -
Slide 3: Reminders
Reminders • All amounts are in U.S. Dollars (unless otherwise noted) • Today’s discussion excludes the impact of other expense, net • Prior period comparatives have been restated to reflect the transfer of certain assets out of Corporate & Other to the Company’s operating segments to better reflect
Slide 4: Financial Highlights
Q1 2019 Financial Highlights • Solid first quarter sales and Adjusted Diluted EPS despite: – Challenging global production environment – FX headwinds – Unanticipated costs in Electronics • Generated $347M in free cash flow • Returned $403M to shareholders 4
Slide 5: Consolidated Sales Performance
Q1 2019 Consolidated Sales Performance $ BILLIONS 5 ($Millions) (311) (107) (37) 268 (201) B/(W) 10.8 4.3 3.1 1.4 1.9 10.6 Q1 2018 Body Exteriors & Structures Power & Vision Seating Complete Vehicles Q1 2019 - 2 %
Slide 6: Consolidated Sales Performance
Q1 2019 Consolidated Sales Performance $ BILLIONS 6 Key Factors: • Foreign exchange translation ( - ) • Global light vehicle production ( - ) • Net customer price concessions ( - ) • Launch of new programs (+) • Acquisitions, net of divestitures (+) Q1 2018 Q1 2019 - 2 % 10.8 10.6
Slide 7: Adjusted EBIT and Equity Income
Q1 2019 Adjusted EBIT and Equity Income 7 - 130 BP ADJUSTED EBIT MARGIN % 8.1 6.8 KEY FACTORS - 60 % EQUITY INCOME ($ Millions) 87 35 Q1 2018 Q1 2019 - 18 % ADJUSTED EBIT ($ Millions) 875 720 • Power & Vision ( - ) • Seating ( - ) • Complete Vehicles ( - ) • Body Exteriors & Structures (+)
Slide 8: Financial Highlights
Q1 2019 Financial Highlights 8 Q1 2018 Q1 2019 ADJUSTED DILUTED EPS - $0.21 $1.84 $1.63 Q1 2018 Q1 2019 EFFECTIVE TAX RATE + 240 BP 21.3% 23.7% Q1 2018 Q1 2019 ADJUSTED NET INCOME ATTRIBUTABLE TO MAGNA - $132 Million $663M $531M
Slide 9: Segment Sales: Body Exteriors & Structures
Q1 2019 Segment Sales BODY EXTERIORS & STRUCTURES $ BILLIONS 9 • Global light vehicle production ( - ) • Foreign currency translation ( - ) • Net customer price concessions ( - ) • New program launches (+) Significant New Launches: • GMC Sierra and Chevrolet Silverado • BMW X3 • Mercedes - Benz G -
Slide 10: Segment Adjusted EBIT Margin: Body Exteriors & Structures
Q1 2019 Segment Adjusted EBIT Margin % BODY EXTERIORS & STRUCTURES 10 • Lower launch costs (+) • Productivity and efficiency improvements (+) • Customer pricing resolutions and commercial settlements (+) • Foreign exchange gains (+) • Higher depreciation and amortization ( - ) • Inefficiencies at pl
Slide 11: Segment Sales: Power & Vision
Q1 2019 Segment Sales POWER & VISION $ BILLIONS 11 • Foreign currency translation ( - ) • Global light vehicle production ( - ) • Net customer price concessions ( - ) • Acquisitions, net of divestitures (+) • New program launches (+) Significant New Launches: • BMW X5 • Chevrolet Blazer • Audi A6 •
Slide 12: Segment Adjusted EBIT Margin: Power & Vision
Q1 2019 Segment Adjusted EBIT Margin % POWER & VISION 12 • Higher engineering and other costs in Electronics ( - ) • Lower equity income ( - ) • A favourable settlement reported last year ( - ) • Acquisitions, net of divestitures ( - ) • Fixed asset write - down in Electronics ( - ) • Lower deprecia
Slide 13: Segment Sales: Seating
Q1 2019 Segment Sales SEATING $ BILLIONS 13 • Foreign currency translation ( - ) • Global light vehicle production ( - ) • End of production of certain programs ( - ) • Net customer price concessions ( - ) • New program launches (+) Significant New Launches: • BMW X5 • Geely Bin Yue • Skoda Kodiaq •
Slide 14: Segment Adjusted EBIT Margin: Seating
Q1 2019 Segment Adjusted EBIT Margin % SEATING 14 Q1 2018 Q1 2019 - 220 BP 8.8% 6.6% • Higher launch costs ( - ) • Impact of lower sales ( - ) • Higher commodity costs ( - ) • Lower equity income ( - ) • Gain on asset sale (+)
Slide 15: Complete Vehicles
Q1 2019 Complete Vehicles 15 + 12 % ASSEMBLY VOLUMES (Thousands of units) 40.9 45.9 + 16 % SALES ($ Billions) 1.7 1.9 + 9 ADJUSTED EBIT ($ Millions) 19 28 ADJUSTED EBIT MARGIN % 1.1 1.5 Q1 2018 Q1 2019 + 40 BP
Slide 16: Cash Flow
Q1 2019 Cash Flow $ MILLIONS 16 Cash from Operations Net Income + Non - Cash Items $ 888 Changes in Non - Cash Operating Assets & Liabilities $ (294) $ 594 Investment Activities Fixed Assets $ (251) Investments, Other Assets & Intangibles $ (82) $ (333) Proceeds from Disposition and Other $ 86 Free
Slide 17: Return of Capital to Shareholders
Return of Capital to Shareholders 17 Common Shares Repurchased in Q1 5.6M $ to Repurchase Shares in Q1 $ 284M Dividends Paid $ 119M Total Q1 Return to Shareholders $ 403M Common Shares Repurchased to date in Q2 1 2.2M $ to Repurchase Shares in Q2 1 $ ~120M 1 As of May 3, 2019
Slide 18: 2019 Outlook
2019 Outlook 18 May February Vehicle Production: – North America 16.7M 17.0M – Europe 21.5M 22.3M – China – Magna’s Top 30 Programs 1 4.3M 4.7M Foreign Exchange Rates: – U.S. – Cdn 0.743 0.760 – U.S. – Euro 1.124 1.130 – U.S. – RMB 0.148 0.145 1 Represents ~70% of Magna’s 2018 consolidated sales in
Slide 19: 2019 Outlook
2019 Outlook 1 $ BILLIONS UNLESS OTHERWISE NOTED 19 U.S. GAAP May February Sales: • Body Exteriors & Structures $16.3 - $17.1 $16.8 - $17.6 • Power & Vision $11.0 - $11.6 $11.2 - $11.8 • Seating Systems $5.5 - $5.9 $5.8 - $6.2 • Complete Vehicles $6.9 - $7.3 $6.9 - $7.3 Total Sales $39.1 - $41.3 $40
Slide 20: 2019 Segment Adjusted EBIT Margin
2019 Segment Adjusted EBIT Margin % 20 2018 Prior 2019 Outlook Current 2019 Outlook BODY EXTERIORS & STRUCTURES 8.1% 8.2 - 8.6% 8.2 - 8.6% SEATING SYSTEMS 7.7% 6.8 - 7.3% 6.2 - 6.7% POWER & VISION 9.5% 8.5 - 9.0% 6.6 - 7.1% COMPLETE VEHICLES 1.1% 1.5 - 2.0% 1.5 - 2.0%
Slide 21: Revised 2021 Outlook
Revised 2021 Outlook 1 CONSOLIDATED UPDATED PREVIOUS Equity Income $220M - $275M $290M - $345M EBIT Margin % 7.9% - 8.3% 8.1% - 8.5% 21 1 We have updated our 2021 outlook for one of our transmission joint ventures in China. Equity income has been reduced by $70 m ill ion as a result of lower than ex
Slide 22: Summary
Summary • Sales were strong considering challenging vehicle environment and currency headwinds • Outside of ADAS headwinds, our businesses performed well • 2019 outlook reduced due to higher engineering and other costs, lower equity income, lower volumes and currency • 2021 equity income and EBIT ma
Slide 23: Appendix
Q1 2019 APPENDIX 23 May 9, 2019
Slide 24: Sales Performance vs Market
Sales Performance vs Market Q1 2019 vs Q1 2018 Reported Organic 1 Unweighted Outperformance Weighted Outperformance Body Exteriors & Structures (7%) (3%) 4% 0% Power & Vision (3%) (1%) 6% 2% Seating (3%) 2% 9% 5% Complete Vehicles 16% 26% 33% 29% TOTAL SALES (2%) 3% 10% 6% Unweighted Production Grow
Slide 25: Geographic Sales
Geographic Sales Q1 2019 vs Q1 2018 25 Q1 2018 Q1 2019 - 5 % NORTH AMERICA ($Billions) PRODUCTION - 3% - 11 % ASIA ($Millions) PRODUCTION - 9% (China - 17%) + 3 % EUROPE ($Billions) PRODUCTION - 3% - 14 % REST OF WORLD ($Millions) S.A. PRODUCTION - 4% 5.4 5.1 4.7 4.9 659 587 137 118
Slide 26: Segment Impact on Adjusted EBIT
Segment Impact on Adjusted EBIT % of Sales Q1 2019 vs Q1 2018 $ MILLIONS 26 Sales Adjusted EBIT Adjusted EBIT as a Percentage of Sales First Quarter of 2018 $ 10,792 $ 875 8.1% Increase (Decrease) related to: Body Exteriors & Structures $ (311) $ 20 0.4% Power & Vision $ (107) $ (143) (1.3%) Seating
Slide 27: Adjusted Debt to Adjusted EBITDA Calculation
Adjusted Debt to Adjusted EBITDA Calculation $ MILLIONS 27 Q1 2019 LTM EBITDA $ 4,236 Other Income (Expense) LTM $ 20 Other $ 358 Adjusted EBITDA $ 4,614 Debt per Balance Sheet $ 3,519 Lease Liability $ 1,742 Other $ 218 Adjusted Debt $ 5,479 Adjusted Debt / Adjusted EBITDA 1.19x
Slide 28: Reconciliation of Reported Results
Q1 2019 Reconciliation of Reported Results EXCLUDING OTHER EXPENSE (INCOME), NET $ MILLIONS – EXCEPT PER SHARE FIGURES 28 Reported Other Exp./Inc. Excl. Other Exp./Inc. Income Before Income Taxes $ 1,368 $ 679 $ 689 % of Sales 12.9% 6.5% Income Taxes $ 267 $ 104 $ 163 % of Pretax 19.5% 23.7% Income
Slide 29: Q1 2018 Reconciliation of Reported Results
Q1 2018 Reconciliation of Reported Results EXCLUDING OTHER EXPENSE (INCOME), NET $ MILLIONS – EXCEPT PER SHARE FIGURES 29 Reported Restructuring Excl. Other Exp./Inc. Income Before Income Taxes $ 851 $ (3) $ 854 % of Sales 7.9% 7.9% Income Taxes $ 182 $ - $ 182 % of Pretax 21.4% 21.3% Income Attribu
Slide 30: ENCE.
ENCE. INNOVATION.