Magna International Inc. · TSX:MG
Magna International — Q1 2024 Earnings Presentation
33 slides from Magna International's earnings presentation, May 6, 2024
Slide 1: First Quarter 2024 Results
First Quarter 2024 May 3, 2024 Q1 2024 Results 1
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q1 2024 Results 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q1 2024 Results 3 Certain statements in this presentation and accompanying document constitute "forward - looking information" or "forward - looking statements" (collectively, "forward - looking statements") . Any such forward - looking statements are intended to provide i
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q1 2024 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 develop
Slide 5: Reminders
Reminders Q1 2024 Results 5 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. T
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q1 2024 Results 6
Slide 7: Key Takeaways
Q1 financial performance ahead of our expectations, excluding Fisker impairments On track with Operational Excellence activities • Contributing to margin expansion Maintaining 2024 Adjusted EBIT Margin Outlook despite • Negative impact of assuming no additional Fisker Ocean production • Lower sales
Slide 8: Operating Environment
• More stable production schedules compared to recent years • Expect relatively level vehicle production over outlook period – Content growth driving our higher sales • Input cost inflation, including labour – Mitigating cost increases, ongoing customer discussions with respect to recoveries • Evolv
Slide 9: Fisker Ocean Update
Fisker Ocean Update Q1 2024 Results 9 • Fisker Ocean production currently idled • Our updated 2024 Outlook assumes no further Fisker Ocean production – ~$400M in reduced Sales, ~25 bps negative impact to Adjusted EBIT Margin • Operating assets and warrants fully impaired in Q1 2024 – $261M in assets
Slide 10: Proactively Managing Challenges
Proactively Managing Challenges Q1 2024 Results 10 • Operational excellence activities on track for ~75 bps improvement in 2024 - 2025 • Additional actions: – Improved input cost headwinds from ~30 to ~25 bps – Optimizing megatrend engineering spend by ~$50 million – Lowering capital spending outloo
Slide 11: Awarded Specialized eDrive System Business
Awarded Specialized eDrive System Business • New electrification program to support high - end vehicle platform • Primary rear drive system delivers exceptional power and performance in one package Continue to Advance Position in Electrification Q1 2024 Results 11
Slide 12: Industry and Customer Recognition
Industry and Customer Recognition • 100+ Customer Awards annually • Launch and Quality Performance • Five GM 2023 Supplier of the Year Awards, across four product areas Magna Wins 2024 Automotive News Pace Award, Receives PACEpilot Recognitions Q1 2024 Results 12 Magna Earns Five 2023 Supplier of th
Slide 13: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q1 2024 Results 13
Slide 14: Q1 2024 Performance Highlights
Q1 2024 Performance Highlights Q1 2024 Results 14 Consolidated Sales $11.0B +3% Weighted GoM 1 of - 1% (+2% excl. Complete Vehicles) Adjusted Diluted EPS $1.08 - 6% Free Cash Flow 2 - $270M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%) after a
Slide 15: Q1 2024 Financial Results: Consolidated Sales
Q1 2024 Financial Results Q1 2024 Results 15 Weighted GoM 1 - 1% (+2% excl. Complete Vehicles) Consolidated Sales ($Millions) +3% 2 Q1 2024 PRODUCTION 2% Global 2% North America - 3% Detroit - based - 2% Europe 11% China 1% Magna Weighted 1 Weighted Growth over Market (GoM) compares organic sales gr
Slide 16: Q1 2024 Financial Results: Adjusted EBIT & Margin
Q1 2024 Financial Results • Operational – Operational excellence activities • Non - recurring – Lower warranty – Gain on sale of equity - method investment • Higher net input costs (inflation) – Higher labour • Volumes & Other – Acquisitions, net of divestitures ( - ) – Lower earnings on lower assem
Slide 17: Q1 2024 Financial Results
Q1 2024 Financial Results Q1 2024 Results 17 CHANGE Q1 2024 Q1 2023 ($Millions, unless otherwise noted) 20 469 449 Adjusted EBIT 31 51 20 Interest Expense (11) 418 429 Adjusted Pre - Tax Income 2 (90) 21.5% (92) 21.4% Adjusted Income Taxes (9) (17) (8) (Income) Attributable to Non - Controlling Inte
Slide 18: Q1 2024 Cash Flow and Investment Activities
Q1 2024 Cash Flow and Investment Activities Free Cash Flow 1 ($Millions) KEY SOURCES (USES) OF CASH 757 1,636 Net Issuances of Debt (134) (132) Dividends Q1 2024 Q1 2023 ($Millions) 591 568 Cash from Operations Before Changes in Operating Assets & Liabilities (330) (341) Changes in Operating Assets
Slide 19: Continued Financial Strength
Continued Financial Strength ($Millions) LEVERAGE RATIO (LTM, 31MAR24) 8,049 Adjusted Debt 4,067 Adjusted EBITDA 1.98 Adjusted Debt / Adjusted EBITDA Adjusted Debt / Adjusted EBITDA (excl. excess cash) 1 1.83 TOTAL LIQUIDITY (31MAR24) ($Millions) Cash 1,517 Available Term & Operating Lines of Credit
Slide 20: Updated 2024 Outlook – Key Assumptions
Updated 2024 Outlook – Key Assumptions Q1 2024 Results 20 MAY 2024 FEBRUARY 2024 2023 Light Vehicle Production (millions of units) 15.7 15.7 15.6 • North America 17.4 17.4 17.4 • Europe 29.0 28.3 29.3 • China Foreign Exchange Rates 0.725 0.740 0.742 • 1 CDN dollar equals USD 1.065 1.080 1.082 • 1 EU
Slide 21: Updated 2024 Outlook
Updated 2024 Outlook Q1 2024 Results 21 MAY 2024 FEBRUARY 2024 2023 ($Billions, unless otherwise noted) 42.6 - 44.2 43.8 - 45.4 42.8 Total Sales 5.4% - 6.0% 5.4% - 6.0% 5.2% Adjusted EBIT Margin % 1 120M - 150M 120M - 150M 112M Equity Income ~230M ~230M 156M Interest Expense ~22% ~21% 21.0% Income T
Slide 22: Updated 2024 Consolidated Sales Outlook
Updated 2024 Consolidated Sales Outlook Q1 2024 Results 22 ($Billions) 1 Includes Active Safety volume declines, program delays and customer in - sourcing, partially offset by higher sales in other areas. 1 43.8 - 45.4 42.6 - 44.2
Slide 23: In Summary
In Summary Q1 financial performance ahead of our expectations (excluding Fisker impairments) On track with operational excellence activities, and taking further mitigating actions Maintaining Adjusted EBIT Margin Outlook and lowering capital spending Assessing impacts of OEM electrification plans to
Slide 24: Magna – Forward. For all.
AA MAGNA Forward. For all.
Slide 25: Appendix
Appendix – Q1 2024 Results Q1 2024 Results 26
Slide 26: Q1 2024 Reconciliation of Reported Results
Q1 2024 Reconciliation of Reported Results 1 Adjusted Net Income Attributable to Magna represents Net Income excluding Other expense (income), net and Amortization of Acquired Intangible Assets Q1 2024 Results 27 Adjusted (2) (1) Reported Excluding: (1) Other Expense (Income), Net and (2) Amortizati
Slide 27: Q1 2023 Reconciliation of Reported Results
Q1 2023 Reconciliation of Reported Results 1 Adjusted Net Income Attributable to Magna represents Net Income excluding Other expense (income), net and Amortization of Acquired Intangible Assets Q1 2024 Results 28 Adjusted (2) (1) Reported Excluding: (1) Other Expense (Income), Net and (2) Amortizati
Slide 28: Sales Performance vs Market Performance
Sales Performance vs Market Q1 2024 Results 29 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported (1%) 0% 0% Body Exteriors & Structures 5% 6% 16% Power & Vision (3%) (2%) (2%) Seating Systems (17%) (16%) (15%) Complete Vehicles (2%) (1%) 2% TOTAL SALES 2% 1% Unweighted Prod
Slide 29: Segment Impact on Adjusted EBIT % of Sales
Segment Impact on Adjusted EBIT % of Sales Q1 2024 Results 30 Adjusted EBIT as a Percentage of Sales Adjusted EBIT Sales ($Millions) 4.2% $ 449 $ 10,673 1 st Quarter of 2023 Increase (Decrease) Related to: 0.2% $ 26 $ (10) Body Exteriors & Structures (0.1%) $ 6 $ 519 Power & Vision 0.1% $ 15 $ (31)
Slide 30: Geographic Sales
Geographic Sales Q1 2023 Q1 2024 Asia ASIA PRODUCTION 4% China Production 11% $5.2B $5.3B $4.4B $4.2B $1,100M $1,500M $125M Q1 2024 Results 31 $120M North America PRODUCTION 2% Europe PRODUCTION (2%) ROW PRODUCTION 7% South America Production (5%) Rest of World Q1 2024 vs Q1 2023
Slide 31: 2024 Segment Adjusted EBIT Margin
2024 Segment Adjusted EBIT Margin Body Exteriors & Structures 2023 February 2024 Outlook May 2024 Outlook 7.4% 7.4 - 8.0% 7.4 - 8.0% 3.6% 3.1 - 3.7% 3.1 - 3.7% 4.7% 5.5 - 6.1% 5.5 - 6.1% 2.2% Q1 2024 Results 32 1.2 - 1.8% 1.0 - 1.6% Seating Power & Vision Complete Vehicles
Slide 32: Capital Allocation Principles
Capital Allocation Principles Q1 2024 Results 33 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q1 2024 1.98x 1 LTM 31MAR24 • Preserve liquidity and high investment Maintain Strong grade credit ratings Balance Sheet - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x • Ma
Slide 33: Leverage Ratio
Leverage Ratio Q1 2024 Q1 2024 Results 34 ($Millions) $ 3,718 LTM EBITDA 349 Credit Rating Agency Adjustments $ 4,067 Adjusted EBITDA $ 7,924 Debt per Balance Sheet 125 Credit Rating Agency Adjustments $ 8,049 Adjusted Debt 1.98x Adjusted Debt / Adjusted EBITDA Ratio (Q1 2024) Adjusted Debt / Adjust