Magna International Inc. · TSX:MG
Magna International — Q1 2023 Earnings Presentation
32 slides from Magna International's earnings presentation, May 5, 2023
Slide 1: Q1-2023 Results
Q1-2023 Results #AMAGNA May 5, 2023
Slide 2: Louis Tonelli, Vice President, Investor Relations
Louis Tonelli Vice President, Investor Relations Q1 - 2023 RESULTS 2
Slide 3: Forward Looking Statements
Forward Looking Statements Q1 - 2023 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
Slide 4: Forward Looking Statements (cont.)
Forward Looking Statements (cont.) Q1 - 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
Q1 - 2023 RESULTS 5 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"
Slide 6: Swamy Kotagiri, Chief Executive Officer
Swamy Kotagiri Chief Executive Officer Q1 - 2023 RESULTS 6
Slide 7: Key Takeaways
Key Takeaways Q1 - 2023 RESULTS 7 Organic sales outperformed weighted industry production by 8% Strong Q1 operating performance Increasing lower end of Adjusted EBIT margin outlook by 60 bps from 4.1% to 4.7% ~$8 billion in sales growth in next three years, including from new program launches, drivi
Slide 8: Operating Environment
Operating Environment Q1 - 2023 RESULTS 8 • Interlocking challenges impacting entire industry – Higher inflation – Rising interest rates – Slowing economic growth • Remained focused on: – Driving operational improvements – Working with customers to recover inflationary costs – Executing our strategy
Slide 9: Operational Excellence Focus
Operational Excellence Focus 9 Margin Expansion Potential Consolidation and restructuring of management, SG&A and engineering functions Short and Mid - Term Acceleration of manufacturing plant restructuring and consolidation Repricing on underperforming programs Long - Term Accretive automation and
Slide 10: Executing in Megatrend Product Areas
Executing in Megatrend Product Areas Q1 - 2023 RESULTS 10 Profitability Inflection Point in 2025 1 Powertrain electrification includes consolidated 48 - volt and high - voltage sales (Excluding pending acquisition of Veoneer Active Safety) Sales Q1 Key Program Announcements ClearView Vision System
Slide 11: Investing Capital To Support Sales Growth
Investing Capital To Support Sales Growth Q1 - 2023 RESULTS 11 Record business awards in 2022 – 30% above 5 - year average Sales / Capital Outlook Q1 Key Program Announcements Seat Complete Assemblies for General Motors EV Pick - up Trucks (SOP 2025) Engineering and Contract Manufacturing for INEOS
Slide 12: Customer Recognition
Q1 - 2023 RESULTS 12 • 100+ Customer Awards annually • Launch and Quality Performance • Seven GM 2022 Supplier of the Year Awards, one Overdrive Award Customer Recognition
Slide 13: Pat McCann, Executive Vice President & Chief Financial Officer
Pat McCann Executive Vice President & Chief Financial Officer Q1 - 2023 RESULTS 13
Slide 14: Q1 2023 Performance Highlights
Q1 2023 Performance Highlights Q1 - 2023 RESULTS 14 Consolidated Sales $10.7B Weighted GoM 1 of 8% (5% excl. Complete Vehicles) +11% Adjusted Diluted EPS $1.11 - 13% Free Cash Flow 2 - $279M 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicle production change (%) after
Slide 15: Q1 2023 Financial Results: Consolidated Sales
Q1 2023 Financial Results Q1 - 2023 RESULTS 15 Weighted GoM 1 8% (5% excl. Complete Vehicles) Consolidated Sales ($Millions) +11% 2 Q1 2023 PRODUCTION +3% Global +8% North America +7% Europe - 5% China +7% Magna Weighted 1 Weighted Growth over Market (GoM) compares organic sales growth (%) to vehicl
Slide 16: Q1 2023 Financial Results: Adjusted EBIT
Q1 2023 Financial Results Q1 - 2023 RESULTS 16 • Non - recurring – Lower net favourable commercial items – Warranty accrual • Operational – Inefficiencies at BES facility in Europe – Higher program - related engineering – Higher launch costs – Productivity and efficiency improvements (+) • Higher ne
Slide 17: Q1 2023 Financial Results
Q1 2023 Financial Results Q1 - 2023 RESULTS 17 CHANGE Q1 2023 Q1 2022 ($Millions, unless otherwise noted) (70) 437 507 Adjusted EBIT 6 20 26 Interest Expense (64) 417 481 Adjusted Pre - Tax Income (7) (90) (83) Adjusted Income Taxes 7 (8) (15) (Income) Attributable to Non - Controlling Interests (64
Slide 18: Q1 2023 Cash Flow and Investment Activities
Q1 2023 Cash Flow and Investment Activities Q1 - 2023 RESULTS 18 Free Cash Flow 1 ($Millions) KEY SOURCES (USES) OF CASH 1,636 (328) Net (Repayment) Issuances of Debt (132) (133) Dividends Q1 2023 Q1 2022 ($Millions, unless otherwise noted) 568 749 Cash from Operations Before Changes in Operating As
Slide 19: Continued Financial Strength
Continued Financial Strength Q1 - 2023 RESULTS 19 Anticipate Return to Target Leverage Ratio by End of 2024 LEVERAGE RATIO (LTM, 31MAR23) ($M illions) $ 6,923 Adjusted Debt $ 3,163 Adjusted EBITDA 2.19 Adjusted Debt / Adjusted EBITDA TOTAL LIQUIDITY (31MAR23) ($M illions) $ 2,429 Cash $ 3,500 Availa
Slide 20: Updated 2023 Outlook – Key Assumptions
Updated 2023 Outlook – Key Assumptions Q1 - 2023 RESULTS 20 MAY 2023 FEBRUARY 2023 2022 Light Vehicle Production (millions of units) 15.0 14.9 14.3 • North America 16.3 16.2 15.8 • Europe 26.2 26.2 26.4 • China Foreign Exchange Rates 0.748 0.750 0.769 • 1 CDN dollar equals USD 1.086 1.070 1.053 • 1
Slide 21: Updated 2023 Outlook
Updated 2023 Outlook Q1 - 2023 RESULTS 21 Raised Outlook MAY 2023 FEBRUARY 2023 2022 ($Billions, unless otherwise noted) 40.2 – 41.8 39.6 – 41.2 37.8 Total Sales 4.7% - 5.1% 4.1% – 5.1% 4.4% Adjusted EBIT Margin % 1 95M – 125M 95M – 125M 89M Equity Income ~150M ~150M 81M Interest Expense ~21% ~21% 2
Slide 22: In Summary
In Summary Q1 - 2023 RESULTS 22 Strong Q1 operating performance Taking additional actions to reduce expenses and optimize cost structure Raising low end of Adjusted EBIT margin outlook for 2023 Growth over market across all segments
Slide 23: Appendix – Q1 2023 Results
Appendix – Q1 2023 Results Q1 - 2023 RESULTS 23
Slide 24: Q1 2023 Reconciliation of Reported Results
Q1 2023 Reconciliation of Reported Results Q1 - 2023 RESULTS 24 Excl. Other Expense, Net Other Expense, Net Reported Excluding Other Expense (Income), Net $Millions, except for share figures $ 417 $ 142 $ 275 Income Before Income Taxes 3.9% 2.6% % of Sales $ 90 $ 32 $ 58 Income Tax Expense 21.6% 21.
Slide 25: Q1 2022 Reconciliation of Reported Results
Q1 2022 Reconciliation of Reported Results Q1 - 2023 RESULTS 25 Excl. Other Income, Net Other Expense, Net Reported Excluding Other Expense (Income), Net $Millions, except for share figures $ 481 $ 61 $ 420 Income Before Income Taxes 5.0% 4.4% % of Sales $ 83 $ 42 $ 41 Income Tax Expense 17.3% 9.8%
Slide 26: Sales Performance vs Market Performance
Sales Performance vs Market Q1 - 2023 RESULTS 26 Performance vs Weighted Global Production (Weighted GoM) Organic 1 Reported 5% 12% 9% Body Exteriors & Structures 7% 14% 9% Power & Vision 4% 11% 8% Seating Systems 26% 33% 28% Complete Vehicles 8% 15% 11% TOTAL SALES 3% Unweighted Production Growth 7
Slide 27: Segment Impact on Adjusted EBIT % of Sales
Segment Impact on Adjusted EBIT % of Sales Q1 - 2023 RESULTS 27 Adjusted EBIT as a Percentage of Sales Adjusted EBIT Sales ($Millions) 5.3% $ 507 $ 9,642 1 st Quarter of 2022 Increase (Decrease) Related to: 0.2% $ 41 $ 362 Body Exteriors & Structures (0.8%) $ (70) $ 277 Power & Vision (0.2%) $ (13)
Slide 28: Geographic Sales
Geographic Sales Q1 - 2023 RESULTS 28 Q1 2022 Q1 2023 Asia ASIA PRODUCTION (1%) China Production (5%) $4.9B $5.2B $0.0B $1.0B $2.0B $3.0B $4.0B $5.0B $6.0B $3.7B $4.4B $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B $4.5B $5.0B $1,040M $1,100M $0,000M $0,200M $0,400M $0,600M $0,800M $1,000
Slide 29: 2023 Segment Adjusted EBIT Margin
2023 Segment Adjusted EBIT Margin Q1 - 2023 RESULTS 29 Body Exteriors & Structures 2022 February 2023 Outlook May 2023 Outlook 5.3% 5.5 - 6.5% 6.4 - 6.9% 1.9% 2.5 - 3.5% 2.9 - 3.4% 4.0% 4.5 - 5.5% 4.8 - 5.3% 4.5% 1.0 - 2.0% 1.4 - 1.9% Seating Power & Vision Complete Vehicles
Slide 30: Capital Allocation Principles
Capital Allocation Principles Q1 - 2023 RESULTS 30 Disciplined, Profitable Approach to Growth Remains a Foundational Principle Q1 2023 • Preserve liquidity and high investment grade credit ratings Maintain Strong Balance Sheet 2.19x LTM 31MAR23 - Adj. debt / Adj. EBITDA ratio between 1.0 - 1.5x • Ma
Slide 31: Financial Outlook 2025
Financial Outlook 1 Q1 - 2023 RESULTS 31 2025 ($Billions, unless otherwise noted) Sales: 20.0 – 21.0 • Body Exteriors & Structures 14.8 – 15.4 • Power & Vision 6.2 – 6.6 • Seating Systems 4.0 – 4.5 • Complete Vehicles 44.7 – 47.2 Total Sales 6.7% – 7.8% Adjusted EBIT Margin % 2 180M – 225M Equity In
Slide 32: Magna – Forward. For all.
A\ MAG Forward. For all.