Magna International Inc. · TSX:MG
Magna International — Investor Presentation (September 2019)
39 slides from Magna International's investor presentation, September 2019
Slide 1: Investor Presentation September 2019
INVESTOR PRESENTATION SEPTEMBER 2019 Magna International Inc. | magna.com
Slide 2: Slide 2
Slide 3: Forward Looking Statements
Forward Looking Statements 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-looking sta
Slide 4: Agenda / Q2 2019 Update
Agenda • Q2-2019 Update • Reporting Segment and Consolidated Outlooks • Positioning for the Future • Financial Strategy 3 Q2 2019 UPDATE 4
Slide 5: Q2 2019 Sales and Earnings; Segment Results
Q2 2019 Sales and Earnings Sales Adjusted Diluted EPS ($Billions) ($) -1% -4% 10.3 10.1 1.67 1.59 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Global LV Production = ~(6%) Organic +5% 5 Q2 2019 Segment Results ($Millions, unless otherwise noted) BODY EXT. & STRUCTURES Q2 2018 Q2 2019 POWER & VISION Q2 2018 Q2 20
Slide 6: Financial Outlook – Key Assumptions
Financial Outlook – Key Assumptions MAY AUGUST OUTLOOK OUTLOOK 2019 2019 Automotive Light Vehicle Production (millions of units) • North America 16.7 16.6 • Europe 21.5 21.4 • China – Magna’s Top 30 Vehicles 1 2.8 2.6 Foreign Exchange Rates • U.S. – Cdn 0.743 0.745 • U.S. – Euro 1.124 1.125 • U.S. –
Slide 7: 2019 Segment Adjusted EBIT Margin %; Seating Margin Outlook
2019 Segment Adjusted EBIT Margin % Body Exteriors & Structures Power & Vision 9.5% 8.1% 8.2-8.6% 8.2-8.6% 6.6-7.1% 6.6-7.1% Seating Systems Complete Vehicles 7.7% 6.2-6.7% 5.7-6.2% 1.5-2.0% 1.7-2.2% 1.1% 2018 Prior 2019 Outlook (May) Current 2019 Outlook (August) 9 Revised 2019 Seating Margin
Slide 8: Revised 2019 Free Cash Flow Outlook
Revised 2019 Free Cash Flow Outlook Free Cash Flow 1 ($Billions) 1.9-2.1 1.8-2.0 May Outlook Aug. Outlook 1 Free Cash Flow is Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets minus capital spending minus investment in other assets 11 REPORTING SE
Slide 9: Body Exteriors & Structures: Growth and Margins
B O D Y E X T E R I O R S & S T R U C T U R E S Growth In-Line with Production 2019 Sales By Region Sales 28% ($Billions) 64% 7% 1-2% 1% CAGR N.A. Eur Asia ROW 17.8-18.8 17.5 16.3-17.1 • Strong growth expected in Asia • Lightweight technologies outgrowing market (hot stamping, high pressure aluminum
Slide 10: Power and Vision: Growth and Margins
P O W E R A N D V I S I O N Expect Further Growth 2019 Sales By Region Sales ($Billions) 43% 46% 3-5% 1% 10% 1 CAGR N.A. Eur Asia ROW 11.8-12.6 1 • Continued growth in all regions (adjusted 1 10.6-11.2 10.8 for FP&C sale), highest % in Asia • Growth driven by DCTs, mechatronics, electronics/ADAS, mi
Slide 11: Seating Systems: Growth and Margins
S E A T I N G S Y S T E M S Further Success in Growing Well Above Market 2019 Sales By Region Sales 23% ($Billions) 68% 5% 4% 4-7% CAGR N.A. Eur Asia ROW 6.3-6.8 5.4-5.8 • Double-digit growth in Europe and Asia 5.5 • High exposure to SUV/CUVs remains a positive • BMW programs continue to launch • Ac
Slide 12: Complete Vehicles: Growth and Margins
C O M P L E T E V E H I C L E S Launches Drive Continued Growth 2019 Sales By Region Sales ($Billions) 99% 1% 5-9% CAGR N.A. Eur Asia ROW 7.0-7.7 6.8-7.2 • Largest contract manufacturer of 6.0 vehicles and leader in turnkey engineering services • Launching Mercedes-Benz G-Class, Jaguar I-Pace, BMW Z
Slide 13: Consolidated Outlook
CONSOLIDATED OUTLOOK 21 Magna’s Consolidated Sales Continue to Grow Magna Consolidated Sales ($Billions) 3-5% 1 CAGR 1-4% CAGR 42.4-45.4 40.8 38.9-41.1 • Higher growth in Europe and Asia FP&C 1.5 0.4 creating more balanced geographic diversification • Weaker €/RMB/Turkish Lira/C$, FP&C sale net of o
Slide 14: EBIT Margin %
1 EBIT Margin % Auto Parts and Systems 2 Complete Vehicles (%) (%) 9.1-9.6 8.5 7.3-7.7 1.7-2.2 1.7-2.3 1.1 3 3 2018 2019F 2021F 2018 2019F 2021F % of Sales ~87 ~83 ~84 % of Sales ~13 ~17 ~16 1 Excluding other expense (income), net 2 Represents combined Body Exteriors & Structures, Power & Vision, an
Slide 15: Consolidated EBITDA Margin; Positioning for the Future
1 Consolidated EBIDTA Margin % EBITDA (%) 10.7% 10.1-10.4 2 2018 2019F 2021F 1 Excluding other expense (income), net 2 Adjusted EBIT Margin % and Equity Income were reduced on May 9, 2019 to reflect changes in our outlook at one of our transmission joint ventures in China. We have not updated key as
Slide 16: Positioned to Help Reduce Vehicle Weight
27 Positioned to Help Reduce Vehicle Weight • Broadest offering of lightweight design and manufacturing solutions • Ability to support OEMs with comprehensive engineering for product and process design • Strong know-how in joining multi-materials • Global footprint allows us to win, support and laun
Slide 17: Powertrain Electrification is Growing
Powertrain Electrification is Growing… 2018 2025 2030 1% 2% 3% 5% 12% 8% 26% 10% 49% 45% 41% 28% 15% 37% 18% Internal Combustion Engine (ICE) Micro Hybrid: ICE with 12V start/stop functionality & regeneration capability Mild Hybrid: ICE with 48V start/stop functionality, regeneration & boosting capa
Slide 18: ADAS – Autonomous Driving Roadmap
ADAS – Autonomous Driving Roadmap Monitored Driving Non-Monitored Driving LEVEL 0 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 Functional Safety High Availability (Redundancy) Automation Æ Å Driver Penetration Rates1 2025 23% 33% 32% 8% 4% 0% 2030 17% 28% 33% 15% 7% 1 Magna Internal ADAS market forecast
Slide 19: Technologies Supporting Autonomy and Smart Mobility
Technology Platforms to Support Smart Mobility • Micro Vehicle • Sedan • Van Architecture • CUV BEV BEV + Rx • HV battery and control module Powertrain • Independent drive axles • Range extender Seating • Seat reconfiguration • Cameras ADAS and • LiDAR • RADAR Electronics • Domain Controller • Ultra
Slide 20: Reconfigurable Seating; Future of Vehicle Access
Reconfigurable Seating Solutions and Technology • Magna is a pioneer in reconfigurable seating – Stow ’n Go® seats on 4 generations of Chrysler minivans – Pitch Slide EZ Entry 1st to market on GMC Acadia • New system designed for flexible collaborative interior – Car sharing – Long road trips – Auto
Slide 21: Select Cross Group Collaboration Activities
Select Cross Group Collaboration Activities 37 Magna’s Competitive Advantage: Agility and Cross Group Collaboration Liftgate Synergy 48 Volt E-Drive Battery Project Enclosures • Exteriors & Mechatronics • Electronics & Powertrain • Exteriors & Cosma co-development initiative 48Volt E-Drive co-develo
Slide 22: Financial Strategy: Our Ongoing Financial Focus
FINANCIAL STRATEGY 39 Our Ongoing Financial Focus • Unchanged capital allocation strategy – Maintain strong balance sheet, invest for growth and return capital to shareholders – Adjusted Debt to Adjusted EBITDA ratio of between 1.0 and 1.5x • Driving down our capital spending % of sales • Further in
Slide 23: Capital Allocation Principles; Capital/Sales
Capital Allocation Principles Unchanged • Preserve liquidity and high investment 1 Maintain Strong Balance Sheet grade credit ratings • Maintain flexibility to invest for growth • Organic opportunities 2 Invest for Growth • Innovation • Acquisitions that fit product strategy • Continued dividend gro
Slide 24: Free Cash Flow Generation; Dividend Growth
Further Strong Free Cash Flow Generation Free Cash Flow 1 ($Billions) 1.9-2.1 1.6 1.2 >$6.5B (2019-2021) >40% of Market Cap 1.1 >$6B (2018-2020) ~$5B (2017-2019) 2016 2017 2018 2019F 2020F 2021F 1 Free Cash Flow is Cash from Operating Activities plus proceeds from normal course dispositions of fixed
Slide 25: Returning Capital to Shareholders; Returns
…Proven Track Record of Returning Capital to Shareholders 2011-2018 Dividends Share Repurchases Returned $ 2.7B $ 7.7B $ 10.4B 178 million shares Since 2011 ~37% of 12/31/2010 shares outstanding Returned >$1B to date in 2019 45 Delivering Strong and Improving Returns Return On Invested Capital 1 (%)
Slide 26: In Summary / Appendix
In Summary • Continuing to grow sales • Increasing investment in electrification and autonomy • Expect significant free cash flow generation (2019-2021) • Well positioned for future mobility • Attractive valuation 47 APPENDIX 48
Slide 27: Our Business: Magna At A Glance
OUR BUSINESS 49 Magna At A Glance 3rd > $6.5B Largest Auto Supplier FCF 2019-2021 Globally 1 $40.8B > $15B 2018 Total Sales Market Cap 1 Automotive News ranking based on 2018 Sales 50
Slide 28: Body Exteriors & Structures; Power & Vision Today
Body Exteriors & Structures Today $17.5B Products and Capabilities 2018 Sales Other • Body & Chassis 0.5 • Exterior Fascia, Front End & Liftgate Modules • Active Aerodynamic Systems Body & • Exterior Trim Chassis Exteriors • Fuel Tanks 10.5 6.5 BODY & CHASSIS EXTERIORS • Roof Systems Key Trends: Lig
Slide 29: Seating Systems; Complete Vehicles Today
Seating Systems Today Products and Capabilities • Seating Structures $5.5B • Seat Trim & Foam • Seating Mechanisms 2018 Sales • Complete Seats SEATING Key Trends: Vertical Integration, Autonomy, Seat Content Growth Comfort & Convenience for Consumer Design/Engineering for Manufacturing is Critical S
Slide 30: Viza Seating Acquisition; Geographic Sales
Viza Seating Acquisition • Expands our global footprint and vertical integration in seat structures • 2017 sales of approximately €125 million in four production facilities supporting customers that include VW, PSA, and Renault Nissan • Brings seat-structure expertise and a portfolio of products inc
Slide 31: North America; Europe Sales
North America Sales 1 ($Billions) 20.1 19.3-19.9 • Launch of new programs (+) • GM plant actions (-) • Getrag Mexico wind-down (-) • Weaker C$ (-) • Lower NA vehicle production (-) 2018 2019F N.A. Light Vehicle Production Growth = (2%) 1 Excluding sales of Fluid Pressure & Controls (FP&C) business u
Slide 32: Asia; Rest of World Sales
Asia Sales 1 ($Billions) 2.2-2.6 • Launch of new programs (+) 2.4 • Lower China vehicle production (-) • Lower renminbi (-) 2018 2019F Magna’s Top 30 China Vehicles = (18%) 1 Excluding sales of Fluid Pressure & Controls (FP&C) business unit (2018-$0.3B, 2019-$0.1B) for which we announced agreement t
Slide 33: New Launches Ramping Up: North America, Europe
N O R T H A M E R I C A New Launches Ramping Up Q Q Q Q Q Q Q BMW X7 Chevrolet Blazer Ford Explorer | Lincoln Aviator Q Q Q Q Q Q Q Q Ford Ranger Honda Passport Jeep Gladiator Q Body Q Power & Vision Q Seating 61 E U R O P E New Launches Ramping Up Q Q Q Q Q Q Q Q Q Q Audi A3 Sportback BMW 1-Series
Slide 34: New Launches Ramping Up: Asia; Powertrain Content per Vehicle
A S I A New Launches Ramping Up Q Q Q Q Q Q Acura RDX Audi A6 BMW 3-Series Q Q Q Q Q Changan COS Ford Focus Geely CV-2 Q Body Q Power & Vision Q Seating 63 Powertrain Content per Vehicle Opportunities ICE Full 48V Mild 300V Powertrain EV Hybrid V HEV / PHEV AWD AWD P2.5 AWD P2.5 / P4 AWD MAGNA CONTE
Slide 35: Powertrain Electrification by Region; Hasco JV
Powertrain Electrification by Region 2018 2025 2030 1% 12% 21% 10% 30% 47% 49% CHINA 9% 69% 48% 6% 4% 11% 14% 22% EUROPE 9% 69% 83% 76% 3% 6% 6% 6% 13% 15% 26% USA 69% 39% 46% 10% 55% Internal Combustion Engine (ICE) Micro Hybrid Mild Hybrid PHEV/HEV EV Source: Magna OEM Fleet Analysis June 2019 65
Slide 36: ADAS Features by Magna; Locations in All Key Markets
ADAS Features by Magna Traffic Light Automatic Vision-only Adaptive Simple Radar Detection Emergency Braking Cruise Control Fusion Drowsy Driver Advanced Following Distance Assist Lane Data Indication Pre-Collison Control Pedestrian AEB Traffic Sign Recognition Trailer Backup High-Beam Assist Assist
Slide 37: Improving Geographic Diversification
Improving Geographic Diversification Consolidated Sales By Region ROW ROW Asia Asia 7% 1% 8% 2% North America Europe 2018 2017 North 2021F 46% 42% America 50% Europe 44% 69 Improving Geographic Diversification Total Sales by Region Including Unconsolidated JVs ROW ROW Asia Asia 11% 1% 12% 2% North A
Slide 38: 2021 Financial Outlook
2021 Financial Outlook – Key Assumptions 1 2021 Automotive Light Vehicle Production (millions of units) • North America 17.0 • Europe 22.9 2 • China – Magna’s Top 30 Vehicles 3.1 Foreign Exchange Rates • U.S. – Cdn 0.760 • U.S. – Euro 1.130 • U.S. – RMB 0.145 Acquisitions/Divestitures/Other Signific
Slide 39: Adjusted Debt to Adjusted EBITDA Calculation
Adjusted Debt to Adjusted EBITDA Calculation ($Millions) Q2 2019 LTM EBITDA $ 4,124 LTM Other Income per Financial Statements & Restructuring (Expense) $ 512 Other $ (134) Adjusted EBITDA $ 4,502 Debt per Balance Sheet $ 3,382 Lease Liability per Balance Sheet $ 1,758 Other $ 218 Adjusted Debt $ 5,3
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