Magna International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the fourth quarter and year ended December
31, 2022.
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THREE MONTHS ENDEDDECEMBER 31, |
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YEAR ENDEDDECEMBER 31, |
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2022 |
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|
|
2021 |
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|
2022 |
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|
2021 |
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Reported |
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Sales |
|
$ |
9,568 |
|
|
$ |
9,110 |
|
|
$ |
37,840 |
|
|
$ |
36,242 |
|
|
|
|
|
|
|
|
|
|
Income from operations before income taxes |
|
$ |
146 |
|
|
$ |
576 |
|
|
$ |
878 |
|
|
$ |
1,948 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna International Inc. |
|
$ |
95 |
|
|
$ |
464 |
|
|
$ |
592 |
|
|
$ |
1,514 |
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|
|
|
|
|
|
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Diluted earnings per share |
|
$ |
0.33 |
|
|
$ |
1.54 |
|
|
$ |
2.03 |
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|
$ |
5.00 |
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Non-GAAP Financial
Measures(1) |
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Adjusted EBIT |
|
$ |
356 |
|
|
$ |
508 |
|
|
$ |
1,662 |
|
|
$ |
2,064 |
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|
|
|
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Adjusted diluted earnings per share |
|
$ |
0.91 |
|
|
$ |
1.30 |
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|
$ |
4.10 |
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|
$ |
5.13 |
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All results are reported in millions of U.S. dollars,
except per share figures, which are in U.S. dollars.
(1) Adjusted EBIT and Adjusted diluted
earnings per share are Non-GAAP financial measures that have no
standardized meaning under U.S. GAAP, and as a result may not be
comparable to the calculation of similar measures by other
companies. A reconciliation of these Non-GAAP financial measures is
included in the back of this press release.
A photo of Swamy Kotagiri, Magna’s Chief Executive Officer
is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/70f2a350-5416-4e16-8480-40b245c72513
THREE MONTHS ENDED DECEMBER 31,
2022
We recorded consolidated sales of $9.6 billion
in the fourth quarter of 2022, an increase of 5% over the fourth
quarter of 2021. Excluding the impact of foreign currency
translation, sales increased 13% compared to global light vehicle
production that increased 5%.
Adjusted EBIT decreased to $356 million in the
fourth quarter of 2022 compared to $508 million in the fourth
quarter of 2021. This decrease mainly reflects higher net
engineering costs related to our electrification and ADAS
businesses, including at certain equity-accounted entities, higher
net warranty costs, higher launch costs, operating inefficiencies
at a facility in Europe, and provisions against certain accounts
receivable and other balances. These factors were partially offset
by earnings on higher sales and higher net favourable commercial
resolutions.
Income from operations before income taxes was
$146 million in the fourth quarter of 2022 compared to $576 million
in the fourth quarter of 2021. Included in income from operations
before income taxes in the fourth quarter of 2022 was Other
expense, net of $193 million, comprised of net losses on the
revaluation of certain public and private company warrants and
equity investments, a loss on the sale of a business operation, and
restructuring and impairment costs (see "Non-GAAP Financial
Measures" section included in this Press Release). In comparison,
in the fourth quarter of 2021 we recorded, Other income, net of $90
million, comprised of merger agreement termination fee income and
net gains on the revaluation of certain public and private company
warrants and equity investments, partially offset by restructuring
and impairment costs. Excluding Other expense (income), net from
both periods, income from operations before income taxes decreased
$147 million in the fourth quarter of 2022 compared to the fourth
quarter of 2021.
Net income attributable to Magna International
Inc. was $95 million in the fourth quarter of 2022 compared to $464
million in the fourth quarter of 2021. Included in net income
attributable to Magna International Inc. in the fourth quarter of
2022 was Other expense, net of $166 million after tax, compared to
Other income, net of $60 million and Adjustments to Deferred Tax
Valuation Allowances of $13 million in the fourth quarter of 2021.
Excluding Other expense (income), net and Adjustments to Deferred
Tax Valuation Allowances from both periods, net income attributable
to Magna International Inc. decreased $130 million in the fourth
quarter of 2022 compared to the fourth quarter of 2021.
Diluted earnings per share decreased to $0.33 in
the fourth quarter of 2022 compared to $1.54 in the comparable
period and Adjusted diluted earnings per share decreased to $0.91
compared to $1.30.
In the fourth quarter of 2022, we generated $1.3
billion in cash from operating activities after changes in
operating assets and liabilities. Investment activities in the
fourth quarter of 2022 included $750 million in fixed asset
additions, and $186 million for investments, other assets and
intangible assets.
YEAR ENDED DECEMBER 31, 2022
We recorded consolidated sales of $37.8 billion
for the year ended December 31, 2022, an increase of 4% from the
year ended December 31, 2021. Excluding the impact of foreign
currency translation, sales increased 11% compared to global light
vehicle production that increased 6%.
Adjusted EBIT decreased to $1.66 billion in 2022
compared to $2.06 billion in 2021. This decrease mainly reflects
higher net production input costs, including energy, commodity,
labour and freight costs, inefficiencies and other costs at certain
underperforming facilities, higher net engineering costs related to
our electrification and ADAS businesses, including at certain
equity-accounted entities, the net weakening of foreign currencies
against the U.S. dollar, reduced earnings as a result of the
substantial idling of our Russian operations, and lower equity
income. These factors were partially offset by earnings on higher
sales, higher net favourable commercial resolutions and a $45
million provision on engineering service contracts with the
automotive unit of Evergrande in 2021.
During 2022, income from operations before
income taxes was $878 million and net income attributable to Magna
International Inc. was $592 million, down $1.07 billion and $922
million compared to 2021, respectively.
Diluted earnings per share decreased to $2.03 in
2022 compared to $5.00 in 2021 and adjusted diluted earnings per
share decreased to $4.10 compared to $5.13.
During 2022, we generated cash from operations
of $2.1 billion including changes in operating assets and
liabilities. Investment activities in 2022 included
$1.7 billion in fixed asset additions, $455 million in
investments, other assets and intangible assets, and $29 million in
public and private equity investments.
RETURN OF CAPITAL TO
SHAREHOLDERS
During the year ended December 31, 2022, we
repurchased 12.6 million shares for $780 million. In addition, we
paid dividends of $126 million and $514 million for the three
months and year ended December 31, 2022, respectively.
Our Board of Directors declared a fourth quarter
dividend of $0.46 per Common Share. The dividend is payable on
March 10, 2023 to shareholders of record as of the close of
business on February 24, 2023.
2023 AND 2025 OUTLOOK
Our current year Outlook is provided annually
and updated quarterly; our 2025 Outlook is provided below, but not
updated quarterly. Our outlook does not incorporate material
unannounced acquisitions or divestitures. It also excludes the
pending acquisition of Veoneer Active Safety announced on December
20, 2022.
2023 and 2025 Outlook
Assumptions
|
|
|
2023 |
|
2025 |
Light Vehicle
Production (millions of
units) North
America Europe China |
14.916.226.2 |
|
16.517.529.0 |
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|
|
|
|
|
Average Foreign exchange
rates:1 Canadian dollar equals1 euro equals |
|
|
US$0.750US$1.070 |
|
US$0.750US$1.070 |
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2023 and 2025 Outlook
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2023 |
|
2025 |
Segment
Sales Body Exteriors
& Structures
Power & Vision
Seating Systems
Complete
Vehicles |
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|
$16.7 - $17.3 billion$13.0 - $13.4 billion$5.5 - $5.8 billion$4.9 -
$5.2 billion |
|
$20.0 - $21.0 billion$14.8 - $15.4 billion$6.2 - $6.6 billion$4.0 -
$4.5 billion |
Total Sales |
|
|
$39.6 - $41.2 billion |
|
$44.7 - $47.2 billion |
|
|
|
|
|
|
Adjusted EBIT Margin(2) |
|
|
4.1% - 5.1% |
|
6.7% - 7.8% |
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|
|
|
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Equity Income (included in
EBIT) |
|
|
$95 - $125 million |
|
$180 - $225 million |
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Interest Expense, net |
|
|
Approximately $150 million |
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Income Tax Rate(3) |
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Approximately 21% |
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Net Income attributable to
Magna(4) |
|
|
$1.1 - $1.4 billion |
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Capital Spending |
|
|
Approximately $2.4 billion |
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Notes:(2) Adjusted
EBIT Margin is the ratio of Adjusted EBIT to Total Sales(3) The
Income Tax Rate has been calculated using Adjusted EBIT and is
based on current tax legislation(4) Net Income attributable to
Magna excludes Other expense (income), net |
|
Our Outlook is intended to provide information
about management's current expectations and plans and may not be
appropriate for other purposes. Although considered reasonable by
Magna as of the date of this document, the 2023 and 2025 Outlook
above and the underlying assumptions may prove to be inaccurate.
Accordingly, our actual results could differ materially from our
expectations as set forth herein. The risks identified in the
“Forward-Looking Statements” section below represent the primary
factors which we believe could cause actual results to differ
materially from our expectations.
Key Drivers of Our Business
Our operating results are primarily dependent on
the levels of North American, European and Chinese car and light
truck production by our customers. While we supply systems and
components to every major original equipment manufacturer ["OEM"],
we do not supply systems and components for every vehicle, nor is
the value of our content consistent from one vehicle to the next.
As a result, customer and program mix relative to market trends, as
well as the value of our content on specific vehicle production
programs, are also important drivers of our results.
Ordinarily OEM production volumes are aligned
with vehicle sales levels and thus affected by changes in such
levels. Aside from vehicle sales levels, production volumes are
typically impacted by a range of factors, including: general
economic and political conditions; labour disruptions; free trade
arrangements; tariffs; relative currency values; commodities
prices; supply chains and infrastructure; availability and relative
cost of skilled labour; regulatory considerations, including those
related to environmental emissions and safety standards; and other
factors. Additionally, COVID-19 can impact vehicle production
volumes, including through: mandatory stay-at-home orders which
restrict production; elevated employee absenteeism; and supply
chain disruptions, such as the semiconductor chip shortage
currently impacting global vehicle production volumes.
Overall vehicle sales levels are significantly
affected by changes in consumer confidence levels, which may in
turn be impacted by consumer perceptions and general trends related
to the job, housing and stock markets, as well as other
macroeconomic and political factors. Other factors which typically
impact vehicle sales levels and thus production volumes include:
interest rates and/or availability of credit; fuel and energy
prices; relative currency values; regulatory restrictions on use of
vehicles in certain megacities; and other factors. Additionally,
COVID-19 can impact vehicle sales, including through: mandatory
stay-at-home orders which restrict operations of car dealerships,
as well as through a deterioration in consumer confidence.
Segment Analysis[All amounts in U.S. dollars
and all tabular amounts in millions unless otherwise noted]
Body Exteriors & Structures
|
For the three months |
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|
ended December 31, |
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|
2022 |
|
|
2021 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
4,004 |
|
$ |
3,620 |
|
$ |
384 |
|
+ |
11 |
% |
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
$ |
198 |
|
$ |
168 |
|
$ |
30 |
|
+ |
18 |
% |
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales
(i) |
4.9 |
% |
|
4.6 |
% |
|
|
|
+ |
0.3 |
% |
(i) Adjusted EBIT as a percentage of
sales is calculated as Adjusted EBIT divided by Sales.
Sales for Body Exteriors & Structures
increased 11% or $384 million to $4.00
billion in the fourth quarter of 2022 compared to $3.62
billion in 2021. The increase in sales was primarily due to
higher global light vehicle production, the launch of new programs
during or subsequent to the fourth quarter of 2021, including the
Rivian R1T and R1S, Honda CR-V, Ford F-150 Lightning and Jeep Grand
Cherokee, and customer input cost recoveries. These factors
were partially offset by a $224 million decrease in reported U.S.
dollar sales as a result of the weakening of foreign currencies
against the U.S. dollar and net customer price concessions.
Adjusted EBIT increased $30
million to $198 million for the fourth quarter of 2022
compared to $168 million in the fourth quarter of 2021
and Adjusted EBIT as a percentage of sales increased to 4.9%
from 4.6%. The increase is primarily due to earnings on higher
sales, lower net warranty costs and higher net favourable
commercial settlements. These were partially offset by higher net
production input costs, including labour, commodity, freight and
energy costs, inefficiencies and other costs at certain
underperforming facilities, provisions against certain accounts
receivable and other balances, and higher launch costs.
Power & Vision
|
For the three months |
|
|
|
|
|
ended December 31, |
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|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
|
|
|
|
|
|
|
|
Sales |
$ |
3,016 |
|
$ |
2,804 |
|
$ |
212 |
|
+ |
8 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
$ |
109 |
|
$ |
171 |
|
$ |
(62 |
) |
- |
36 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales |
3.6 |
% |
|
6.1 |
% |
|
|
- |
2.5 |
% |
Sales for Power & Vision increased 8%
or $212 million to $3.02 billion in the fourth
quarter of 2022 compared to $2.80 billion in 2021. The
increase in sales was primarily due to higher global light vehicle
production, the launch of new programs during or subsequent to the
fourth quarter of 2021, including the Chery Arrizo 8, BMW X5 and
Nio ES7, and customer input cost recoveries. These factors
were partially offset by a $235 million decrease in reported U.S.
dollar sales as a result of the weakening of foreign currencies
against the U.S. dollar and net customer price concessions.
Adjusted EBIT decreased $62
million to $109 million for the fourth quarter of 2022
compared to $171 million for the fourth quarter of 2021 and
Adjusted EBIT as a percentage of sales decreased to 3.6% from
6.1%. These decreases are primarily due to higher net
warranty costs, higher net engineering costs related to our
electrification and ADAS businesses, including at certain
equity-accounted entities, lower equity income and higher launch
costs. These were partially offset by earnings on higher
sales, customer recoveries in excess of increased net production
input costs, including commodity, energy, freight and labour costs
and higher net favourable commercial settlements.
Seating Systems
|
For the three months |
|
|
|
|
|
ended December 31, |
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|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
|
|
|
|
|
|
|
|
Sales |
$ |
1,345 |
|
$ |
1,299 |
|
$ |
46 |
|
+ |
4 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
$ |
13 |
|
$ |
49 |
|
$ |
(36 |
) |
- |
73 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales |
1.0 |
% |
|
3.8 |
% |
|
|
- |
2.8 |
% |
Sales for Seating Systems increased 4%
or $46 million to $1.35 billion in the fourth
quarter of 2022 compared to $1.30 billion in 2021. The
increase in sales was primarily due to higher global light vehicle
production, and the launch of new programs during or subsequent to
the fourth quarter of 2021, including the BYD Qin Plus, BYD Atto 3
and Changan Shenlan SL03. These factors were partially offset
by a $97 million decrease in reported U.S. dollar sales as a result
of the weakening of foreign currencies against the U.S. dollar and
net customer price concessions.
Adjusted EBIT decreased $36
million to $13 million for the fourth quarter of 2022
compared to $49 million for the fourth quarter of 2021 and
Adjusted EBIT as a percentage of sales decreased to 1.0% from 3.8%.
These decreases are primarily due to inefficiencies and other costs
at an underperforming facility, higher net production input costs,
including freight, labour, energy and commodity costs, higher
launch costs and provisions against certain accounts receivable and
other balances, partially offset by higher net favourable
commercial settlements.
Complete Vehicles
|
For the three months |
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Volumes (thousands of
units) |
|
27.0 |
|
|
32.7 |
|
|
|
- |
17 |
% |
|
|
|
|
|
|
|
|
|
Sales |
$ |
1,330 |
|
$ |
1,511 |
|
$ |
(181 |
) |
- |
12 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
$ |
57 |
|
$ |
98 |
|
$ |
(41 |
) |
- |
42 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales |
|
4.3 |
% |
|
6.5 |
% |
|
|
- |
2.2 |
% |
Sales for Complete Vehicles decreased 12%
or $181 million to $1.33 billion in the fourth
quarter of 2022 compared to $1.51 billion in the fourth
quarter of 2021 and assembly volumes decreased 17% or 5,700 units.
This sales decline was primarily due to a $164 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar and the impact of lower assembly volumes,
partially offset by favourable program mix.
Adjusted EBIT decreased $41
million to $57 million for the fourth quarter of 2022
compared to $98 million for the fourth quarter of 2021 and Adjusted
EBIT as a percentage of sales decreased to 4.3% from 6.5% primarily
due to lower government research and development incentives, higher
net production input costs, including energy and labour costs, and
lower net favourable commercial settlements.
Corporate and Other
Adjusted EBIT decreased $43
million to a loss of $21 million for the fourth quarter
of 2022 compared to income of $22 million for the fourth quarter of
2021 primarily due to higher incentive compensation and labour
costs, higher costs to accelerate our operational excellence
initiatives and a decrease in fees received from our divisions,
partially offset by transactional foreign exchange gains in the
fourth quarter of 2022 compared to losses in the fourth quarter of
2021.
MAGNA INTERNATIONAL INC.CONSOLIDATED
STATEMENTS OF INCOME[Unaudited][U.S. dollars in millions,
except per share figures]
|
Three months ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
9,568 |
|
$ |
9,110 |
|
|
$ |
37,840 |
|
$ |
36,242 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
8,403 |
|
|
7,822 |
|
|
|
33,188 |
|
|
31,097 |
|
Depreciation and amortization |
|
349 |
|
|
389 |
|
|
|
1,419 |
|
|
1,512 |
|
Selling, general and administrative |
|
477 |
|
|
414 |
|
|
|
1,660 |
|
|
1,717 |
|
Interest expense, net |
|
17 |
|
|
22 |
|
|
|
81 |
|
|
78 |
|
Equity income |
|
(17 |
) |
|
(23 |
) |
|
|
(89 |
) |
|
(148 |
) |
Other expense (income), net [i] |
|
193 |
|
|
(90 |
) |
|
|
703 |
|
|
38 |
|
Income from operations before income taxes |
|
146 |
|
|
576 |
|
|
|
878 |
|
|
1,948 |
|
Income taxes |
|
35 |
|
|
98 |
|
|
|
237 |
|
|
395 |
|
Net income |
|
111 |
|
|
478 |
|
|
|
641 |
|
|
1,553 |
|
Income attributable to non-controlling interests |
|
(16 |
) |
|
(14 |
) |
|
|
(49 |
) |
|
(39 |
) |
Net income attributable to Magna International
Inc. |
$ |
95 |
|
$ |
464 |
|
|
$ |
592 |
|
$ |
1,514 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.33 |
|
$ |
1.55 |
|
|
$ |
2.04 |
|
$ |
5.04 |
|
Diluted |
$ |
0.33 |
|
$ |
1.54 |
|
|
$ |
2.03 |
|
$ |
5.00 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per Common Share |
$ |
0.45 |
|
$ |
0.43 |
|
|
$ |
1.80 |
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Common Shares outstanding
during the period [in millions]: |
|
|
|
|
|
|
|
|
|
Basic |
|
285.9 |
|
|
299.7 |
|
|
|
290.4 |
|
|
300.6 |
|
Diluted |
|
286.3 |
|
|
301.5 |
|
|
|
291.2 |
|
|
302.8 |
|
[i] See "Other (income) expense, net"
information included in this Press Release.
MAGNA INTERNATIONAL INC.CONSOLIDATED
BALANCE SHEETS[Unaudited][U.S. dollars in millions]
|
|
As at |
|
|
|
As at |
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
1,234 |
|
|
$ |
2,948 |
|
Accounts receivable |
|
6,791 |
|
|
|
6,307 |
|
Inventories |
|
4,180 |
|
|
|
3,969 |
|
Prepaid expenses and other |
|
320 |
|
|
|
278 |
|
|
|
12,525 |
|
|
|
13,502 |
|
|
|
|
|
|
|
Investments |
|
1,429 |
|
|
|
1,593 |
|
Fixed assets, net |
|
8,173 |
|
|
|
8,293 |
|
Operating lease right-of-use assets |
|
1,595 |
|
|
|
1,700 |
|
Intangible assets, net |
|
452 |
|
|
|
493 |
|
Goodwill |
|
2,031 |
|
|
|
2,122 |
|
Deferred tax assets |
|
491 |
|
|
|
421 |
|
Other assets |
|
1,093 |
|
|
|
962 |
|
|
$ |
27,789 |
|
|
$ |
29,086 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Short-term borrowing |
$ |
8 |
|
|
$ |
— |
|
Accounts payable |
|
6,999 |
|
|
|
6,465 |
|
Other accrued liabilities |
|
2,118 |
|
|
|
2,156 |
|
Accrued salaries and wages |
|
850 |
|
|
|
851 |
|
Income taxes payable |
|
93 |
|
|
|
200 |
|
Long‑term debt due within one year |
|
654 |
|
|
|
455 |
|
Current portion of operating lease liabilities |
|
276 |
|
|
|
274 |
|
|
|
10,998 |
|
|
|
10,401 |
|
|
|
|
|
|
|
Long‑term debt |
|
2,847 |
|
|
|
3,538 |
|
Operating lease liabilities |
|
1,288 |
|
|
|
1,406 |
|
Long-term employee benefit liabilities |
|
548 |
|
|
|
700 |
|
Other long‑term liabilities |
|
461 |
|
|
|
376 |
|
Deferred tax liabilities |
|
312 |
|
|
|
440 |
|
|
|
16,454 |
|
|
|
16,861 |
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
Capital stock |
|
|
|
|
|
Common Shares |
|
|
|
|
|
[issued: 285,931,816; December 31, 2021 – 297,871,776] |
|
3,299 |
|
|
|
3,403 |
|
Contributed surplus |
|
111 |
|
|
|
102 |
|
Retained earnings |
|
8,639 |
|
|
|
9,231 |
|
Accumulated other comprehensive loss |
|
(1,114 |
) |
|
|
(900 |
) |
|
|
10,935 |
|
|
|
11,836 |
|
|
|
|
|
|
|
Non-controlling interests |
|
400 |
|
|
|
389 |
|
|
|
11,335 |
|
|
|
12,225 |
|
|
$ |
27,789 |
|
|
$ |
29,086 |
|
MAGNA INTERNATIONAL INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS[Unaudited][U.S. dollars in
millions]
|
Three months ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Cash provided from (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net income |
$ |
111 |
|
$ |
478 |
|
|
$ |
641 |
|
$ |
1,553 |
|
Items not involving current cash flows |
|
406 |
|
|
371 |
|
|
|
1,776 |
|
|
1,576 |
|
|
|
517 |
|
|
849 |
|
|
|
2,417 |
|
|
3,129 |
|
Changes in operating assets and liabilities |
|
739 |
|
|
502 |
|
|
|
(322 |
) |
|
(189 |
) |
Cash provided from operating activities |
|
1,256 |
|
|
1,351 |
|
|
|
2,095 |
|
|
2,940 |
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
|
Fixed asset additions |
|
(750 |
) |
|
(549 |
) |
|
|
(1,681 |
) |
|
(1,372 |
) |
Increase in equity method investments |
|
— |
|
|
(63 |
) |
|
|
— |
|
|
(517 |
) |
Increase in investments, other assets and intangible assets |
|
(186 |
) |
|
(105 |
) |
|
|
(455 |
) |
|
(403 |
) |
Increase in public and private equity investments |
|
— |
|
|
(45 |
) |
|
|
(29 |
) |
|
(68 |
) |
Proceeds from dispositions |
|
20 |
|
|
32 |
|
|
|
124 |
|
|
81 |
|
Business combinations |
|
(3 |
) |
|
(31 |
) |
|
|
(3 |
) |
|
(13 |
) |
Proceeds on (funding for) disposal of facilities |
|
— |
|
|
— |
|
|
|
6 |
|
|
(41 |
) |
Settlement of long-term receivable from non-consolidated JV |
|
— |
|
|
— |
|
|
|
— |
|
|
50 |
|
Cash used for investing activities |
|
(919 |
) |
|
(761 |
) |
|
|
(2,038 |
) |
|
(2,283 |
) |
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Issues of debt |
|
9 |
|
|
21 |
|
|
|
54 |
|
|
55 |
|
Increase (decrease) in short-term borrowings |
|
8 |
|
|
— |
|
|
|
11 |
|
|
(101 |
) |
Repayments of debt |
|
(39 |
) |
|
(16 |
) |
|
|
(456 |
) |
|
(121 |
) |
Issue of Common Shares on exercise of stock options |
|
3 |
|
|
10 |
|
|
|
8 |
|
|
146 |
|
Tax witholdings on vesting of equity awards |
|
— |
|
|
(1 |
) |
|
|
(15 |
) |
|
(13 |
) |
Repurchase of Common Shares |
|
(5 |
) |
|
(251 |
) |
|
|
(780 |
) |
|
(517 |
) |
Contributions to subsidiaries by non-controlling interests |
|
— |
|
|
8 |
|
|
|
5 |
|
|
8 |
|
Dividends paid to non-controlling interests |
|
(24 |
) |
|
(39 |
) |
|
|
(46 |
) |
|
(49 |
) |
Dividends paid |
|
(126 |
) |
|
(127 |
) |
|
|
(514 |
) |
|
(514 |
) |
Cash used for financing activities |
|
(174 |
) |
|
(395 |
) |
|
|
(1,733 |
) |
|
(1,106 |
) |
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash, cash equivalents and restricted
cash equivalents |
|
(31 |
) |
|
5 |
|
|
|
(38 |
) |
|
23 |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents during the
period |
|
132 |
|
|
200 |
|
|
|
(1,714 |
) |
|
(426 |
) |
Cash,
cash equivalents and restricted cash equivalents, beginning of
period |
|
1,102 |
|
|
2,748 |
|
|
|
2,948 |
|
|
3,374 |
|
Cash and cash equivalents, end of period |
$ |
1,234 |
|
$ |
2,948 |
|
|
$ |
1,234 |
|
$ |
2,948 |
|
MAGNA INTERNATIONAL INC.SUPPLEMENTAL
DATA[Unaudited][All amounts in U.S. dollars and all
tabular amounts in millions unless otherwise noted]
OTHER EXPENSE (INCOME), NET
|
|
|
Three months ended |
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and impairments |
[a] |
$ |
34 |
|
$ |
18 |
|
|
$ |
424 |
|
$ |
101 |
|
Net losses (gains) on investments |
[b] |
|
101 |
|
|
(8 |
) |
|
|
221 |
|
|
2 |
|
Loss on sale of business |
[c] |
|
58 |
|
|
— |
|
|
|
58 |
|
|
75 |
|
Merger agreement termination fee |
[d] |
|
— |
|
|
(100 |
) |
|
|
— |
|
|
(100 |
) |
Gain on business combinations |
[e] |
|
— |
|
|
— |
|
|
|
— |
|
|
(40 |
) |
|
|
|
$ |
193 |
|
$ |
(90 |
) |
|
$ |
703 |
|
$ |
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
[a] Restructuring and impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Body Exteriors & Structures |
|
$ |
12 |
|
$ |
— |
|
|
$ |
185 |
|
$ |
16 |
|
|
Power & Vision |
|
|
22 |
|
|
4 |
|
|
|
26 |
|
|
67 |
|
|
Seating Systems |
|
|
— |
|
|
14 |
|
|
|
10 |
|
|
18 |
|
|
Corporate |
|
|
— |
|
|
— |
|
|
|
203 |
|
|
— |
|
|
Other expense, net |
|
|
34 |
|
|
18 |
|
|
|
424 |
|
|
101 |
|
|
Tax effect |
|
|
— |
|
|
(1 |
) |
|
|
(17 |
) |
|
(18 |
) |
|
Net loss attributable to Magna |
|
$ |
34 |
|
$ |
17 |
|
|
$ |
407 |
|
$ |
83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in the table above, the Company recorded a $376 million
[$361 million after tax] impairment charge related to its
investment in Russia during the second quarter of 2022. This
included net asset impairments of $173 million and a $203 million
reserve against the related foreign currency translation losses
that are included in accumulated other comprehensive loss. The net
asset impairments consisted of $163 million and $10 million in our
Body Exteriors & Structures segment and our Seating segment,
respectively. |
|
|
|
|
|
|
|
|
|
|
|
|
[b] Net losses (gains) on
investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of public company warrants |
|
$ |
77 |
|
$ |
(14 |
) |
|
$ |
173 |
|
$ |
(4 |
) |
|
Revaluation of public and private equity investments |
|
24 |
|
|
6 |
|
|
|
48 |
|
|
6 |
|
|
Other expense (income), net |
|
|
101 |
|
|
(8 |
) |
|
|
221 |
|
|
2 |
|
|
Tax effect |
|
|
(26 |
) |
|
6 |
|
|
|
(53 |
) |
|
7 |
|
|
Net loss (income) attributable to Magna |
|
$ |
75 |
|
$ |
(2 |
) |
|
$ |
168 |
|
$ |
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[c] Loss on sale of business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the fourth quarter of 2022, the Company entered into an
agreement to sell a European Power & Vision operation in early
2023. Under the terms of the arrangement, the Company expects to
provide the buyer with $42 million of funding, resulting in a loss
of $58 million [$57 million after tax].During the third quarter of
2021, the Company sold three Body Exteriors & Structures
operations in Germany. Under the terms of the arrangement, the
Company provided the buyer with $41 million of funding, resulting
in a loss on disposal of $75 million. [$75 million after tax]. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[d] Merger agreement termination fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the fourth quarter of 2021, Veoneer, Inc. (“Veoneer”)
terminated its merger agreement with Magna. In connection
with the termination of the merger agreement, Veoneer paid the
Company a termination fee which, net of the Company’s associated
transaction costs, amounted to $100 million [ $75 million after
tax]. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[e] Gain on business combinations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the first quarter of 2021, the Company acquired a 65% equity
interest and a controlling financial interest in Chongqing Hongli
Zhixin Scientific Technology Development Group LLC. The acquisition
included an additional 15% equity interest in two entities for
which the Company previously used equity accounting. On the change
in basis of accounting, the Company recognized a $22 million gain
[$22 million after tax].Also during the first quarter of 2021, the
Company recorded a gain of $18 million [$18 million after tax] in
connection with the distribution of substantially all of the assets
of the Company's European joint venture, Getrag Ford Transmission
GmbH. |
|
|
SEGMENTED INFORMATION
Magna is a global automotive supplier which has
complete vehicle engineering and contract manufacturing expertise,
as well as product capabilities which include body, chassis,
exterior, seating, powertrain, active driver assistance,
electronics, mirrors & lighting, mechatronics and roof systems.
Magna also has electronic and software capabilities across many of
these areas.
The Company is organized under four operating
segments: Body Exteriors & Structures, Power & Vision,
Seating Systems and Complete Vehicles. These segments have been
determined on the basis of technological opportunities, product
similarities, and market and operating factors, and are also the
Company's reportable segments.
The Company's chief operating decision maker
uses Adjusted Earnings before Interest and Income Taxes ["Adjusted
EBIT"] as the measure of segment profit or loss, since management
believes Adjusted EBIT is the most appropriate measure of
operational profitability or loss for its reporting segments.
Adjusted EBIT is calculated by taking Net income and adding back
Income taxes, Interest expense, net, and Other expense (income),
net.
The following tables show segment information
for the Company's reporting segments: See Non-GAAP Financial
Measures section for a reconciliation of Adjusted EBIT to the
Company’s consolidated net income.
|
|
|
Three months ended December 31, 2022 |
|
|
TotalSales |
|
ExternalSales |
|
AdjustedEBIT [ii] |
|
Depreciationandamortization |
|
Equity(income)loss |
|
Fixedassetadditions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Body Exteriors & Structures |
$ |
4,004 |
|
$ |
3,945 |
|
$ |
198 |
|
$ |
171 |
|
$ |
— |
|
$ |
442 |
|
|
Power & Vision |
|
3,016 |
|
|
2,961 |
|
|
109 |
|
|
124 |
|
|
(5 |
) |
|
203 |
|
|
Seating Systems |
|
1,345 |
|
|
1,344 |
|
|
13 |
|
|
20 |
|
|
(6 |
) |
|
43 |
|
|
Complete Vehicles |
|
1,330 |
|
|
1,318 |
|
|
57 |
|
|
28 |
|
|
(7 |
) |
|
52 |
|
|
Corporate & Other [i] |
|
(127 |
) |
|
— |
|
|
(21 |
) |
|
6 |
|
|
1 |
|
|
10 |
|
|
Total Reportable Segments |
$ |
9,568 |
|
$ |
9,568 |
|
$ |
356 |
|
$ |
349 |
|
$ |
(17 |
) |
$ |
750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2021 |
|
|
TotalSales |
|
ExternalSales |
|
AdjustedEBIT [ii] |
|
Depreciationandamortization |
|
Equityloss(income) |
|
Fixedassetadditions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Body Exteriors & Structures |
$ |
3,620 |
|
$ |
3,558 |
|
$ |
168 |
|
$ |
189 |
|
$ |
5 |
|
$ |
311 |
|
|
Power & Vision |
|
2,804 |
|
|
2,757 |
|
|
171 |
|
|
145 |
|
|
(18 |
) |
|
181 |
|
|
Seating Systems |
|
1,299 |
|
|
1,294 |
|
|
49 |
|
|
23 |
|
|
(2 |
) |
|
34 |
|
|
Complete Vehicles |
|
1,511 |
|
|
1,500 |
|
|
98 |
|
|
27 |
|
|
(7 |
) |
|
20 |
|
|
Corporate & Other [i] |
|
(124 |
) |
|
1 |
|
|
22 |
|
|
5 |
|
|
(1 |
) |
|
3 |
|
|
Total Reportable Segments |
$ |
9,110 |
|
$ |
9,110 |
|
$ |
508 |
|
$ |
389 |
|
$ |
(23 |
) |
$ |
549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2022 |
|
|
TotalSales |
|
ExternalSales |
|
AdjustedEBIT [ii] |
|
Depreciationandamortization |
|
Equityloss(income) |
|
Fixed assetadditions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Body Exteriors & Structures |
$ |
16,004 |
|
$ |
15,763 |
|
$ |
843 |
|
$ |
706 |
|
$ |
10 |
|
$ |
928 |
|
|
Power & Vision |
|
11,861 |
|
|
11,636 |
|
|
471 |
|
|
504 |
|
|
(77 |
) |
|
544 |
|
|
Seating Systems |
|
5,269 |
|
|
5,252 |
|
|
99 |
|
|
84 |
|
|
(15 |
) |
|
101 |
|
|
Complete Vehicles |
|
5,221 |
|
|
5,180 |
|
|
235 |
|
|
107 |
|
|
(10 |
) |
|
94 |
|
|
Corporate & Other [i] |
|
(515 |
) |
|
9 |
|
|
14 |
|
|
18 |
|
|
3 |
|
|
14 |
|
|
Total Reportable Segments |
$ |
37,840 |
|
$ |
37,840 |
|
$ |
1,662 |
|
$ |
1,419 |
|
$ |
(89 |
) |
$ |
1,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2021 |
|
|
TotalSales |
|
ExternalSales |
|
AdjustedEBIT [ii] |
|
Depreciationandamortization |
|
Equityloss(income) |
|
Fixedassetadditions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Body Exteriors & Structures |
$ |
14,477 |
|
$ |
14,196 |
|
$ |
820 |
|
$ |
743 |
|
$ |
13 |
|
$ |
711 |
|
|
Power & Vision |
|
11,342 |
|
|
11,129 |
|
|
738 |
|
|
554 |
|
|
(134 |
) |
|
522 |
|
|
Seating Systems |
|
4,891 |
|
|
4,851 |
|
|
152 |
|
|
92 |
|
|
(9 |
) |
|
73 |
|
|
Complete Vehicles |
|
6,106 |
|
|
6,057 |
|
|
287 |
|
|
103 |
|
|
(10 |
) |
|
54 |
|
|
Corporate & Other [i] |
|
(574 |
) |
|
9 |
|
|
67 |
|
|
20 |
|
|
(8 |
) |
|
12 |
|
|
Total Reportable Segments |
$ |
36,242 |
|
$ |
36,242 |
|
$ |
2,064 |
|
$ |
1,512 |
|
$ |
(148 |
) |
$ |
1,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[i] Included in Corporate and Other
Adjusted EBIT are intercompany fees charged to the automotive
segments.[ii] For a definition and reconciliation of
Adjusted EBIT, refer to our Non-GAAP financial measures
reconciliation included in the “Supplemental Data” section of this
Press Release. |
|
|
MAGNA INTERNATIONAL INC.SUPPLEMENTAL
DATA[Unaudited][All amounts in U.S. dollars and all
tabular amounts in millions unless otherwise noted]
NON-GAAP FINANCIAL MEASURES
In addition to the financial results reported in
accordance with U.S. GAAP, this press release contains references
to the Non-GAAP financial measures reconciled below. We
believe the Non-GAAP financial measures used in this press release
are useful to both management and investors in their analysis of
the Company’s financial position and results of operations, and to
improve comparability between fiscal periods. In particular,
management believes that Adjusted EBIT and Adjusted diluted
earnings per share, are useful measures in assessing the Company’s
financial performance by excluding certain items that are not
indicative of the Company's core operating performance. The
presentation of Non-GAAP financial measures should not be
considered in isolation, or as a substitute for the Company’s
related financial results prepared in accordance with U.S.
GAAP.
The following table reconciles Net income to
Adjusted EBIT:
|
Three months ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
111 |
|
$ |
478 |
|
|
$ |
641 |
|
$ |
1,553 |
|
Add: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
17 |
|
|
22 |
|
|
|
81 |
|
|
78 |
|
Other expense (income), net |
|
193 |
|
|
(90 |
) |
|
|
703 |
|
|
38 |
|
Income taxes |
|
35 |
|
|
98 |
|
|
|
237 |
|
|
395 |
|
Adjusted EBIT |
$ |
356 |
|
$ |
508 |
|
|
$ |
1,662 |
|
$ |
2,064 |
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles Net income attributable to Magna
International Inc. to Adjusted diluted earnings per share: |
|
|
|
|
|
Three months ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna International
Inc. |
$ |
95 |
|
$ |
464 |
|
|
$ |
592 |
|
$ |
1,514 |
|
Add: |
|
|
|
|
|
|
|
|
|
Other expense (income), net |
|
193 |
|
|
(90 |
) |
|
|
703 |
|
|
38 |
|
Tax effect on Other expense (income), net |
|
(27 |
) |
|
30 |
|
|
|
(71 |
) |
|
14 |
|
Adjustments to Deferred Tax Valuation Allowances [i] |
|
— |
|
|
(13 |
) |
|
|
(29 |
) |
|
(13 |
) |
Adjusted net income attributable to Magna International
Inc. |
|
261 |
|
|
391 |
|
|
|
1,195 |
|
|
1,553 |
|
Diluted weighted average number of Common Shares |
|
|
|
|
|
|
|
|
|
outstanding during the period (millions): |
|
286.3 |
|
|
301.5 |
|
|
|
291.2 |
|
|
302.8 |
|
Adjusted diluted earnings per share |
$ |
0.91 |
|
$ |
1.30 |
|
|
$ |
4.10 |
|
$ |
5.13 |
|
|
|
|
|
|
|
|
|
|
|
[i] During 2022 and 2021, the Company recorded
adjustments to the valuation allowance against its deferred tax
assets in certain European and North America countries. The net
effect of these adjustments was a reduction in income tax expense
of $29 million and $13 million, respectively [‘‘Adjustments to
Deferred Tax Valuation Allowances’’]. |
Certain of the forward-looking financial
measures above are provided on a Non-GAAP basis. We do not provide
a reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with U.S. GAAP. To do so would be potentially
misleading and not practical given the difficulty of projecting
items that are not reflective of on-going operations in any future
period. The magnitude of these items, however, may be
significant.
This press release together with our
Management’s Discussion and Analysis of Results of Operations and
Financial Position and our Interim Financial Statements are
available in the Investor Relations section of our website at
www.magna.com/company/investors and filed electronically through
the System for Electronic Document Analysis and Retrieval (SEDAR)
which can be accessed at www.sedar.com as well as on the United
States Securities and Exchange Commission’s Electronic Data
Gathering, Analysis and Retrieval System (EDGAR), which can be
accessed at www.sec.gov.
We will hold a conference call for interested
analysts and shareholders to discuss our fourth quarter and year
ended December 31, 2022 results on Friday, February 10, 2023 at
8:00 a.m. ET. The conference call will be chaired by Swamy
Kotagiri, Chief Executive Officer. The number to use for this call
from North America is 1-800-891-9945. International callers should
use 1-416-981-9017. Please call in at least 10 minutes prior to the
call start time. We will also webcast the conference call at
www.magna.com. The slide presentation accompanying the conference
call as well as our financial review summary will be available on
our website Friday prior to the call.
TAGSQuarterly earnings,
financial results, vehicle production, outlook
INVESTOR CONTACTLouis Tonelli,
Vice-President, Investor Relations louis.tonelli@magna.com │
905.726.7035
MEDIA CONTACT Tracy Fuerst,
Vice-President, Corporate Communications & PR
tracy.fuerst@magna.com │ 248.761.7004
WEBCAST CONTACTNancy Hansford, Executive
Assistant, Investor Relations nancy.hansford@magna.com │
905.726.7108
OUR BUSINESS (5)Magna is more
than one of the world’s largest suppliers in the automotive space.
We are a mobility technology company with a global,
entrepreneurial-minded team of over 168,000(6) employees and an
organizational structure designed to innovate like a startup. With
65+ years of expertise, and a systems approach to design,
engineering and manufacturing that touches nearly every aspect of
the vehicle, we are positioned to support advancing mobility in a
transforming industry. Our global network includes 343
manufacturing operations and 88 product development, engineering
and sales centres spanning 29 countries.
For further information about Magna (NYSE:MGA; TSX:MG), please
visit www.magna.com or follow us on Twitter @MagnaInt.
(5) Manufacturing operations,
product development, engineering and sales centres include certain
operations accounted for under the equity method.(6) Number of
employees includes approximately 158,000 employees at our wholly
owned or controlled entities and over 10,000 employees at certain
operations accounted for under the equity method.
FORWARD-LOOKING STATEMENTSCertain statements in
this press release constitute "forward-looking information" or
"forward-looking statements" (collectively, "forward-looking
statements"). Any such forward-looking statements are intended to
provide information about management's current expectations and
plans and may not be appropriate for other purposes.
Forward-looking statements may include financial and other
projections, as well as statements regarding our future plans,
strategic objectives or economic performance, or the assumptions
underlying any of the foregoing, and other statements that are not
recitations of historical fact. We use words such as "may",
"would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "aim", "forecast",
"outlook", "project", "estimate", "target" and similar expressions
suggesting future outcomes or events to identify forward-looking
statements. The following table identifies the material
forward-looking statements contained in this document, together
with the material potential risks that we currently believe could
cause actual results to differ materially from such forward-looking
statements. Readers should also consider all of the risk factors
which follow below the table:
Material Forward-Looking
Statement |
Material Potential Risks Related to Applicable
Forward-Looking Statement |
Light Vehicle Production |
- Light vehicle sales levels
- Supply disruptions
- Production allocation decisions by OEMs
|
Total SalesSegment Sales |
- Impact of elevated interest rates and availability of credit on
consumer confidence and in turn vehicle sales and production
- Potential supply disruptions
- Impact of the Russian invasion of Ukraine on global economic
growth and industry production volumes
- Impact of deteriorating vehicle affordability on consumer
demand and in turn vehicle sales and production
- Concentration of sales with six customers
- Shifts in market shares among vehicles or vehicle segments
- Shifts in consumer “take rates” for products we sell
|
Adjusted EBIT MarginNet Income Attributable to Magna |
- Same risks as for Total Sales and Segment Sales above
- Successful execution of critical program launches, including
complete vehicle manufacturing of the Fisker Ocean SUV
- Operational underperformance
- Production inefficiencies in our operations due to volatile
vehicle production allocation decisions by OEMs
- Higher costs incurred to mitigate the risk of supply
disruptions
- Inflationary pressures
- Our ability to secure cost recoveries from customers and/or
otherwise offset higher input costs
- Price concessions
- Commodity cost volatility
- Scrap steel price volatility
- Higher labour costs
- Tax risks
|
Equity Income |
- Same risks as Adjusted EBIT Margin and Net Income Attributable
to Magna
- Risks related to conducting business through joint
ventures
|
|
|
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 developments, as well as other factors we believe are
appropriate in the circumstances. While we believe we have a
reasonable basis for making any such forward-looking statements,
they are not a guarantee of future performance or outcomes. In
addition to the factors in the table above, whether actual results
and developments conform to our expectations and predictions is
subject to a number of risks, assumptions and uncertainties, many
of which are beyond our control, and the effects of which can be
difficult to predict, including, without limitation:
Risks Related to the Automotive Industry
- economic cyclicality;
- regional production volume declines, including as a result of
deteriorating vehicle affordability;
- intense competition;
- potential restrictions on free trade;
- trade disputes/tariffs;
Customer and Supplier Related Risks
- concentration of sales with six customers;
- risks related to conducting business with newer OEMs with
limited operating history, product maturity and warranty
experience;
- OEM consolidation and cooperation;
- shifts in market shares among vehicles or vehicle
segments;
- shifts in consumer "take rates" for products we sell;
- dependence on outsourcing;
- quarterly sales fluctuations;
- potential loss of any material purchase orders;
- a deterioration in the financial condition of our supply
base;
Manufacturing / Operational Risks
- product and new facility launch risks, including the successful
launch of critical programs such as the Fisker Ocean SUV;
- operational underperformance;
- supply disruptions, including with respect to semiconductor
chips;
- impact of volatile OEM vehicle production allocation decisions
on the efficiency of our operations;
- risks arising from Russia’s invasion of Ukraine and compliance
with the sanctions regime imposed in response;
- restructuring costs;
- impairment charges;
- labour disruptions;
- risks related to COVID-19;
- climate change risks;
- attraction/retention of skilled labour;
IT Security/Cybersecurity Risk
- IT/Cybersecurity breach;
- Product Cybersecurity breach;
|
Pricing Risks
- inflationary pressures;
- our ability to secure cost recoveries from customers and/or
otherwise offset higher input costs;
- pricing risks following time of quote and start of
production;
- price concessions;
- commodity cost volatility;
- declines in scrap steel/aluminum prices;
Warranty / Recall Risks
- costs related to repair or replacement of defective products,
including due to a recall;
- warranty or recall costs that exceed warranty provision or
insurance coverage limits;
- product liability claims;
Acquisition Risks
- competition for strategic acquisition targets;
- inherent merger and acquisition risks;
- acquisition integration risks;
Other Business Risks
- risks related to conducting business through joint
ventures;
- our ability to consistently develop and commercialize
innovative products or processes;
- our changing business risk profile as a result of increased
investment in electrification and autonomous driving, including:
higher R&D and engineering costs, and challenges in quoting for
profitable returns on products for which we may not have
significant quoting experience;
- risks of conducting business in foreign markets;
- fluctuations in relative currency values;
- tax risks;
- reduced financial flexibility as a result of an economic
shock;
- changes in credit ratings assigned to us;
Legal, Regulatory and Other Risks
- antitrust risk;
- legal claims and/or regulatory actions against us; and
- changes in laws and regulations, including those related to
vehicle emissions or made as a result of the COVID-19
pandemic.
|
|
|
In evaluating forward-looking statements
or forward-looking information, we caution readers not to place
undue reliance on any forward-looking statement. Additionally,
readers should specifically consider the various factors which
could cause actual events or results to differ materially from
those indicated by such forward-looking statements, including the
risks, assumptions and uncertainties above which are:
- discussed under the “Industry Trends and Risks” heading
of our Management’s Discussion and Analysis; and
- set out in our Annual Information Form filed with
securities commissions in Canada, our annual report on Form 40-F
filed with the United States Securities and Exchange Commission,
and subsequent filings.
Readers should also consider discussion
of our risk mitigation activities with respect to certain risk
factors, which can be also found in our Annual Information
Form.
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