Magna Announces Second Quarter 2022 Results
Magna International (MGA) reported Q2 2022 sales of $9.4 billion, a 4% increase compared to Q2 2021, while global light vehicle production rose by 2%. However, diluted loss per share was $0.54, including $1.24 in non-cash impairment charges. Adjusted EBIT fell 36% to $358 million, primarily due to higher input costs and operational inefficiencies. Net income declined to $(156) million from $424 million YoY. The company forecasts total sales for 2022 between $37.6 and $39.2 billion, maintaining an Adjusted EBIT margin of 5.0% to 5.4%.
- Sales increased 4% YoY to $9.4 billion.
- Sales outlook upgraded for 2022 to $37.6 - $39.2 billion.
- Total cash from operations before changes was $560 million.
- Diluted loss per share decreased to $(0.54) from $1.40 YoY.
- Adjusted EBIT down 36% to $358 million YoY.
- Net income attributable to Magna declined to $(156) million from $424 million YoY.
- Sales of
$9.4 billion increased4% , compared to global light vehicle production increase of2% - Diluted loss per share of
$0.54 includes$1.24 of non-cash impairment charges related to our investment in Russia - Adjusted diluted earnings per share decreased
41% - Increased sales outlook
AURORA, Ontario, July 29, 2022 (GLOBE NEWSWIRE) -- Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2022.
Please click HERE for full second quarter Financial Statements and MD&A.
THREE MONTHS ENDED JUNE 30, | SIX MONTHS ENDED JUNE 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Reported | ||||||||||||||
Sales | $ | 9,362 | $ | 9,034 | $ | 19,004 | $ | 19,213 | ||||||
(Loss) income from operations before income taxes | $ | (88 | ) | $ | 540 | $ | 332 | $ | 1,345 | |||||
Net (loss) income attributable to Magna International Inc. | $ | (156 | ) | $ | 424 | $ | 208 | $ | 1,039 | |||||
Diluted (loss) earnings per share | $ | (0.54 | ) | $ | 1.40 | $ | 0.70 | $ | 3.42 | |||||
Non-GAAP Financial Measures(1) | ||||||||||||||
Adjusted EBIT | $ | 358 | $ | 557 | $ | 865 | $ | 1,327 | ||||||
Adjusted diluted earnings per share | $ | 0.83 | $ | 1.40 | $ | 2.11 | $ | 3.27 | ||||||
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 accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d6b9ebcc-18df-424a-a889-e7538c1a2811
THREE MONTHS ENDED JUNE 30, 2022
Sales were
Adjusted EBIT of
(Loss) income from operations before income taxes was
Net (loss) income attributable to Magna International Inc. was
Diluted (loss) earnings per share decreased to
In the second quarter of 2022, we generated cash from operations before changes in operating assets and liabilities of
SIX MONTHS ENDED JUNE 30, 2022
We posted sales of
Adjusted EBIT decreased to
During the six months ended June 30, 2022, income from operations before income taxes was
During the first six months ended June 30, 2022, Adjusted diluted earnings per share decreased
For the six months ended June 30, 2022, we generated cash from operations before changes in operating assets and liabilities of
RETURN OF CAPITAL AND OTHER MATTERS
During the three months ended June 30, 2022, we paid
Our Board of Directors declared a second quarter dividend of
The Board also announced the appointment of Jan Hauser, a corporate director with global leadership and accounting expertise.
SEGMENT SUMMARY
($Millions unless otherwise noted) | For the three months ended June 30, | ||||||||||||||||
Sales | Adjusted EBIT | ||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
Body Exteriors & Structures | $ | 3,947 | $ | 3,647 | $ | 300 | $ | 191 | $ | 227 | $ | (36 | ) | ||||
Power & Vision | 2,888 | 2,881 | 7 | 91 | 203 | (112 | ) | ||||||||||
Seating Systems | 1,253 | 1,166 | 87 | 2 | 26 | (24 | ) | ||||||||||
Complete Vehicles | 1,403 | 1,490 | (87 | ) | 63 | 79 | (16 | ) | |||||||||
Corporate and Other | (129 | ) | (150 | ) | 21 | 11 | 22 | (11 | ) | ||||||||
Total Reportable Segments | $ | 9,362 | $ | 9,034 | $ | 328 | $ | 358 | $ | 557 | $ | (199 | ) |
For the three months ended June 30, | |||||||||||||||||||
Adjusted EBIT as a percentage of sales | |||||||||||||||||||
2022 | 2021 | Change | |||||||||||||||||
Body Exteriors & Structures | 4.8% | (1.4 | %) | ||||||||||||||||
Power & Vision | 3.2% | (3.8 | %) | ||||||||||||||||
Seating Systems | 0.2% | (2.0 | %) | ||||||||||||||||
Complete Vehicles | 4.5% | (0.8 | %) | ||||||||||||||||
Consolidated Average | 3.8% | (2.4 | %) | ||||||||||||||||
($Millions unless otherwise noted) | For the six months ended June 30, | ||||||||||||||||||
Sales | Adjusted EBIT | ||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||
Body Exteriors & Structures | $ | 8,024 | $ | 7,672 | $ | 352 | $ | 420 | $ | 554 | $ | (134 | ) | ||||||
Power & Vision | 5,934 | 6,037 | (103 | ) | 245 | 500 | (255 | ) | |||||||||||
Seating Systems | 2,629 | 2,469 | 160 | 51 | 81 | (30 | ) | ||||||||||||
Complete Vehicles | 2,678 | 3,340 | (662 | ) | 113 | 159 | (46 | ) | |||||||||||
Corporate and Other | (261 | ) | (305 | ) | 44 | 36 | 33 | 3 | |||||||||||
Total Reportable Segments | $ | 19,004 | $ | 19,213 | $ | (209 | ) | $ | 865 | $ | 1,327 | $ | (462 | ) |
For the six months ended June 30, | ||||||||||
Adjusted EBIT as a percentage of sales | ||||||||||
2022 | 2021 | Change | ||||||||
Body Exteriors & Structures | 5.2% | ( | ||||||||
Power & Vision | 4.1% | ( | ||||||||
Seating Systems | 1.9% | ( | ||||||||
Complete Vehicles | 4.2% | ( | ||||||||
Consolidated Average | 4.6% | ( | ||||||||
For further details on our segment results, please see our Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements.
2022 OUTLOOK
We first disclose a full-year Outlook annually in February, with quarterly updates. The following Outlook is an update to our previous Outlook in April 2022.
Updated 2022 Outlook Assumptions
Current | Previous | |||
Light Vehicle Production (millions of units) | ||||
North America Europe China | 14.7 16.4 24.4 | 14.7 16.4 24.4 | ||
Average Foreign exchange rates: 1 Canadian dollar equals 1 euro equals | U.S. U.S. | U.S. U.S. | ||
Updated 2022 Outlook
Current | Previous | |||
Segment Sales | ||||
Body Exteriors & Structures Power & Vision Seating Systems Complete Vehicles | ||||
Total Sales | ||||
Adjusted EBIT Margin(2) | ||||
Equity Income (included in EBIT) | ||||
Interest Expense, net | Approximately | Approximately | ||
Income Tax Rate(3) | Approximately | Approximately | ||
Net Income attributable to Magna(4) | ||||
Capital Spending | Approximately | Approximately | ||
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 represents Net Income excluding 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 2022 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.
OEM production volumes are generally 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; 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.
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 deterioration in consumer confidence.
NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||
Adjusted EBIT | |||||||
The following table reconciles net income to Adjusted EBIT: | |||||||
For the three months ended June 30, | |||||||
2022 | 2021 | ||||||
Net (loss) income | $ | (145 | ) | $ | 436 | ||
Add: | |||||||
Interest expense, net | 20 | 11 | |||||
Other expense, net | 426 | 6 | |||||
Income taxes | 57 | 104 | |||||
Adjusted EBIT | $ | 358 | $ | 557 | |||
Adjusted EBIT as a percentage of sales (“Adjusted EBIT margin”) | |||||||
Adjusted EBIT as a percentage of sales is calculated in the table below: | |||||||
For the three months ended June 30, | |||||||
2022 | 2021 | ||||||
Sales | $ | 9,362 | $ | 9,034 | |||
Adjusted EBIT | $ | 358 | $ | 557 | |||
Adjusted EBIT as a percentage of sales | 3.8 | % | 6.2 | % | |||
Adjusted diluted earnings per share | |||||||
The following table reconciles net income attributable to Magna International Inc. to Adjusted diluted earnings per share: | |||||||
For the three months ended June 30, | |||||||
2022 | 2021 | ||||||
Net (loss) income attributable to Magna International Inc. | $ | (156 | ) | $ | 424 | ||
Add (deduct): | |||||||
Other expense, net | 426 | 6 | |||||
Tax effect on Other expense, net | (27 | ) | (4 | ) | |||
Adjusted net income attributable to Magna International Inc. | $ | 243 | $ | 426 | |||
Diluted weighted average number of Common Shares outstanding during the period (millions): | 291.1 | 303.6 | |||||
Adjusted diluted earnings per share | $ | 0.83 | $ | 1.40 |
NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||
Adjusted EBIT | |||||||
The following table reconciles net income to Adjusted EBIT: | |||||||
For the six months ended June 30, | |||||||
2022 | 2021 | ||||||
Net income | $ | 234 | $ | 1,058 | |||
Add (deduct): | |||||||
Interest expense, net | 46 | 34 | |||||
Other expense (income), net | 487 | (52 | ) | ||||
Income taxes | 98 | 287 | |||||
Adjusted EBIT | $ | 865 | $ | 1,327 | |||
Adjusted EBIT as a percentage of sales (“Adjusted EBIT margin”) | |||||||
Adjusted EBIT as a percentage of sales is calculated in the table below: | |||||||
For the six months ended June 30, | |||||||
2022 | 2021 | ||||||
Sales | $ | 19,004 | $ | 19,213 | |||
Adjusted EBIT | $ | 865 | $ | 1,327 | |||
Adjusted EBIT as a percentage of sales | 4.6 | % | 6.9 | % | |||
Adjusted diluted earnings per share | |||||||
The following table reconciles net income attributable to Magna International Inc. to Adjusted diluted earnings per share: | |||||||
For the six months ended June 30, | |||||||
2022 | 2021 | ||||||
Net income attributable to Magna International Inc. | $ | 208 | $ | 1,039 | |||
Add (deduct): | |||||||
Other expense (income), net | 487 | (52 | ) | ||||
Tax effect on Other expense (income), net | (40 | ) | 5 | ||||
Adjustments to Deferred Tax Valuation Allowances | (29 | ) | - | ||||
Adjusted net income attributable to Magna International Inc. | $ | 626 | $ | 992 | |||
Diluted weighted average number of Common Shares outstanding during the period (millions): | 295.0 | 303.6 | |||||
Adjusted diluted earnings per share | $ | 2.11 | $ | 3.27 | |||
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 second quarter ended June 30, 2022 results on Friday, July 29, 2022 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 1-877-412-4946. International callers should use 1-416-620-9188. 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.
TAGS
Quarterly earnings, financial results, vehicle production
INVESTOR CONTACT
Louis 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
TELECONFERENCE CONTACT
Nancy 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 161,000(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 341 manufacturing operations and 89 product development, engineering and sales centres spanning 28 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 over 152,000 employees at our wholly owned or controlled entities and over 9,000 employees at certain operations accounted for under the equity method.
FORWARD-LOOKING STATEMENTS
Certain 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 |
Total Sales Segment Sales |
|
Adjusted EBIT Margin Net Income Attributable to Magna |
|
Equity Income |
|
Free Cash Flow |
|
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
Customer and Supplier Related Risks
Manufacturing Operational Risks
IT Security/Cybersecurity Risk
Pricing Risks
| Warranty / Recall Risks
Acquisition Risks
Other Business Risks
Legal, Regulatory and Other Risks
|
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.
FAQ
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