In a release issued under the same headline on Friday, February 9th by Magna International Inc. (TSX:MG, NYSE:MGA), please note that some of the information in the Consolidated Statements of Cash Flows and Supplemental Data tables has been updated. The corrected release follows:
Fourth Quarter 2023 Highlights
Sales increased 9% to $10.5 billion, compared to 7% increase in global light vehicle production
Sales increased 4% excluding foreign currency translation and acquisitions net of divestitures
Diluted earnings per share and Adjusted diluted earnings per share increased to $0.94 and $1.33, respectively, compared to $0.33 and $0.94 last year
Paid $133 million in dividends
Raised quarterly cash dividend to $0.475 per share
2024 Outlook Highlights
Sales expected to continue to outgrow global light vehicle production through outlook period
Expect Adjusted EBIT Margin to expand by 180 basis points or more by 2026 to 7.0-7.7% range
AURORA, Ontario, Feb. 12, 2024 (GLOBE NEWSWIRE) — Magna International Inc. (TSX:MG, NYSE:MGA) today reported financial results for the fourth quarter and year ended December 31, 2023.
THREE MONTHS ENDED
DECEMBER 31,
YEAR ENDED
DECEMBER 31,
2023
2022
2023
2022
Reported
Sales
$
10,454
$
9,568
$
42,797
$
37,840
Income from operations before income taxes
$
310
$
146
$
1,606
$
878
Net income attributable to Magna International Inc.
$
271
$
95
$
1,213
$
592
Diluted earnings per share
$
0.94
$
0.33
$
4.23
$
2.03
Non-GAAP Financial Measures(1)
Adjusted EBIT
$
558
$
367
$
2,238
$
1,708
Adjusted diluted earnings per share
$
1.33
$
0.94
$
5.49
$
4.24
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. Effective July 1, 2023, we revised our calculations of Adjusted EBIT and Adjusted diluted earnings per share to exclude the amortization of acquired intangible assets. The Non-GAAP measures within this press release reflect the revised calculations. Further information and 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/1c9b7141-bcbf-4974-9c9d-6ebd77439317
THREE MONTHS ENDED DECEMBER 31, 2023
We posted sales of $10.5 billion for the fourth quarter of 2023, an increase of 9% over the fourth quarter of 2022, which compares to global light vehicle production that increased 7%, including 5%, 7% and 12% higher production in North America, Europe, and China respectively. In addition to higher global vehicle production, our sales benefitted from the launch of new programs and acquisitions net of divestitures, partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the fourth quarter of 2023, which negatively impacted sales by approximately $275 million. Excluding the impact of foreign currency translation and acquisitions net of divestitures, sales increased 4%.
Adjusted EBIT increased to $558 million in the fourth quarter of 2023 compared to $367 million in the fourth quarter of 2022. Our ongoing focus on operational excellence and cost initiatives helped drive strong earnings on higher sales. In addition, the Adjusted EBIT increase mainly reflected productivity and efficiency improvements, including lower costs at certain previously underperforming facilities, higher tooling contribution, higher customer recoveries net of higher production input costs, lower net warranty costs, and lower provisions against certain accounts receivable and other balances, partially offset by the negative impact of the UAW labour strikes during the fourth quarter of 2023, higher launch, engineering and other costs associated with new assembly business, and higher restructuring costs.
Income from operations before income taxes increased to $310 million for the fourth quarter of 2023 compared to $146 million in the fourth quarter of 2022. Included in income from operations before income taxes were other expense, net, and amortization of acquired intangibles totaling $195 million and $204 million in the fourth quarters of 2023 and 2022, respectively. Excluding other expense, net and amortization of acquired intangibles from both periods, income from operations before income taxes increased $155 million in the fourth quarter of 2023 compared to the fourth quarter of 2022.
Net income attributable to Magna International Inc. was $271 million for the fourth quarter of 2023 compared to $95 million in the fourth quarter of 2022. Included in net income attributable to Magna International Inc. were other expense, net, amortization of acquired intangibles and Adjustments to Deferred Tax Valuation Allowances totaling $112 million after tax in the fourth quarter of 2023, compared to $175 million after tax in the fourth quarter of 2022. Excluding these amounts from both periods, net income attributable to Magna International Inc. increased $113 million in the fourth quarter of 2023 compared to the fourth quarter of 2022.
Diluted earnings per share was $0.94 in the fourth quarter of 2023, compared to $0.33 in the comparable period. Adjusted diluted earnings per share was $1.33 compared to $0.94 for the fourth quarter of 2022.
In the fourth quarter of 2023, we generated cash from operations before changes in operating assets and liabilities of $660 million and used $918 million in operating assets and liabilities. Investment activities for the fourth quarter of 2023 included $944 million in fixed asset additions, $189 million in investments, other assets and intangible assets and $1 million in private equity investments.
YEAR ENDED DECEMBER 31, 2023
We posted sales of $42.8 billion for the year ended December 31, 2023, an increase of 13% over the year ended December 31, 2022, which compares to global light vehicle production that increased 8%, including 9%, 11% and 8% higher production in North America, Europe, and China respectively. In addition to higher global vehicle production, our sales benefitted from the launch of new programs and acquisitions net of divestitures, partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the third and fourth quarters of 2023, which negatively impacted sales by approximately $325 million. Excluding the impact of foreign currency translation and acquisitions net of divestitures, sales increased 11%.
Adjusted EBIT increased to $2.2 billion for the year ended December 31, 2023 compared to $1.7 billion for year ended December 31, 2022, primarily due to earnings on higher sales, including higher margins due to the impact of operational excellence and cost initiatives, and productivity and efficiency improvements, including lower costs at previously underperforming facilities, partially offset by higher launch, engineering and other costs associated with new assembly business, the negative impact of the UAW labour strikes during the third and fourth quarters of 2023, the net unfavourable impact of commercial items, lower amortization related to the initial value of public company securities, higher launch costs associated with new manufacturing business, and the impact of acquisitions, net of divestitures.
During the year ended December 31, 2023, income from operations before income taxes was $1.6 billion, net income attributable to Magna International Inc. was $1.2 billion and diluted earnings per share was $4.23, increases of $728 million, $621 million, and $2.20, respectively, each compared to the year ended December 31, 2022.
During the year ended December 31, 2023, Adjusted diluted earnings per share increased 29% to $5.49, compared to the year ended December 31, 2022.
During the year ended December 31, 2023, we generated cash from operations before changes in operating assets and liabilities of $2.9 billion and invested $221 million in operating assets and liabilities. Investment activities for the year ended December 31, 2023 included $1.5 billion to purchase Veoneer Active Safety, $2.5 billion in fixed asset additions, a $562 million increase in investments, other assets and intangible assets and $11 million in public and private equity investments.
RETURN OF CAPITAL TO SHAREHOLDERS
We paid dividends of $133 million and $522 million for the three months and year ended December 31, 2023, respectively.
Our Board of Directors declared a fourth quarter dividend of $0.475 per Common Share. This represents a 3% increase in our dividend, representing our 14th consecutive year of fourth quarter dividend increases. The dividend is payable on March 8, 2024 to shareholders of record as of the close of business on February 23, 2024.
Subject to approval by the Toronto Stock Exchange and New York Stock Exchange, our Board of Directors approved a new Normal Course Issuer Bid (“NCIB”) to purchase up to 0.3 million of our Common Shares, representing approximately 0.11% of our public float of Common Shares. This NCIB is expected to commence on February 15, 2024 and will terminate one year later.
2024 AND 2026 OUTLOOK
Our current year Outlook is provided annually, with quarterly updates; our 2026 Outlook is provided below, but not updated quarterly. Our outlook does not incorporate material unannounced acquisitions or divestitures.
2024 and 2026 Outlook Assumptions
2024
2026
Light Vehicle Production (millions of units)
North America
Europe
China
15.7
17.4
28.3
16.1
17.3
30.6
Average Foreign exchange rates:
1 Canadian dollar equals
1 euro equals
U.S. $0.74
U.S. $1.08
U.S. $0.74
U.S. $1.08
2024 and 2026 Outlook
2024
2026
Segment Sales
Body Exteriors & Structures
Power & Vision
Seating Systems
Complete Vehicles
$17.4 – $18.0 billion
$15.8 – $16.2 billion
$5.5 – $5.8 billion
$5.6 – $5.9 billion
$19.6 – $20.6 billion
$16.8 – $17.4 billion
$6.5 – $6.9 billion
$6.1 – $6.5 billion
Total Sales
$43.8 – $45.4 billion
$48.8 – $51.2 billion
Adjusted EBIT Margin(2)
5.4% – 6.0%
7.0% – 7.7%
Equity Income (included in EBIT)
$120 – $150 million
$165 – $210 million
Interest Expense, net
Approximately $230 million
Income Tax Rate(3)
Approximately 21%
Adjusted Net Income attributable to Magna(4)
$1.6 – $1.8 billion
Capital Spending
Approximately $2.5 billion
Notes:
(2)
Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales. Refer to the reconciliation of Non-GAAP financial measures in the back of this press release for further information
(3)
The Income Tax Rate has been calculated using Adjusted EBIT and is based on current tax legislation
(4)
Adjusted Net Income attributable to Magna represents Net Income excluding Other expense, net and amortization of acquired intangible assets, net of tax
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 2024 and 2026 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 and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors.
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; government subsidies to consumers for the purchase of low- and zero-emission vehicles; and other factors.
Segment Analysis
[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]
Body Exteriors & Structures
For the three months
ended December 31,
2023
2022
Change
Sales
$
4,178
$
4,004
$
174
+
4%
Adjusted EBIT
$
280
$
200
$
80
+
40%
Adjusted EBIT as a percentage of sales (i)
6.7%
5.0%
+
1.7%
(i) Adjusted EBIT as a percentage of sales is calculated as Adjusted EBIT divided by Sales.
Sales for Body Exteriors & Structures increased 4% or $174 million to $4.18 billion in the fourth quarter of 2023 compared to $4.00 billion in 2022. 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 2022, including the Ford F-Series SuperDuty, Fisker Ocean, Mercedes-Benz EQE, and Chevrolet Equinox EV, and the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar sales by $49 million. These factors were partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the fourth quarter of 2023, which negatively impacted sales by approximately $170 million, and net customer price concessions.
Adjusted EBIT increased $80 million to $280 million for the fourth quarter of 2023 compared to $200 million in the fourth quarter of 2022 and Adjusted EBIT as a percentage of sales increased to 6.7% from 5.0%. These increases were primarily due to earnings on higher sales including higher margins due to the impact of operational excellence and cost initiatives, productivity and efficiency improvements, including lower costs at certain previously underperforming facilities, lower provisions against certain accounts receivable and other balances, higher tooling contribution, and higher customer recoveries net of higher production input costs. These were partially offset by the negative impact of the UAW labour strikes during the fourth quarter of 2023, higher restructuring costs, higher employee profit sharing and incentive compensation.
Power & Vision
For the three months
ended December 31,
2023
2022
Change
Sales
$
3,775
$
3,016
$
759
+
25%
Adjusted EBIT
$
231
$
116
$
115
+
99%
Adjusted EBIT as a percentage of sales
6.1%
3.8%
+
2.3%
Sales for Power & Vision increased 25% or $759 million to $3.78 billion in the fourth quarter of 2023 compared to $3.02 billion in the fourth quarter of 2022. The increase in sales was primarily due to the launch of new programs during or subsequent to the fourth quarter of 2022, including the Chery Jetour Traveller, Fisker Ocean, Subaru Impreza, and Mercedes-Benz EQE, higher global light vehicle production, acquisitions, net of divestitures, subsequent to the fourth quarter of 2022, which increased sales by $355 million, the net strengthening of foreign currencies against the U.S. dollar, which increased U.S. dollar sales by $59 million, and customer input cost recoveries. These factors were partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the fourth quarter of 2023, which negatively impacted sales by approximately $65 million, and net customer price concessions.
Adjusted EBIT increased $115 million to $231 million for the fourth quarter of 2023 compared to $116 million for the fourth quarter of 2022 and Adjusted EBIT as a percentage of sales increased to 6.1% from 3.8%. These increases were primarily due to earnings on higher sales including higher margins due to the impact of operational excellence and cost initiatives, lower net warranty costs, higher customer recoveries net of higher production input costs, cost savings and efficiencies realized, including as a result of restructuring actions taken, and lower net engineering costs including spending related to our electrification and active safety businesses.
These were partially offset by the negative impact of the UAW labour strikes during the fourth quarter of 2023, and net inefficiencies and other costs, including at certain underperforming facilities.
Seating Systems
For the three months
ended December 31,
2023
2022
Change
Sales
$
1,429
$
1,345
$
84
+
6%
Adjusted EBIT
$
44
$
14
$
30
+
214%
Adjusted EBIT as a percentage of sales
3.1%
1.0%
+
2.1%
Sales for Seating Systems increased 6% or $84 million to $1.43 billion in the fourth quarter of 2023 compared to $1.35 billion in 2022. The increase in sales was primarily due to the launch of new programs during or subsequent to the fourth quarter of 2022, including the Geely Boyue L, Changan Qiyuan A07, Changan Qiyuan A05, and Fisker Ocean, higher global light vehicle production and the net strengthening of foreign currencies against the U.S. dollar, which increased U.S. dollar sales by $12 million. These factors were partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the fourth quarter of 2023, which negatively impacted sales by approximately $40 million, and net customer price concessions.
Adjusted EBIT increased $30 million to $44 million for the fourth quarter of 2023 compared to $14 million for the fourth quarter of 2022 and Adjusted EBIT as a percentage of sales increased to 3.1% from 1.0%. These increases were primarily due to earnings on higher sales including higher margins due to the impact of operational excellence and cost initiatives, productivity and efficiency improvements, including lower costs at previously underperforming facilities, lower launch costs and provisions against certain accounts receivable and other balances in 2022, and commercial items in the fourth quarter of 2023 and 2022, which had a net favourable impact on a year over year basis. These were partially offset by higher production input costs net of customer recoveries, the negative impact of the UAW labour strikes during the fourth quarter of 2023, and foreign exchange losses on the weakening of the Argentine peso against the U.S. dollar.
Complete Vehicles
For the three months
ended December 31,
2023
2022
Change
Complete Vehicle Assembly Volumes (thousands of units)
21.4
28.6
–
25%
Sales
$
1,201
$
1,330
$
(129
)
–
10%
Adjusted EBIT
$
43
$
57
$
(14
)
–
25%
Adjusted EBIT as a percentage of sales
3.6%
4.3%
–
0.7%
Sales for Complete Vehicles decreased 10% or $129 million to $1.20 billion in the fourth quarter of 2023 compared to $1.33 billion in the fourth quarter of 2022 and assembly volumes decreased 25% or 7,200 units. This sales decline was primarily due to lower assembly volumes, including the end of production of the BMW 5-Series, partially offset by favourable program mix and a $65 million increase in reported U.S. dollar sales as a result of the strengthening of the euro against the U.S. dollar.
Adjusted EBIT decreased $14 million to $43 million for the fourth quarter of 2023 compared to $57 million for the fourth quarter of 2022 and Adjusted EBIT as a percentage of sales decreased to 3.6% from 4.3% primarily due to higher launch, engineering and other costs associated with new assembly business, and lower earnings on lower assembly volumes, net of contractual fixed cost recoveries on certain programs, partially offset by commercial items in the fourth quarters of 2023 and 2022, which had a net favourable impact on a year over year basis, and higher customer recoveries net of higher production input costs.
Corporate and Other
Adjusted EBIT was a loss of $40 million for the fourth quarter of 2023 compared to a loss of $20 million for the fourth quarter of 2022. The $20 million decrease was primarily due to lower amortization related to the initial value of public company securities, higher incentive and stock-based compensation, higher investments in research, development and new mobility, and higher labour costs partially offset by an increase in fees received from our divisions.
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,
2023
2022
2023
2022
Sales
$
10,454
$
9,568
$
42,797
$
37,840
Costs and expenses
Cost of goods sold
8,961
8,403
37,185
33,188
Depreciation
372
338
1,436
1,373
Amortization of acquired intangible assets
31
11
88
46
Selling, general and administrative
566
477
2,050
1,660
Interest expense, net
53
17
156
81
Equity income
(3
)
(17
)
(112
)
(89
)
Other expense, net [i]
164
193
388
703
Income from operations before income taxes
310
146
1,606
878
Income taxes
12
35
320
237
Net income
298
111
1,286
641
Income attributable to non-controlling interests
(27
)
(16
)
(73
)
(49
)
Net income attributable to Magna International Inc.
$
271
$
95
$
1,213
$
592
Earnings per Common Share:
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