Magna Announces Second Quarter 2023 Results

Swamy Kotagiri, Magna’s Chief Executive Officer

“I am pleased with our second quarter operating performance, which reflects continued strong execution on higher organic sales and cost reduction actions being taken across the company. We remain highly focused on executing our strategy and remain confident in our ability to meet our short- and long-term growth and margin outlooks. With the closing of the Veoneer Active Safety acquisition, we have hit the ground running on integration plans and delivering synergies from the combined business.”

• Sales increased 17% to $11.0 billion, compared to global light vehicle production increase of 15%
• Diluted earnings per share were $1.18
• Adjusted diluted earnings per share increased 81% to $1.50
• Completed the acquisition of Veoneer Active Safety
• Raised 2023 outlook for Total Sales, Adjusted EBIT Margin and Adjusted Net Income attributable to Magna
  

AURORA, Ontario, Aug. 04, 2023 (GLOBE NEWSWIRE) -- Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2023.

Please click HERE for full second quarter MD&A and Financial Statements.

A photo of Swamy Kotagiri, Magna’s Chief Executive Officer is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/5e29a8e2-b233-452f-af61-45ffab21c982

THREE MONTHS ENDED JUNE 30, 2023

We posted sales of $11.0 billion for the second quarter of 2023, an increase of 17% from the second quarter of 2022, which compares to a 15% increase in global light vehicle production, including 14%, 13% and 21% higher production in North America, Europe and China, respectively. In addition to higher global production, our sales benefitted from the launch of new programs and higher sales in our Complete Vehicles segment, while the net weakening of foreign currencies against the U.S. dollar negatively impacted sales.

Adjusted EBIT increased to $603 million in the second quarter of 2023 compared to $358 million in the second quarter of 2022. Our focus on operational excellence and cost initiatives helped drive strong earnings on higher sales. In addition, the EBIT increase reflects losses in our Russian facilities during the second quarter of 2022, and commercial items in the second 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, higher engineering, launch and other costs, including for new vehicle assembly business, and acquisitions, net of divestitures subsequent to the second quarter of 2022.

Income from operations before income taxes was $483 million for the second quarter of 2023 compared to a loss of $88 million in the second quarter of 2022, which includes Other expense, net⁽²⁾ of $86 million and $426 million in the second quarters of 2023 and 2022, respectively. Excluding Other expense, net from both periods, income from operations before income taxes increased $231 million in the second quarter of 2023 compared to the second quarter of 2022.

Net income attributable to Magna International Inc. was $339 million for the second quarter of 2023 compared to a loss of $156 million in the second quarter of 2022, which includes Other expense, net⁽²⁾, after tax of $91 million and $399 million in the second quarters of 2023 and 2022, respectively. Excluding Other expense, net, after tax from both periods, net income attributable to Magna International Inc. increased $187 million in the second quarter of 2023 compared to the second quarter of 2022.

Diluted earnings per share increased to $1.18 in the second quarter of 2023, compared to a loss of $0.54 in the second quarter of 2022, and Adjusted diluted earnings per share increased 81% to $1.50 in the second quarter of 2023 compared to $0.83 in the second quarter of 2022.

In the second quarter of 2023, we generated cash from operations before changes in operating assets and liabilities of $879 million and used $332 million in operating assets and liabilities. Investment activities for the second quarter of 2023 included $1.48 billion to acquire Veoneer Active Safety, $502 million in fixed asset additions, a $96 million increase in investments, other assets and intangible assets, and $3 million in public and private equity investments.

^{(2) Other expense, net is comprised of restructuring and impairment costs and net losses on the revaluation of certain public company warrants and equity investments during the three and six months ended June 30, 2022 & 2023. The three and six months ended June 30, 2023 also includes impairment of an investment and business acquisition costs. Net Income in Q1 2022 includes a $29 million benefit related to Adjustments to Deferred Tax Valuation Allowances. A reconciliation of these Non-GAAP financial measures is included in the back of this press release.}

SIX MONTHS ENDED JUNE 30, 2023

We posted sales of $21.7 billion for the six months ended June 30, 2023, an increase of 14% from the six months ended June 30, 2022, as global light vehicle production increased 10%.

Adjusted EBIT increased to $1.04 billion for the six months ended June 30, 2023 compared to $865 million for the six months ended June 30, 2022, primarily due to earnings on higher sales, productivity and efficiency improvements, including lower costs at certain previously underperforming facilities, and higher equity income, partially offset by higher engineering, launch and other costs, including for new assembly business, higher production input costs net of customer recoveries, and commercial items in the first six months of 2023 and 2022, which had a net unfavourable impact on a year over year basis.

During the six months ended June 30, 2023, income from operations before income taxes was $758 million, net income attributable to Magna International Inc. was $548 million and diluted earnings per share was $1.91, increases of $426 million, $340 million, and $1.21, respectively, each compared to the first six months of 2022.

During the first six months ended June 30, 2023, Adjusted diluted earnings per share increased 24% to $2.61 compared to the first six months of 2022.

For the six months ended June 30, 2023, we generated cash from operations before changes in operating assets and liabilities of $1.45 billion and used $673 million in operating assets and liabilities. Investment activities for the six months ended June 30, 2023 included $1.48 billion to purchase Veoneer Active Safety, $926 million in fixed asset additions, a $197 million increase in investments, other assets and intangible assets, and $3 million in public and private equity investments.

RETURN OF CAPITAL TO SHAREHOLDERS

During the three months ended June 30, 2023, we paid $129 million in dividends.

Our Board of Directors declared a second quarter dividend of $0.46 per Common Share, payable on September 1, 2023 to shareholders of record as of the close of business on August 18, 2023.

SEGMENT SUMMARY