Press Release - Magna Announces Fourth Quarter 2021 Results and Outlook

Fourth Quarter 2021 Highlights

  • Sales of decreased 14%, compared to a 17% decrease in global light vehicle production
  • Diluted earnings per share and Adjusted diluted earnings per share of and , respectively, compared to and last year
  • Returned to shareholders through share repurchases and dividends
  • Raised quarterly cash dividend by 5% to .45 per share

Full Year 2021 Highlights

  • Sales of increased 11%, compared to global vehicle production which increased 4%
  • Diluted earnings per share and Adjusted diluted earnings per share of and , respectively, compared to and last year
  • Returned over to shareholders through share repurchases and dividends

, (GLOBE NEWSWIRE) -- (TSX: MG; NYSE: MGA) today reported financial results for the fourth quarter and year ended .

 

 THREE MONTHS ENDED
,
 YEAR ENDED
,
 2021 2020 2021 2020
Reported       
        
Sales$        9,110  $10,568  $        36,242  $32,647 
        
Income from operations before income taxes$        576  $973  $        1,948  $1,006 
        
Net income attributable to
 Magna International Inc.
$464  $738  $1,514  $757 
        
Diluted earnings per share$        1.54  $2.45  $        5.00  $2.52 
        
Non-GAAP Financial Measures(1)       
        
Adjusted EBIT$        508  $1,095  $        2,064  $1,676 
        
Adjusted diluted earnings per share$        1.30  $2.83  $        5.13  $3.95 
                
Download image of Swamy Kotagiri
, Magna’s Chief Executive Officer

“Although 2021 presented its share of challenges, we delivered above-market sales growth and generated solid free cash flow, as we worked closely with our customers and suppliers to minimize the impacts on vehicle production.Despite significant input cost headwinds, we expect improved operating results in 2022 as the industry recovers and production schedules normalize. In addition, we remain confident in our ability to capitalize on the opportunities in front of us, especially in the areas of electrification, autonomy and new mobility.” - , Magna’s Chief Executive Officer

All results are reported in millions of dollars, except per share figures, which are in dollars.

(1) Adjusted EBIT and Adjusted diluted earnings per share are Non-GAAP financial measures that have no standardized meaning under 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/eb378346-1015-44a3-82d5-5eaba7f057fd

THREE MONTHS ENDED

Sales and Adjusted EBIT came in ahead of our expectations in the fourth quarter of 2021, as vehicle production was better than forecasted. We also benefitted from lower than anticipated net warranty and engineering costs.

We posted sales of billion in the fourth quarter of 2021, a decrease of 14% from the fourth quarter of 2020. By contrast, global light vehicle production decreased 17% in the fourth quarter, reflecting decreases of 20% in , 28% in , and 10% in . The lower light vehicle production was driven by the semiconductor chip shortages the industry has faced throughout 2021.

Adjusted EBIT decreased to in the fourth quarter of 2021 compared to in the fourth quarter of 2020. This decrease mainly reflects lower margins earned on reduced sales, labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity, freight and energy costs, and lower net favourable commercial items. These factors were partially offset by lower profit sharing and incentive compensation costs and decreased net warranty costs.

Income from operations before income taxes was in the fourth quarter of 2021 compared to in the fourth quarter of 2020. Included in income from operations before income taxes in the fourth quarter of 2021 was Other income, net of , comprised of merger agreement termination fee income and net gains on the revaluation of certain public and private equity investments, partially offset by restructuring and impairment costs. In comparison, Other expense, net was in the fourth quarter of 2020, comprised of restructuring and impairment costs and a loss on the sale of an equity-accounted investment, partially offset by net gains on the revaluation of certain private equity investments. Excluding Other (income) expense, net from both periods, income from operations before income taxes decreased in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Net income attributable to was in the fourth quarter of 2021 compared to in the fourth quarter of 2020. Included in net income attributable to in the fourth quarter of 2021 was Other income, net of after tax and Adjustments to Deferred Tax Valuation Allowances of (see "Non-GAAP Financial Measures" section included in this Press Release), compared to Other expense, net of in the fourth quarter of 2020. Excluding Other (income) expense, net and Adjustments to Deferred Tax Valuation Allowances from both periods, net income attributable to decreased in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Diluted earnings per share decreased to in the fourth quarter of 2021 compared to in the comparable period. Adjusted diluted earnings per share decreased to compared to in the fourth quarter of 2020.

In the fourth quarter of 2021, we generated in cash from operating activities after changes in operating assets and liabilities. Investment activities in the fourth quarter of 2021 included in fixed asset additions, for investments, other assets and intangible assets, in acquisitions and business combinations, and in public and private equity investments.

YEAR ENDED

We posted sales of for the year ended , an increase of 11% from the year ended , compared to global light vehicle production which increased 4%. Light vehicle production in 2021 was negatively impacted primarily by semiconductor chip shortages, while 2020 was negatively impacted primarily by the COVID-19 pandemic and related restrictions that resulted in the temporary suspension of production at substantially all OEM and supplier production facilities in the first half of 2020. In 2021, light vehicle production increased 1% in and declined 3% in , our two largest markets, and increased 5% in .

Adjusted EBIT increased to in 2021 compared to in 2020. The increase was primarily due to margins earned on higher sales, cost savings as a result of restructuring actions, lower net application engineering costs related to three upcoming ADAS program launches and decreased net warranty costs. These factors were partially offset by labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity, freight and energy costs, and higher launch costs.

During 2021, income from operations before income taxes was and net income attributable to was , up and , respectively, each compared to 2020.

Diluted earnings per share increased to .00 in 2021 compared to in 2020. Our adjusted diluted earnings per share increased 30% to in 2021 compared to in 2020.

During 2021, we generated cash from operations of including changes in operating assets and liabilities. Investment activities in 2021 included .4 billion in fixed asset additions, in investments, other assets and intangible assets, in acquisitions and business combinations, and in public and private equity investments.

RETURN OF CAPITAL TO SHAREHOLDERS

During the three months and year ended , we repurchased 3.1 million shares for and 6.0 million shares for , respectively. In addition, we paid dividends of and for the three months and year ended , respectively.

Our Board of Directors declared a fourth quarter dividend of per Common Share. This represents a 5% increase in the dividend. The dividend is payable on to shareholders of record as of the close of business on .

2022 AND 2024 OUTLOOK

Our current year Outlook is provided annually and updated quarterly; our 2024 Outlook is provided below, but not updated quarterly.

2022 and 2024 Outlook Assumptions

 2022 2024
Light Vehicle Production (millions of units)   
 15.2 17.5
 18.5 21.2
 24.2 29.0
    
Average Foreign exchange rates:   
equals    
equals    
    

2022 and 2024 Outlook

 2022 2024
Segment Sales   
Body Exteriors & Structures-  -
Power & Vision-  -
Seating Systems-  -
Complete Vehicles-  -
Total Sales-  -
    
Adjusted EBIT Margin(1)6.0% - 6.4% 8.1% - 8.6%
    
Equity Income (included in EBIT)-  -
    
Interest Expense, netApproximately   
    
Income Tax Rate(2)Approximately 21%  
    
Net Income attributable to Magna(3)-   
    
Capital SpendingApproximately   
    
Notes:   
(1) Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales
(2) The Income Tax Rate has been calculated using Adjusted EBIT and is based on current tax legislation
(3) Net Income attributable to Magna represents Net Income excluding Other expense (income), net and Adjustments to Deferred Tax Valuation Allowances
 

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 and 2024 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.

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 dollars and all tabular amounts in millions unless otherwise noted]

Body Exteriors & Structures              
  For the three months        
  ended ,        
  2021   2020   Change 
               
Sales$3,620  $4,393  $(773) - 18%
               
Adjusted EBIT$168  $543  $(375) - 69%
               
Adjusted EBIT as a percentage of sales (i) 4.6%  12.4%  -  - 7.8%

(i)  Adjusted EBIT as a percentage of sales is calculated as Adjusted EBIT divided by Sales.

Sales for Body Exteriors & Structures decreased 18% or $773 million to $3.62 billion in the fourth quarter of 2021 compared to $4.39 billion in 2020. The decrease in sales was primarily due to lower global light vehicle production, including the negative impact of production disruptions due to semiconductor chip shortages. In addition, sales decreased due to the sale of three operations in during the third quarter of 2021, the end of production of certain programs and net customer price concessions. These factors were partially offset by the launch of new programs during or subsequent to the fourth quarter of 2020, including the Jeep Wagoneer and Grand Wagoneer, Ford , Ford Maverick and Jeep Grand Cherokee L.

Adjusted EBIT decreased $375 million to $168 million in the fourth quarter of 2021 compared to $543 million in the fourth quarter of 2020 and Adjusted EBIT as a percentage of sales decreased to 4.6% in the fourth quarter of 2021 compared to 12.4% in the fourth quarter of 2020. The decreases mainly reflect lower margins earned on reduced sales, lower net favourable commercial items, labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity and energy costs, an increase in net warranty costs and higher launch costs.

            
Power & Vision           
 For the three months       
 ended ,       
 2021  2020  Change 
            
Sales$2,804  $3,179  $(375) - 12%
            
Adjusted EBIT$171  $359  $(188) - 52%
            
Adjusted EBIT as a percentage of sales6.1% 11.3%    - 5.2%
            

Sales for Power & Vision decreased 12% or $375 million to $2.80 billion in the fourth quarter of 2021 compared to $3.18 billion in 2020. The decrease in sales was primarily due to lower global light vehicle production, including the negative impact of production disruptions due to semiconductor chip shortages, and net customer price concessions. These factors were partially offset by sales from business combinations during 2021 and the launch of new programs during or subsequent to the fourth quarter of 2020, including the Ford F-Series pick-up trucks, Dongfeng T5 EVO, Ford Bronco and and Grand Wagoneer.

Adjusted EBIT decreased million to $171 million in the fourth quarter of 2021 compared to $359 million in the fourth quarter of 2020 and Adjusted EBIT as a percentage of sales decreased to 6.1% in the fourth quarter of 2021 compared to 11.3% in the fourth quarter of 2020. The decreases mainly reflect lower margins earned on reduced sales, labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity, freight and energy costs, business combinations during 2021 and lower equity income. These were partially offset by a decrease in net warranty costs and lower net application engineering costs related to three upcoming ADAS program launches.

            
Seating Systems           
 For the three months       
 ended ,       
 2021  2020  Change 
            
Sales$1,299  $1,390  $(91) - 7%
            
Adjusted EBIT$49  $85  $(36) - 42%
            
Adjusted EBIT as a percentage of sales3.8% 6.1%    - 2.3%
            

Sales for Seating Systems decreased 7% or $91 million to $1.30 billion in the fourth quarter of 2021 compared to $1.39 billion in 2020. The decrease in sales was primarily due to lower global light vehicle production, including the negative impact of production disruptions due to semiconductor chip shortages, and net customer price concessions. These factors were partially offset by sales from the acquisition of Hongli during 2021 and the launch of new programs during or subsequent to the fourth quarter of 2020, including the Jeep Grand Cherokee L, Skoda Enyaq and Enyaq Coupe and Geely Xingyue L.

Adjusted EBIT decreased million to $49 million in the fourth quarter of 2021 compared to $85 million in the fourth quarter of 2020 and Adjusted EBIT as a percentage of sales decreased to 3.8% in the fourth quarter of 2021 compared to 6.1% in the fourth quarter of 2020. The decreases mainly reflect lower margins earned on reduced sales, labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, and higher production costs, including energy costs. These were partially offset by the acquisition of Hongli during 2021 and lower restructuring costs.

            
Complete Vehicles           
 For the three months       
 ended ,       
 2021  2020  Change 
            
Complete Vehicle Assembly Volumes (thousands of units)32.7  34.5     - 5%
            
Sales$1,511  $1,759  $(248) - 14%
            
Adjusted EBIT$98  $110  $(12) - 11%
            
Adjusted EBIT as a percentage of sales6.5% 6.3%    + 0.2%
            

Sales for Complete Vehicles decreased 14% or $248 million to $1.51 billion in the fourth quarter of 2021 compared to $1.76 billion in the fourth quarter of 2020 and assembly volumes decreased 5% or 1,800 units. This sales decrease was primarily due to lower assembly volumes, in particular the Jaguar I-Pace, including the negative impact of production disruptions due to semiconductor chip shortages, and a decrease in reported dollar sales as a result of the weakening of the euro against the dollar.

Adjusted EBIT decreased $12 million to $98 million in the fourth quarter of 2021 primarily due to lower earnings on reduced engineering and assembly sales, including labour inefficiencies due to semiconductor chip shortages, and higher production costs, including energy costs. These were partially offset by higher government research and development incentives.

Adjusted EBIT as a percentage of sales improved to 6.5% in the fourth quarter of 2021 compared to 6.3% in the fourth quarter of 2020 primarily due to higher government research and development incentives and favourable program mix. These were partially offset by lower earnings on reduced engineering and assembly sales, including labour inefficiencies due to semiconductor chip shortages, and higher production costs, including energy costs.

 

 
CONSOLIDATED STATEMENTS OF INCOME
[Unaudited]
[ dollars in millions, except per share figures]
 Three months ended   Year ended 
 ,    ,  
  2021   2020   2021   2020 
Sales$9,110  $10,568  $36,242  $32,647 
                
Costs and expenses               
Cost of goods sold 7,822   8,753   31,097   28,207 
Depreciation and amortization 389   362   1,512   1,366 
Selling, general and administrative 414   448   1,717   1,587 
Interest expense, net 22   22   78   86 
Equity income (23)  (90)  (148)  (189)
Other (income) expense, net [i] (90)  100   38   584 
Income from operations before income taxes 576   973   1,948   1,006 
Income taxes 98   223   395   329 
Net income 478   750   1,553   677 
(Income) loss attributable to non-controlling interests (14)  (12)  (39)  80 
Net income attributable to Magna International Inc. $464  $738  $1,514  $757 
                
Earnings per Common Share:               
Basic$1.55  $2.46  $5.04  $2.52 
Diluted$1.54  $2.45  $5.00  $2.52 
                
Cash dividends paid per Common Share$0.43  $0.40  $1.72  $1.60 
                
Weighted average number of Common Shares outstanding during the period [in millions]:               
Basic 299.7   299.6   300.6   299.7 
Diluted 301.5   300.9   302.8   300.4 

[i]  See "Other (income) expense, net" information included in this Press Release.

 

 
 
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[ dollars in millions]
        
   As at   As at 
  ,    ,  
  2021   2020 
        
ASSETS       
Current assets       
Cash and cash equivalents$2,948  $3,268 
Accounts receivable 6,307   6,394 
Inventories 3,969   3,444 
Prepaid expenses and other 278   260 
  13,502   13,366 
        
Investments 1,593   947 
Fixed assets, net 8,293   8,475 
Operating lease right-of-use assets 1,700   1,906 
Intangible assets, net 493   481 
  2,122   2,095 
Deferred tax assets 421   372 
Other assets 962   963 
 $29,086  $28,605 
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Current liabilities       
Accounts payable$6,465  $6,266 
Other accrued liabilities 2,156   2,254 
Accrued salaries and wages 851   815 
Income taxes payable 200   38 
Long‑term debt due within one year 455   129 
Current portion of operating lease liabilities 274   241 
  10,401   9,743 
        
Long‑term debt 3,538   3,973 
Operating lease liabilities 1,406   1,656 
Long-term employee benefit liabilities 700   729 
Other long‑term liabilities 376   332 
Deferred tax liabilities 440   452 
  16,861   16,885 
        
Shareholders' equity       
Capital stock       
Common Shares       
[issued: 297,871,776; – 300,527,416] 3,403   3,271 
Contributed surplus 102   128 
Retained earnings 9,231   8,704 
Accumulated other comprehensive loss (900)  (733)
  11,836   11,370 
        
Non-controlling interests 389   350 
  12,225   11,720 
 $29,086  $28,605 

 

 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[ dollars in millions]
 
 Three months ended   Year ended 
 ,    ,  
  2021   2020   2021   2020 
                
Cash provided from (used for):               
                
OPERATING ACTIVITIES               
Net income$478  $750  $1,553  $677 
Items not involving current cash flows 371   548   1,576   1,976 
  849   1,298   3,129   2,653 
Changes in operating assets and liabilities 502   961   (189)  625 
Cash provided from operating activities 1,351   2,259   2,940   3,278 
                
INVESTING ACTIVITIES               
Fixed asset additions (549)  (560)  (1,372)  (1,145)
Increase in equity method investments (63)     (517)   
Increase in investments, other assets and intangible assets (105)  (98)  (403)  (331)
Increase in public and private equity investments (45)  (18)  (68)  (132)
Proceeds from dispositions 32   69   81   117 
Business combinations (31)  98   (13)  91 
Funding provided on sale of business       (41)   
Settlement of long-term receivable from non-consolidated JV       50    
Cash used for investing activities (761)  (509)  (2,283)  (1,400)
                
FINANCING ACTIVITIES               
Issues of debt 21   (2)  55   854 
Decrease in short-term borrowings    (13)  (101)  (31)
Repayments of debt (16)  (12)  (121)  (140)
Issue of Common Shares on exercise of stock options 10   64   146   81 
Tax withholdings on vesting of equity awards (1)  (3)  (13)  (13)
Repurchase of Common Shares (251)     (517)  (203)
Contributions to subsidiaries by non-controlling interests 8   18   8   18 
Dividends paid to non-controlling interests (39)  (12)  (49)  (18)
Dividends paid (127)  (115)  (514)  (467)
Cash (used for) provided from financing activities (395)  (75)  (1,106)  81 
                
Effect of exchange rate changes on cash, cash equivalents and               
restricted cash equivalents 5   81   23   23 
                
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents during the period 200   1,756   (426)  1,982 
Cash, cash equivalents and restricted cash equivalents, beginning of period 2,748   1,618   3,374   1,392 
Cash, cash equivalents and restricted cash equivalents, end of period$2,948  $3,374  $2,948  $3,374 

 



SUPPLEMENTAL DATA
[Unaudited]
[All amounts in dollars and all tabular amounts in millions unless otherwise noted]

OTHER (INCOME) EXPENSE, NET
   Three months ended  Year ended 
   ,   ,  
    2021   2020   2021   2020 
                  
Restructuring and impairments [a]$18  $101  $101  $269 
Net (gains) losses on investments [b] (8)  (11)  2   (32)
Merger agreement termination fee [c] (100)     (100)   
Gain on business combinations [d]       (40)   
Loss on sale of business [e]       75    
Impairment of equity-accounted investments [f]    10      347 
   $(90) $100  $38  $584 

 

[a]Restructuring and impairments
  
 For the three months ended , the company recorded restructuring and impairment charges of $14 million [ after tax] for its Seating Systems segment and [ after tax] for its Power & Vision segment. During 2021, the company recorded restructuring and impairment charges of [ after tax] for its Body Exteriors & Structures segment, [ after tax] for its Seating Systems segment and [ after tax], for its Power & Vision segment.
  
 For the three months ended , the Company recorded restructuring and impairment charges of $86 million [ after tax] for its Body Exteriors & Structures segment, and [ after tax] for its Seating Systems segment. During 2020, the Company recorded restructuring and impairment charges of $123 million [ after tax] for its Body Exteriors & Structures segment, [ after tax] for its Power & Vision segment and [ after tax] for its Seating Systems segment.
  
[b]Net (gains) losses on investments
  
 During the fourth quarter of 2021, the Company recorded net unrealized losses of [ after tax] on the revaluation of certain public and private equity investments. For the three and twelve months ended , the Company also recorded unrealized gains of and [ and after tax] respectively, related to the revaluation of certain public company warrants.
  
 For the three and twelve months ended , the Company recorded realized and unrealized gains of [ after tax] and [ after tax], respectively on the revaluation of its private equity investments.
  
[c]Merger agreement termination fee
  
 In 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 [ after tax].
  
[d]Gain on business combinations
  
 During 2021, the Company acquired a 65% equity interest and a controlling financial interest in . The acquisition included an additional 15% equity interest in two entities that were previously equity accounted for by the Company. On the change in basis of accounting, the Company recognized a gain [ after tax].
  
 The Company also recorded a gain of [ after tax] in connection with the distribution of substantially all of the assets of the Company's European joint venture, .
  
[e]Loss on sale of business
  
 During 2021, the Company sold three Body Exteriors & Structures operations in . Under the terms of the arrangement, the Company provided the buyer with of funding, resulting in a loss on disposal of [ after tax].
  
[f]Impairment of equity-accounted investments
  
 For the three and twelve months ended , the Company recorded impairment charges of [ after tax] related to For the twelve months ended , the Company also recorded impairment charges of [ after tax], related to Both equity-accounted investments were included in the Power & Vision segment.
  

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
             Depreciation   Equity   Fixed 
 Total  External Adjusted   and  loss   asset 
 sales   sales  EBIT [ii]  amortization  (income)   additions 
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 
                      
 Three months ended
            Depreciation      Fixed 
 Total  External Adjusted   and  Equity   asset 
 sales   sales  EBIT [ii]  amortization income  additions 
Body Exteriors & Structures$4,393  $4,314 $543  $190 $(1) $296 
Power & Vision 3,179   3,126  359   124  (80)  198 
Seating Systems 1,390   1,383  85   20  (5)  38 
Complete Vehicles 1,759   1,743  110   23  (3)  15 
Corporate & Other [i] (153)  2  (2)  5  (1)  13 
Total Reportable Segments$10,568  $10,568 $1,095  $362 $(90) $560 
                      
 Year ended
            Depreciation Equity   Fixed 
  Total  External Adjusted   and  loss   asset 
 sales   sales  EBIT [ii]  amortization (income)  additions 
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 
                      
 Year ended
            Depreciation      Fixed 
  Total  External Adjusted   and  Equity   asset 
 sales   sales  EBIT [ii]  amortization income  additions 
Body Exteriors & Structures$13,550  $13,292 $817  $727 $  $581 
Power & Vision 9,722   9,553  495   464  (179)  440 
Seating Systems 4,455   4,433  107   73  (6)  70 
Complete Vehicles 5,415   5,363  274   84  (3)  34 
Corporate & Other [i] (495)  6  (17)  18  (1)  20 
Total Reportable Segments$32,647  $32,647 $1,676  $1,366 $(189) $1,145 
                      
[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.
 

 


SUPPLEMENTAL DATA
[Unaudited]
[All amounts in dollars and all tabular amounts in millions unless otherwise noted]

NON-GAAP FINANCIAL MEASURES

In addition to the financial results reported in accordance with 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 GAAP.

The following table reconciles Net income to Adjusted EBIT:

 Three months ended  Year ended 
 ,   ,
  2021   2020   2021  2020 
               
Net income$478  $750  $1,553 $677 
Add:              
Interest expense, net 22   22   78  86 
Other (income) expense, net (90)  100   38  584 
Income taxes 98   223   395  329 
Adjusted EBIT$508  $1,095  $2,064 $1,676 
               
The following table reconciles Net income attributable to to Adjusted diluted earnings per share:
               
 Three months ended  Year ended
 ,   ,
  2021   2020   2021  2020 
               
Net income attributable to $464  $738     $1,514 $757 
Add:              
Other (income) expense, net (90)  100   38  584 
Tax effect on Other (income) expense, net 30   13   14  (80)
Adjustments to Deferred Tax Valuation Allowances [i] (13)     (13)  
Loss attributable to non-controlling interests related to Other (income) expense, net         (75)
Adjusted net income attributable to $391  $851  $1,553 $1,186 
Diluted weighted average number of Common Shares outstanding during the period (millions): 301.5   300.9   302.8  300.4 
Adjusted diluted earnings per share$1.30  $2.83  $5.13 $3.95 
               
[i]  In the fourth quarter of 2021 the Company recorded adjustments to the valuation allowance against its deferred tax assets in certain European and countries. The net effect of these adjustments was a reduction in income tax expense of [‘‘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 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 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 results on at . The conference call will be chaired by , Chief Executive Officer. The number to use for this call from is [1-800-909-4145]. International callers should use [1-416-981-9023]. 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
, Vice-President, Investor Relations
louis.tonelli@magna.com │ 905.726.7035

MEDIA CONTACT
, Vice-President,
tracy.fuerst@magna.com │ 248.631.5396

WEBCAST CONTACT
, Executive Assistant, Investor Relations
nancy.hansford@magna.com │ 905.726.7108

OUR BUSINESS (1)
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 158,000 employees and an organizational structure designed to innovate like a startup. With 60+ 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 91 product development, engineering and sales centres spanning 28 countries. Our common shares trade on the (MG) and the (MGA).

(1) Manufacturing operations, product development, engineering and sales centres and employee figures include 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 StatementMaterial Potential Risks Related to Applicable Forward-Looking Statement
Light Vehicle Production
  • Light vehicle sales levels
  • Supply disruptions, including as a result of the current semiconductor chip shortage
  • Production allocation decisions by OEMs
Total Sales
Segment Sales
  • Economic impact of COVID-19 on consumer confidence
  • Supply disruptions, including as a result of: a semiconductor chip shortage currently being experienced in the industry; and COVID-19 related lockdowns of large port hubs in
  • Elevated level of inflation
  • Global energy shortages
  • 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 Margin
Net Income Attributable to Magna
  • Same risks as for Total Sales and Segment Sales above
  • Operational underperformance
  • Higher costs incurred to mitigate the risk of supply disruptions, including: materials price increases; higher-priced substitute supplies; premium freight costs to expedite shipments; production inefficiencies due to production lines being stopped/restarted unexpectedly based on customers’ production schedules; other unrecoverable costs; and price increases from sub-suppliers that have been negatively impacted by production inefficiencies
  • Price concessions
  • Commodity cost 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 the COVID-19 pandemic, and the semiconductor shortage;
  • intense competition;
  • potential restrictions on free trade;
  • trade disputes/tariffs;
Customer and Supplier Related Risks
  • concentration of sales with six customers;
  • emergence of potentially disruptive Electric Vehicle (EV) OEMs, including risks related to limited revenues/operating history of new OEM entrants;
  • OEM consolidation and cooperation;
  • shifts in market shares among vehicles or vehicle segments;
  • shifts in consumer "take rates" for products we sell;
  • quarterly sales fluctuations;
  • potential loss of any material purchase orders;
  • a deterioration in the financial condition of our supply base, including as a result of the COVID-19 pandemic;
Manufacturing Operational Risks
  • product and new facility launch risks;
  • operational underperformance;
  • restructuring costs;
  • impairment charges;
  • labour disruptions;
  • COVID-19 shutdowns;
  • supply disruptions, including with respect to semiconductor chips;
  • climate change risks;
  • attraction/retention of skilled labour;
  • leadership succession;
IT Security/Cybersecurity Risk
  • IT/Cybersecurity breach;
  • Product Cybersecurity breach;
 Pricing Risks
  • pricing risks following time of quote;
  • 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 , our annual report on Form 40-F filed with the , 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.


Primary Logo

Source: Magna International Inc.