Press Release - Magna Announces Third Quarter 2021 Results
- Sales decreased 13% to
$7.9 billion , reflecting a global light vehicle production decrease of 12%, including decreases of 20% inEurope , 19% inNorth America and 12% inChina - Diluted earnings per share and adjusted diluted earnings per share of
$0.04 and$0.56 , respectively, compared to$1.35 and$1.95 last year - Results negatively impacted by lower light vehicle production substantially due to continued industry semiconductor chip shortages, production inefficiencies driven by unpredictable OEM production schedules, increased production and commodity costs and a provision on engineering service contracts
AURORA, Ontario
Please click HERE for full third quarter Financial Statements and MD&A.
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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2021 | 2020 | 2021 | 2020 | |||||||||
Reported | ||||||||||||
Sales | $ | 7,919 | $ | 9,129 | $ | 27,132 | $ | 22,079 | ||||
Income from operations before income taxes | $ | 27 | $ | 436 | $ | 1,372 | $ | 33 | ||||
Net income attributable to |
$ | 11 | $ | 405 | $ | 1,050 | $ | 19 | ||||
Diluted earnings per share | $ | 0.04 | $ | 1.35 | $ | 3.46 | $ | 0.06 | ||||
Non-GAAP Financial Measures(1) | ||||||||||||
Adjusted EBIT | $ | 229 | $ | 778 | $ | 1,556 | $ | 581 | ||||
Adjusted diluted earnings per share | $ | 0.56 | $ | 1.95 | $ | 3.83 | $ | 1.12 | ||||
All results are reported in millions of
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(1) Adjusted
EBIT and Adjusted diluted earnings per share are Non-GAAP financial measures that have no
standardized
meaning under |
The third quarter of 2021 represented one of the most volatile
operating environments we have experienced in recent years. I am pleased with how our organization
continues to manage through the adversity and am confident that we will be well positioned once the
current industry disruptions subside. In the meantime, we continue investing to position Magna for
further future growth.
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A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/60ffd1d6-41cc-4523-abda-aa402bb4a8b8
THREE MONTHS ENDED
Sales and Adjusted EBIT came in below our expectations in the third quarter of 2021, as vehicle production was significantly lower than anticipated largely due to ongoing semiconductor chip shortages which drove unpredictable customer production schedules, resulting in labour and other operational inefficiencies at our facilities. In addition, our results were negatively impacted by higher production costs, including freight and commodity costs, as well as a provision on engineering service contracts with the automotive unit of Evergrande.
On a consolidated basis, we posted sales of
Adjusted EBIT decreased to
Income from operations before income taxes was
Net income attributable to
Diluted earnings per share was
In the third quarter of 2021, we generated cash from operations before changes in operating assets
and liabilities of
NINE MONTHS ENDED
We posted sales of
During the nine months ended
During the nine months ended
During the nine months ended
RETURN OF CAPITAL TO SHAREHOLDERS
During the three months ended
Our Board of Directors declared a third quarter dividend of
MANAGEMENT CHANGES
Our Board of Directors has approved the following management changes, all effective
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Vincent J. Galifi , our current Executive Vice-President and Chief Financial Officer has been appointed as President. In this role, Vince will support Magna’s Chief Executive Officer,Swamy Kotagiri , on corporate strategy, capital markets, stakeholder relations and other matters.
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Patrick W.D. McCann has been promoted to Executive Vice-President and Chief Financial Officer, reporting to our Chief Executive Officer. In his 22+ year career at Magna, Pat has served in a variety of senior finance roles at Magna’s Head Office, including most recently as Senior Vice-President, Finance. Pat also served as Vice-President, Finance for Magna’s largest operating unit,Cosma International , between 2016 and 2019.
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Anton Mayer has been promoted to Executive Vice-President and Chief Technology Officer, from his current role as Executive Vice-President, Research & Development. Anton also recently served as Executive Vice-President, Systems & Portfolio Strategy and has held various other roles in a 35+ year career at Magna.
OTHER MATTERS
Subject to approval by the
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/af74df36-0125-4881-8444-4f2bfe96ea23
SEGMENT SUMMARY
($Millions unless otherwise noted) |
For
the three months ended |
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Sales | Adjusted EBIT | ||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||
Body Exteriors & Structures | $ | 3,185 | $ | 3,858 | $ | (673 | ) | $ | 98 | $ | 390 | $ | (292 | ) | |||
Power & Vision | 2,501 | 2,722 | (221 | ) | 67 | 227 | (160 | ) | |||||||||
Seating Systems | 1,123 | 1,280 | (157 | ) | 22 | 66 | (44 | ) | |||||||||
Complete Vehicles | 1,255 | 1,402 | (147 | ) | 30 | 70 | (40 | ) | |||||||||
Corporate and Other | (145 | ) | (133 | ) | (12 | ) | 12 | 25 | (13 | ) | |||||||
Total Reportable Segments | $ | 7,919 | $ | 9,129 | $ | (1,210 | ) | $ | 229 | $ | 778 | $ | (549 | ) |
For
the three months ended |
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Adjusted EBIT as a percentage of sales |
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2021 | 2020 | Change | |||||||||||||||||
Body Exteriors & Structures | 3.1 | % | 10.1 | % | (7.0 | )% | |||||||||||||
Power & Vision | 2.7 | % | 8.3 | % | (5.6 | )% | |||||||||||||
Seating Systems | 2.0 | % | 5.2 | % | (3.2 | )% | |||||||||||||
Complete Vehicles | 2.4 | % | 5.0 | % | (2.6 | )% | |||||||||||||
Consolidated Average | 2.9 | % | 8.5 | % | (5.6 | )% | |||||||||||||
($Millions unless otherwise noted) |
For
the nine months ended |
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Sales | Adjusted EBIT | ||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||
Body Exteriors & Structures | $ | 10,857 | $ | 9,157 | $ | 1,700 | $ | 652 | $ | 274 | $ | 378 | |||||||
Power & Vision | 8,538 | 6,543 | 1,995 | 567 | 136 | 431 | |||||||||||||
Seating Systems | 3,592 | 3,065 | 527 | 103 | 22 | 81 | |||||||||||||
Complete Vehicles | 4,595 | 3,656 | 939 | 189 | 164 | 25 | |||||||||||||
Corporate and Other | (450 | ) | (342 | ) | (108 | ) | 45 | (15 | ) | 60 | |||||||||
Total Reportable Segments | $ | 27,132 | $ | 22,079 | $ | 5,053 | $ | 1,556 | $ | 581 | $ | 975 |
For
the nine months ended |
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Adjusted EBIT as a percentage of sales |
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2021 | 2020 | Change | ||||||||
Body Exteriors & Structures | 6.0 | % | 3.0 | % | 3.0 | % | ||||
Power & Vision | 6.6 | % | 2.1 | % | 4.5 | % | ||||
Seating Systems | 2.9 | % | 0.7 | % | 2.2 | % | ||||
Complete Vehicles | 4.1 | % | 4.5 | % | (0.4 | )% | ||||
Consolidated Average | 5.7 | % | 2.6 | % | 3.1 | % | ||||
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.
2021 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
Updated 2021 Outlook Assumptions
Current | Previous | ||||
Light Vehicle Production (millions of units) North America Europe China |
13.4 16.5 23.0 |
14.4 18.1 24.7 |
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Average Foreign exchange rates: |
Updated 2021 Outlook
Current | Previous | ||||
Segment Sales Body Exteriors & Structures Power & Vision Seating Systems Complete Vehicles |
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Total Sales |
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Adjusted EBIT Margin(3) | 5.1% - 5.4% | 7.0% - 7.4% | |||
Equity Income (included in EBIT) |
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Interest Expense, net | Approximately |
Approximately |
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Income Tax Rate(4) | Approximately 21% | Approximately 23% | |||
Net Income attributable to Magna(5) |
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Capital Spending | Approximately |
Approximately |
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Notes: (3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales (4) The Income Tax Rate has been calculated using Adjusted EBIT and is based on current tax legislation (5) 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 2021 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.
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 |
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2021 | 2020 | ||||||
Net income | $ | 17 | $ | 327 | |||
Add: | |||||||
Interest expense, net | 22 | 26 | |||||
Other expense, net | 180 | 316 | |||||
Income taxes | 10 | 109 | |||||
Adjusted EBIT | $ | 229 | $ | 778 | |||
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 |
|||||||
2021 | 2020 | ||||||
Sales | $ | 7,919 | $ | 9,129 | |||
Adjusted EBIT | $ | 229 | $ | 778 | |||
Adjusted EBIT as a percentage of sales | 2.9 | % | 8.5 | % | |||
Adjusted diluted earnings per share | |||||||
The following table
reconciles net income attributable to |
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For the three months ended |
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2021 | 2020 | ||||||
Net income attributable to |
$ | 11 | $ | 405 | |||
Add (deduct): | |||||||
Other expense, net | 180 | 316 | |||||
Tax effect on Other expense, net | (21 | ) | (61 | ) | |||
Loss attributable to non-controlling interests related | |||||||
to Other expense, net | - | (75 | ) | ||||
Adjusted
net income attributable to |
$ | 170 | $ | 585 | |||
Diluted weighted average number of Common Shares outstanding during the period (millions): | 302.6 | 299.4 | |||||
Adjusted diluted earnings per share | $ | 0.56 | $ | 1.95 |
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Adjusted EBIT | |||||||
The following table reconciles net income to Adjusted EBIT: | |||||||
For the nine months ended |
|||||||
2021 | 2020 | ||||||
Net income (loss) | $ | 1,075 | $ | (73 | ) | ||
Add: | |||||||
Interest expense, net | 56 | 64 | |||||
Other expense, net | 128 | 484 | |||||
Income taxes | 297 | 106 | |||||
Adjusted EBIT | $ | 1,556 | $ | 581 | |||
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 nine months ended |
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2021 | 2020 | ||||||
Sales | $ | 27,132 | $ | 22,079 | |||
Adjusted EBIT | $ | 1,556 | $ | 581 | |||
Adjusted EBIT as a percentage of sales | 5.7 | % | 2.6 | % | |||
Adjusted diluted earnings per share | |||||||
The following table
reconciles net income attributable to |
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For the nine months ended |
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2021 | 2020 | ||||||
Net income attributable to |
$ | 1,050 | $ | 19 | |||
Add (deduct): | |||||||
Other expense, net | 128 | 484 | |||||
Tax effect on Other expense, net | (16 | ) | (93 | ) | |||
Loss attributable to non-controlling interests related | |||||||
to Other expense, net | - | (75 | ) | ||||
Adjusted
net income attributable to |
$ | 1,162 | $ | 335 | |||
Diluted weighted average number of Common Shares outstanding during the period (millions): | 303.2 | 300.2 | |||||
Adjusted diluted earnings per share | $ | 3.83 | $ | 1.12 |
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
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
We will hold a conference call for interested analysts and shareholders to discuss our third quarter
ended
TAGS
Quarterly earnings, financial results, vehicle production
INVESTOR CONTACT
louis.tonelli@magna.com │ 905.726.7035
MEDIA CONTACT
tracy.fuerst@magna.com │ 248.761.7004
TELECONFERENCE CONTACT
nancy.hansford@magna.com │ 905.726.7108
OUR BUSINESS(6)
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 154,000 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 347 manufacturing operations and 90 product development,
engineering and sales centres spanning 28 countries.
For further information about
(6) Manufacturing operations, product development, engineering and sales centres and employee figures include certain equity-accounted operations.
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 |
Light Vehicle Production |
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Total Sales Segment Sales |
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Adjusted EBIT Margin Net Income Attributable to Magna |
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Equity Income |
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Free Cash Flow |
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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
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Pricing Risks
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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 theUnited 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.
Source: Magna International Inc.