EX-99.2 3 exh_992.htm EXHIBIT 99.2

EXHIBIT 99.2

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC. 
(United States dollars in millions, except per share figures) (Unaudited)
Prepared in accordance with U.S. GAAP
              2021   2022   2023
          Note   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
VEHICLE VOLUME STATISTICS (in millions)                      
North America     3.752 3.213 2.921 3.219 13.105   3.615 3.551 3.600 3.514 14.280   3.883 4.081 3.932 3.693 15.589
                                               
  Western Europe     3.045 2.443 1.783 2.392 9.663   2.491 2.596 2.292 2.704 10.083   3.020 2.972 2.415 2.807 11.214
  Eastern Europe     1.870 1.671 1.212 1.650 6.403   1.506 1.424 1.305 1.484 5.719   1.561 1.626 1.415 1.665 6.267
Total Europe       4.915 4.114 2.995 4.042 16.066   3.997 4.020 3.597 4.188 15.802   4.581 4.598 3.830 4.472 17.481
                                               
China           6.032 5.699 5.437 7.366 24.534   6.365 5.491 7.239 7.268 26.363   5.938 6.799 7.678 8.166 28.581
                                               
Other           6.868 5.786 5.246 6.037 23.937   6.382 6.147 6.712 6.866 26.107   6.953 6.642 6.929 7.053 27.577
                                               
Global           21.567 18.812 16.599 20.664 77.642   20.359 19.209 21.148 21.836 82.552   21.355 22.120 22.369 23.384 89.228
                                               
Magna Steyr vehicle assembly volumes     0.041 0.030 0.025 0.034 0.130   0.026 0.032 0.026 0.028 0.112   0.034 0.027 0.023 0.021 0.105
                                               
AVERAGE FOREIGN EXCHANGE RATES                                      
1 Canadian dollar equals U.S. dollars     0.790 0.814 0.794 0.794 0.798   0.790 0.783 0.765 0.737 0.769   0.740 0.745 0.746 0.735 0.742
1 Euro equals U.S. dollars     1.205 1.206 1.178 1.144 1.183   1.123 1.064 1.006 1.019 1.053   1.073 1.089 1.088 1.076 1.082
1 Chinese renminbi equals U.S. dollars     0.154 0.155 0.155 0.156 0.155   0.158 0.151 0.146 0.140 0.149   0.146 0.143 0.138 0.138 0.141
                                               
CONSOLIDATED STATEMENTS OF INCOME (LOSS)                                      
Sales:                                            
    Body Exteriors & Structures      4,025      3,647      3,185      3,620 14,477   4,077     3,947     3,976     4,004 16,004   4,439     4,540      4,354    4,178 17,511
    Power & Vision     3,156      2,881      2,501      2,804 11,342   3,046     2,888     2,911     3,016 11,861   3,323     3,462      3,745    3,775 14,305
    Seating Systems     1,303 1,166 1,123 1,299 4,891   1,376 1,253 1,295 1,345 5,269   1,486 1,603 1,529 1,429 6,047
    Complete Vehicles     1,850 1,490 1,255 1,511 6,106   1,275 1,403 1,213 1,330 5,221   1,626 1,526 1,185 1,201 5,538
    Corporate & Other     (155) (150) (145) (124) (574)   (132) (129) (127) (127) (515)   (201) (149) (125) (129) (604)
Sales           10,179      9,034      7,919      9,110 36,242   9,642     9,362     9,268     9,568 37,840   10,673   10,982    10,688  10,454 42,797
                                               
Costs and expenses:                                      
  Cost of goods sold     8,662      7,728      6,885      7,822 31,097   8,400     8,259     8,126     8,403 33,188   9,416     9,544      9,264    8,961 37,185
  Selling, general and administrative      430         419         454         414 1,717   386        410        387        477 1,660   488        505         491       566 2,050
  Equity income     (47)         (44)         (34)         (23) (148)   (20)         (25)         (27)         (17) (89)   (33)         (36)          (40)          (3) (112)
                                               
Adjusted EBITDA     1,134 931 614 897 3,576   876 718 782 705 3,081   802 969 973 930 3,674
  Depreciation     352         362         373         377 1,464   357        348        330        338 1,373   353        353         358       372 1,436
                                               
Adjusted EBIT     782 569 241 520 2,112   519 370 452 367 1,708   449 616 615 558 2,238
  Amortization of acquired intangible assets     12 12 12 12 48   12 12 11 11 46   12 13 32 31 88
  Other expense (income), net 1   (58) 6 180 (90) 38   61 426 23 193 703   142 86 (4) 164 388
  Interest expense, net     23           11           22           22 78   26          20          18          17 81   20          34           49         53 156
                                               
Income (loss) from operations before income taxes     805 540 27 576 1,948   420 (88) 400 146 878   275 483 538 310 1,606
Income tax expense     183         104           10           98 395   41          57        104          35 237   58        129         121         12 320
                                               
Net income (loss)     622         436           17         478 1,553   379       (145)        296        111 641   217        354         417       298 1,286
(Income) loss attributable to non-controlling interests     (7)         (12)           (6)         (14) (39)   (15)         (11)           (7)         (16) (49)   (8)         (15)          (23)        (27) (73)
                                               
Net income (loss) attributable to Magna International Inc.     615 424 11 464 1,514   364 (156) 289 95 592   209 339 394 271 1,213
                                               
Diluted earnings (loss) per common share:      $    2.03  $    1.40  $    0.04  $    1.54  $    5.00    $   1.22  $  (0.54)  $   1.00  $   0.33  $   2.03    $   0.73  $   1.18  $    1.37  $  0.94  $   4.23
                                               
Weighted average number of Common Shares outstanding                                       
  during the period (in millions):     303.6 303.6 302.6 301.5 302.8   298.1 291.1 288.5 286.3 291.2   286.6 286.3 286.8 286.6 286.6
                                               
                                               
NON-GAAP MEASURES                                      
                                               
  Adjusted EBITDA     1,134 931 614 897 3,576   876 718 782 705 3,081   802 969 973 930 3,674
                                               
  Adjusted EBIT 2   782 569 241 520 2,112   519 370 452 367 1,708   449 616 615 558 2,238
                                               
  Adjusted net income attributable to Magna International Inc.     575 434 179 399 1,587   393 253 317 270 1,233   329 441 419 383 1,572
                                               
  Adjusted Diluted earnings (loss) per common share      $    1.89  $    1.43  $    0.59  $    1.32  $    5.24    $   1.32  $   0.87  $   1.10  $   0.94  $   4.24    $   1.15  $   1.54  $    1.46  $  1.33  $   5.49
                                               
                                               
PROFITABILITY RATIOS                                      
  Selling, general and administrative /Sales     4.2% 4.6% 5.7% 4.5% 4.7%   4.0% 4.4% 4.2% 5.0% 4.4%   4.6% 4.6% 4.6% 5.4% 4.8%
  Adjusted EBIT /Sales     7.7% 6.3% 3.0% 5.7% 5.8%   5.4% 4.0% 4.9% 3.8% 4.5%   4.2% 5.6% 5.8% 5.3% 5.2%
  Operating income /Sales     7.9% 6.0% 0.3% 6.3% 5.4%   4.4% -0.9% 4.3% 1.5% 2.3%   2.6% 4.4% 5.0% 3.0% 3.8%
  Effective tax rate                                      
    Reported     22.7% 19.3% 37.0% 17.0% 20.3%   9.8% -64.8% 26.0% 24.0% 27.0%   21.1% 26.7% 22.5% 3.9% 19.9%
    Excluding Other expense (income) and amortization, net of taxes     23.3% 20.1% 15.5% 17.1% 20.1%   17.2% 24.6% 25.3% 18.3% 21.2%   21.4% 21.6% 21.9% 18.8% 21.0%

 

Q4 2023 Financial Review of Magna International Inc.Page 1 of 6 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(United States dollars in millions) (Unaudited)
                                             
              2021     2022     2023
              1st Q 2nd Q 3rd Q 4th Q     1st Q 2nd Q 3rd Q 4th Q     1st Q 2nd Q 3rd Q 4th Q
FUNDS EMPLOYED                                    
Current assets:                                    
  Accounts receivable     7,176      6,531      6,082      6,307     7,006     6,764     7,082     6,791     7,959     8,556      8,477    7,881
  Inventories     3,645      3,999      4,150      3,969     4,258     4,064     4,108     4,180     4,421     4,664      4,751    4,606
  Prepaid expenses and other     290         294         247         278     310        262        269        320     367        455         387       352
                 11,111    10,824    10,479    10,554       11,574   11,090   11,459   11,291       12,747   13,675    13,615  12,839
Current liabilities:                                    
  Accounts payable     6,787      6,248      5,914      6,465     6,845     6,443     6,624     6,999     7,731     7,984      7,911    7,842
  Accrued salaries and wages     897         912         893         851     879        766        810        850     822        858         900       912
  Other accrued liabilities     2,298      2,186      2,070      2,156     2,123     2,096     1,986     2,118     2,526     2,637      2,537    2,626
  Income taxes payable (receivable)     109         123         125         200     190        136          97          93     9         (14)           33       125
              10,091      9,469      9,002      9,672     10,037     9,441     9,517   10,060     11,088   11,465    11,381  11,505
                                             
Working capital      1,020      1,355      1,477         882     1,537     1,649     1,942     1,231     1,659     2,210      2,234    1,334
                                             
Investments               960      1,124      1,455      1,593         1,487     1,375     1,323     1,429         1,390     1,287      1,311    1,273
Fixed assets, net          8,305      8,297      8,166      8,293         8,090     7,723     7,470     8,173         8,304     8,646      8,778    9,618
Goodwill, other assets and intangible assets     3,614      3,632      3,530      3,577     3,544     3,353     3,280     3,576     3,640     4,733      4,726    4,962
Operating lease right-of-use assets          1,869      1,854      1,731      1,700         1,667     1,587     1,545     1,595         1,638     1,667      1,696    1,744
Funds employed        15,768    16,262    16,359    16,045       16,325   15,687   15,560   16,004       16,631   18,543    18,745  18,931
FINANCING                                      
Straight debt:                                      
  Cash and cash equivalents     (3,464)    (3,426)    (2,748)    (2,948)     (1,996)    (1,664)    (1,102)    (1,234)     (2,429)    (1,281)     (1,022)   (1,198)
  Short-term borrowings     -             -             -             -     -             -             -            8     4        150             2       511
  Long-term debt due within one year     137         117         101         455     127        105          95        654     668     1,426      1,398       819
  Long-term debt     3,935      3,941      3,908      3,538     3,501     3,408     3,325     2,847     4,500     4,159      4,135    4,175
  Current portion of operating lease liabilities     244         278         269         274     276        270        266        276     285        303         384       399
  Operating lease liabilities     1,613      1,563      1,438      1,406         1,369     1,294     1,254     1,288         1,318     1,345      1,289    1,319
                   2,465      2,473      2,968      2,725         3,277     3,413     3,838     3,839         4,346     6,102      6,186    6,025
Long-term employee benefit liabilities     733         743         716         700     686        651        617        548     563        579         564       591
Other long-term liabilities     414         482         466         376     374        390        397        461     451        448         453       475
Deferred tax liabilities, net     104         124           40           19     (51)       (111)       (138)       (179)     (218)       (242)        (210)      (437)
                   1,251      1,349      1,222      1,095         1,009        930        876        830            796        785         807       629
Shareholders' equity     12,052    12,440    12,169    12,225     12,039   11,344   10,846   11,335     11,489   11,656    11,752  12,277
                 15,768    16,262    16,359    16,045       16,325   15,687   15,560   16,004       16,631   18,543    18,745  18,931
                                                       
ASSET UTILIZATION RATIOS                                    
  Days in accounts receivable     63.4 65.1 69.1 62.3     65.4 65.0 68.8 63.9     67.1 70.1 71.4 67.8
  Days in accounts payable     70.5 72.8 77.3 74.4     73.3 70.2 73.4 75.0     73.9 75.3 76.9 78.8
  Inventory turnover - cost of sales     9.5 7.7 6.6 7.9     7.9 8.1 7.9 8.0     8.5 8.2 7.8 7.8
  Working capital turnover      39.9 26.7 21.4 41.3     25.1 22.7 19.1 31.1     25.7 19.9 19.1 31.3
  Total asset turnover      2.6 2.2 1.9 2.3     2.4 2.4 2.4 2.4     2.6 2.4 2.3 2.2
                                             
CAPITAL STRUCTURE                                    
  Straight debt     15.6% 15.2% 18.1% 17.0%     20.1% 21.8% 24.7% 24.0%     26.1% 32.9% 33.0% 31.8%
  Long-term employee benefit liabilities, other long-term                                    
    liabilities & deferred tax liabilities, net     7.9% 8.3% 7.5% 6.8%     6.2% 5.9% 5.6% 5.2%     4.8% 4.2% 4.3% 3.3%
  Shareholders' equity      76.4% 76.5% 74.4% 76.2%     73.7% 72.3% 69.7% 70.8%     69.1% 62.9% 62.7% 64.9%
              100.0% 100.0% 100.0% 100.0%     100.0% 100.0% 100.0% 100.0%     100.0% 100.0% 100.0% 100.0%
                                             
  Debt to total capitalization      33.0% 32.2% 32.0% 31.7%     30.5% 30.9% 31.3% 30.9%     37.1% 38.8% 38.0% 37.0%
                                             
ANNUALIZED RETURNS                                    
  Return on equity (Net income attributable to Magna                                    
    International Inc. / Average shareholders' equity)     20.7% 13.8% 0.4% 15.2%     12.0% -5.3% 10.4% 3.4%     7.3% 11.7% 13.5% 9.0%
  Adjusted Return on equity (Adjusted Net income attributable                                    
     to Magna International Inc. / Average shareholders' equity)     19.4% 14.2% 5.8% 13.1%     13.0% 8.7% 11.4% 9.7%     11.5% 15.2% 14.3% 12.8%
  Return on Invested Capital (Annualized after-tax operating                                    
    profits / invested capital)     16.3% 11.1% 0.9% 12.2%     9.9% -3.2% 7.9% 3.2%     5.7% 8.7% 9.8% 7.2%
  Adjusted Return on Invested Capital (Adjusted Annualized after-tax                                    
    operating profits / invested capital)     15.3% 11.4% 5.0% 10.6%     10.6% 7.0% 8.6% 7.6%     8.7% 11.0% 10.3% 9.6%

 

Q4 2023 Financial Review of Magna International Inc.Page 2 of 6 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States dollars in millions) (Unaudited)
                                               
              2021   2022   2023
Cash provided from (used for): Note   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
                               
Operating activities                                      
  Net income (loss)             622         436           17         478      1,553          379       (145)        296        127        657          217        354         417       298     1,286
  Items not involving current cash flows (i)           349         341         515         371      1,576          370        705        295        406     1,776          351        525         404       362     1,642
          (i)           971         777         532         849      3,129          749        560        591        533     2,433          568        879         821       660     2,928
  Changes in operating assets and liabilities (i)         (310)       (249)       (132)         502       (189)         (569)       (139)       (353)        723       (338)         (341)       (332)          (24)       918        221
Cash provided from operating activities             661         528         400      1,351      2,940          180        421        238     1,256     2,095          227        547         797    1,578     3,149
                                                     
Investment activities                                            
  Fixed asset additions            (212)       (277)       (334)       (549)    (1,372)         (238)       (329)       (364)       (750)    (1,681)         (424)       (502)        (630)      (944)    (2,500)
  Increase in equity method investment                -              -         (454)         (63)       (517)              -              -              -              -              -                -              -               -             -              -  
  Increase in investments, other assets and intangible assets           (104)         (93)       (101)       (105)       (403)           (64)         (80)       (125)       (186)       (455)         (101)         (96)        (176)      (189)       (562)
  Net cash (outflow) inflow from disposal of facilities 1(c), 1(f)              -              -           (41)            -           (41)              6            -              -              -              6           (25)            -            (23)           -           (48)
  Increase in public and private equity investments               (3)         (17)           (3)         (45)         (68)             (2)           (2)         (25)            -           (29)              -             (3)            (7)          (1)         (11)
  Settlement of long-term receivable from non-consolidated joint venture             50            -              -              -             50              -              -              -              -              -                -              -               -             -              -  
  Proceeds from disposition               19           20           10           32           81            23          40          41          20        124            19          44           32         27        122
  Business combinations               39         (21)            -           (31)         (13)              -              -              -             (3)           (3)              -      (1,475)             -          (29)    (1,504)
Cash used for investment activities           (211)       (388)       (923)       (761)    (2,283)         (275)       (371)       (473)       (919)    (2,038)         (531)    (2,032)        (804)   (1,136)    (4,503)
                                                     
Financing activities                                            
  Net issues (repayments) of debt           (126)         (33)         (13)             5       (167)         (328)         (31)         (10)         (22)       (391)       1,636        544        (135)      (119)     1,926
  Common Shares issued on exercise of stock options               83           50             3           10         146              4            -              1            3            8              6            -               8           6          20
  Repurchase of Common Shares           (162)         (99)           (5)       (251)       (517)         (383)       (212)       (180)           (5)       (780)             (9)           (2)             -            (2)         (13)
  Tax withholdings on vesting of equity awards             (12)            -              -             (1)         (13)           (14)           (1)            -              -           (15)             (9)           (1)             -            (1)         (11)
  Contributions to subsidiaries by non-controlling interests                -              -              -               8             8              -              5            -              -              5              -              -               -           11          11
  Dividends paid to non-controlling interests                -             (8)           (2)         (39)         (49)              -           (12)         (10)         (24)         (46)             (7)         (24)          (18)        (25)         (74)
  Dividends paid           (130)       (127)       (130)       (127)       (514)         (133)       (130)       (125)       (126)       (514)         (132)       (129)        (128)      (133)       (522)
                                                     
Cash provided from (used for) financing activities           (347)       (217)       (147)       (395)    (1,106)         (854)       (381)       (324)       (174)    (1,733)       1,485        388        (273)      (263)     1,337
Effect of exchange rate changes on cash, cash equivalents                                            
  and restricted cash equivalents             (13)           39           (8)             5           23             (3)           (1)           (3)         (31)         (38)            14         (51)           21          (3)         (19)
Net increase (decrease) in cash, cash equivalents                                      
  and restricted cash equivalents during the period               90         (38)       (678)         200       (426)         (952)       (332)       (562)        132    (1,714)       1,195    (1,148)        (259)       176         (36)
Cash, cash equivalents and restricted cash equivalents,                                      
  beginning of period          3,374      3,464      3,426      2,748      3,374       2,948     1,996     1,664     1,102     2,948       1,234     2,429      1,281    1,022     1,234
Cash, cash equivalents and restricted cash equivalents,                                            
  end of period          3,464      3,426      2,748      2,948      2,948       1,996     1,664     1,102     1,234     1,234       2,429     1,281      1,022    1,198     1,198
                                               
        (i) Certain amounts in prior periods have been reclassified to conform with current period presentation.

 

Q4 2023 Financial Review of Magna International Inc.Page 3 of 6 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
(United States dollars in millions, except per share figures) (Unaudited)
 
    This Analyst should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022.
                                               
Note 1: OTHER EXPENSE (INCOME), NET
    Other expense (income), net consists of:
              2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
                                               
    Investment revaluations, (gains) losses on sales, and impairments [a]   (33) (38) 81 (8) 2   61 50 9 101 221   24 98 (19) 98 201
    Restructuring [b]   15 44 12 18 89   - - - 22 22   118 (35) (1) 66 148
    Impairments and loss on sale of operations in Russia [c]   - - - - -   - 376 - - 376   - - 16 - 16
    Veoneer related termination fees and transaction costs [d]   - - - (100) (100)   - - - - -   - 23 - - 23
    Loss on sale of business [e]   - - 75 - 75   - - - 58 58   - - - - -
    Impairments [f]   - - 12 - 12   - - 14 12 26   - - - - -
    Gain on business combinations [g]   (40) - - - (40)   - - - - -   - - - - -
                                                    -      
              (58)             6         180         (90)           38   61        426          23        193        703   142          86            (4)       164        388
  [a] Investment revaluations, (gains) losses on sales, and impairments
    The Company revalues its public and private equity investments and certain public company warrants every quarter. The gains and losses related to this revaluation, as well as gain and losses on disposition, are primarily recorded in Corporate. In the second quarter of 2023, the Company recorded a non-cash impairment charge of $85 million on a private equity investment and related long-term receivables within Other assets in its Corporate segment.  In the fourth quarter of 2023, the Company also recorded a non-cash impairment charge of $5 million on a private equity investment in its Power & Vision segment.
     
  [b] Restructuring
    Reversal of restructuring charges:              
    During the second quarter of 2023, the Company’s Power & Vision segment reversed $39 million of charges due to a change in the restructuring plans related to a plant closure.
     
    Sale of buildings as a result of restructuring activities:
    During the second and third quarter of 2023, the Company’s Power & Vision segment recorded a $10 million and $8 million gain on the sale of a building as a result of restructuring activities, respectively.
     
    Other Restructuring:      2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
    Power & Vision               15           44             4             4           67               -             -             -          22          22          105            5             7         57        174
    Body Exteriors & Structures                 -             -             8             -             8               -             -             -             -             -            13            9              -           9          31
    Seating Systems     - - - 14 14   - - - - -   - - - - -
              15           44           12           18           89   -             -             -          22 22   118          14             7         66 205
  [c] Impairments and loss on sale of operations in Russia
    As a result of the expected lack of future cashflows and the continuing uncertainties connected with the Russian economy, during the second quarter of 2022, the Company recorded a $376 million impairment charge related to its investment in Russia. This included net asset impairments of $173 million and a $203 million reserve against the related foreign currency translation losses that were included in accumulated other comprehensive loss. The net asset impairments consisted of $163 million and $10 million in our Body Exteriors & Structures and our Seating Systems segments, respectively.

During the third quarter of 2023, the Company completed the sale of all of its investments in Russia resulting in a loss of $16 million including a net cash outflow of $23 million.
     
  [d] Veoneer related termination fees and transaction costs
    During 2023, the Company incurred $23 million of transaction costs related to the acquisition of the Veoneer Active Safety Business.

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 $100 million.
     
  [e] Loss on sale of business
    During the fourth quarter of 2022, the Company entered into an agreement to sell a European Power & Vision operation. Under the terms of the arrangement, the Company was contractually obligated to provide the buyer with up to $42 million of funding, resulting in a loss of $58 million. During the first quarter of 2023, the Company completed the sale of this operation which resulted in a net cash outflow of $25 million.

During the third quarter of 2021, the Company sold three Body Exteriors & Structures operations in Germany. Under the terms of the arrangement, the Company provided the buyer with $41 million of funding, resulting in a loss on disposal of $75 million.
     
  [f] Impairments     2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
    Body Exteriors & Structures                 -             -             8             -             8               -             -          10          12          22               -             -              -            -             -
    Power & Vision                 -             -             -             -             -               -             -            4             -            4               -             -              -            -             -
    Seating Systems     - - 4 - 4   - - - - -   - - - - -
              -             -           12             -           12   -             -          14          12 26   -             -              -            - -
  [g] Gain on business combinations
    In Seating Systems, during the first quarter of 2021, the Company recognized a $22 million gain on the change in basis of accounting for its previously held equity method investments. Also during the first quarter of 2021, in Power & Vision, substantially all of the assets of the Company's European joint venture with Ford Motor Company, Getrag Ford Transmission GmbH, were distributed to either Ford or the Company, which resulted in the Company recording a gain of $18 million.

 

Q4 2023 Financial Review of Magna International Inc.Page 4 of 6 

 

Note 2: NON-GAAP MEASURES
    The Company presents Adjusted EBIT (Earnings before interest, taxes, Other expense (income),net and amortization of acquired intangible assets); Adjusted Net Income (Net Income before Other expense (income),net, net of tax excluding significant income tax valuation allowance adjustments, and amortization of acquired intangible assets); Adjusted Diluted Earnings per Share and Adjusted EBIT as a percentage of sales; Adjusted Return on Invested Capital and Adjusted Return on Equity. Effective July 1, 2023, the Company revised its calculation of Adjusted EBIT, Adjusted diluted earnings per share and Adjusted Return on Invested Capital to exclude the amortization of acquired intangibles assets. The Company presents these financial figures because such measures are widely used by analysts and investors in evaluating the operating performance of the Company.  However, such measures do not have any standardized meaning under U.S. generally accepted accounting principles and may not be comparable to the calculation of similar measures by other companies. Adjusted EBIT, Adjusted Net Income and Adjusted diluted earnings per share presented in the tables below, including for the prior period, have been updated to reflect the revised calculation.
     
    The following table reconciles Income (loss) from operations before income taxes to Adjusted EBIT:
              2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
                                               
    Income (loss) from operations before income taxes     805         540           27         576 1,948   420         (88)        400        146 878   275        483         538       310 1,606
      Exclude:                                      
        Amortization of acquired intangible assets     12           12           12           12 48   12          12          11          11 46   12          13           32         31 88
        Other expense (income), net     (58)             6         180         (90) 38   61        426          23        193 703   142          86            (4)       164 388
        Interest expense     23           11           22           22 78   26          20          18          17 81   20          34           49         53 156
    Adjusted EBIT     782         569         241         520 2,112   519        370        452        367 1,708   449        616         615       558 2,238
                                               
    The following table reconciles Net income (loss) attributable to Magna International Inc. to Adjusted net income attributable to Magna International Inc.:
              2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
                                               
    Net income (loss) attributable to Magna International Inc.     615         424           11         464      1,514   364       (156)        289          95        592   209        339         394       271     1,213
      Exclude:                                       
        Amortization of acquired intangible assets     9 8 9 8           34   10 10 9 9          38   10 11 25 25          71
        Investment revaluations, (gains) losses on sales, and impairments   (24) (29) 64 (2)             9   48 38 7 75        168   18 95 (14) 74        173
        Restructuring     15 31 11 17           74   - - - 22          22   92 (26) (2) 60        124
        Impairments and loss on sale of operations in Russia     - - - -             -   - 361 - -        361   - - 16 -          16
        Veoneer related termination fees and transaction costs     - - - (75)         (75)   - - - -             -   - 22 - -          22
        Impairments     - - 9 -             9   - - 12 12          24   - - - -             -
        Net losses on the sale of business     - - 75 -           75   - - - 57          57   - - - -             -
        Adjustments to Deferred Tax Valuation Allowance [i]   - - - (13)         (13)   (29) - - -         (29)   - - - (47)         (47)
        Gain on business combinations     (40) - - -         (40)   - - - -             -   - - - -             -
                                      -                   -
    Adjusted net income attributable to Magna International Inc.     575         434         179         399      1,587   393        253        317        270     1,233   329        441         419       383     1,572
                                               
    The following table reconciles diluted earnings (loss) per common share to Adjusted diluted earnings (loss) per common share:
              2021   2022   2023
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
                                               
    Diluted earnings (loss) per common share      $    2.03  $    1.40  $    0.04  $    1.54  $    5.00    $   1.22  $  (0.54)  $   1.00  $   0.33  $   2.03    $   0.73       1.18        1.37  $  0.95  $   4.23
      Exclude:                                      
        Amortization of acquired intangible assets     0.03        0.04        0.03        0.02 0.11   0.04       0.03       0.03       0.03 0.13   0.04       0.04        0.09      0.09 0.25
        Investment revaluations, (gains) losses on sales, and impairments   (0.08)      (0.10)        0.21      (0.01) 0.03   0.16       0.13       0.03       0.26 0.58   0.07       0.33       (0.06)      0.25 0.60
        Restructuring     0.05        0.10        0.03        0.06 0.24   -            -              -         0.08 0.08   0.31      (0.09)             -        0.20 0.43
        Impairments and loss on sale of operations in Russia     -            -              -              -   -   -       1.24            -              -   1.24   -            -          0.06           -   0.06
        Veoneer related termination fees and transaction costs     -            -              -        (0.25) (0.25)   -            -              -              -   -   -       0.08             -             -   0.08
        Impairments     -            -          0.03            -   0.03   -            -         0.04       0.04 0.08   -            -               -             -   -
        Net losses on the sale of business     -            -          0.25            -   0.25   -            -              -         0.20 0.20   -            -               -             -   -
        Adjustments to Deferred Tax Valuation Allowance [i]   -            -              -        (0.04) (0.04)   (0.10)            -              -              -   (0.10)   -            -               -       (0.16) (0.16)
        Gain on business combinations     (0.14)            -              -              -   (0.13)   -            -              -              -   -   -            -               -             -   -
                                               
    Adjusted diluted earnings per common share       $    1.89  $    1.43  $    0.59  $    1.32  $    5.24    $   1.32  $   0.87  $   1.10  $   0.94  $   4.24    $   1.15  $   1.54  $    1.46  $  1.33  $   5.49
     
    [i] Adjustments to Deferred Tax Valuation Allowance
    The Company records quarterly adjustments to the valuation allowance against its deferred tax assets in continents like North America, Europe, Asia, and South America. The net effect of these adjustments is a reduction to income expense.

 

Q4 2023 Financial Review of Magna International Inc.Page 5 of 6 

 

Note 3: SEGMENTED INFORMATION  
     
          2021   2022   2023
          1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL
    Body Exteriors & Structures                     
      Sales   4,025 3,647 3,185 3,620 14,477   4,077 3,947 3,976 4,004 16,004   4,439 4,540 4,354 4,178 17,511
      Adjusted EBIT   329 230 100 171 830   231 194 227 200 852   272 394 358 280 1,304
      Adjusted EBIT as a percentage of sales   8.2% 6.3% 3.1% 4.7% 5.7%   5.7% 4.9% 5.7% 5.0% 5.3%   6.1% 8.7% 8.2% 6.7% 7.4%
                                           
    Power & Vision                                    
      Sales   3,156 2,881 2,501 2,804 11,342   3,046 2,888 2,911 3,016 11,861   3,323 3,462 3,745 3,775 14,305
      Adjusted EBIT   306 210 77 178 771   163 99 124 116 502   92 124 221 231 668
      Adjusted EBIT as a percentage of sales   9.7% 7.3% 3.1% 6.3% 6.8%   5.4% 3.4% 4.3% 3.8% 4.2%   2.8% 3.6% 5.9% 6.1% 4.7%
                                           
    Seating Systems                                    
      Sales   1,303 1,166 1,123 1,299 4,891   1,376 1,253 1,295 1,345 5,269   1,486 1,603 1,529 1,429 6,047
      Adjusted EBIT   56 28 22 51 157   50 3 37 14 104   37 67 70 44 218
      Adjusted EBIT as a percentage of sales   4.3% 2.4% 2.0% 3.9% 3.2%   3.6% 0.2% 2.9% 1.0% 2.0%   2.5% 4.2% 4.6% 3.1% 3.6%
                                           
    Complete Vehicles                                    
      Sales   1,850 1,490 1,255 1,511 6,106   1,275 1,403 1,213 1,330 5,221   1,626 1,526 1,185 1,201 5,538
      Adjusted EBIT   80 79 30 98 287   50 63 65 57 235   52 34 (5) 43 124
      Adjusted EBIT as a percentage of sales   4.3% 5.3% 2.4% 6.5% 4.7%   3.9% 4.5% 5.4% 4.3% 4.5%   3.2% 2.2% -0.4% 3.6% 2.2%
                                           
    Corporate and other                                    
      Intercompany eliminations   (155) (150) (145) (124) (574)   (132) (129) (127) (127) (515)   (201) (149) (125) (129) (604)
      Adjusted EBIT   11 22 12 22 67   25 11 (1) (20) 15   (4) (3) (29) (40) (76)
                                           
    Total                                    
      Sales   10,179 9,034 7,919 9,110 36,242   9,642 9,362 9,268 9,568 37,840   10,673 10,982 10,688 10,454 42,797
      Adjusted EBIT   782 569 241 520 2,112   519 370 452 367 1,708   449 616 615 558 2,238
      Adjusted EBIT as a percentage of sales   7.7% 6.3% 3.0% 5.7% 5.8%   5.4% 4.0% 4.9% 3.8% 4.5%   4.2% 5.6% 5.8% 5.3% 5.2%

 

 

Q4 2023 Financial Review of Magna International Inc. Page 6 of 6