Mr. Swamy Kotagiri reports

MAGNA ANNOUNCES FIRST QUARTER 2023 RESULTS

Magna International Inc. has released financial results for the first quarter ended March 31, 2023.

Three months ended March 31, 2023

Magna posted sales of $10.7-billion for the first quarter of 2023, an increase of 11 per cent from the first quarter of 2022, which compares with a 3-per-cent increase in global light vehicle production, including 8-per-cent-higher and 7-per-cent-higher production in the company's two largest markets, North America and Europe, respectively. In addition to higher global production, Magna's sales benefited from higher volumes at its complete vehicles assembly segment, and the launch of new programs, while the net weakening of foreign currencies against the U.S. dollar negatively impacted sales.

Adjusted EBIT (earnings before interest and taxes) decreased to $437-million in the first quarter of 2023 compared with $507-million in the first quarter of 2022. The decrease mainly reflected higher net production input costs, operating inefficiencies at a facility in Europe, higher net engineering costs, including spending relating to Magna's electrification and ADAS (advanced driver assistance systems) businesses, lower net favourable commercial resolutions and higher net warranty costs. These declines were partially offset by earnings on higher sales and lower employee profit sharing and incentive compensation.

Income from operations before income taxes was $275-million for the first quarter of 2023 compared with $420-million in the first quarter of 2022, which includes other expense, net of $142-million and $61-million, respectively. Excluding other expense, net from both periods, income from operations before income taxes decreased $64-million in the first quarter of 2023 compared with the first quarter of 2022.

Net income attributable to Magna was $209-million for the first quarter of 2023 compared with $364-million in the first quarter of 2022, which includes after tax other expense, net of $110-million and $48-million, respectively, and adjustments to deferred tax valuation allowances of $29-million in the first quarter of 2022. Excluding other expense, net, after tax and deferred tax valuation allowances from both periods, net income attributable to Magna decreased $64-million in the first quarter of 2023 compared with the first quarter of 2022.

Diluted earnings per share decreased to 73 cents in the first quarter of 2023, compared with $1.22 in the first quarter of 2022, and adjusted diluted earnings per share decreased to $1.11 compared with $1.28.

In the first quarter of 2023, Magna generated cash from operations before changes in operating assets and liabilities of $568-million and used $341-million in operating assets and liabilities. Investment activities for the first quarter of 2023 included $424-million in fixed asset additions and a $101-million increase in investments, other assets and intangible assets.

Return of capital to shareholders

During the three months ended March 31, 2023, Magna paid dividends of $132-million.

Magna's board of directors declared a first quarter dividend of 46 cents per common share, payable on June 2, 2023, to shareholders of record as of the close of business on May 19, 2023.

2023 outlook

Magna discloses a full-year outlook annually in February with quarterly updates. The outlook herein is an update to the company's previous outlook in February, 2023.

Magna's 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 2023 outlook above and the underlying assumptions may prove to be inaccurate. Accordingly, Magna's actual results could differ materially from our expectations as set forth herein.

Key drivers of Magna's business

Magna's operating results are primarily dependent on the levels of North American, European and Chinese car and light truck production by the company's customers. While Magna supplies systems and components to every major original equipment manufacturer (OEM), it does not supply systems and components for every vehicle, nor is the value of its 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 Magna's content on specific vehicle production programs, are also important drivers of the company's results.

OEM production volumes are generally aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: general economic and political conditions; labour disruptions; free-trade arrangements; tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors. 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 a deterioration in consumer confidence.

About Magna International Inc.

Magna is more than one of the world's largest suppliers in the automotive space. It is a mobility technology company with a global, entrepreneurial-minded team of 171,000 employees and an organizational structure designed to innovate like a start-up. With over 65 years of expertise, and a systems approach to design, engineering and manufacturing that touches nearly every aspect of the vehicle, the company is positioned to support advancing mobility in a transforming industry. Magna's global network includes 341 manufacturing operations and 88 product development, engineering and sales centres spanning 29 countries.

Swamy Kotagiri, Magna's chief executive officer:

"Our strong first quarter operating performance reflects strong earnings on higher organic sales. More importantly, we are taking targeted actions to reduce expenses and optimize our cost structure. Our increased outlook is based on the strength of our first quarter results and the expected benefit of these targeted actions. We are highly focused on executing our strategy and remain confident in our ability to meet our long-term growth and margin outlook."

We seek Safe Harbor.