Mr. Swamy Kotagiri reports

MAGNA ANNOUNCES THIRD QUARTER 2024 RESULTS

Magna International Inc. will release its financial results for the third quarter ended Sept. 30, 2024. All dollar amounts are in U.S. dollars, except as otherwise noted.

"We continue to mitigate industry headwinds, including lower production volumes in each of our core regions. Our ongoing initiatives and results to date reinforce our conviction in our free cash flow outlook this year and beyond. As we continuously seek to optimize value creation, we are resuming share repurchases in the fourth quarter -- ahead of our prior plan," said Swamy Kotagiri, Magna's chief executive officer

Three months ended Sept. 30, 2024

The company posted sales of $10.3-billion for the third quarter of 2024, a decrease of 4 per cent from the third quarter of 2023. The lower sales largely reflects a 4-per-cent decrease in global light vehicle production, including 6 per cent lower production in each of North America and China and a 2-per-cent decline in Europe. In addition, sales were negatively impacted by the end of production of certain programs, and divestitures, net of acquisitions, partially offset by the launch of new programs and customer price increases to recover certain higher production input costs.

Adjusted EBIT (earnings before interest and taxes) decreased to $594-million in the third quarter of 2024, compared with $615-million in the third quarter of 2023. This mainly reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, and lower equity income. These were partially offset by higher net favourable commercial items, continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, lower net engineering costs, including spending related to the company's electrification and active safety businesses, and the negative impact of the UAW labour strike during the third quarter of 2023.

Income from operations before income taxes increased to $700-million for the third quarter of 2024, compared with $538-million in the third quarter of 2023, which includes other (income) expense, net (2), and amortization of acquired intangibles totalling ($160-million) and $28-million in the third quarters of 2024 and 2023, respectively. The most significant item in either period was the positive impact of recognizing $196-million of Fisker deferred revenue as the associated agreements were cancelled in the third quarter of 2024. Excluding other (income) expense, net, and amortization of acquired intangibles from both periods, income from operations before income taxes decreased $26-million in the third quarter of 2024, compared with the third quarter of 2023, largely reflecting the decrease in adjusted EBIT.

Net income attributable to Magna International was $484-million for the third quarter of 2024, compared with $394-million in the third quarter of 2023, which includes other (income) expense, net(2), after tax and amortization of acquired intangibles totalling ($115-million) and $25-million in the third quarters of 2024 and 2023, respectively. Excluding other (income) expense, net, after tax and amortization of acquired intangibles from both periods, net income attributable to Magna International decreased $50-million in the third quarter of 2024, compared with the third quarter of 2023.

Diluted earnings per share were $1.68 in the third quarter of 2024, compared with $1.37 in the comparable period. Adjusted diluted earnings per share were $1.28, down 18 cents from $1.46 for the third quarter of 2023, including 10 cents due to a higher income tax rate.

In the third quarter of 2024, the company generated cash from operations before changes in operating assets and liabilities of $785-million and used $58-million in operating assets and liabilities. Investment activities for the third quarter of 2024 included $476-million in fixed asset additions, $115-million in investments, other assets and intangible assets, and $1-million in private equity investments.

(2) Other (income) expense, net, comprises Fisker Inc. related impacts (restructuring and impairment of assembly and production assets, the impairment of Fisker warrants, and the recognition of previously deferred revenue), revaluations of certain public company warrants and equity investments, restructuring activities, and gain on business combination, during the three and nine months ended Sept. 30, 2023, and Sept. 30, 2024.

Nine months ended Sept. 30, 2024

The company posted sales of $32.2-billion for the nine months ended Sept. 30, 2024, compared with $32.3-billion for the nine months ended Sept. 30, 2023, a period in which global light vehicle production decreased 1 per cent.

Adjusted EBIT was $1.64-billion for the nine months ended Sept. 30, 2024, compared with $1.68-billion for the nine months ended Sept. 30, 2023. This reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, reduced earnings on lower assembly volumes, acquisitions, net of divestitures, during or subsequent to the first nine months of 2023, and lower equity income. These were partially offset by continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, higher net favourable commercial items and lower net engineering costs, including spending related to the company's electrification and active safety businesses.

During the nine months ended Sept. 30, 2024, income from operations before income taxes was $1.16-billion, net income attributable to Magna International was $806-million and diluted earnings per share were $2.81, decreases of $135-million, $136-million and 48 cents, respectively, each compared with the first nine months of 2023.

During the nine months ended Sept. 30, 2024, adjusted diluted earnings per share decreased 10 per cent to $3.72, compared with the first nine months of 2023.

During the nine months ended Sept. 30, 2024, the company generated cash from operations before changes in operating assets and liabilities of $2.06-billion, and invested $333-million in operating assets and liabilities. Investment activities for the first nine months of 2024 included $1.47-billion in fixed asset additions, a $410-million increase in investments, other assets and intangible assets, and $22-million in public and private equity investments.

Return of capital

During the three months ended Sept. 30, 2024, the company paid $138-million in dividends.

The board of directors declared a third quarter dividend of 47.5 cents per common share, payable on Nov. 29, 2024, to shareholders of record as of the close of business on Nov. 15, 2024.

Other matters

Subject to the approval by the Toronto Stock Exchange, the board of directors approved a new normal course issuer bid (NCIB) to purchase up to approximately 28.5 million of the company's common shares, representing approximately 10 per cent of our public float of common shares. This NCIB is expected to commence on or about Nov. 7, 2024, and will terminate one year later.

For further details on the segment results, please see the company's management's discussion and analysis of results of operations and financial position, and its interim financial statements.

2024 outlook

The company first disclose a full-year outlook annually in February, with quarterly updates. The outlook presented in an attached table is an update to the company's previous outlook in August, 2024.

The 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 news release, the 2024 outlook and the underlying assumptions may prove to be inaccurate. Accordingly, the company's actual results could differ materially from its expectations as set forth herein.

Key drivers of the company's business

The company's operating results are primarily dependent on the levels of North American, European and Chinese car and light truck production by its customers. While the company 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 the company's 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: labour disruptions; free trade arrangements and tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory frameworks; and other factors.

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 that typically impact vehicle sales levels and thus production volumes include: vehicle affordability; interest rates and/or availability of credit; fuel and energy prices; relative currency values; uncertainty as to consumer acceptance of electric vehicles; government subsidies to consumers for the purchase of low-emission and zero-emission vehicles; and other factors.

Non-GAAP (generally accepted accounting principles) financial measures reconciliation

Effective July 1, 2023, the company revised its calculations of adjusted EBIT and adjusted diluted earnings per share to exclude the amortization of acquired intangible assets. Revenue generated from acquired intangible assets is included within revenue in determining net income attributable to Magna. The company believe that excluding the amortization of acquired intangible assets from these non-GAAP measures helps management and investors in understanding the company's underlying performance, and improves comparability between the company's segmented results of operations and its peers.

The company's business (6)

Magna is more than one of the world's largest suppliers in the automotive space. The company is a mobility technology company built to innovate, with a global, entrepreneurial-minded team of over 175,000 (7) employees across 343 manufacturing operations and 107 product development, engineering and sales centres spanning 28 countries. With 65-plus years of expertise, the company's ecosystem of interconnected products, combined with its complete vehicle expertise, uniquely positions Magna to advance mobility in an expanded transportation landscape.

(6) Manufacturing operations, product development, engineering and sales centres include certain operations accounted for under the equity method.

(7) The number of employees includes over 162,000 employees at the company's wholly owned or controlled entities, and over 13,000 employees at certain operations accounted for under the equity method.

We seek Safe Harbor.