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 | |||||||
, 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, net | Approximately | ||
| Income Tax Rate(2) | Approximately 21% | ||
| Net Income attributable to Magna(3) | - | ||
| Capital Spending | Approximately | ||
| 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 sales | 6.1 | % | 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 sales | 3.8 | % | 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 sales | 6.5 | % | 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 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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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
| 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 , 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.
Source: Magna International Inc.