Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Magna Announces Outlook

January 16, 2020 GMT

-- Sales growth and increased EBIT Margin1 anticipated over outlook period -- Forecast free cash flow2 of approximately $5.5 billion in 2020-2022 period -- Higher EBIT Margin expected in 2020

AURORA, Ontario, Jan. 16, 2020 (GLOBE NEWSWIRE) -- Magna International Inc. (TSX: MG; NYSE: MGA) today announced its financial outlook for 2020 and 2022.

Our outlook to 2022 anticipates continued growth in total sales and improvement in our EBIT Margin, both as compared to 2019 despite our expectation of relatively stable light vehicle production levels in North America and Europe during this same time period. Improvement in EBIT Margin is expected across each of our operating segments. We anticipate cumulative free cash flow of approximately $5.5 billion over the 2020-2022 period, reflecting continued strong earnings and disciplined capital spending.

For 2020, as compared to 2019, our sales are expected to be negatively impacted by foreign currency translation, reflecting the stronger U.S. dollar, the disposition of our Fluid Pressure & Controls business in 2019, net of acquisitions, and lower expected light vehicle production in Europe. Our outlook anticipates a higher EBIT Margin in 2020 reflecting, among other factors, lower spending on ADAS and autonomy, and continued operational improvements at a number of facilities.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/08f0f417-2529-4bb4-96af-468bdb8d5559

1 Earnings Before Interest and Taxes (“EBIT”) is defined as Net Income attributable to Magna before income attributable to non-controlling interests, income taxes, and interest expense, net. EBIT Margin is the ratio of EBIT to Total Sales.2 Free cash flow represents Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets minus capital spending and investments in other assets.


2020 2022 -------------------------- --------------------- Light Vehicle Production (Units) North America 16.3 million 16.3 million Europe 20.8 million 21.6 million Segment Sales Body Exteriors & Structures $16.0 - $16.8 billion Power & Vision $10.7 - $11.3 billion Seating Systems $5.7 - $6.1 billion $17.5 - $18.5 billion Complete Vehicles $6.0 - $6.4 billion $11.5 - $12.3 billion $6.3 - $6.8 billion $5.7 - $6.4 billion Total Sales $38.0 - $40.0 billion $40.5 - $43.5 billion EBIT Margin3 6.7% - 7.0% 7.6% - 8.0% Equity Income (included in EBIT) $130 - $175 million $175 - $230 million Interest Expense Approximately $85 million Tax Rate Approximately 24.5% Net Income Attributable to Magna $1.8 - $2.0 billion Capital Spending Approximately $1.7 billion -------------------------------- -------------------------- ---------------------

3 Earnings Before Interest and Taxes (“EBIT”) is defined as Net Income attributable to Magna before income attributable to non-controlling interests, income taxes, and interest expense, net. EBIT Margin is the ratio of EBIT to Total Sales.

In this outlook we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate year end 2019 rates.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/1a9de362-9ba4-4895-a70c-22bdc0330d20


Our Board of Directors is pleased to appoint Swamy Kotagiri as President of Magna, reporting to Don Walker, Chief Executive Officer. In his new role, Mr. Kotagiri will work with Mr. Walker on driving Magna’s overall strategy including strengthening the alignment between our customer strategy, R&D initiatives and new mobility activities.

Mr. Kotagiri will continue to oversee our Power & Vision segment as well as our corporate research and development programs and related investments.

The Board is also pleased to announce that The Honourable V. Peter Harder, P.C., has rejoined the Board, following the end of his service as the Government Representative in the Senate of Canada. Mr. Harder previously served on the Board between 2012 and 2016 and brings a wealth of experience in public policy and international trade, as well as a deep understanding of Chinese political and economic matters.

OTHER MATTERSAfter almost two years of collaboration, Magna and Lyft have decided to evolve how we work together. Moving forward, we are concluding our partnership to co-develop self-driving technology. We expect to continue to collaborate in several areas related to autonomous developments, including aspects of hardware development and potential joint opportunities in software and hardware manufacturing.

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 U.S. 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.

We will hold a conference call for interested analysts and shareholders to review the details of our outlook on Thursday, January 16, 2020 at 8:00 a.m. ET. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call from North America is 1-800-920-3395. International callers should use 1-416-981-9005. 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 will be available on our website Thursday morning prior to the call.

TAGS2020 outlook, sales growth, free cash flow

INVESTOR CONTACTLouis Tonelli, Vice-President, Investor Relations louis.tonelli@magna.com, 905.726.7035

MEDIA CONTACTTracy Fuerst, Vice-President, Corporate Communications & PR tracy.fuerst@magna.com, 248.631.5396

WEBCAST CONTACTNancy Hansford, Executive Assistant, Investor Relations nancy.hansford@magna.com, 905.726.7108

OUR BUSINESS4 We are a mobility technology company. We have over 166,000 entrepreneurial-minded employees 346 manufacturing operations and 92 product development, engineering and sales centres in 28 countries. We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting and roof systems. Magna also has electronic and software capabilities across many of these areas. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For further information about Magna, visit www.magna.com.

4 Manufacturing operations, product development, engineering and sales centres and employee figures include certain equity-accounted operations.

FORWARD-LOOKING STATEMENTS We disclose “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) to provide information about management’s current expectations and plans. Such forward-looking statements may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, 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.

Forward-looking statements in this press release include, but are not limited to, 2020-2022 outlook period statements related to:

-- Forecasts of light vehicle -- EBIT margin -- Expected sales growth, EBIT production in North America -- Equity income margin growth and forecast and Europe -- Net interest expense EBIT margin improvement -- Expected Total sales, based -- Tax rate -- Cumulative free cash flow on such light vehicle -- Net income expectations production, including -- Capital spending; and -- Underlying assumptions expected split by segment -- Future returns of capital to regarding relative foreign -- Anticipated growth drivers of our shareholders, including currency rate our business through dividends or share repurchases

Our 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 such forward-looking statements, they are not a guarantee of future performance or outcomes. 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:

Other Business Risks Risks Related to the Automotive Industry -- risks related to conducting business through joint -- economic cyclicality ventures -- regional production volume -- our ability to consistently declines IT Security Risk develop and commercialize -- intense competition innovative products or -- trade disputes / tariffs -- IT/Cybersecurity breach processes Customer and Supplier Related Risks Pricing Risks -- our changing business risk profile as a result of -- concentration of sales with -- pricing risks between time increased investment in six customers of quote and start of electrification and -- shifts in market shares production autonomous driving, among vehicles or vehicle -- price concessions including: higher R&D and segments -- commodity costs engineering costs, and -- shifts in “take rates” for -- declines in scrap steel challenges in quoting for products we sell prices profitable returns on -- quarterly sales Warranty / Recall Risks products for which we may fluctuations not have significant quoting -- potential loss of any -- costs to repair or experience material purchase orders replacement of defective -- risks of conducting business -- a deterioration in the products, including due to in foreign markets financial condition of our a recall -- fluctuations in relative supply base -- warranty or recall costs currency values -- OEM consolidation that exceed warranty -- tax risks Manufacturing Operational Risks provisions or insurance -- reduced financial coverage limits flexibility as a result of -- product and new facility Acquisition Risks economic shock launch risks -- changes in credit ratings -- operational -- inherent merger and assigned to us underperformance acquisition risks Legal, Regulatory and Other Risks -- restructuring costs -- acquisition integration -- impairment charges risks -- antitrust risk -- labour disruptions -- legal claims and/or -- supply disruptions regulatory actions against -- climate change risks us -- attraction / retention of -- changes in laws and skilled labour regulations, including those related to vehicle emissions

In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forward-looking statement, and 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 in greater detail in this document under the section titled “Industry Trends and Risks” and set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings.