CA - Magna International Inc. (MGA) Q1 2024 Earnings Call Transcript

2024-05-03 11:10:20 ET

Magna International Inc. (MGA)

Q1 2024 Earnings Conference Call

May 03, 2024 8:00 AM ET

Company Participants

Louis Tonelli – Vice President-Investor Relations

Swamy Kotagiri – Chief Executive Officer

Pat McCann – Executive Vice-President and Chief Financial Officer

Conference Call Participants

John Murphy – Bank of America

Tamy Chen – BMO Capital Markets

Mark Delaney – Goldman Sachs

Itay Michaeli – Citi

Joseph Spak – UBS Securities

Dan Levy – Barclays

Krista Friesen – CIBC

Colin Langan – Wells Fargo

Michael Glen – Raymond James

Presentation

Operator

Thank you for standing by, and welcome to the Magna International First Quarter 2024 Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Finally, a reminder that this conference is being recorded.

I would now like to turn the conference over to Louis Tonelli, Vice President of Investor Relations. Please go ahead.

Louis Tonelli

Thank you, operator. Hello, everyone, and welcome to our conference call covering our first quarter 2024. Joining me today are Swamy Kotagiri and Pat McCann. Yesterday, our Board of Directors met and approved our financial results for the first quarter of 2024. We issued a press release this morning outlining our results. You’ll find the press release, today’s conference call webcast, the slide presentation to go along with the call and our updated quarterly financial review all in the Investor Relations section of our website at magna.com.

Before we get started, just as a reminder, the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions and uncertainties, which may cause the company’s actual or future results and performance to be materially different from those expressed or implied in these statements. Please refer to today’s press release for a complete description of our safe harbor disclaimer. Please also refer to our reminder slide included in our presentation that relates to our commentary today.

With that, I’ll pass it over to Swamy.

Swamy Kotagiri

Thank you, Louis. Good morning, everyone. I appreciate you joining our call today. Let’s jump right in. There are some notable takeaways from the quarter that I would like to highlight before getting into some of the details. We are pleased that our Q1 results for sales and earnings, excluding fiscal impairments, came in ahead of our expectations. This was in part due to our continued operational excellence activities, which are on track to collectively contribute about 75 basis points to margin expansion over the next two years.

We are maintaining our adjusted EBIT margin outlook for 2024 despite the negative impact of assuming no additional Fisker Ocean production and lower sales on program delays and mix. Our operational excellence activities, continuing efforts to contain costs and commercial recoveries are all expected to contribute to this. And we issued $400 million of senior notes in Q1 to refinance debt coming due this quarter. We expect to be back into our target leverage range during 2025. So far this year, we have experienced more stable production schedules relative to what we experienced in recent years. This is contributing to improved operating results. We anticipate a relatively flat vehicle production environment over our outlook period, particularly in our key markets of North America and Europe....

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