Magna(MGA) - 2024 Q3 - Quarterly Report

Global Light Vehicle Production and Sales Impact - Global light vehicle production decreased by 4% in Q3 2024 compared to Q3 2023, with North America and China both down 6%, and Europe down 2%[4] - Total sales decreased by 4% to $10.28 billion in Q3 2024, primarily due to lower global light vehicle production and the end of certain programs[19] Earnings and Profitability - Diluted earnings per share increased to$1.68 in Q3 2024, up from $1.37 in Q3 2023, largely due to$196 million in Other income from deferred revenue related to Fisker warrants[4] - Adjusted diluted earnings per share decreased to $1.28 in Q3 2024 from$1.46 in Q3 2023, reflecting lower sales, higher production input costs, and a higher income tax rate[4] - Net income attributable to Magna International Inc. increased by $90 million to$484 million in Q3 2024 compared to $394 million in Q3 2023, driven by higher income from operations[41] - Net income for the third quarter of 2024 was$508 million, compared to $417 million in the same period of 2023, representing a 21.8$508 million, up 21.8% from $417 million in the same period in 2023[120] - Earnings per share (EPS) for the three months ended September 2024 were$1.68, compared to $1.37 in the same period in 2023, an increase of 22.6$862 million, compared to $988 million in the same period of 2023[185] Cash Flow and Financial Position - Cash from operating activities decreased by$70 million to $727 million in Q3 2024[4] - Cash provided from operating activities decreased by$70 million in Q3 2024 compared to Q3 2023, primarily due to a $182 million decrease in cash received from customers[72] - Cash used for investing activities in Q3 2024 was$328 million lower than Q3 2023, driven by a $154 million decrease in cash used for fixed assets[74] - Cash resources increased by$0.1 billion to $1.1 billion in Q3 2024, supported by operating activities[79] - Cash and cash equivalents as of September 30, 2024, were$1,061 million, a decrease of 11.4% from $1,198 million as of December 31, 2023[123] - Cash provided from operating activities for the nine months ended September 30, 2024, was$1,724 million, up from $1,571 million in the same period in 2023[125] - Cash and cash equivalents at the end of September 30, 2024, were$1,061 million, up from $1,022 million at the end of September 30, 2023[125] - Cash and cash equivalents decreased to$1,061 million as of September 30, 2024, from $1,198 million at the end of 2023[146] - Cash and cash equivalents decreased to$1,061 million as of September 30, 2024, from $1,198 million at the end of 2023[162] Fisker-Related Impacts - Magna recognized$196 million in Other income related to deferred revenue from Fisker warrants after the termination of the Fisker Ocean SUV manufacturing agreement[4] - Magna faces potential exposure of approximately $50 million related to contractual obligations and cancellation claims from suppliers due to the termination of Fisker Ocean SUV production[12] - Impairment charges related to Fisker assets totaled$287 million for the nine months ended September 30, 2024, including $261 million in Q1 2024 and$26 million in Q2 and Q3 2024[30] - The company recognized $196 million of previously deferred revenue related to Fisker warrants in Q3 2024 due to the termination of the manufacturing agreement[134][139] - Restructuring charges in the Complete Vehicles segment amounted to$22 million in Q1 2024 related to Fisker assembly operations[140] - The company recorded a $33 million impairment charge on Fisker warrants in Q1 2024, reducing their value to nil[138] - Fisker-related impairment charges totaled$287 million for the nine months ended September 30, 2024, including $261 million in Q1,$19 million in Q2, and 7 million in Q3[135] Segment Performance - Sales for Body Exteriors & Structures decreased by 7% (316 million) to 4.04 billion in Q3 2024, primarily due to the end of production of certain programs and divestitures[51][52] - Power & Vision segment sales increased by 2% (92 million) to 3.84 billion in Q3 2024, driven by new program launches and customer price increases[57][58] - Adjusted EBIT for Power & Vision increased by 26% (58 million) to $279 million in Q3 2024, with Adjusted EBIT as a percentage of sales rising to 7.3$150 million) to $1.38 billion in Q3 2024, primarily due to lower production on certain programs and the end of production of others[61][62] - Complete Vehicles assembly volumes decreased by 32$26 million) to $1.16 billion[65][66] - Adjusted EBIT for Complete Vehicles improved to$27 million in Q3 2024 from a loss of $5 million in Q3 2023, with Adjusted EBIT as a percentage of sales increasing to 2.3$36 million in Q3 2024, a 7 million decrease from Q3 2023, primarily due to higher foreign exchange losses[68][69] - Sales for the Body Exteriors & Structures segment decreased by 3% (401 million) to 12.93 billion for the nine months ended September 30, 2024[82] - Adjusted EBIT for the Body Exteriors & Structures segment decreased by 112 million to $912 million, with Adjusted EBIT as a percentage of sales dropping to 7.1$1.08 billion) to 11.61 billion for the nine months ended September 30, 2024[87] - Adjusted EBIT for the Power & Vision segment increased by 32% (138 million) to $575 million, with Adjusted EBIT as a percentage of sales rising to 5.0$329 million) to 4.29 billion for the nine months ended September 30, 2024[90] - Adjusted EBIT for Power & Vision increased by 138 million to $575 million, with Adjusted EBIT as a percentage of sales rising to 5.0$329 million to $4.29 billion, primarily due to the end of production of certain programs and lower production on certain programs[93] - Complete Vehicle Assembly Volumes decreased by 33$553 million to $3.78 billion[96] - Adjusted EBIT for Complete Vehicles decreased by$7 million to $74 million, while Adjusted EBIT as a percentage of sales increased to 2.0$77 million, a 41 million decrease primarily due to foreign exchange losses and increased investments in research and development[99] - Total sales for the Body Exteriors & Structures segment in Q3 2024 were 4,038 million, with Adjusted EBIT of 273 million[181] - Power & Vision segment reported total sales of 3,837 million and Adjusted EBIT of $279 million in Q3 2024[181] - Seating Systems segment generated$1,379 million in total sales and $51 million in Adjusted EBIT for Q3 2024[181] - Complete Vehicles segment had total sales of$1,159 million and Adjusted EBIT of 27 million in Q3 2024[181] - Corporate & Other segment reported a negative Adjusted EBIT of 36 million in Q3 2024[181] Costs and Expenses - Cost of goods sold decreased by $436 million to$8.83 billion in Q3 2024, primarily due to lower material, direct labor, and overhead costs associated with reduced production sales[21] - Depreciation increased by $26 million to$384 million in Q3 2024 compared to $358 million in Q3 2023, driven by increased capital deployment at new and existing facilities[23] - Amortization of acquired intangible assets decreased by$4 million to $28 million in Q3 2024 compared to$32 million in Q3 2023[24] - SG&A expense decreased by $4 million to$487 million in Q3 2024 compared to $491 million in Q3 2023, primarily due to lower legal fees and provisions against accounts receivable[25] - Net interest expense increased by$5 million to $54 million in Q3 2024 compared to$49 million in Q3 2023, driven by higher short-term borrowing and Senior Notes issued at higher interest rates[26] - Equity income decreased by $27 million to$13 million in Q3 2024 compared to $40 million in Q3 2023, primarily due to reduced earnings from commercial items and lower sales at equity-accounted entities[27] - Adjusted EBIT as a percentage of sales remained stable at 5.8$1,134 million for the nine months ended September 30, 2024, compared to $1,064 million in the same period of 2023[147] - The company incurred$23 million in transaction costs related to the acquisition of the Veoneer Active Safety Business in 2023[145] Investments and Capital Allocation - Magna paid dividends of $138 million in Q3 2024 and approved a new Normal Course Issuer Bid to purchase up to 28.5 million Common Shares, representing approximately 10$1.57 billion to $19.06 billion, primarily due to investments in fixed assets and acquisitions[103] - The company approved a new normal course issuer bid to purchase up to 28.5 million Common Shares, representing approximately 10$5 million during the nine months ended September 30, 2024[158] - Dividends paid for the three months ended September 30, 2024, were $138 million, compared to$128 million in the same period in 2023[127] Legal and Contingent Liabilities - The company may be contingently liable for litigation, legal and/or regulatory actions and proceedings and other claims[113] - The company is contesting a customer's claim for $352 million related to two product recalls, with potential liability capped at 50$162 million to $700 million in Q3 2024 compared to$538 million in Q3 2023, driven by higher sales and lower costs[38] - Adjusted EBIT for the nine months ended September 30, 2024, was $1.64 billion, compared to$1.68 billion for the same period in 2023[104] - Adjusted diluted earnings per share for the nine months ended September 30, 2024, was $3.72, compared to$4.15 for the same period in 2023[106] - Adjusted After-tax operating profits for the nine months ended September 30, 2024, were $1,246 million, compared to$1,316 million in the same period in 2023[108] - Total Assets as of September 30, 2024, were $32,790 million, compared to$31,675 million as of September 30, 2023[109] - Invested Capital as of September 30, 2024, was $19,530 million, compared to$18,745 million as of September 30, 2023[109] - Adjusted Return on Invested Capital for the nine months ended September 30, 2024, was 8.7%, compared to 10.0% in the same period in 2023[110] - Comprehensive income for the three months ended September 2024 was $812 million, up 267.4$221 million in the same period in 2023[122] - Accounts receivable as of September 30, 2024, were $8,377 million, an increase of 6.3$7,881 million as of December 31, 2023[123] - Inventories as of September 30, 2024, were $4,592 million, a slight decrease of 0.3$4,606 million as of December 31, 2023[123] - Total assets as of September 30, 2024, were $32,790 million, an increase of 1.7$32,255 million as of December 31, 2023[123] - Total liabilities as of September 30, 2024, were $20,103 million, an increase of 0.6$19,978 million as of December 31, 2023[123] - Shareholders' equity as of September 30, 2024, was $12,687 million, an increase of 3.3$12,277 million as of December 31, 2023[123] - Fixed asset additions for the nine months ended September 30, 2024, were $1,469 million, compared to$1,556 million in the same period in 2023[125] - Acquisitions for the nine months ended September 30, 2024, totaled $86 million, significantly lower than$1,475 million in the same period in 2023[125] - Total equity as of September 30, 2024, was $12,687 million, up from$12,010 million at June 30, 2024[127] - Other comprehensive income for the three months ended September 30, 2024, was $304 million, compared to a loss of$196 million in the same period in 2023[127][128] - Stock-based compensation expense for the three months ended September 30, 2024, was $13 million, compared to$12 million in the same period in 2023[127][128] - A bargain purchase gain of 9 million was recorded in Q2 2024 from the acquisition of a business in the Body Exteriors & Structures segment[143] - The company completed the sale of its Russian investments in Q3 2023, resulting in a 16 million loss[144] - Accounts receivable decreased to $11 million for the three months ended September 30, 2024, compared to$35 million in the same period in 2023[148] - Inventories decreased to $68 million for the three months ended September 30, 2024, compared to$160 million in the same period in 2023[148] - The company disposed of its Body Exteriors & Structures operations in India for proceeds of $78 million in cash and$14 million in a convertible note during Q3 2024[149] - Raw materials and supplies inventory decreased to $1,822 million as of September 30, 2024, compared to$1,861 million as of December 31, 2023[150] - Equity method investments decreased to $889 million as of September 30, 2024, compared to$987 million as of December 31, 2023[151] - Preproduction costs related to long-term supply agreements decreased to $739 million as of September 30, 2024, compared to$835 million as of December 31, 2023[152] - Warranty accruals increased to $305 million as of September 30, 2024, compared to$270 million as of January 1, 2024[153] - Short-term borrowings under the U.S. commercial paper program increased to $827 million as of September 30, 2024, compared to$299 million as of December 31, 2023[154] - The company extended the maturity date of its $800 million 364-day syndicated revolving credit facility to June 24, 2025[155] - Net unrealized gain (loss) for the quarter ending September 30, 2024, was$5 million, compared to a loss of $13 million in the same period in 2023[161] - The company's supplier financing program had outstanding amounts of$113 million as of September 30, 2024, down from $132 million at the end of 2023[163] - The net book value of the company's Senior Notes was$4.5 billion, with an estimated fair value of $4.6 billion as of September