Magna(US:MGA)2024-02-23 12:41Financial Performance - Sales increased to $42,797 million in 2023, up from $37,840 million in 2022, representing a 13.1% growth[20] - Net income attributable to Magna International Inc. rose to $1,213 million in 2023, compared to $592 million in 2022, a 104.9% increase[20] - Earnings per share (EPS) for 2023 were $4.24 (basic) and $4.23 (diluted), up from $2.04 (basic) and $2.03 (diluted) in 2022[20] - Comprehensive income attributable to Magna International Inc. was $1,430 million in 2023, up from $369 million in 2022[21] - Net income for 2023 increased to $1,286 million, up from $641 million in 2022, reflecting a significant growth in profitability[23] - Adjusted EBIT for 2023 rose to $2.238 billion, compared to $1.708 billion in 2022, indicating improved profitability[168] - Total sales for 2023 increased to $42.797 billion, up from $37.840 billion in 2022, reflecting growth across all segments[168] - Basic earnings per Common Share in 2023 were $4.24, up from $2.04 in 2022[83] Assets and Liabilities - Total assets grew to $32,255 million in 2023, up from $27,789 million in 2022, a 16.1% increase[22] - Intangible assets, net increased to $876 million in 2023, compared to $452 million in 2022, primarily due to the Veoneer AS acquisition[22] - Goodwill rose to $2,767 million in 2023, up from $2,031 million in 2022, reflecting the Veoneer AS business combination[22] - Long-term debt increased to $4,175 million in 2023, up from $2,847 million in 2022, a 46.6% rise[22] - Retained earnings grew to $9,303 million in 2023, compared to $8,639 million in 2022[22] - Total equity increased to $12,277 million in 2023 from $11,335 million in 2022, driven by higher net income and other comprehensive income[24] - Financial assets totaled $9,253 million in 2023, with cash and cash equivalents at $1,198 million and accounts receivable at $7,881 million[147] - Financial liabilities increased to $13,347 million in 2023 from $10,508 million in 2022, primarily due to a rise in long-term debt to $4,994 million from $3,501 million[147] - Net assets increased to $19.007 billion in 2023, up from $16.083 billion in 2022[170] Acquisitions and Investments - Veoneer AS acquisition contributed 4% of total assets and 2% of sales to the consolidated financial statements as of December 31, 2023[15] - Acquisitions in 2023 amounted to $1,504 million, a substantial increase from $3 million in 2022, highlighting aggressive expansion efforts[23] - Acquisition of Veoneer Active Safety Business for $1,438 million, with a net cash outflow of $1,475 million[88][89] - Investment in Yulu Mobility and establishment of Magna Yuma with a cash contribution of $52 million for a 51% controlling interest[91][92] - Transaction costs related to the acquisition of Veoneer Active Safety Business were $23 million in 2023[77] Cash Flow and Operational Efficiency - Cash provided from operating activities rose to $3,149 million in 2023, compared to $2,095 million in 2022, indicating improved operational efficiency[23] - Fixed asset additions in 2023 totaled $2,500 million, up from $1,681 million in 2022, reflecting increased investment in infrastructure[23] - Dividends paid in 2023 were $522 million, slightly higher than $514 million in 2022, maintaining a stable return to shareholders[23] - Cash and cash equivalents decreased to $1,198 million in 2023 from $1,234 million in 2022[85] - Fixed assets increased to $22,428 million in 2023 from $20,179 million in 2022, with construction in progress expenditures of $2.6 billion[99] - Fixed asset additions totaled $2.500 billion in 2023, with Body Exteriors & Structures accounting for $1.638 billion[168] Segment Performance - Body Exteriors & Structures segment led with $17.511 billion in total sales and $1.304 billion in Adjusted EBIT for 2023[168] - Power & Vision segment reported $14.305 billion in total sales and $668 million in Adjusted EBIT for 2023[168] - General Motors remained the largest customer, contributing $6.162 billion in external revenues for 2023, up from $5.903 billion in 2022[170] - North America accounted for $20.722 billion in external sales in 2023, with the United States contributing $10.855 billion[171] - Europe's external sales reached $16.217 billion in 2023, with Austria leading at $6.926 billion[171] - Asia Pacific external sales grew to $5.316 billion in 2023, with China contributing $4.843 billion[171] Taxes and Deferred Tax Assets - Effective income tax rate decreased to 19.9% in 2023 from 27.0% in 2022, primarily due to research and development tax credits and foreign rate differentials[101] - Foreign income before taxes increased significantly to $1,790 million in 2023 from $935 million in 2022[102] - Current income tax provision rose to $581 million in 2023, with foreign taxes accounting for $557 million of the total[103] - Deferred tax assets increased to $1,265 million in 2023, with tax benefit of loss carryforwards contributing $892 million[104] - Unrecognized tax benefits increased to $220 million in 2023, with $188 million potentially affecting the effective tax rate if recognized[110] Intangible Assets and Goodwill - Intangible assets grew to $1,748 million in 2023, with patents and technology showing the largest increase to $613 million[111] - Goodwill balance increased to $2,767 million in 2023, driven by acquisitions of $670 million in the Power & Vision segment[100] Debt and Financing - Long-term debt increased to $4.175 billion in 2023 from $2.847 billion in 2022, with significant issuances including $300 million Senior Notes due 2026 at 5.980% and $500 million Senior Notes due 2033 at 5.500%[116] - Future principal repayments on long-term debt are estimated to be $819 million in 2024, $693 million in 2025, and $2.125 billion thereafter[117] - Interest expense, net increased to $156 million in 2023 from $81 million in 2022, with interest paid in cash rising to $242 million from $128 million[118] - The company has a $800 million syndicated revolving credit facility extended to June 24, 2024, with no borrowings as of December 31, 2023[114] - Commercial paper programs outstanding totaled $509 million in 2023, with weighted average interest rates of 5.57% for U.S. notes and 4.02% for Euro notes[115] Employee Benefits and Liabilities - Long-term employee benefit liabilities increased to $591 million in 2023 from $548 million in 2022, driven by termination and long-term service arrangements[122] - Defined benefit pension plans showed a net liability of $84 million in 2023, with a projected benefit obligation of $511 million and plan assets at fair value of $427 million[125] - The asset allocation for defined benefit pension plans in 2023 was 67% fixed income securities, 28% equity securities, and 5% cash and cash equivalents[126] - Termination and long-term service arrangements resulted in a net liability of $445 million in 2023, with a projected benefit obligation of $445 million[131] - Retirement medical benefit obligations decreased to 4.8% in 2023 from 5.1% in 2022, with net periodic benefit cost increasing to 5.1% from 3.1%[133] - Projected benefit obligation for retirement medical benefits plans remained stable at $21 million in both 2023 and 2022[133] - Expected employer contributions for 2024 total $31 million, with $13 million for defined benefit pension plans, $17 million for long service arrangements, and $1 million for retirement medical benefits plans[134] - Total expected benefit payments from 2024 to 2028 amount to $259 million, with $45 million in 2024, $46 million in 2025, $50 million in 2026, $55 million in 2027, and $63 million in 2028[134] Risks and Contingencies - The company's global operations expose it to foreign exchange risks, with assets and liabilities translated at year-end exchange rates[31] - Magna's investments in private and publicly traded companies are subject to impairment reviews, with fair value determined using observable price changes[38] - Credit risk exposure from newer electric vehicle-focused customers due to their short operating histories and limited financial resources[157] - Foreign exchange risk managed through hedging programs using foreign exchange forward contracts[158] - Interest rate risk exposure on Term Loan due to variable interest rates, but not on Senior Notes with fixed rates[160] - Potential liability for product recalls: up to $352 million, with customer discretion to debit up to 50% of costs[167] Other Financial Metrics - Total tooling and engineering sales for the year ended December 31, 2023 were $785 million, compared to $731 million in 2022[64] - Research and development costs charged to expense, net of reimbursements, were $862 million in 2023, up from $649 million in 2022[69] - Unbilled accounts receivable balance as of December 31, 2023 was $765 million, compared to $571 million in 2022[66] - Contract liability balance as of December 31, 2023 was $570 million, up from $347 million in 2022[67] - The Company recognized $87 million of previously recorded contract liabilities into revenue during 2023, compared to $130 million in 2022[67] - Other expense, net for 2023 was $388 million, including $201 million in investment-related expenses and $148 million in restructuring costs[74] - Impairments and loss on sale of operations in Russia amounted to $16 million in 2023, compared to $376 million in 2022[74] - Net loss attributable to Magna in 2023 was $173 million, compared to $168 million in 2022[75] - Restructuring charges in 2023 were $117 million in the Power & Vision segment and $31 million in the Body Exteriors & Structures segment[76] - Loss on sale of operations in Russia in 2023 was $16 million, with a net cash outflow of $23 million[78] - Inventories increased to $4,606 million in 2023 from $4,180 million in 2022[94] - Warranty accruals increased to $270 million in 2023, with $85 million in new expenses and $91 million in settlements[113] - Long-term liabilities increased to $475 million in 2023 from $461 million in 2022, driven by a rise in long-term income taxes payable to $167 million from $136 million[135] - The company authorized a Normal Course Issuer Bid to repurchase up to 0.3 million common shares, representing approximately 0.11% of the public float[138] - Accumulated other comprehensive loss improved to $898 million in 2023 from $1,114 million in 2022, with a net unrealized gain of $183 million on translation of net investment in foreign operations[142] - Foreign exchange forward contracts for 2024 include commitments to buy $18 million in Canadian dollars and sell $397 million in U.S. dollars, with weighted average rates of 1.313 and 0.779, respectively[144] - Derivative foreign currency contracts at gross fair value: Assets $82 million, Liabilities $(20) million as of December 31, 2023[148] - Supplier financing program outstanding amount: $132 million as of December 31, 2023[150] - Senior Notes net book value: $4.5 billion, estimated fair value: $4.4 billion as of December 31, 2023[154] - Sales to the six largest customers represented 76% of total sales in 2023, down from 79% in 2022[157] - Balance sheet exposure related to newer electric vehicle-focused customers: approximately $600 million, majority related to Fisker[157] - Adjusted EBIT calculation revised to exclude amortization of acquired intangible assets for better comparability[166]