Magna International Q4 Earnings Surpass Expectations, Dividend Raised

Core Insights - Magna International (MGA) reported fourth-quarter 2025 adjusted earnings of $2.18 per share, an increase from $1.69 in the same quarter last year, surpassing the Zacks Consensus Estimate of $1.81 [1] - Net sales rose 2% year over year to $10.85 billion, exceeding the Zacks Consensus Estimate of $10.48 billion [1] Segmental Performance - The Body Exteriors & Structures segment generated revenues of $4.25 billion, up 4.6% year over year, driven by higher production on ongoing and new programs, as well as foreign currency appreciation, surpassing the Zacks Consensus Estimate of $4.1 billion [2] - Adjusted EBIT for this segment increased to $465 million from $371 million year over year, exceeding the Zacks Consensus Estimate of $365.22 million due to enhanced productivity and efficiency [3] - The Power & Vision segment's revenues grew 1.5% year over year to $3.84 billion, also benefiting from higher production and foreign currency appreciation, surpassing the Zacks Consensus Estimate of $3.8 billion [4] - However, adjusted EBIT for the Power & Vision segment fell from $235 million to $166 million, missing the Zacks Consensus Estimate of $269.2 million due to an unfavorable product mix and increased warranty and production costs [5] - Revenues from the Seating Systems segment rose 8.1% year over year to $1.63 billion, exceeding the Zacks Consensus Estimate of $1.48 billion, driven by new program launches and currency strength [5] - Adjusted EBIT for the Seating Systems segment increased to $136 million from $67 million year over year, surpassing the Zacks Consensus Estimate of $89 million due to productivity improvements and lower warranty costs [6] - The Complete Vehicles segment saw revenues decrease by 10.1% year over year to $1.26 billion, attributed to lower engineering revenues and the end of production for certain models, but still outpacing the Zacks Consensus Estimate of $1.24 billion [7] - Adjusted EBIT for the Complete Vehicles segment decreased to $50 million from $56 million year over year, exceeding the Zacks Consensus Estimate of $39.62 million despite lower income from engineering sales [8] Financial Overview - As of December 31, 2025, Magna had $1.61 billion in cash and cash equivalents, up from $1.25 billion a year earlier, while long-term debt increased to $4.69 billion from $4.13 billion [9] - Cash provided from operating activities totaled $1.98 billion, an increase from $1.91 billion year over year [9] - The company raised its quarterly dividend by 2% to 49.50 cents per common share, payable on March 13, 2026, to shareholders of record as of February 27, 2026 [10] 2026 Guidance - Magna expects 2026 revenues to be between $41.9 billion and $43.5 billion, compared to $42.01 billion in 2025, with an adjusted EBIT margin projected between 6% and 6.6% [12] - Adjusted diluted EPS is anticipated to be in the range of $6.25 to $7.25, up from $5.73 reported in 2025, with capital expenditures guided between $1.5 billion and $1.6 billion [12]