GlobeNewswire Inc | Aug 7, 2020 05:00AM EDT

August 07, 2020

-- Light vehicle production in North America and Europe, our most significant production markets, down 70% and 59%, respectively; global light vehicle production down 42% -- Estimated COVID-19 impacts of approximately $5.5 billion on sales, $1.2 billion on both income from operations before income taxes and Adjusted EBIT -- Sales of $4.3 billion decreased 58%, diluted (loss) earnings per share of ($2.17) compared to $1.42 in the second quarter of 2019 -- Reinstated financial outlook for 2020

AURORA, Ontario, Aug. 07, 2020 (GLOBE NEWSWIRE) -- Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2020.Please clickHERE for full second quarter Financial Statements and MD&A.

THREE MONTHS ENDED SIX MONTHS ENDED JUNE JUNE 30, 30, 2020 2019 2020 2019Reported Sales $ $ 10,126 $ $ 20,717 4,293 12,950 (Loss) income from operations $ ) $ 595 $ ) $ 1,963before income taxes (789 (403 Net (loss) income attributable to Magna $ (647 ) $ 452 $ (386 ) $ 1,558International Inc. Diluted (loss) earnings per $ ) $ 1.42 $ ) $ 4.83share (2.17 (1.29 Non-GAAP Financial Measures^ (1) Adjusted EBIT $ ) $ 677 $ ) $ 1,397 (600 (197 Adjusted diluted (loss) $ ) $ 1.59 $ ) $ 3.22earnings per share (1.71 (0.83

All results are reported in millions of U.S. dollars, except per share figures,which are in U.S. dollars.

^(1) Adjusted EBIT and Adjusted diluted (loss) earnings per share areNon-GAAP financial measures that have no standardized meaning under U.S. GAAP,and as a result may not be comparable to the calculation of similar measures byother companies. A reconciliation of these Non-GAAP financial measures isincluded in the back of this press release.

Don Walker, Magnas Chief Executive Officer commented: While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world. Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production. We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.

THE IMPACT OF COVID-19

During the second quarter of 2020, our most significant production markets of North America and Europe experienced vehicle production declines compared to the second quarter of 2019 that, both in percentage and absolute volume terms, far exceeded the worst comparable quarterly declines experienced during the 2008-2009 financial crisis. These declines are largely due to our customers production suspensions and volume reductions attributable to the COVID-19 pandemic.

Based on our expectations at the beginning of the year, we estimate that reduced volumes in the quarter resulted in lost sales of approximately $5.5 billion and that Adjusted EBIT was negatively impacted by approximately $1.2 billion. For the six months ended June 30, 2020, we estimate such lost sales to be approximately $6.6 billion and that Adjusted EBIT was negatively impacted by approximately $1.45 billion. (Loss) income from operations before income taxes, net (loss) income attributable to Magna International Inc. and diluted (loss) earnings per share, each for the second quarter and six months ended June 30, 2020, were also negatively impacted by the COVID-19 related volume reductions.

THREE MONTHS ENDED JUNE 30, 2020

On a consolidated basis, we posted sales of $4.3 billion for the second quarter of 2020, a decrease of 58% from the second quarter of 2019, compared to global light vehicle production that decreased 42%, reflecting declines of 70% and 59% in North America and Europe, respectively, and an increase of 3% in China.

Adjusted EBIT decreased to $(600) million in the second quarter of 2020 compared to $677 million in the second quarter of 2019.

(Loss) income from operations before income taxes was $(789) million for the second quarter of 2020 compared to $595 million in the second quarter of 2019. Included in loss from operations before income taxes in the second quarter of 2020 were Other expense, net items totaling $168 million comprised of restructuring and impairment costs compared to $68 million in the second quarter of 2019. Excluding Other expense, net from both periods, income from operations before income taxes decreased $1.3 billion in the second quarter of 2020 compared to the second quarter of 2019.

Net (loss) income attributable to Magna International Inc. was $(647) million for the second quarter of 2020 compared to $452 million in the second quarter of 2019. Included in net loss attributable to Magna International Inc. in the second quarter of 2020 were Other expense, net items totaling $136 million after tax compared to $57 million after tax in the second quarter of 2019. Excluding Other expense, net from both periods, net income attributable to Magna International Inc. decreased $1 billion in the second quarter of 2020 compared to the second quarter of 2019.

Diluted (loss) earnings per share decreased to $(2.17) in the second quarter of 2020, compared to $1.42 in the comparable period. Adjusted diluted (loss) earnings per share decreased to $(1.71) compared to $1.59 for the second quarter of 2019.

In the second quarter of 2020, we used $1.2 billion in cash from operating activities, including $934 million for operating assets and liabilities. Investment activities for the second quarter of 2020 included $169 million in fixed asset additions, $72 million in investments, other assets and intangible assets and $2 million in private equity investments.

SIX MONTHS ENDED JUNE 30, 2020

We posted sales of $12.95 billion for the six months ended June 30, 2020, a decrease of 37% from the six months ended June 30, 2019. This is compared to global light vehicle production which decreased 33% in the first six months of 2020 compared to the first six months of 2019, reflecting declines of 40% and 39% in our most significant production markets of North America and Europe, respectively, and a decline of 23% in China.

During the six months ended June 30, 2020, loss from operations before income taxes was $403 million, Net loss attributable to Magna International Inc. was $386 million and diluted loss per share was $1.29, down $2.4 billion, $1.9 billion and $6.12, respectively, each compared to the first six months of 2019.

During the six months ended June 30, 2020, Adjusted EBIT decreased to $(197) million, and adjusted diluted (loss) earnings per share decreased to $(0.83).

During the six months ended June 30, 2020, we generated cash from operations before changes in operating assets and liabilities of $317 million and invested $910 million in operating assets and liabilities. Investment activities for the first six months of 2020 included $372million in fixed asset additions, $165 million in investments, other assets and intangible assets, and $102 million in private equity investments, primarily related to Waymo.

RETURN OF CAPITAL TO SHAREHOLDERS

During the three and six months ended June 30, 2020, we paid dividends of $116 million and $237 million, respectively. In addition, we repurchased 4.8 million shares for cancellation for $192 million in the first quarter of 2020.

Our Board of Directors declared a second quarter dividend of $0.40 per Common Share, payable on September 4, 2020 to shareholders of record as of the close of business on August 21, 2020.

Vince Galifi, Magnas Chief Financial Officer stated: The second quarter of 2020 was among the most challenging that the auto industry has ever faced, resulting in our first normalized operating loss in over a decade. Nevertheless, we took important steps operationally and financially in the quarter to further strengthen our business. Our updated 2020 financial outlook reflects our expectations of a solid recovery in earnings and cash flow in the second half of this year.

SEGMENT SUMMARY

($Millions For the three months ended June 30,unlessotherwise Sales Adjusted EBITnoted) 2020 2019 Change 2020 2019 ChangeBody Exteriors & $ 1,623 $ 4,243 $ (2,620 ) $ (315 ) $ 341 $ (656 )StructuresPower & 2,808 (1,510 ) ) 201 (427 )Vision 1,298 (226Seating 1,452 (928 ) ) 83 (167 )Systems 524 (84Complete 1,802 (869 ) 43 1 Vehicles 933 44Corporate ) (179 ) 94 ) 9 (28 )and Other (85 (19Total Reportable $ 4,293 $ 10,126 $ (5,833 ) $ (600 ) $ 677 $ (1,277 )Segments

For the three months ended June 30, Adjusted EBIT as a percentage of sales 2020 2019 ChangeBody Exteriors & (19.4 )% 8.0 % (27.4 )%StructuresPower & )% 7.2 % (24.6 )%Vision (17.4Seating )% 5.7 % (21.7 )%Systems (16.0Complete % 2.4 % 2.3 %Vehicles 4.7Consolidated )% 6.7 % (20.7 )%Average (14.0 ($Millions For the six months ended June 30,unlessotherwise Sales Adjusted EBITnoted) 2020 2019 Change 2020 2019 ChangeBody Exteriors & $ 5,299 $ 8,551 $ (3,252 ) $ (116 ) $ 704 $ (820 )StructuresPower & 5,891 (2,070 ) ) 417 (508 )Vision 3,821 (91Seating 2,885 (1,100 ) ) 177 (221 )Systems 1,785 (44Complete 3,730 (1,476 ) 94 71 23 Vehicles 2,254Corporate and ) (340 ) 131 ) 28 (68 )Other (209 (40Total Reportable $ 12,950 $ 20,717 $ (7,767 ) $ (197 ) $ 1,397 $ (1,594 )Segments

For the six months ended June 30, Adjusted EBIT as a percentage of sales 2020 2019 ChangeBody Exteriors & Structures (2.2 )% 8.2 % (10.4 )%Power & Vision (2.4 )% 7.1 % (9.5 )%Seating Systems (2.5 )% 6.1 % (8.6 )%Complete Vehicles 4.2 % 1.9 % 2.3 % Consolidated Average (1.5 )% 6.7 % (8.2 )%

For further details on our segment results, please see our Managements Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements.

2020 OUTLOOK

Light Vehicle Production (Units) North America 12.5 million Europe 15.9 million Total Sales $30.0 - $32.0 billion Adjusted EBIT Margin^(2) 2.9% - 3.3% Interest Expense, net Approximately $90 million Income Tax Rate^(3) Approximately 30% Capital Spending Approximately $1.4 billion ^(2) Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales^(3) The Income Tax Rate has been calculated using Adjusted EBIT and is basedon current tax legislation

In this 2020 outlook, we have assumed:

? 2020 light vehicle production volumes (as set out above); ? no material unannounced acquisitions or divestitures; and ? foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency as follows: - 1 Canadian dollar equals U.S. dollars 0.732 - 1 euro equals U.S. dollars 1.121

Currently there is increased uncertainty related to our outlook above as a result of elevated risks associated with consumer demand, as well as continuing COVID-19 risks to various aspects of our business and the automotive industry, as discussed in our MD&A for the second quarter of 2020, our Annual Information Form / Form 40-F dated March 27, 2020 and subsequent filings.

In our press release dated March 26, 2020, we withdrew our outlooks for 2020 and 2022. While we have reinstated our 2020 outlook with the above, we are not reinstating the outlook for any periods beyond 2020 at this time.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Adjusted EBIT

The following table reconciles net income to Adjusted EBIT: For the three months ended June 30, 2020 2019 Net (loss) income $ (652 ) $ 450 Add (deduct): Interest expense, net 21 14 Other expense, net 68 168Income taxes ) 145 (137Adjusted EBIT $ ) $ 677 (600 Adjusted EBIT as a percentage of sales (?Adjusted EBIT margin?) Adjusted EBIT as a percentage of sales is calculated in the table below: For the three months ended June 30, 2020 2019 Sales $ $ 10,126 4,293Adjusted EBIT $ ) $ 677 (600Adjusted EBIT as a percentage of sales ) 6.7 % (14.0 % Adjusted diluted earnings per share The following table reconciles net income attributable to Magna InternationalInc. to Adjusted diluted earnings per share: For the three months ended June 30, 2020 2019 Net (loss) income attributable to Magna International $ ) $ 452 Inc. (647Add (deduct): Other expense, net 68 168Tax effect on Other expense, net ) (11 ) (32Adjusted net (loss) income attributable to Magna $ ) $ 509 International Inc. (511Diluted weighted average number of Common Shares 319.5 outstanding during the period (millions): 298.4Adjusted diluted (loss) earnings per share $ ) $ 1.59 (1.71

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Adjusted EBIT

The following table reconciles net income to Adjusted EBIT: For the six months ended June 30, 2020 2019 Net (loss) Income $ ) $ 1,551 (400Add (deduct): Interest expense, net 38 45 Other expense (income), net (611 ) 168Income taxes (3 ) 412 Adjusted EBIT $ ) $ 1,397 (197 Adjusted EBIT as a percentage of sales (?Adjusted EBIT margin?) Adjusted EBIT as a percentage of sales is calculated in the table below: For the six months ended June 30, 2020 2019 Sales $ $ 20,717 12,950Adjusted EBIT $ (197 ) $ 1,397 Adjusted EBIT as a percentage of sales ) 6.7 % (1.5 % Adjusted diluted earnings per share The following table reconciles net income attributable to Magna InternationalInc. to Adjusted diluted earnings per share: For the six months ended June 30, 2020 2019 Net (loss) income attributable to Magna International $ (386 ) $ 1,558 Inc.Add (deduct): Other expense (income), net 168 (611 )Tax effect on Other expense (income), net ) 93 (32Adjusted net (loss) income attributable to Magna $ (250 ) $ 1,040 International Inc.Diluted weighted average number of Common Shares 322.9 outstanding during the period (millions): 300.3Adjusted diluted (loss) earnings per share $ ) $ 3.22 (0.83

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.

This press release together with our Managements Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements are available in the Investor Relations section of our website at www.magna.com/company/investors and filed electronically through the System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com as well as on the United States Securities and Exchange Commissions Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which can be accessed at www.sec.gov.

We will hold a conference call for interested analysts and shareholders to discuss our second quarter ended June 30, 2020 results on Friday, August 7, 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 1-800-621-6136. International callers should use 1-303-223-4363. 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 as well as our financial review summary will be available on our website Friday prior to the call.

TAGSQuarterly earnings, financial results, COVID impacts, vehicle production

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

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

OUR BUSINESS (4)We are a mobility technology company. We have over 152,000 entrepreneurial-minded employees, 346 manufacturing operations and 93 product development, engineering and sales centres in 27 countries. We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities that include body, chassis, exteriors, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting and roof systems. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA).

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

FORWARD-LOOKING STATEMENTSCertain statements in this press release constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements"). Any such forward-looking statements are intended to provide information about management's current expectations and plans and may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, strategic 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, statements relating to: the expected impact of ourcost structure reductionson our financial results; earnings and cash flow expectations; forecasts of light vehicle production in North America and Europe; expected Total sales, based on such light vehicle production; EBIT margin; Equity income; Net interest expense; Tax rate; Net income; and Capital spending.

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 any 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:

Risks Related to the AutomotiveIndustry

* economic cyclicality; * regional production volume declines, including as a result of the COVID-19 (coronavirus) pandemic; * intense competition; * potential restrictions on free trade; * trade disputes/tariffs; Warranty / Recall RisksCustomer and Supplier RelatedRisks * costs related to repair or replacement of defective products, including due to a * concentration of sales with recall; six customers; * warranty or recall costs that exceed * OEM consolidation and warranty provision or insurance coverage cooperation; limits; * shifts in market shares * product liability claims; among vehicles or vehicle segments; Acquisition Risks * shifts in consumer "take rates" for products we * inherent merger and acquisition risks; sell; * acquisition integration risk; * quarterly sales fluctuations; Other Business Risks * potential loss of any material purchase orders; * risks related to conducting business * a deterioration in the through joint ventures; financial condition of our * our ability to consistently develop and supply base, including as a commercialize innovative products or result of the COVID-19 processes; (Coronavirus) pandemic; * our changing business risk profile as a result of increased investment inManufacturing Operational Risks electrification and autonomous driving, including: higher R&D and engineering * product and new facility costs, and challenges in quoting for launch risks; profitable returns on products for which we * operational may not have significant quoting underperformance; experience; * restructuring costs; * risks of conducting business in foreign * impairment charges; markets; * labour disruptions; * fluctuations in relative currency values; * COVID-19 (Coronavirus) * tax risks; shutdowns; * reduced financial flexibility as a result * supply disruptions, of an economic shock; including as a result of * changes in credit ratings assigned to us; the COVID-19 (coronavirus) pandemic; Legal, Regulatory and Other Risks * climate change risks; * attraction/retention of * antitrust risk; skilled labour; * legal claims and/or regulatory actions against us; andIT Security/Cybersecurity Risk * changes in laws and regulations, including those related to vehicle emissions. * IT/Cybersecurity breach; * Product Cybersecurity breach;

Pricing Risks

* pricing risks between time of quote and start of production; * price concessions; * commodity costs; * declines in scrap steel prices;



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.