Magna International Inc. (MGA) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 5, 2023 8:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Q1 2023 Results Call. [Operator Instructions]. As a reminder, today's call is being recorded Friday, May 5, 2023.

Now I would like to turn the conference over now to Louis Tonelli, VP, Investor Relations. Please go ahead.

Louis Tonelli

Thanks, Tommy. Hello, everyone, and welcome to our conference call covering our first quarter 2023. 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 '23. 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 and 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 the reminder slide included in our presentation that relates to our commentary today.

And with that, I'll pass the call over to Swamy.

Swamy Kotagiri

Thank you, Louis, and good morning, everyone. I appreciate you joining our call today, and let me jump right in. There are some notable takeaways to highlight before getting into some of the details. Organic sales grew by 15%, outperforming weighted production by 8% driven by growth across our portfolio. Our strong Q1 operating performance reflects strong earnings on higher organic sales. We are raising the lower end of our adjusted EBIT outlook by 60 basis points based on the strength of these results and targeted actions to reduce expenses and optimize our cost structure.

We are highly focused on executing our strategy and remain confident in our ability to meet our long-term growth and margin outlook. Given our sales growth of about $8 billion in the next 3 years, particularly on new program launches, we are investing in the business and expect CapEx to sales ratio to normalize by 2025. Our CapEx outlook is unchanged at for 2023. In the quarter, we issued 1.6 billion of debt to finance our pending acquisition of Veoneer Active Safety and we plan to be back in our target leverage range by the end of 2024.