Magna International Inc. reported financial results for the fourth quarter and year ended Dec. 31, 2021.

Fourth Quarter 2021 Highlights

• Sales of $9.1 billion decreased 14%, compared to a 17% decrease in global light vehicle production
• Diluted earnings per share and Adjusted diluted earnings per share of $1.54 and $1.30, respectively, compared to $2.45 and $2.83 last year
• Returned $378 million to shareholders through share repurchases and dividends
• Raised quarterly cash dividend by 5% to $0.45 per share

Full Year 2021 Highlights

• Sales of $36.2 billion increased 11%, compared to global vehicle production which increased 4%
• Diluted earnings per share and Adjusted diluted earnings per share of $5.00 and $5.13, respectively, compared to $2.52 and $3.95 last year
• Returned over $1 billion to shareholders through share repurchases and dividends

Three Months Ended Dec. 31, 2021

“Sales and Adjusted EBIT came in ahead of our expectations in the fourth quarter of 2021, as vehicle production was better than forecasted. We also benefitted from lower than anticipated net warranty and engineering costs,” said Swamy Kotagiri, Magna’s chief executive officer.

Magna posted sales of $9.1 billion in the fourth quarter of 2021, a decrease of 14% from the fourth quarter of 2020. By contrast, global light vehicle production decreased 17% in the fourth quarter, reflecting decreases of 20% in North America, 28% in Europe, and 10% in China. The lower light vehicle production was driven by the semiconductor chip shortages the industry has faced throughout 2021, the company says.

Adjusted EBIT decreased to $508 million in the fourth quarter of 2021 compared to $1.1 billion in the fourth quarter of 2020. This decrease mainly reflects lower margins earned on reduced sales, labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity, freight and energy costs, and lower net favourable commercial items. These factors were partially offset by lower profit sharing and incentive compensation costs and decreased net warranty costs.

Income from operations before income taxes was $576 million in the fourth quarter of 2021 compared to $973 million in the fourth quarter of 2020. Included in income from operations before income taxes in the fourth quarter of 2021 was Other income, net of $90 million, comprised of merger agreement termination fee income and net gains on the revaluation of certain public and private equity investments, partially offset by restructuring and impairment costs. In comparison, Other expense, net was $100 million in the fourth quarter of 2020, comprised of restructuring and impairment costs and a loss on the sale of an equity-accounted investment, partially offset by net gains on the revaluation of certain private equity investments. Excluding Other (income) expense, net from both periods, income from operations before income taxes decreased $587 million in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Net income attributable to Magna International Inc. was $464 million in the fourth quarter of 2021 compared to $738 million in the fourth quarter of 2020. Included in net income attributable to Magna International Inc. in the fourth quarter of 2021 was Other income, net of $60 million after tax and Adjustments to Deferred Tax Valuation Allowances of $13 million (see “Non-GAAP Financial Measures” section included in this Press Release), compared to Other expense, net of $113 million in the fourth quarter of 2020. Excluding Other (income) expense, net and Adjustments to Deferred Tax Valuation Allowances from both periods, net income attributable to Magna International Inc. decreased $460 million in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Diluted earnings per share decreased to $1.54 in the fourth quarter of 2021 compared to $2.45 in the comparable period. Adjusted diluted earnings per share decreased to $1.30 compared to $2.83 in the fourth quarter of 2020.

In the fourth quarter of 2021, we generated $1.4 billion in cash from operating activities after changes in operating assets and liabilities. Investment activities in the fourth quarter of 2021 included $549 million in fixed asset additions, $105 million for investments, other assets and intangible assets, $94 million in acquisitions and business combinations, and $45 million in public and private equity investments.

Year Ended Dec. 31, 2021

Magna posted sales of $36.2 billion for the year ended December 31, 2021, an increase of 11% from the year ended Dec. 31, 2020, compared to global light vehicle production which increased 4%. Light vehicle production in 2021 was negatively impacted primarily by semiconductor chip shortages, while 2020 was negatively impacted primarily by the COVID-19 pandemic and related restrictions that resulted in the temporary suspension of production at substantially all OEM and supplier production facilities in the first half of 2020. In 2021, light vehicle production increased 1% in North America and declined 3% in Europe, our two largest markets, and increased 5% in China.

Adjusted EBIT increased to $2.1 billion in 2021 compared to $1.7 billion in 2020. The increase was primarily due to margins earned on higher sales, cost savings as a result of restructuring actions, lower net application engineering costs related to three upcoming ADAS program launches and decreased net warranty costs. These factors were partially offset by labour and other operational inefficiencies at our facilities as a result of unpredictable customer production schedules due to semiconductor chip shortages, higher production costs, including commodity, freight and energy costs, and higher launch costs.

During 2021, income from operations before income taxes was $1.9 billion and net income attributable to Magna International Inc. was $1.5 billion, up $942 million and $757 million, respectively, each compared to 2020.

Diluted earnings per share increased to $5.00 in 2021 compared to $2.52 in 2020. Our adjusted diluted earnings per share increased 30% to $5.13 in 2021 compared to $3.95 in 2020.

During 2021, we generated cash from operations of $2.9 billion including changes in operating assets and liabilities. Investment activities in 2021 included $1.4 billion in fixed asset additions, $403 million in investments, other assets and intangible assets, $530 million in acquisitions and business combinations, and $68 million in public and private equity investments.

The full report, as well as Magna’s Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements, are available in the Investor Relations section at www.magna.com/company/investors