Magna International MGA reported fourth-quarter 2022 adjusted earnings of 91 cents per share, which slumped 30% on a year-over-year basis. The bottom line also lagged the Zacks Consensus Estimate of $1.24 a share. Lower-than-expected EBIT in Body Exteriors & Structures, Power & Vision and Seating Systems segments led to the underperformance. In the reported quarter, net sales increased 5% from the prior-year quarter to $9,568 million, surpassing the consensus mark of $9,473 million.
Adjusted EBIT of $356 million in the quarter fell 30% from the fourth quarter of 2021, largely attributable to higher net engineering costs and provisions against accounts receivable and other balances.
Magna International Inc. Price, Consensus and EPS Surprise
Magna International Inc. price-consensus-eps-surprise-chart | Magna International Inc. Quote
Segmental Performance
The Body Exteriors & Structures segment’s revenues in the reported quarter were $4,004 million, rising 11% year over year due to higher global light vehicle production. The figure, however, missed the consensus mark of $4,104 million. The segment reported an adjusted EBIT of $198 million, up 18% from the year-ago period but lagging the consensus mark of $272 million.
In the reported quarter, the Power & Vision segment revenues increased 8% to $3,016 million from the prior-year figure, topping the consensus mark of $2,935 million. The segmental EBIT of $109 million registered a 36% decrease year over year. The metric also lagged the consensus mark of $148 million.
Revenues in the Seating Systems segment increased 4% year over year to $1,345 million in the reported quarter but missed the consensus mark of $1,346 million. The segment reported an adjusted EBIT of $13 million, declining 73% from the corresponding quarter of 2021 and also lagging the consensus estimate of $35.63 million.
The Complete Vehicles segment’s revenues decreased 12% year over year to $1,330 million but surpassed the consensus mark of $1,226 million. Adjusted EBIT was down 42% from the year-ago period. The metric came in at $57 million, surpassing the Zacks Consensus Estimate of $52 million.
Financials
Magna had $1,234 million in cash and cash equivalents as of Dec 31, 2022, down from $2,948 million in 2021-end. Long-term debt, as of Dec 31, 2022, was $2,847 million, down from $3,538 million in 2021-end. In the reported quarter, cash provided from operating activities totaled $1,256 million, declining from the year-ago figure of $1,351 million.
During the quarter under review, Magna returned $131 million to shareholders ($126 million in dividends and $5 million in stock buyback). The company declared a fourth-quarter dividend of 46 cents per common share, marking a 2.2% increase from the prior pay out. The dividend will be paid on Mar 10, 2023, to shareholders on record as of the close of business on Feb 24, 2023.
Guidance
Magna expects full-year 2023 and 2025 revenues in the band of $39.6-$41.2 billion and $44.7-$47.2 billion, respectively. Adjusted EBIT margins for 2023 and 2025 are forecast in the range of 4.1-5.1% and 6.7-7.8%, respectively. Capital spending and net income attributable to Magna are expected to be $2.4 billion and between $1.1 and $1.4 billion for FY2023.
Zacks Rank & Key Picks
MGA currently has a Zacks Rank #5 (Strong Sell).
A few better-ranked players in the auto space include Wabash National WNC, Modine Manufacturing MOD and Hyliion HYLN. While WNC and MOD sport a Zacks Rank #1 (Strong Buy), HYLN carries a Zacks Rank #2 (Buy).
Wabash National is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 24%, respectively.
Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimate for MOD’s 2023 sales and earnings implies year-over-year growth of 11.43% and 43.09%, respectively.
Hyliion provides electrified powertrain solutions for Class 8 commercial vehicles. The Zacks Consensus Estimate for HYLN’s 2023 sales implies year-over-year growth of 538.07%.
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Magna International Inc. (MGA) : Free Stock Analysis Report
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