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Revenue: $10.6 billion, down 3% year-over-year.
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Adjusted EBIT: $583 million, up 1% year-over-year.
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EBIT Margin: 5.5%, up 20 basis points year-over-year.
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Adjusted Diluted EPS: $1.44, up 7% year-over-year.
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Free Cash Flow: $301 million, up $178 million year-over-year.
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Dividends Returned to Shareholders: $137 million in Q2.
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Adjusted Effective Income Tax Rate: 20.5%.
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Net Income: $407 million, $18 million higher than Q2 2024.
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Liquidity: Over $5 billion, including about $1.5 billion in cash.
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Adjusted Debt to Adjusted EBITDA Ratio: 1.87.
Release Date: August 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Magna International Inc (NYSE:MGA) reported strong Q2 2025 results with adjusted EBIT up 1% and adjusted diluted EPS increasing by 7%.
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The company improved its free cash flow by $178 million year-over-year, reflecting strong financial management.
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Magna International Inc (NYSE:MGA) raised the low end of its adjusted EBIT margin range, indicating confidence in its cost-saving initiatives and operational excellence.
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The company successfully reduced its estimated annualized tariff exposure from $250 million to $200 million, demonstrating effective risk management.
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Magna International Inc (NYSE:MGA) received prestigious industry awards, including the J.D. Power Platinum Plant Quality Award and the Volkswagen Group Award, highlighting its commitment to quality and innovation.
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Despite strong financial results, Magna International Inc (NYSE:MGA) faced lower production in its two largest markets, North America and Europe, impacting year-over-year sales.
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The company experienced a 3% decline in consolidated sales compared to Q2 2024, partly due to lower production volumes and negative production mix.
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Tariffs had a 40 basis point negative impact on the company’s EBIT margin, with some costs not yet recovered from customers.
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Magna International Inc (NYSE:MGA) is navigating a challenging industry environment with ongoing uncertainty due to tariffs and trade dynamics.
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The company anticipates a softer H2 2025 compared to H1, with potential impacts from lower North American production volumes and macroeconomic uncertainties.
Q: Were there any one-time items affecting the BES segment’s strong margin results, or was it mainly due to a better program mix? A: Patrick McCann, CFO: The strong margin result was primarily driven by operational excellence and a positive mix on a year-over-year basis. There was a minor improvement due to a supplier issue in Mexico last year, but it was not significant.
Q: Are you expecting to receive tariff recoveries by Q4, and have you established a formal mechanism with OEM customers for timely recoveries? A: Seetarama Kotagiri, CEO: We expect a cadence of recovery, and while some tariffs will still come in Q4, we feel comfortable with our outlook. We have signed agreements with some customers and are working on a framework with others to avoid lump sum payments.
Q: How do you view the impact of reshoring discussions with OEMs on your North American assets? A: Seetarama Kotagiri, CEO: We have a footprint in all three regions (US, Canada, Mexico), which positions us well for any rebalancing based on USMCA compliance. Increased local production due to tariffs could be an opportunity for Magna.
Q: Can you elaborate on the expected margin improvement in the second half and whether it sets a baseline for 2026? A: Seetarama Kotagiri, CEO: The improvement is driven by new program launches, tariff recoveries, and operational excellence. We have good visibility on these factors, and if volumes hold, we feel confident about our 2026 outlook.
Q: What is the outlook for the Seating segment, and does it still fit within Magna’s return profile? A: Seetarama Kotagiri, CEO: The Seating segment is expected to recover in the second half due to tariff recoveries. It remains a good business in terms of ROIC and meets our financial metrics for returns. We continue to see operational improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.