Magna (MGA) Q2 Earnings & Sales Miss Mark, Trims ’21 View

Magna International MGA reported second-quarter 2021 adjusted earnings of $1.40 per share, turning around from the loss of $1.71 incurred in the year-ago period. The bottom line, however, missed the Zacks Consensus Estimate of $1.44 per share. For the reported quarter, net sales skyrocketed 114.7% from the prior-year quarter to $9,034 million but fell short of the consensus mark of $9,082 million.

Magna International Inc. Price, Consensus and EPS Surprise

Magna International Inc. price-consensus-eps-surprise-chart | Magna International Inc. Quote

Segmental Performances

The Body Exteriors & Structures segment’s revenues for the reported quarter were $3,647 million, jumping 125% year over year on thanks to the launch of new models, forex gains and higher global light vehicle production. Consequently, the segment reported adjusted EBIT of $227 million, reversing the year-ago period’s loss of $315 million amid cost savings, productivity improvements and higher sales.

For the June-end quarter, the Power & Vision segment revenues soared to $2,881 million from the prior-year figure of $1,298 million. Launch of programs during or subsequent to second-quarter 2020, increase in light vehicle production (LVP) and net strengthening of foreign currencies against the U.S. dollar boosted the unit’s sales. Cost-cut efforts and higher sales resulted in segmental EBIT of $203 million, versus loss of $226 million incurred in the comparable year-ago period.

Revenues in the Seating Systems segment surged 123% year over year to $1,166 million for the reported quarter due to the launch of new programs subsequent to second-quarter 2020, higher LVP and favorable foreign currency translations. The segment reported pretax profit of $26 million, against a loss of $84 million in the corresponding quarter of 2020.

For the April-June period, the Complete Vehicles segment’s revenues grew 60% year over year to $1,490 million amid higher assembly volumes and forex gains. Adjusted EBIT soared 80% year over year to $79 million on the back high sales and cost-containment efforts.

Financials & Updated Guidance

Magna — whose peers include American Axle & Manufacturing AXL, Adient ADNT and Meritor MTOR — had $3,426 million cash and cash equivalents as of Jun 30, 2021. It had a long-term debt of $3,941 million. For the reported quarter, cash provided from operating activities totaled $528 million. During the quarter under review, Magna returned $226 million to shareholders via dividends ($127 million) and stock buybacks ($99 million).

In the light of global microchip concerns, Magna has trimmed its 2021 outlook. It now expects full-year 2021 revenues in the band of $38-$39.5 billion, down from the previous view of $40.2-$41.8 billion. Adjusted EBIT margin is anticipated to be 7-7.4% versus the prior guided range of 7.2-7.6%. The Zacks Rank #3 (Hold) company envisions capital spending of $1.6 billion in 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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