MG.TO - Earnings call transcript Q3 2022 | Magna International Inc.

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Operator

Greetings, and welcome to the Magna International Q3 2022 Results Conference Call.

During the presentation, all participants will be in a listen-only mode. After which we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Friday, November 4, 2022. It is now my pleasure to turn the conference over to Louis Tonelli, Vice President, Investor Relations. ahead. go Please

Louis Tonelli

everyone, our Hello, to conference our Thanks, 'XX and results. covering QX call Tina. welcome

Joining are approved our we our Board for me results. McCann. 'XX. issued of Pat today QX this Directors SwamyKotagiri, our Vince press met morning finished and We our release results and financial -- Galifi outlining Yesterday,

section You'll presentation updated with Relations along and our our to quarterly the press review of the today's in call conference magna.com. release, the at go find webcast, slide all financial the website call Investor

included or information Before expressed statements also those reminder, for be to we release harbor complete from of get the assumptions the Please statements. discussion started, implied future different to with Such forward-looking to materially actual to these that, which just refer certain involve as today's pass today the results a may today's statements disclaimer. or refer it uncertainties, our Swamy. and I'll contain press to or legislation. slide over today's cause commentary. and description meaning performance in safe Please deck the And of within related a in risks, applicable securities may reminder forward-looking company's

Swamy Kotagiri

everyone. morning, you, Louis. here well a to provide update to Thank Good on our results. Happy call. Key today's be QX general as as Magna takeaways from

and a quarter. basis environment operating last for We year-over-year quarter a compared difficult both manage and our results continue on a through to the third sequential improved to on basis

were with expectations. which Excluding our to third reduced quarter line the our and our impacted results contributing facilities, our disappointing at is outlook, certain performance in

our continue And our drive assumptions. production strategy our result and go-forward from lower internal future cost we we recoveries to challenges, business. reduced customers, to on external for highly reflecting and in focused QX, sales we We while expect another make secure improvement inefficiencies operating progress to addressing sequential short-term are including and efforts outlook mainly our as have XXXX, and a margin increased on earnings of of

Let me briefly cover the current dynamics the industry. impacting

particular, half experience in point, supply through expected. factor. of first and with higher is to ongoing second At Improvement energy most the semiconductors. not constraints XXXX. the some the of Input We the end anticipate year XXXX choppiness continue recent scheduled we in half costs remain into the as much in this as costs of Europe, elevated

to which impact relative recoveries we to that results. and operate, cost currencies in our to with continue We a high expect previous our there auto we impact dollar U.S. XXXX. euro, increase in and input consumers. stronger our risk modest make the will particularly customer Relative interest continue. negatively forward And continues The customers rising other remains inflation rates outlook, our going reported discussions net in progress to only for

And tailwinds, inventories vehicle constrained of supply terms and auto In levels. light historical remained years. in and increased this dealer below tight by point, demand to forecasters underlying auto vehicle to expect coming resilient continue the production global remains

costs XXX to includes vehicle This positive XX%. factor up XXXX, Relative representing to the basis of third were weighted offsetting recoveries. vehicle sales continuing significant in the light an up to factor. On turning was impacts margin third $X.X EBIT largest production, to XX% the outgrowth quarter Higher X% basis, billion, increase was market. the QX. Now customer growth were over a increased in of production Increased input most X.X%. points net our earnings. organic quarter XX% consolidated global compared sales

every in improved margin EBIT Our operating year-over-year segment.

QX. $X.XX rose $XXX EPS XX% adjusted Our was the quarter, cash in our and for use to flow free of million

'XX through cash shares form million you shareholders our the another of dividends. will quarter, in using During and revised $XXX out in Pat X.X the to take later. million paid $XXX outlook details the we of repurchased million

to take you margin about Compared of at to X the basis strokes. through midpoint mainly the adjusted factors. points related to reducing we range by me XX EBIT our previous outlook, Let a to are X.X% broad X%,

level The inefficiencies operating is a EBIT is highlighted inefficiency a of these experiencing basis most few operating the facility from facilities. that in impact are about The quarter. points. higher last we BES have We significant XX

have the and issues We are in identified action place. plans

of We the in progress improving forward. expect rate run losses going

North Together, disruption is relative lower basis sales outlook, to the in XX contribution resulted volume assumptions and a lower more production and schedule approximately we changes. offset and sales are by These schedule volume, on our impact volatility sales in are costs Europe Our China. last in from America partially seeing higher points.

movement been of about but relative a essentially of prices. costs, compared expecting market lower to impact higher of sales overall, as some lower costs, $XX steel to in net million we input reflecting net our mainly Lastly, there costs, earnings previous bringing by are engineering scrap and sequential expect improved higher result is outlook couple of our partially Despite areas QX has expense. down, of aluminum we which a QX, in input offset in outlook lower still our the

we are steps to strategy. short-term take tackling our While go-forward continue industry in challenges, we

Magna's adjacent micro management, We are XX-volt technologies as and capabilities markets in enter leveraging battery software as mobility stack such sensors growing and platform to mobility. areas such

India's with largest allows service mobility business, a with Cartken as powertrain the growth to largest market last-mile DCTs electrification, Jeep hybrid robots are through electrified enter our and investment internally launching Fiat own delivery. Stellantis area world's Yulu starting mobility recent addressing for and our for of with Our collaboration models. X-wheeled X-wheel and we electrified us In the are we developed both

future Europe. also for hybrid additional agreement models includes Our

to chargers. This have X step broke customers regulatory plans Mercedes electrification global efficiency our meet helping DCT support America. hybrid improve fuel facility in and is is onboard customers' performance LG we and business BMW; and hybrid in to venture in our an joint important and electrify in our an Stellantis. with OEMs: To to year, our Mexico scalable awarded a their important requirements. date, inverters, this we North supply step Earlier Our will powertrain ground motors on that in ability technology fleet new been

Automotive News we Space die award past a recently real-time X during offers won the years Lastly, our Xth the for in such adjustments stamping solution Award, that another process.

News footprint. Magna innovation awarded very better-performing drive are to die-cast We success call alloy over lower an With Watch applications. technological Innovation cost Pat. for of continued our I'll proud also used a PACEpilot to Automotive here. efforts provides advancements the carbon structural our aluminum pass a both innovation recognize and across The and lower to These and awards for that,

Pat McCann

the morning, XX% in increased up detailed quarter vehicle of similar and Thanks, production percentage. Swamy, with good quarter. a Global everyone. start I'll key the markets all with a review by

On global percent million $X.X at consolidated at representing in and commercial $XX an quarter. The inefficiencies increased increase input to price by XXXX, sales, These quarter launch input by higher higher higher equity-accounted $XX certain provision divestitures contract in volumes, operating partially was additional spending on an were equity-accounted higher and entities. net basis, Our to costs, in JV foreign loss-making reflects on offset increased in higher programs support X.X%, sales price the $XXX earnings costs EBIT $X by in lower XX% new and to which were a quarter at certain Evergrande tooling year-over-year, X.X% was reduced QX assembly currency certain to customer growth, of warranty organic reflects third XXX offset Adjusted These with and earnings costs XX% on of input translation, higher settlements, income the partially recover X% impact due entities. sales are from Europe, negative concessions. launches entities, in sales EBIT basis higher year-over-year in higher a the launch the adjusted XXXX. on EBIT costs. electrification million services sales net Equity million million our points in higher a The net increases The primarily weighted our and engineering margin contribution growth was quarter. QX decline vehicle higher of Russia earnings higher facilities in and partially facility sales billion, Russia. and compares XXXX. offset LG lower and at down to the over the up new market production, of to

higher XXXX, a change and income in Magna Net came rate. up partially Our at income reflecting rate higher effective $XXX compared QX positions. credits $XXX reserves the in earnings, the changes was offset offset of expense, lower $X.XX tax income tax to compares XXXX R&D The mix rate tax last QX for by year. to and XX.X%. adjusted partially in to to lower due favorable EBIT uncertain compared $X.XX Diluted by interest was to attributable EPS higher million was million,

share. per $X.XX sorry, -- flows our X% about by will EPS our investment reduced and review exchange activities. Foreign now I cash

generated free before and for Mobility. Yulu used we from third activities investments, $XXX million XXXX, changes the During million for in Overall, in capital. million we million working invested and $XXX $XXX Investment fixed in in million in increase million in assets, flow quarter included cash other and investment assets $XXX QX. cash the our in quarter a intangibles capital $XXX $XX of of working operations

[$X.X] of adjusted strong million billion, and At third liquidity cash. the quarter, remains repurchased EBITDA million dividends. adjusted common X.XX, debt also of in in was billion paid $X.X We end to our and shares our including the [$XXX] our $XXX at

North will America our In our volumes exchange and outlook reduced we we most our outlook, rates. expectations our significant rates increased Europe, China. I slightly and from cover Next, our will previous our We vehicle assume outlook. recent markets, and approximate production in

euro, for relative now moves, previous weaker expect to Given our Canadian recent RMB outlook. we currency dollar a and XXXX

and dollar, reflecting relative expected We of particular, our ranges euro. the have largely narrowed and lower the the consolidated sales, volumes strengthening U.S. and segment to for in reduced

indicated now X% narrowed to margin We to X% margin X.X% previously. As narrowed slightly and and to raised compared expectations. equity we income earlier, reduced range expectations. We our expect X.X% our EBIT of and Swamy a

income adjusted net narrowed attributable Our to expectations been largely EBIT lower has and capital we this sales lowered to our lower expectation and year. for margin, reduced reflect spending for Magna and

volatility. range our projections supply We million. the we With to reduced capital, This and working chain mainly by to lower Lastly, we to ongoing expected levels flow higher expected to stock, have had million reflects working carrying partially higher free that safety by decline respect $XXX $XXX increased capital, earnings been of of capital lower year-end. given cash spending. offset

to We bit last above higher anticipate through in XXXX. in summary, change we further the our now quarter. reflects and the year last were end over We tooling improved In collections. also of fourth working both little a a timing improvement results are capital better. normal earnings although expected levels had of quarter, The quarter sequential assuming remain third

help to your to the operations, managing progress address recoveries focus making We costs continue in this go-forward to are for on and obtaining unperforming our our and ongoing questions. be happy attention We improvements in strategy. making morning. current challenges, answer Thanks our your customer would we

Operator

Murphy, The first Instructions] of question comes from John Bank America. [Operator

John Murphy

Just a on implied first for question guide the fourth the quarter.

the about $XXX at and of was midpoint like $X.X million. think range, the is I the billion EBIT the adjusted revenue

marked improvement a So and a in the profitability. third improvement pretty significant sequentially from quarter

Just because million wondering driving sequentially revenues million I at sequentially EBIT I also mean $XXX it only improvement and key about mean, the that, are in the of midpoint. $XXX what sort factors -- are that improvement in like it's looks

some big of well. incrementals sort implies it as So

Pat McCann

the John, thanks question. for

we're sense. to range. had makes I Big think seeing volumes if recoveries And we that on translation. foreign increased QX, from as then the we you portion from QX where we're as be you're revenues QX, looking, of looking A QX the is would progress through offset exchange look midpoint, sales, provide into good the when also picture, against a roughly year. through at booked math headwinds higher well. And So expecting but that that we

the input side, engineering just margin there's as small increasing, net normal expecting and and our be and relative progression a in improvements some our course customer D&A timing would QX John. the of you recoveries to as launch. QX. basis, takes, drivers, On then of we're puts programs big at on and Those then look a And spending costs primarily

John Murphy

or about it volatility that how to is actual, in allude Okay. some a incurring is those sentiment what from and with? of inflation The they're relative schedules like seem or seemed relative reasonably cost forward? maybe really expecting actual, commercial automakers inflation third how the be that whether helpful. And certainly to to playing period? question. are That's what the ball third So fourth kind well? material, detail you're much for costs to then or specifically volatility Pat, should the the you're think And quarter. of cost in the that and quarter we schedules And in can second fourth they quarter just for quarter you of go as

Pat McCann

When John, $XXX about say. volatility, about every customer we've would in recoveries, we're our breaking we talk commercial to costs been would number that not recoveries, I course input previously. or normal specifically or production million is out recoveries we're this guiding month, our commercial speaking $XXX we reflected When recoveries related have our that that's

So go but tended it there's to cancellations. that this quarter production our launch, toolings, they ups and downs. program favor, such happened It covers in areas as schedules, just

that the quarter, So said -- from discussion, just they in but we they go list there's issues quarter-to-quarter whole into and that in list bounce our a forecast don't our went category, numbers. this favor around those we laundry of like in

John Murphy

how you're will the mean value used be long to to is philosophically, lots worked like I that out these finished as XXXX? down that suppliers Swamy, something in buffer lastly, worked do this goods. back you'll will just-in-time chain buffer get maintain I buffer That's dealer do in automotive early mean stocks? pretty consequential this And on XXXX and Or how seem backing you sit stocks just stocks to think inventory then be now up be going And yourselves you to there And dramatically. this levels? lean the pretty been into Okay. be to used to think

Swamy Kotagiri

John, great question.

I to as customers, The of obviously, to to you start-stop at going the the slack stable and N, of is this Tier can we able going inventories it in to versus think, the the difference is continuity the to that but production make I the in think if within stick that think, be having production release how down stocks. I the determine one releases buffer the had value just thought and stream not being to we look And think half XXXX. release it's state beyond equilibrium, But a of get to has a improved bit just year. these not due to first from make I a second to will as we today. what the to to because half to for much a going think believe would But volatility I keep plants in see I difference. XXXX impact of it the leads it's have sure start the to is of and our trying Hopefully, the improving. be going little does. big

John Murphy

Swamy, of is And you idea I'm -- sorry, just Will an it one guideposts know look have to would stability? Or to? any I mean could it going you follow-up on when happens. this that. just you happen

Swamy Kotagiri

asked So John, had if you the think typically, me I question.

John Murphy

it’s I’m not time, giving a hard a hard you question.

Swamy Kotagiri

no, no, No, fine. it's

X decent XX out, we to If said, get ago, the XX or right, had to we had a about weeks the you right? the asked releases picked a but That you X from really question or been right? issue. into so would XX the We years customer it, have up on so materialize The has not to come changes parts issue out, and when has and don't are been XX forth. weeks something the releases view

get and So is starting sticks, release we the the I hoping are what next hopefully, release year. think, for

Operator

question comes next Stanley. Adam Morgan The Jonas, from

Adam Jonas

time? have Can just out could kind My hear of an come working for half we just is first system beyond of bathtub question. in working that on a what's question. clarity cap trapped idea quantum stock you the capital I the safety equilibrium, in and Thanks the first the for maybe of what me? so have -- had kind taking the on what over follow-up we but of

Swamy Kotagiri

working quarter-to-quarter look bunch And at these changes a obviously, the things, right? Yes. buffers about. bit to and capital, talking it's been think due little I -- from of a of is you Adam, we've it when part it that

I difficult exactly to change Adam, and I to definitely very quantify point, we have now, accurate, to working versus what we of would buffers year-to-year. think be most At quantify buffers versus things. of to working seeing the exactly. is attribute normal look other at it's -- that that safety won't to can much stock. would the capital this I average the I we're due how the Maybe capital

Pat McCann

I capital, could your did question. the talking, But hear getting there's a if when at data, just sorry, Adam, we to Swamy's we look And -- just buckets of some working couple it.

inventory to -- So other at there's was is we than higher Swamy turns average works, can where the When once if number they are The is at the expectations the PPAP And piece our get working way capital the a when at really, is safety that on our to pretty driving and the system probably you industry and it the working $XXX stock slippage get we year-end we one into get if for look referring get timing look your be, if we when million specifically. -- we're look the where receivables quarter, look that expect they is in realizing that type collections things TNCs. to our where approval that automatic area range. when your we you of capital, you paid tooling. OEMs,

see of at So also receivables driving some year-end. higher that's the we

So of safety stock and the the that range balance tooling million primarily would to you be about collections. $XXX -- inventory, if timing in then of think related

Adam Jonas

That's really color. helpful

of it years, in Just already. we're on as downturn downturn, in as felt been follow-up, already production supplier, global in you've the heading And schedules a a global for ways. many some we're downturn into form you a a

on launch campaigns of that high combustion. stuff when the argument and now I mean seeing know and expensive -- and of And focusing AVs don't loss-making if money that So EVs be everyone customers back proven generating changes is all right science of all-time forward margins a posture free, that made some cutting is into moneymakers be sell big the could your that more from indication signs on any this customers? your I you of look internal OEM kind can like the yet might and any on downturn. ESG on are projects, that. and that seeing you the maybe you're the

Swamy Kotagiri

Yes. Adam. question, Great

we the that strategically at I we've talking over plan about the say we X are the next sustainable plan, the to where when of years And years. account taking out. the X at usually always transition talked from is planning, think product we long-term about table the what long-term look I when XX are into

We an there or I think, changed haven't work a viewpoints a terms obviously, has what platforms program portfolio say in management. But drastic next we today. X, the have or And discussions assessment significantly the have an any change seen shift of of on it different their wouldn't years. for we of view as or also customer product lines, internal call various on right, we as XX we been

Operator

of next Capital from comes Sklar Peter The BMO Markets. question

Peter Sklar

Pat, the these course rents, recoveries, I'm little et a commercial energy, not impact just is all impacts confused but extraordinary cetera. normal of on feeling you're net what inflationary on the

in negotiated you're extraordinary what you QX? the what impact that you level at. commercial a when figure in just versus net-net So And reimbursement elevated at for it QX the Is as where I'm those in positive you benefited is is or out to negative? from that look costs? trying the impact QX recoveries

Pat McCann

clear it up. me try and let Peter,

impact, we've range historically, we commercial about elevated, ended. of year-over-year the down -- talked a we got that's would the XXX guided XXX QX about about last QX, in our QX. our bit about basis the from we basis -- we're basis When thinking you’re have when were in in year and in XXX and is little -- So the specifically the And launch we're range into be of coming our if XXX piece, primarily also about about points points year forget but as number headwind is the recoveries points. would back talking

math, on with headwinds QX the move we're Peter. cost looking basically, through year-over-year of we into input work you basis, as a when a amount minimal So

Peter Sklar

a that's since cost about Okay. talking the number. XXX recoveries. XXX, Correct? the then That's And net basis elevated points you're less

Pat McCann

net basis, a Peter. correct, on that's Everything

Peter Sklar

Yes.

Okay.

an unfold an could production German if would question. think winter, management's have of Next update the government we on things do auto curtail required this was how Do how on to Germany? the that energy an Could industry, shortage. rush that thinking in And you you I Germany they is industry if mean play think in would potentially out? there

Swamy Kotagiri

Yes.

you think talking normal And I that the from much than see policymakers as to It's a our we supply But vehicle possible, bit more is takes rest different societal the at shortage. compared you that be little conversation, general the industry. imagine, can supply in natural years. to only to something the in and from least the is the entire than of to see, as to gas But any ahead one have industry no the stuff. the the It is to this seem the stocks information stop component, the Peter, winter be of harshness but seen. safeguard right, production. as to just chain

from we than think all table Other and stay there part can with production remaining our not these conversations that are to along, policymakers as understand that whole the than do lot possible. address the extent -- other is it side OEMs to to we agile planning of comes being a at it. I to

Peter Sklar

discussion that's just downward to about correctly, in my do a the million question, the my revision if of in on your plant points the XX to last I -- due quarter. guidance, basis the And math $XX loss margin the inefficiencies

what it touched reviewing you on loss, you incurring mind what the of does is and think Europe most the this do that's in there? issue but plant it I last quarter,

Swamy Kotagiri

it's in And Europe. XX of most right, Peter, points, X in is part it think Yes. as mentioned you're facility, Pat, Peter, a basis I just correction, think I right? you

program outsourcing had do cliff capacity divisions of Magna kind look little internal of step just over therefore, the put change a both constrained. to -- facility and in back the was and capacity There a to the at constraints some parts external. If in of a the had we it, and bit of terms you change a

premium it. And As in plan is you when have clearly. caused we definitely place action parts identified, is with talking that issues that can about. are been there the is shipping issue there imagine, has you're and associated The a what

it imagine, rebalance time. As to which reduce you the takes cost, will premium capacity, can the

plan place. We the is understand So issue. in the

a Now costs. matter and to in it's reduced of executing just back way that bringing capacity orderly premium and an

I think I that's I meant glasses what when improving going reducing run about forward. talked rates and

Operator

next Evercore. comes The from McNally, question Chris

Chris McNally

just real think So important. the I quick because a one comments around QX were pretty

that think -- in $XXX million in half, was framework, old it comments the So basis net, million the I $XXX an I half. million on implied second that of were $XXX the QX there's absolute first have the And the bucket? think mean in would Does the maybe the by noncommercial of almost a the from tailwind recovery be normal first given that this pace conversations year neutral. that half a could of we chance that inflationary

Pat McCann

on. your so math is bang Chris,

million, $XXX the the million when brings million at all us to look $XXX $XXX million, $XXX in. So you

when leakage get of into there's QX. bit So a little year-over-year we

I think our energy, year for it’s process. through to tailwinds inflation imagine, number as of given when are in and been we get the of trying we And moving incredible XXXX, an working the business through process planning parts you this middle and can it. into work headwinds

time them into since being basically labor from back we and then into inflation, go inflation of primarily February sticky inflation we our Chris, remember, that bucketed commodities, you guidance energy of is down did buckets. if year, break non-sticky If to a And well. last and you couple

headwind, And think going a so I think labor, on tailwind when to a we're I sure. have for about don't

you labor to top and That's then going projects those plants to primarily we costs one of And all curves efficiencies far as dependent type bringing the settle, is Europe about energy recover automation whether we Swamy scenario. But earlier, really what out. that's rationing 'XX on shakes that, really think it's other big the bucket, be or at as driver a be I the and of expectations. it's energy, of just looking customer where going about sticky We're negate of the to again When into it. headwinds. to what talked going on piece how can work in on think one-off.

the long answer. Sorry for

Chris McNally

North IRA. you And then does little a shared. picture, move in take there's helpful. them, Steyr launching No, update program in in interesting Steyr the the the next in costs of the for lot domestic margin Swamy, is And a I a of in work a bit potential of the on us obviously, How even how a just first on hit sense or are question. Maybe and going bigger Autotech year. of it's as and and like or it X-part half the sorry with launch remind always overruns cadence, a things very then does of reminder an but launched IRA, either this, Steyr just It second it sounds sort a a Fisker terms maybe America. cost for I'm makes bigger ask more with everything

just Steyr. So share you on any can there updates that

Swamy Kotagiri

very the and that, always open in answer So America. they obviously North footprint, there for American are various is said I remains There a appropriate topic, case, if is an the think on from footprint and think we've North the continue. the we perspective, I business still discussions

As very we've run. always the said, disciplined to in long remained we say, have make to has sense it

cadence part, would let the to right talk it's through I talk about them launches that the our leave of on part and don't On customer and on, so it. honestly, to think other we

cadence with we a and place in would it customer the and here. -- on don't We various have for launch will do it, comment that so talk right many we We customers. be about not launches us to

Chris McNally

a an I launch new part forget for a margins case, Swamy, -- maybe about historically, this the year get? investment typically where would And Steyr Magna's about think is period BMW specific in on just where there program, if

Swamy Kotagiri

obviously that depends much and launch, differs it their a take planning time the extent it is depending say the through cadence puts quarter so and of forth, How I I because difficult say see, more. that. the plant every the some customer. customer from how to going one would is to usually, And we other, is cases, and on exactly. and very takes going launch. the right, maturity to there from to the we and on changes process. curve In to that, cases, are gauge I obviously, that in is what talked into when ramp a there just account to launch it about and Pat it drive programs. think is plan particular But during on they the milestones so the as It's we very some programs, one their customers sticks mean,

difficult around, not it's a go I but concrete I'm So wish give answer. more you trying could I quantify, to to

Operator

The from Joseph comes next question RBC CM. Spak,

Joseph Spak

I Vision. think in -- and and just of John's Power & larger talked you almost factors some BES & fourth quarter-over-quarter the the some where I first BES margin in we a bit Power points it here about basis for Vision, like question, seems specifically to Maybe quarter. little XXX there's in If assumptions, single -- XXX like on know

in how there the sequential driving if efficiency help rest? think about, I help you I then Vision Europe. in driving much improvements us Power some the you talked improvement what's quantify is improvement & could of the and right, that what's And maybe sort BES, of of was quarter-over-quarter? wondering

Swamy Kotagiri

on look have we'll I sequentially, segment to Joe, I it don't at I have a don't looking -- good at by think. handle that.

Pat McCann

which of in couple items, have focus onetime obviously did it's -- charge warranty you the on if nature. will is Group, big you -- in QX, at we when a the unusual Joe, it's in look a there Sorry, P&V

disproportionate drive groups. big well recoveries, X industrial the groups they're drivers. just amount far So in -- big a of look customer the When do how that's change as heavy given one as as headwinds, the of those you

piece another that's So of it.

those issues. big of for head are put package And have so to Louis the you. off the said, X have a top into my it as we detail, we'll just tight the But

Joseph Spak

of We just sort one. then. a Follow-up follow-up. could I can guess, quick We X maybe take

sort top line all hit wondering billion, of spot, could You within Europe of level, that pointed if sort us, you if like billion anything? think also if have that it's translation, screens. mean to seems sort you maybe EBIT -- current just was exposure is I mostly like but $X.X see correct? then at And FX. there I I you Obviously, our -- to year. some ballpark of the you on next could $X.X or transaction at be think could we it sort like that of you remind

Louis Tonelli

dollar And about my euro-U.S. $XXX from recollection, $X.XX in is Joe, a change annually. about million past

So $X.XX $XX significant, million it per significant. less probably U.S. dollar per but is Canadian change. it's pretty

assumptions depending there, to So on number pretty be big. making is the what you're going

Joseph Spak

Yes.

Okay.

Pat McCann

of your part primarily impact. Joe, at the mature hedging of you're correct. Sorry, exchange transactional the question, do have the translation process second It's which impacts. a We foreign majority on negates Magna,

Joseph Spak

you something we differently, really that of very happened you Okay. issued what structurally at driver you the assumed have, has like, then update level high of 'XX that volume 'XX I said get just crystal is big one really for I changed understand, back levels still attainable? has know when sort think a sort to it do very to if picture. you a just but just view? And and production. no Or that those sensitize do of we I I don't to guess margin guess, targets, Swamy, of a you targets? is should volume targets the want that's sort assume sort ball of key like sort in since the else

Swamy Kotagiri

So question. Joe, a I think it's good

the about to about you that, are of good. foundational that operations the impact events inflation and The not reachable. on you said, previous than short, if fundamentally Pat in are stickiness if we pretty and mention think volatile at would think things, very say the is also And one Like you I input we my just are plan, think the is In our feel you'd what changing and talked key costs look that at would it's significantly, do. not I sound. look and our obviously comments volume. the we to the have do and perspective be very I say important caused say going underperformance have that start-stop the extraneous in we is talked to to it, about. margins operational I due transparent, that then that equally are would an we part an inefficiencies I I those I this have address production. Other from talked very if how is

that address We conditions feel market confident, So question but there got not that pretty right underlying through mark. puts to we've all a is now. going an these we're

Operator

Colin question comes Langan from next The of Fargo. Wells

Colin Langan

Just suppliers X%. to looking a it like talking at know is I is lot what growth, flattish. something light I clarify, the quarter-over-quarter? Because is mean I mean, vehicle -- think, are assumption of more I production the we're when midpoint your

Louis Tonelli

global about talking you Are QX?

Colin Langan

Yes.

QX what of Just overall, your is? baseline Global kind

Louis Tonelli

assumption a think full I pretty -- are, year-over-year about the where so I [the we line year globally. even in which can our choice]. about conservative tell little X%, is That's for so plus full year, right maybe much with you is

Colin Langan

Okay. or we sort look that into to are rate? at think margins the of there that sort XXXX? like How exit it? that the Is of if rate jumped XX-ish of at rate, maybe All Or as seasonality of some implied right any right. I sort impacting retroactive launch point. that look of recoveries And should QX sort are we

Pat McCann

Yes.

to given on are think Colin. a February here going guidance. It at off above I because for kicking of fair -- to the going I land. in really us we we're the point we're to X QX results a with trying all middle we're that apply, in in where the to we're to cycle of said be really our number Like that give wouldn't this come market budget earlier,

Colin Langan

recoveries just QX lastly, retroactive be any that in And about? and results Okay. we should the thinking QX

Pat McCann

Yes.

on impact of relate you about that half that we input are it net a are to side loaded. the it. and cadence other the gives second it the first But of And benefit the towards back -- of the -- you year of perspective portion of of the of the year front it are cost earlier, half. part were the is headwinds of they a there on cost recoveries the think our our geared had was some piece would in the and XXX part our just we that if guided year-over-year of of So half that

Louis Tonelli

broken it met down, have we that so detail. we haven't But

Operator

Raymond Instructions] [Operator question Glen comes James. Michael from at Our next

Michael Glen

to more. bit a I into Europe the little want Energy dig just just situation

feel about in you it So how energy had year saw guys saw had pressure if like market, guys the significant prices versus trended we -- the energy Europe we in or at translating spot natural at in And cost in should that impacting think some the front that in based you we how you of that. look from I'm back when pretty increased your in results? looking this look the place but market on guidance Europe. particular, if take QX, Europe half what year, you to much doesn't trying earlier escalation way prices just understand we're gas, for energy

Swamy Kotagiri

start, add. I'll can Pat, you Maybe

each the the with you if can’t higher. at have both our I the of they -- say, energy issue, the But details should I we right, say would discussions. are higher. we in there. as costs some gross case. recoveries with that granularity OEM were net the are think us get in I look expected think I can key that's Obviously, obviously the point the discussions the higher and the understand cost these -- were We of discussions also overall, cost, the for

Pat McCann

Mike, And secure energy on or that. do to our protect hedging think other you Great. think I the supply to through as have have to we thing, related well as lock-in

a not moving like look looking what the And are just March curves the first about today, not curve levels. Swamy the our that talked on customers, back spiked period to they're majority time. So at competitors our That's such and QX significant we're of you we're a short it's is it's at The and piece. in up to because energy numbers it impact. XX-day in the down of -- most down. for forward And if

tracking So the with I really market we're around, managing think it customers. bouncing but the is it and

Michael Glen

So Has largely been at with say this then customers? on point, embedded energy that now pass-through your into arrangements? now is would you that

Pat McCann

our so of I operated I a markets, virtually we're Mike, think main when in this, where in we've inflation think a -- part X situation environment. in

some or or markets, it's these evolving Some had Brazil in costs of through. whether our Turkey these in markets, of success other we've passing

lifting suppliers. using the on, one raw our to in suppliers go-forward that utility our some we through our Those of basis, model energy thing we move when going into think not traditional and talking directive it. just a those have quotes in That's think we're cost. actual, more suppliers about coming about, with anything good and So economics or derisk you On When data, what can Swamy's talking areas. you we're specifically about that's of else it done surcharges portion are are the bill. a

fully a industry Mike, with going are spoke remember, of them. issue, we we and more Magna you having So through with facts, industry a transparent an a had broad And issue. more with not it's earlier, data, if success when we've issue. discussion It's it's and

Michael Glen

battery shown appetite information. the just step appetite about I trays, you materials, is ventures battery to and battery in for finally, standpoint, any the way? produce good in That's technology is battery investment of what time. in but I'm over you're on in And technology. early side, know a wondering, you've get battery involved just there significant to any anything Okay. terms invest then the from technology thinking in there you some

Swamy Kotagiri

appetite So our I in always think in the been of some or very direction the -- technologies investing the I thoughtful. guess has

today road evolving. our of We in where is see have evolving we the our and future map of how a sit terms the and products them how given technology vehicle

we're following very it's are through and we we process. that So what do, doing well thought how

and understanding system it look a enclosures, thermal the the controls on said, there the a enough batteries, tank seat we us specific is which from as the how you battery front-row how we at from is topic I of make management the back perspective, but battery done, On a as think sit gives perspective. management

the we joint you in look terms LG so venture, do forth. of our and so and what at onboard If chargers, on there

at. the that looking something that perspective, focused we But not currently we sales from on ecosystem. in play level can would role I think we out are say a at are the figuring cell is where I

Operator

I'll the question. remarks. Swamy call any final for over Kotagiri closing turn our was to back That

Swamy Kotagiri

everyone, Thanks, in. for listening

working underperforming you. of Thank with on the And inflation. We challenging addressing We remain cost Enjoy equally industry important, are are our focused your still obviously facing customers rest our operations. a to we environment. address on day. focused

Operator

Thank you. ask participation the disconnect Thank and have thank for you, you today. lines. you conclude We for please This does day. your that and your good call conference a

Magna International (MGA) 4 Nov 222022 Q3 Earnings call transcript