Magna International (MGA) 5 Nov 212021 Q3 Earnings call transcript

Greetings and welcome to the Third Quarter 2021 results.

During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today, Friday, November 5th, 2021.

Now, I would like to turn the call over to Louis Tonelli, VP of Investor Relations. ahead. right go Please

welcome third and results of conference call. to everyone, quarter our 'XX Hello,

are and results Swamy our today results. press me Joining Kotagiri outlining morning directors quarter. issued our and release third this board Vince met approved the our for We a of Yesterday, Galifi.

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

or started, the get reminder, Such discussion applicable we assumptions, or Company's a Please future press for to statements. Before just or results the cause release actual risks, today's those refer legislation. materially today as information and disclaimer. forward-looking complete safe forward-looking securities may uncertainties, the harbor statements expressed certain may our meaning contain in description involve implied statements of a which to these performance within be and different from of

foreign financial statement note to in the today, note review it and the The results included reconciliation certain acquisitions, of excluding the pass impact of results As please discussion a organic reported for We've earnings unusual figures excludes financial QX between key that and discussed today in we quarterly I'll unusual that QX items. divestitures. 'XX that, dollars. appendix we over and used information lines are U.S. the of exchange, of excluding XXXX sales items. impact mean all the Please context when With in term the Swamy. movements, we

Thanks everyone. Louis, and morning, good

had the operating volatile considered, in back had performance environment. lower Europe. the also August, operating was much solid we in Production intensified very QX, been general be with to experiencing through The industry for quarter to here pressures you happy All than anticipated have a we We quarter. results. update leaving and on Magna, in we QX provide our XXXX a in a are particularly to things

well additional through result, and impacted in continue together know-how a future, generation. QX in this We ongoing as to expected relatively a currently I semiconductor that the production. have approach. what shortage flow growth The few came vehicle us to degree. our earnings. been to operational will There ongoing as and factors, production some remain continue This highlight well future lesser The a complete positions excited significant negatively our future. remains includes driving most at and our below dynamics managing investing expectations, are this well chip are as well-known. strong excellence focused of growth our our market, also on period. The to that as our sight announced particularly given fully portfolio we of challenges We're although Magna's affecting are quarter, industry key free sales to over improvement As number enhance and recently. a systems will cash awards with market headwind sales key of global technologies from realizing industry for signs contribute restructuring remain industry to our global well activities volatile this as not costs last year. Longer-term, our losing initiatives savings

industry it will rate a remains be when seen to the of stable However production. return more to

the labor inflationary causing from including environment intend top point experienced have OEMs auto indications our these factors, facilities. at mid-term levels continues production to chip freight, shortages, of As of a once together sustained a customer's semi-chips to that assuming strong to dealer environment operating year-over-year. increases This energy its degree, and billion to don't lesser efforts in a in historically other production cost. quarter. run our took has sales exceeds to margin on toll schedules and inefficiencies EBIT factors supply. certain other strong inventory Market markets. the hamper our unchanged low On $X.X last Consolidated tailwinds supply operational that commodities, labor production production are for additional available, to day-to-day, to Despite were result are from positive led cost and largely our demand. experience These they challenging suppliers, continues X.X%. quarter. with down demand factors are The or and strong to two XX% unpredictable, declined inputs, industry manage auto we available

Our earnings capability confident that quarter, cash longer term. remain the and cash free value of will in short-term our was Regardless adjusted EPS challenges, the and for underlying over create power was in QX. we $X.XX flow slightly generation negative flow the

OEM about the in provides few a technology, proud year awards, seed of out great our past, to list, Employers top of I a We development global that accomplishment. recent talk this this as which would World XXXX. This point like is variety of for our relationships World's fifth received on was our by mutual testament to making fundamental recognition list I In seeding a Strong are we technologies Annual program were supplier these at Excellence Magna really to a the our of. and with with also of Before highlighted our straight Best move Magna performing possibilities. wide we relationships trusted to commitment the customers. times. recently team's design like award Forbes recognized just transformative success foster to a named have marks the to Awards. This XXrd freeform the Ford to

a complete We seed for are OEM global customer. currently technology launching this a on program

example launching also our from and been including interest in strong enable customers. new a X have provide It's Magna's products believe remains are front-integration decorated the for programs, panel in various to hidden-until-lit will been of good to and the we a the capabilities that features first-to-market, entrant electric of The XXXX, We our a front we ADAS that Recently, format, technology, enables face technology change unique and of Mezzo other vehicles. that have pipeline panel Panel large integration FreeForm integrated customers. lighting, functionality. on us awarded showcasing

call program a OEM European technology. a this using have been from awarded We

Our Mezzo Panel OEMs good that to customers. is front-ends, something distinction possibilities our provides technology traction for with getting design their

to were on We mid-sized we for business business such electric new high-volume a EVs We producing continue electrification. family well business. launching as of in two the in award other while as begin of platforms transmissions the our have this shift DCTs business quarter. long-term areas. stability This hybrid pull transmission vehicles, high-volume growth train a also provides program since and allows utilize our hybrid to our awarded. Daimler recently supports for we This us have the represents programs in and with in the won compact The we It It technology our couple DCT launching XXXX, base continues. awarded DCTs. booked third includes which important to been Lastly, hybrid power Daimler for asset been transition XXXX. traditional DCTs, next-generation to

that over You X by billion X in electrification are may billion sales powertrain managed XXXX by targeting recall we XXXX. and over

in ours a which The in won sales market back Veoneer's position in further area. in camera and Board higher award you European-based based new to result, leading a we above of our this growth is global bid leverage OEM. cameras This us many allows latest program technology. as Qualcomm By have Magna's front ADAS already include area. this supports expected platform the We production, July, will on that investments camera know made and award The bolsters forward the for with of in Veoneer, with coal advanced business announced been a applications our to making technology has that move than emerging agreed Qualcomm. a now, Xb also

years for scale, based to ADAS on had we remained building and for blocks and in expected capabilities. ADAS position we ADAS, and the place for address have valuation. been provide the was investing transaction sensor our the the namely, suite, software price disciplined our this number to Although last requirements in We compute, in accelerate on of

our will as ADAS and invest would We will have add to complement, we portfolio. external investments been, continue to that internally always or consider

expect to CAGR We to XX% XXXX XX% out sales to our XX% around in of ADAS XXXX, to and continue a business from XXXX.

as will Finance. for various Anton third years team. having and that capital Financial Officer, roles Pat our held strategy, markets, Vice President, I'm that President the Vince that, Magna. President confident Magna Pat details. Directors been Galifi, has me. effective Vince? other has overall to Relations, roles corporate in with head as senior Vince most R&D, of XXXX, President XXXX In announce promoted to succession President on Vice Officer, changes most career Senior between our few plus McCann recently of served are XXXX. variety been Anton this Technology have his reporting me Executive as operating served Magna, and Mayer served year promoted President Chief Finance recently Pat Vice to has Vice Executive at Cosma, as office, Chief unit XX in other also corporate and Executive approved more you been over matters. I'm financials each changes, these a through finance management current at CFO, to Magna's a take has for I work of Magna's process, at and International. management Board Lastly, including of hand to the very stakeholder his strength Vice plus With XX and planning career role, as first in Vince in through of to January support we appointed to our pleased quarter In it role together largest continue our has will

detailed Thank you, a quarter. Swamy, review and start the good I'll with of everyone. morning,

was Swamy operations. challenging for quarter earlier, one As indicated Magna's the third very a

how Magna XXXX. production Global driven we production XX% of third However, North the such quarter, vehicle and by that face in reductions I in basis, are XX% in year-over-year and in XX% in XX%, sentiment adversity a quarter the echo XX% On the Swami's of business our quarter. the America, of, managed declined weighted China, proud of third light respectively. Europe would declined

the quarter. Organic of sales $X.X weighted Our were billion third XXXX. the consolidated production in slightly outperformed compared sales quarter to $X.X billion in

EPS the adjusted quarter and EBIT lower the XXXX. of a As result of from sales, third declined each year-over-year

As than were facilities settlement to three with shortage. sequential Evergrande, X% currency foreign value-added to lower higher and tax Europe, light a of translation, North inputs, year, early driven Brazil a a Comparing QX the adjusted principally for segments and cash facilities adjusted X margin point. XX% our sequentially. factors. I The $X.X fell sales, These in reflecting number loss-making the being review sales impacted down engineering customers, in segments from due our quarter. driven launch negative including million results. vehicle last and billion by decline the our of Our unit was more by partially earnings inefficiencies going inflationary EBIT quarter of together our offset sharing reviewing million of activities the of am and in on mix production commodities, sale comparison second increased of typical investment this in at profit This, to and down EBIT quarter, production Each contracts XXXX, Europe, loss-making favorable from America to global the and reflected declined QX million substantially others is the in informative unpredictable this with EBIT exteriors positive in decremental to schedules lower semiconductor by service the in disposition of flows program production led exteriors and more the Xnd quarter X.X% compensation, from $XXX of lower to production cost, and X.X% XXXX in impact on $XXX experienced a in sequential provision the than declines second the of a of and freight $XX margin. the costs sales incentive some QX, Reduced with QX of 'XX automotive quarter.

million During quarter before in XXXX, $XXX cash of we from working generated capital changes and million the invested in working in operation third $XXX capital.

$XX included acquire on $XXX typical of activities venture, Some our $XXX chain ongoing as in million joint quarter a the in use $XX of equity assets our assets, in and relates investments. of in the $XXX the and flow investment the customer provided of buyer Free result LG-Magna sale which the with supply we capital increase in loss-making million facilities, negative Investment the million to to investments, other additional exteriors of third inventory hand an cash was intangibles, million in private funding, in higher terms the cash disruptions. fixed was quarter. than of and working Under X interest quarter. million the a $X million

dividends. in paid million $XXX We also

at the strong Toronto our by We quarter. normal billion up of to bid debt-to-adjusted in course our liquidity X.XX will new a today to million $X.X approval new that adjusted Board third stands shares. of New subject bid EBIT expire and to Exchange is our issuer Our the approved York remains at at the end XXXX. This and of purchase common Stock $XX.X announced November

Turning last month. with to consistent will press we the comments be outlook, my our issued release

have production vehicle between respectively. in by Note We some Europe, expectations and our our reduced year-to-date numbers production and light China actual are X%, X% provided IHS. by X%, differences America, North vehicle light that there those and

automotive However, be aligned we Magna, sales our a minor and and expect our the expectation lower the driven attributable our in for QX have $XX.X to costs, $XX changes decline the maintained for to billion with range in unit with our volume on expectations schedules, X.X% volume margin. our We've $XX.X to each to lower in our These the X% on range We range range of case of services inflationary previously. and expected to a net the range changes OEM sales, mid expectations. inefficiencies reduced be margin interest negligible some slightly dollar relative compared the of currency Canadian now X.X% from October on impact for billion EBIT expense largely estimates and expect We Evergrande. XXXX U.S. are of IHS the $XX.X production sales to narrowed made is for input in a and We production our equity to X.X% update. a Euro to as billion sales substantially engineering the income to result outlook. higher XXXX, in the billion previously. reflecting provision to This operating by of our assumptions, total Based income now unpredictable down dollar. margin

outlook. tax change our rate mix our expectations, slightly the lowered and earnings, in a reduced our from reflecting spending also last was We capital largely of range

were terms schedules. by production in In decline of all driven inefficiencies sales the segment segments impacted OEM by and production significantly margins, unpredictable

provision the represented associated negatively Complete addition, impacting significant in Evergrande margin In our EBIT Vehicles item with segment. an additional

our expectations. reduced of for and at of flow our almost declined mind as expectations North a America midpoint, We outlook, $X XX% result free lower versus respectively. mainly earnings in have vehicle to sales initial in outlook XXXX, August also cash billion reflecting the that Keep volume XX%, sales our and Europe, in expectations assumptions compared and our reductions production

decremental both unpredictable together addition, production unpredictable cash In as industry and inefficiencies schedules solid a driven by pressures. in the expect challenged QX than schedules, billion lower flow cost resulted performance input summary, lower-than-expected this, OEM inflationary we have In typical in production OEM environment. for an a managed We as cost had XXXX. inflationary increasingly volumes and in shortage chip in about due through semi generate to all sales. dollars on still to the well free higher margin Despite pressures you

business portfolio technologies. our of win to continue innovative We with

positioned we subside. be questions morning. the recovery strong for support We growth, the at production once Thank of attention industry We vehicle investing your and time. for to disruptions future to you this remain happy are your answer further would this anticipated

ahead. you Thank proceed much. Bank of the John Securities. first of our Go One please, Murphy right [Operator Instructions] for question. America moment, on with very first line of our question We'll

to and continuing First that. guys, guys. off the looking promotions. to on congratulations you on congrats We're Anton Vince, Pat, with forward work

First here question Vince.

maybe year, to you including thinking and mix think to XX the major you but next more for interesting about volume, forward, hopefully little mix bit negatives There's third on. ramps factors know and months to that the think as about do the up, very you deterioration quarter. But sequential from early production as a second what's made think one I about As going positives to forward quarter mix, comment we gauge next days how about normal? input it's costs other XXXX, you raws become of going outside in

for your comments. thanks John,

has QX about even and think QX in happening we what's in been QX, As and challenging. it

in own continue things it and start think QX is little My a we're stabilize at in expect that We the should deal and rough to of kind bit bottom QX. be to I we into the to end of back mid get to environment. a and get should kind think move I as to as better of type production 'XX, a to little we get we 'XX, normal

So the production, of look with I should the go some buildup, structure, that as inefficiencies normalize, away. should our all cost at having of some all overall that we've that of I inventory been think start-stop so the

able our additional some with of to materials labor production that and But will be I through programs, the us, that you have to confident is around, moving of are some that an commodity again, impact got there. some at going or the as energy. cost, believe being being our with on costs, we of we're some see should forward, deal bounce at deal we I particular to inflationary of improvements. which labors through going that, energy issue don't resale should you of cost significant terms We'll just expanding track look and In we for productivity manage be a forward. look that margins. in I'm on of to continue our with and have

we On little year. a the side, had earlier bit in some year. mix John, positive this tell, hard negative it's to the It's mixes

we market. that a We it Mix be growth market, will or on we to they past. move to we we're given expect expect then, and 'XX talked positive early too as market. was John, where but whether plus experienced growth tell, It's think to in to year. going better some, are in that be of significant. certainly over But over minus accelerate about get into 'XX, going right But impact. haven't some were to QX our actually negative expectations, did growth than I over now, We to 'XX into 'XX, things have previous their going there or have going this wasn't compared the

Yeah.

in at sequentially good the compared business, in and looking when Just we a underperformed Germans had to which of quarter change. our chunk up Europe, mix in tough a make QX, overall were GM the

about about that's kind what talk stuff. talking of we when So we're mix

Got it.

up but That's you just at this curious, Vince just I and around is second opportunity gone, a rebalance. well. the I'm mean, them divestitures, Okay. stepped as know question took But and you too and helpful. Swamy the Veoneer very out. you as LG, acquisitions, yet portfolio JV set the on is for look

going is to far What You're whether as we have think What small customer region, room or be make as some the acquisitions there? sets? product it'd it to time, continued as focus size, larger. or targets, over should about

allocation completely organically we to turn I that is, that or region and can region over we've that an Swamy excess I that another that's John, complement range has consistent Pay world. the of customer. capital strategy continues investment return on out to it One whether capital about wanted just and intact, our our leverage are of or to test it be over technology been to That's of kind point transactions is, after. and overall to always the that and inorganically, obviously, have to and extent in another most good number world grows in base, in the we our of one inorganically. we what one operations, business from and the that our standpoint, the add can and talked time, for dividend generate invest shareholders. intact, we the to do target from cash want priority want that is that with amount profits to we and

it to advances if not is, think overall long Swamy, worried something as positioning. I really it our wanted add as that? you where to we're about

covered think I well, No, Vince. it you

I on think not focused the size. we're

either We either footprint, rationale and a always John, strategically are That us. as I business investments, or will or base, customer normal our just the at internal for for portfolio. our looking been of product or process external, our continue supporting at think that augmenting looking augmenting has

contract the just Okay, on and and real quick Fisker manufacturing. then lastly,

do since curious time car that you over your how the there? get progressing? mean? in are side, you you more SLP, or And program content what existing of help does becoming or also closer start-ups winning you Just from this and banner a Magna customers? from getting more at financially can are actually year, is and a startups, How developed next You coming that even of other from other maybe to much as or interest end

continuing well obviously both customer. component as progressing with new well it other So said I John, past out in from had see But continue I example on capability, like a as so system would conversations the or have full left customers, and portfolio and would from on for perspective, details to that think to definitely the be our be based [Indiscernible] fiscal we just say their whether as like weekly to engineering and just as show past. models comment any discussion we and it'd a program on, in manufacturing. Magna's various is we've is the we be an to and have side,

from pretty progressing think it's our I well. perspective,

Great. Thank guys. much, very you

next Thank Capital get BMO to the the line Markets. We'll of question ahead. Sklar on Peter with right from line Go you. our

Good morning.

electrification that Magna, you the to by are review $X and major the billion and wanted go stream for I to I revenue? of if product that to ask just review you by going anticipated vehicle areas ask your $X billion wanted comments I about back to XXXX. First, you XXXX and comprise said revenue just could about revenues think

Good morning, Peter.

at in past, we're about as talk look we obviously. also products we have of helping the think eDrive But that talking the systems, I are the the about electrification, some said transition. we when

and systems gain and X billion heard part are XXXX, by mark you've hybridization X the in to going the traction, XXXX, past. today, looking in portfolio about continues and eDrive we the talked the getting into hybrid a as towards I numbers, HDT our to mark and have production of products think a DCTs got to We're and right. you've it, So related billion

discussions to more well as traction eBeam, and on as eDrive programs. interesting continue have We

include managed so Peter, add that's for will just we LG a also on that equity would going like to include items HASCO. for it and I it's account basis, instance,

and I'm you've programs recall how eDrive so is announced far? Okay, awards announced many far? so think, you it I X to have trying

business We've in talked about that the we HASCO. VW a have

in HASCO. also We couple years, in of launches have another global, a we end that

haven't that disclosed haven't additional have We but business yet. we and that have. a program, we We do primary additional customer on named secondary,

Okay, and then other just of couple questions. detailed a

the or be On $XX for mean is the reserves it reserved further receivable is that does fully reserve million down Evergrande, possible could that there road? the

fully Yeah, so there our shouldn't exposure, for road. be the anything Peter. We provided down

the anticipate you and purchaser Like is of funding to $XX that loan? Okay, that then of that lastly, $XX Magna million d million? a exterior the plants. provide of recovery Does the

Peter, part that in that look they of the were is contributed million, the sold. into business the outflows assets three as at $XX facilities cash before the we you

operations So considered that and on that money of $XX has the been item. forms unusual charge we these we took disposal an written off million of part

Okay.

down get you through actually hit MD&A, we Peter, charge. But that that million the some thing it when that obligation road, yet. so $X there's in find funding point and flow Just start, haven't at you another of just $XX provide the we million out did funded already one obviously the for cash yet as you'll hasn't

more one I just if and ask may Okay, question.

little a highlighted the technology on with technology. familiar I'm the I'm technology. elaborate you bit is? the that FreeForm just what could not wondering You've quite if seating,

seems just doesn't design OEM FreeForm seat think, there, if through what aspects have I there keep ability that from I the of form process the and at to Obviously, goes interest the at the have selling helps clean with a it the of we a would flexibility, way the lot is just you into consumer given just complexity. That from the easily the FreeForm very the that that be it get flexibility it, normally look and call they would how That's the it. and in be need it. see to the even seams and a lot making it the you gives gives It perspective, base in fundamentally work able Peter, seat it's with providing. design to you maintenance level. can

you. Thank Okay.

much. We Capital. lines Neville Scotia very our question ahead. right the to from Go go with Thanks on Mark next

morning. Good Thanks. Great.

Anton that First Pat ex [Indiscernible] freight? as off, pressures. Is inflationary curious you're congratulations, on maybe and first and maybe materials, correct just on covered resins, Maybe Vince on my congrats well. just thinking your

repeat hear Hey, Vince. all Can didn't it's you I Mark, just that? that.

Sure.

Just inflationary pressures, thinking need your ex resin, on the I'm recourse. my that covered freight you largely is then You're and to if there's with if correct? curious absorb materials, just costs, on

input of terms in cost. Just

on programs As probably overall you customer buy. look at steel, resell were covers XX% that the of our

balance. that's But we some commodity a the do So essentially have flow-through. exposure on

other going we're periodic and On on some our remember, where to discussions that's customers adjustments a there the looking inflationary [Indiscernible] taking we second the each example, these purchased, into With at the every year, for price we aluminum, resin as pressures, of resin in But like of with mechanism pricing on more account. and that largest we we're of have price. to resale some have some bit reductions side, just which probably commodity probably resale. XX% XX% on and seeing we're

direct might it's kind but you So of does offset, not commodity the a pressure weighted, feeling. impact. see indirectly it we're Indirectly, cost negates of a some

to components some looking buying The some that and is QX in with certainly Go we supply keep other make start of ways in in surcharges customers disruptions increases some be to the is generally up the as are recover away temporary semiconductor side. things running. our But there to at to sure that all were across is we're us expect of can seeing But the expect impact shortages that's our QX on and that's well seeing The or that we as customers, doing we're through and we We're and the some in some area industry. impacting QX. going. everything normalize.

Okay.

by Just changes take these terms there in that your it you customer? I terms in there do, lot not now? of you could any schedules, production flex labor, just there's is can of presume that recourse of caused inefficiency curious a how to with you're costs in managing

unpredictable way, like be is or inefficiencies a to us Obviously, planned Mark. you that said, Hi, not the and causing the in able the it. to changes for flex are reason

the We those have. will are of conversations commercial the and the drop. some it's part we and inefficiencies on with the But cost stocks we customers costs, discussions would discussions continue to materials, because that of of have the having normal

but but Great, in I'm wrong, term, maybe see Presume on near it. just NCIB the last don't thoughts just just renewed on you one NCIB this the to in maybe to play be active, question, environment? if to

guess Yeah, November the NCIB Mark, expiring I our is old XXth.

move what to to on our cash, commit Don't continue strategy generating liquidity, our expect to We'll in leverage in you the we last the We'll our want when actions. and are that in XX but have how and see want our view, excess and We we years, market, something, will generate be extent and and certainly consistent cash over ratios. how we seen it's do active to within the much. to pretty you've 'XX. to

lot the Thanks guys. it. a time, for Appreciate

from get We'll Credit to Dan next right Levy much. Go ahead. on with very question our you Thank the Suisse. line

pieces next new type congratulations margin remind and get responsibility. moving margins, year? production if sense I team, maybe start higher we on what of us on recovery I and but really simply Because should on know can morning, just Pat earnings and your Wanted does margin sales alone, wondering just tie Anton there, and cost some more a just think any we expect the piece of incremental contribution volume Good to year? next there's how Vince Hi. and on incremental or we're mix, you form a on

comments. Dan. your Thanks morning, for Good

QX of year start than What this impacting the QX. look larger where COVID, in where shutdown the our at typically about we decrementals. with thinking above time we We expect talk talked reference should unusual was biggest a group, that be we and said contract as period. QX, stops, into BES we segment, than that just manufacturing we we about to organization. and our when thinking There's high and well probably that we that impact moving us. greater of QX, of less in items decrementals a would But in me back lot just about you or combined Magna. the XX%, certainly, decrementals and maybe What than XX% it talked of QX, group, Decrementals, and things and kind We're that expect us during was moving I'll in with our for that's Let some XX% accustomed are QX Seating we good move some XX% what vehicle about at kind sort of during you made back COVID Power that around & QX. we some last been in BES about things comments year, and lot could benchmark the we improvement to. as of for just of during when you were our higher Vision about start as than are

it's be. but should we well, QX to comments, where As earlier Swamy's and in I get comments better, to mentioned not be want it going as our

I into got in and to when 'XX business. to normal our incremental think you you decrementals margins move see start

that's clear, all-in be and to that's or an number just price? on those figures, volume Just purely

or tax would've been to, the excluded. would've just excluded in or it's the charge operational whatever all, and price recovery, value-added recovery. and would QX. that off with dealt inflationary Would've It's have been some back somebody it standpoint, backing referring would This had we That is there then if I'm of deals with is noise. volume that warranty have a decrementals a one-time

it. you. your bid is what Thank was being on question here. Got My for second

this the what business I'm that fine was to you Would really business still it, was say it's we think are to live Was use the 's be that the a just to the initial acquisition but exactly or and guess of Safety without capability? business? you, better? And we subscale Active Veoneer software I what revisit or the still some that core I it pass hardware something try to sale. was it for current at to first, be make it What the could getting is, Can that seek components radar then the put are are nominal maybe So any really you going just up you enhance now meant seeking? those it, know is that things was of rationale.

Maybe I really continue a and in Dan. today and ADAS start we morning, programs. see other traction I'll with programs, a win saying business, Good one business we by we good to like the have talked the off business is and that about pipeline of customers good various and

at augmenting of place. a capability, things. couple was the a the One, have think we question, we it from I digital of to getting rationale some Radar in Now, part your looked first when

reset, program that We we how like, have get at do have would scale.

you you that know, continue plus. the basis forward. going we different doing, across an That our at everyday in we will just across talent but along areas. When industry with is not do on continue experience to generally and a look always augmenting talent, Just as

surround the We digital partner. We building I front it's suite, necessary, LiDAR have, rear as sensor said, blocks talked a view, the I about. in that all that camera, the radar are camera, a launched whether just with

do the the have features. in to We ability fusion the

augmenting that really will and continue we to even to we results continue So have. well reassert we'll as that and of again, said, to as starting believe invest value have progressing. investment as the we good that we really But both and programs, right I internally and we add do what will this an we we had what to anything technologies to platform business core see continue was further, in the are we win our like

you software you capabilities? ample have Do think

we're restricted and important question, that looking from asset Mechatronics, a good Dan. software not That Powertrain, software, forward. is really the to have going ADAS, When It's various we a it from at look such software only other is aspects implications. it at

and engineers, of software and add X,XXX Magna. roughly, areas about have and in that we of continue forth, flexes kind So to different we back

very you Thank Great. much. Appreciate the color.

you. We'll Mark Go Goldman from Thank line Delaney of ahead. on the to next with get question the Sachs. right our line,

talk more improved the feedback customers? new completed my for going bit hoping LG. a was everyone kind it's hearing thanks responsibilities. give Can to and around let that their also taking start has congratulations me of now morning and from I your that you're very the much Magna questions, what been you capabilities to add Good and on for on the with JV

Good morning.

manufacturing feedback important what's the the the you the customers the had. integration has and been said, from do the we very capabilities Like inverters, and think to what eMotors have I the in for rationale positive. was addition to

manufacturing software what some this we system knowledge way needed inverters and own, eMotors, there integration today. to business. We level as of consider have feature their will OEMS only start system systems that, the But the further in various not of and have in. a doing capabilities. on of is or this can the that we augment at Adding participate subsets the things It that might the

and system be a seeing it and and outsourcing very we are take get As already discussions excited happening, those the when evolves it. are so this we rates, would positive to larger market to about it's table, gets we at

more helpful, and particularly and was out your some gave press supply Europe, chain and it mentioned there, expectations on as we're That's a already second on hearing aluminum, my called release semiconductors. well. around in you question your in and was comments But

supply expectations talk maybe you next for into chain a detail your in going bit So more year. around could

with be what would touch could specifically it helpful? Europe If in Thank on you're seeing them aluminum you material, that and you.

Yeah.

I the we're on year. of we mid a next flexibility about bit believe semis, of by the the chain, we talked think and seeing as supply little the improvement

the and mid next we I normalcy continue towards monitor going year. have year, this. would to think But a and see the next manage that through, I again, managing reaffirming to sense but the grind continue of of will through

But discussion see of it's it's don't Now an on on but short-term to around radar at or impact really stoppages which of happening point Clearly so variable by that aluminum, aluminum industry, it. this time, we manage. a We're and creating aware any on, the monitor is the really our magnesium becomes important the driven for supply. monitoring definitely it.

to next with on the much. World very you of Kevin CIBC right question Go Thank We'll line the line, our proceed Markets. Chiang then ahead. from

and know can color provided ask my question, of morning, taking questions Vince, for been a But it maybe way. everybody. there's on good Thanks a good decremental you've there. I the different lot margins, I

there third the production decrementals of just the quarter? excess you at level high kind inefficiencies you to in look printed you you a versus saw, inflation, is the terms in bucket of way it the decrementals broad based to contribution saw If the between a of

value-added EBIT decrementals, to year-over-year was standpoint. margin that there decrementals Good the looking I are I morning, provision was of talked quarter little you probably. last would by about just on guess want look sequentially? because called settlement. and are want them, a When at I from We bit There of a sequential at Maybe Kevin. year, Or QX they that for through we start is if in some There's to look role took million. about I $XX sequentially maybe a $XX do items the we've different. this percent. impacting as Evergrande it tax million. kind You out

there's kind So and there's commercial comp, of quarter-over-quarter, on going that's then incentive have a our profit margins, that's settlements. impact launch negative and to costs sharing, and

from what from provision operationally is But rest and seeing value-added the decremental exclude that costs. you wash perspective, the my standpoint. just tax commodity those is we're kind of that a and really higher Just all when settlement,

are last when out really looking there's have or XX% costs about you the that We & basis, and commodity point operations. out. We decrementals kind did I costs, XX% XX-ish a around I Power year-over-year back On year. Vision, at adds of groups three [Indiscernible] programs. pluses some that impacting up XX about some margin costs. the all but called our significantly of for positive BES would to example, back again of the I higher, support a I'm net new at said launch last decrementals We year, some costs. out couple of this I you provision, Evergrande times guess, COVID employees subscribe the that's programs. like QX of of just about of back backed to XX% Power that Again, again I attribute the stop stops of start Vision, percent even that out employee once and start and to last year-over-year XX BES at a points. inefficiencies, from to just once twice for in and zero, the and the to moving noise, again, about year benefit basis and we So support & and XX% They things lot a our look Seating. that are of decrementals, all there's Again, facility for was inventory minuses, sequentially,

That's color. helpful

guess just production, at outlook maybe an the your think environment high a the of in achievable still on of I is of second did notice mentioned, the here. remarks, On back-half financial in your based of have I that's appendix, your some line Vince not. normalization year. assumptions I a guess unpredictability around of and some your XXXX to maybe prepared you in normalization in appreciate still for or line-of-sight I target I your the level, just maybe is you? next you that current macro I in question sight guess

think at when outlook certain more at volume you and you assumptions, of I things a the from Kevin, IHS started based set if for on and there. recent essentially think look down are when year we look gave our was volume, XXXX the I

we've I mix to volumes, we We and what talked see on to So even have again, We though on I programs where look there's an on XXXX onto think go an seeing a control directly margins That in I after as look to took different this to uptick plan yet. we're big margins. programs still volumes, lower of operating that's don't we successful. do maybe as some written in in see actions that why more we our and mean, a to at at in about exchange from right-size don't we lower lot obviously to that. wanted any on the in have and going the of can't of standpoint. out going unfortunately. a just in we year, control cost to have we rates, benefits have is operational see an I impact. even to I got got to on the coming are that's Where is any right why and that organizational structure, own impact get going Swamy, we on the new its 'XX. with business don't reason the that to going so QX subject revenue business continue not improvements little is 'XX. volumes reason be

and color, it Thank Vince, to great again, Anton, there. leave you. congratulations you, That's Patrick, and and I'll

Kevin. you, Thank

line the our We question the Rod from Research. of next get ahead. right from line, on Lache Go Wolfe

Hey, Rod. this Shreyas Patil for on

on last I Just couple recall questions. the seating of quarter business. focusing a

mix. can I even you launch think margin and favorable a and takes then with are weighing been business initially that in meaningful what of some improve would margins that maybe cost as some that there Obviously, there improvement was more not mix still an going strong. has expectation and the But are even supporting some that environment Is what kind of it QX? QX are about business? to be outgrowth down? outgrowth little talk to and Are into puts the bit

we improvement, mix that to and in really and in of say expecting would negative were be see seen continuing We expect a bit haven't little we I seatings. don't was to it QX.

year, the certainly get Seating they year and into I still is just well, currently, environment. for platforms, think how how in programs really might been in it's Europe the America not performing and top for a both to that it's But are tough North the they're business group. on performing We're that going the look. current the in next

of say made consolidated last numbers in comments tax about than that when as this normal of sequentially, QX had good at benefits that last from higher that keep part quarter, I of settlement. value-added Again, settlement receiving look year, in that was last a quarter. Magna we result the in you mind, some just Brazilian Also I'd sort QX

that of just historically Seating a just thing. outgrowth. in performer negative function terms It's just of it's has a the mix, sort of now, right been Yeah. good

a ever assessing like were How just number who who manufacturers that you at towards then with are I folks expands? work Okay, imagine EV with there to that of I arrangement mean, do business go a markets HASCO and aware had startup level, think you as China. to in and not most ground resources high about I guys and allocate

morning. Good

we programs program, the have is going as continue that supply make obviously, there any gone but along it no presence, I at associated think asset all everything, depending to the variables, to, to of the variables. of look at customer, the bunch we the our that with of our of to and other and and the decisions, to line obviously, with through do the at the perfect when look to base, region, a we look upon product we answer of risk that, we profile we're

can never it's the to think guarantee XXX% I but very up all a you a exhaustive process, time.

a to miss we the a up and the continue there of to been from look do time product were we started. have in that here process One A grand, that and market, elaborate predicted normal business. of their customer, from sum on everything is course but on, current it program roadmap we from very as of so every terms

can report But reserved point we'll money work we them quite a do at We accounting to When this actually we've needs a advance. some at look from the in of standpoint. new we payment for profile. traditional assessment to compared have we an this with take paid of the of do This Swamy, time, believe in through case and is that lot time we wanted also some paid our get happy to done at customers, entrants to into should of ideally perspective. all income. you we're add. Evergrande, Obviously, point in quite when we'll to at at providing be be terms, get I point, a in is what the from look for arrangements different of all the bit we that we this they it it. back work for be risk and just contractual hopeful into received earlier, risks are account this, reverse In financial

different that's asking into but approach, you if be do this markets, for that China, startups, in in would philosophy not other something expand this and that just terms Vince, with payment you in and still payment Okay, you around that to other, were place? advance, expand as

I'm looking way him with sure on he disciplined taught I hope. my carries Pat at Yeah, hope of will, well, I things. I've

Okay.

to every region. region, applies to expand a hard to It's program, mean, every that I right?

it's So a only region. to not particular

you. thank Alright, Okay.

Thank you from of Brian the Go another right on much. do We very from Johnson Barclays. have question the ahead. line line,

lot XX% Vince, a like why about as attacked implied This changes in as XQ, to know before revenue, comments we many and come the sort your assuming at But be higher and is the sort margin, the step-up, is mean, Jason quarter my guess of if Stuhldreher I'll from though I XX% sort I understand suppose decrementals of different on in margin. you're as for to like playing sequentially Brian. I it's incremental a fourth pretty cost kind right, ways. a then high revenue try or math see, to they the But not your double-digits the I simply, as only of for XQ question, move, then, more decrementals been shouldn't margin in XQ? high in back in this low sequentially. equally step-up but like implies I I even quarter guide, third a step-up step-up, we look of

decrementals look So Overall, I'm decrementals. minuses backing decrementals the about for and obviously, I Evergrande, combinations decrementals acquisitions, and implied for warranty, I Magna guess at my look where XX%. calculation QX and out example, other QX business out, when QX and or I imply I'm actual COVID, Magna XX%, overall backing pluses when or and at which showed QX QX

would about that's in at implied to costs visibility we're We our take XX%-XX%, not be we're of that to what took doing. and recording to some, decrementals in production I go guidance the should improvements think, not with should with what the Again, customers, I'd by QX, But sales half think That year. these of to our level expect and able to going initiatives we the some move at improvement QX. slide supply get QX some we normal type of away, my of attribute comments, more we into down, in next improved happy as better of second we're at to get in environment midpoint, the to again, about talked in a an particular. look our the benefits should as help subject past But you and to decrementals I If continued QX. we XXXX, XXXX. need situation QX I be disruptions some reduce and be happens need see I that's on QX the to chip there

Okay. Understood.

Just to year-over-year in Vince, confirm, to there XQ. decrementals I that XQ from were thinking comments the your was the XQ? around sequential

No, I my and sequential was QX was sequential. looking at think was I my QX

Sorry. Okay,

year-over-year. Actually,

Year-over-year.

You're right.

stand Sorry. corrected, year-over-year. I

we want as like can in I notice. doesn't or don't it we is expecting to to seem just offline, from step-up I a that saw in be similar I on Just up revenue, meaningful the a level up much, QX, apologize what a but QX I of assume step and and too terms in decrementals need, there's high follow-up you're something like would incremental but so margin to we it'd QX, take look

you second I of when even a or modest bigger going refer incrementals it's step-up year-over-year, look to is some It's the in be but improvement, 'XX. improvement, think guess enough, but I did never half I improvement. some in at expect I decrementals to Yeah, do

Okay. Thank you.

have much, back to remarks. we Mr. very the line. you any you Kotagiri, closing for I'll questions no turn Thank further and it on

Swamy, we you. hear can't

I and results class new position day. thanks plan a for Thanks on to everyone the and once focus manage the the view. diversity, point and right to of the Magna subside, to strategy recovery future. execution, Enjoy prepare Tommy, re-continue supply for will build listening production rest of the continue business, for the Tough in. Thanks, through everyone. financial a industry from quarter containment, disruption

we participation and everyone. the thank good you disconnect That today. much, We very has day as you everyone. for lines. your your call for conclude you Thank a thank conference Have