Magna International Inc at Barclays Global Automotive Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Johnson - Barclays Capital - Analyst : Speaking of precautions and speaking of COVID, I just want to get an update on where you think market conditions are -- frankly since you reported earnings. Because we've seen a second wave of lockdowns in Germany and the UK, growing restrictions in North America on gatherings and activities which may or may not affect sales. So, what are you seeing both in terms of as you look through and talk to your OEMs about what the retail sales are doing? But then, more specifically, the risks to sales and production -- to production levels and hence your sales in the EU and 4Q 2020?

Question: Brian Johnson - Barclays Capital - Analyst : So, you're not seeing any changes in schedules in Europe yet or any issues with supplier factories? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : Okay. Let's move on to the biggest -- one of the big strategic issues, which is the electrification strategy. You have obviously made some very interesting progress. In fact in about an hour will have Henrik Fisker in to talk about Fisker and, of course, their relationship with you. But maybe just to kind of start, as you go through the Power and Vision division or even other segments of Magna, what percent of the revenue is for parts that really only have use if there is an internal combustion engine in the vehicle? So, it could be a hybrid, but once you go to your BEVs that product line is basically gone.

Question: Brian Johnson - Barclays Capital - Analyst : Well, then let's talk about the EV building blocks just for pure BEVs, because I think your relationship with Fisker, which I'll get to in a moment, but just -- they did point to the EV platform. I don't know if you want to call it skateboard, but the collection of EV, eDrive and other capabilities. Could you maybe talk about what you would call the magna EV platform that you will be providing Fisker?

Question: Brian Johnson - Barclays Capital - Analyst : And how are you sourcing -- are you involved with battery sourcing, battery pack design? Or are you really sort of the motors and the control elements coming after that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : And are you talking to other either startups or established companies? And kind of where do you think -- many of us fed the dream for years that you could become the Foxcon or Flextronics of automotive. Do you think this is a trend that could continue?

Question: Brian Johnson - Barclays Capital - Analyst : So, if we think about the trade-off just within powertrain around electrification, can you remind us of your effective CPV in the powertrain business if an OEM bought everything? But more realistically, what your typical ICE car from a customer would have? And then how does that compare to the potential CV for eDrive units, if you're not doing the final assembly but providing some of the other components?

Question: Brian Johnson - Barclays Capital - Analyst : And where are you on eDrive pipeline for BEVs? Because I certainly understand that if you are doing Magna Steyr and really helping out on a broad scale there's an opportunity there. Yet when I think of the major OEMs, several of them -- for example, six of one of your competitor's top six customers have all announced very publicly that they are doing their eMotor assembly design in-house. So, where does eDrive fit into that world? Are there other OEMs who are more than happy to outsource the eDrives? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : And in terms of components, what is the real value added component or components that you could supply to an OEM who has to take his or her XYZ engine plan and repurpose it into EVs, so might be doing the assembly? And can you -- what are the components that you could still provide? And are they attractive areas or is it a very crowded space?

Question: Brian Johnson - Barclays Capital - Analyst : And final question on electrification and then I'll get to the more traditional post-quarter growth and margin questions. The frame business comes up when I talk to investors about Magna. Obviously you are a major provider of frames for a major pickup truck platform. Yet that very same -- there are electric pickup trucks coming out that we think will eat away at some of the higher end volume on that. How do frames go -- how will the frame business evolve if more and more of those heavier light trucks moved to EVs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : And you mentioned the battery pack trays, but is there an opportunity there to take what you know and hydroforming, etc., on frames and bring that very aggressively into the battery pack business?

Question: Brian Johnson - Barclays Capital - Analyst : Okay, good. Well, let's move back to the broader business. And one of the key questions (inaudible) spend forever going through your financials because of the diversity of your businesses. Can you give us maybe a feel for how to think about incrementals going into next year? We've had some positive developments over the last two quarters. Looks like you've got some improvement in some of the underperforming facilities. So, just including -- how are some of the headwinds that we saw 2019, first half 2020. How are those reversing now?

Question: Brian Johnson - Barclays Capital - Analyst : I look at the margins by segment, BES is pretty much back to where it was in 2017. Complete vehicle has overshot that, I want to drill down on that. Seating and power vision are lagging there in 2017. So, let's start with complete vehicle. Can you just remind us, if you were to adjust for the equity income coming out of China, how the margins in Austria look?

Question: Brian Johnson - Barclays Capital - Analyst : So, that margin we're seeing in complete vehicle systems really reflects that -- Steyr is operating at good cap utilization.

Question: Brian Johnson - Barclays Capital - Analyst : And in seating is it ever fair -- is it fair for investors to assume that you'll ever get back to 2017 margins? And in particular over the last year or so it's been hurt by the ramp-up of your BMW South Carolina program I believe. Is that beginning to turn around or are there other things that could -- and/or are there other things that could weigh on seating margins?

Question: Brian Johnson - Barclays Capital - Analyst : And does that get you to the 400 to 700 basis points growth over market that you talked about at the winter Investor Day for seating?

Question: Brian Johnson - Barclays Capital - Analyst : Yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : Okay, and then quickly on the ADAS side. Clearly that is going to drive growth above market. How is your business developing here and what does the Level 2+ landscape look like?

Question: Brian Johnson - Barclays Capital - Analyst : Final set of questions -- you are going to have a new CEO soon, obviously with a very technical background coming from the CTO. What do you think is going to be different, if anything, in terms of capital allocation or portfolio strategy with Swamy at the helm? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2020 / 3:50PM, MG.TO - Magna International Inc at Barclays Global Automotive Conference (Virtual)

Question: Brian Johnson - Barclays Capital - Analyst : Well, good. Thank you very much. It's been a great 35 minutes. And for everyone, in five minutes we're going to reconvene with Tenneco. But thank you Vince; thank you, Louis.

Question: Brian Johnson - Barclays Capital - Analyst : You were my last cross-border and last trip ever. So, I hope to get up to Toronto whenever you'll let us back in.