Magna International Inc at Morgan Stanley Laguna Conference Transcript

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

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Yeah. I mean -- look, I mean, the stock, it's not just you. Other suppliers as well have been kind of really beaten up. I think we published something where if you were in the S&P 500, which you're not, but if you were, you'd rank somewhere in the bottom, 1% or 2% of that. And that's not something I know you guys are excited about, but I didn't -- to the extent you can address things within your control and this industry is what it is, it's difficult. What is it about either the execution, or the strategy, or maybe both, that needs to get better, that you can own and have accountability on?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : The questions get easier after that.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Yeah, absolutely. I mean, just look, I mean, you're -- historically, you would have traded in double-digit PE multiple or sometimes even higher than mid-teens. You're at seven handle now or something-ish. Usually, when that happens, the market -- that's the market's way of saying your numbers are too high. So why is the market wrong?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. All right. I want to -- we're going to talk about capital allocation later, but maybe, well, why don't you get started with a few other topics? So I think you brought up 2026. Obviously, you put out the new targets at earnings. We can all look at the numbers and compare versus the last targets. But I guess is there anything that's a little bit more strategic that's hidden in there that investors should know about between now and 2026 and changes that you're making?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Anything on restructuring? I mean, maybe just elaborate on those efforts, anywhere that's concentrated region wise, product line wise? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : All right. Look, capital allocation, let me just kind of go to it now, I guess. It seems like if you look at the last 5 or 10 years, even kind of before COVID, profitability has been -- margins have not expanded. Maybe -- depending on your starting point, they might be flat, they might be down a little bit at the end or start of full year. Your CapEx has gone up. So it's certainly -- your CapEx is -- capital putting into the business has grown faster than

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Sure. I know you and the Board discussed that. I mean, you do, right?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : And you're not where you want to be?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : You've gone through periods where you've been under, and then you've done a lot of buybacks.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Yeah. You know I just want to start something you can't see through right now.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : What about portfolio changes? I mean, again, you guys do so many things in your products, and your customer base is diversified as any supplier in the world. But has the world changed enough where -- that you can reassess some of the businesses that you do where you don't think you can be number one, two, or three in that business on the typical Magna way? You don't want to be in a market where you're four or five, where maybe you're -- or maybe you dispose of some things. And another way of asking the question is, from an M&A and portfolio perspective, are you an incremental buyer or an incremental seller? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Answer any way you want.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I mean, there's something in between as a play. I asked Sergio Marchionne once. I said, are you a buyer or a seller? And Sergio said, rest his soul, he goes, Adam, I'm not saying I'm a buyer. I'm not saying I'm a seller. I'm just saying I'm a player. Are you player?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I mean, that shirt, you look like a player with that shirt.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Maybe on complete vehicles, I think in the past, you said you're rightsizing operations. Maybe like what is rightsizing? I mean, how do you kind of think about the long-term value of the complete vehicle business?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : We did.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : All right.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Fisker. How much -- you're a numbers guy. How much did that cost Magna, overall, round number?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : An impairment. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : But then there was -- that's it? Just the impairment?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Do you think that the media and investor, let's say, fawning over Chinese EV players is overhyped? Or is it deserving of the hype given what you know about the automobile?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : You think Western firms can beat the Chinese on cost?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Meaning, like for like -- meaning, like landed? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Have you driven many of the Chinese cars yourself?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Louis?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Well, then I can't ask the question I was going to ask.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : For another time, maybe we should do that. Do you think that there's a path for -- you said you can help the Chinese OEMs come to Europe. Can you help them come to the US, too, even if it's -- I mean, you don't have the manufacturing capacity here, but is there -- let me ask it a different way. Do you think there's a path for the Chinese to enter the US market and transplant here with the help of suppliers and even OEM partners? Do you think that's something that --

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Also, BYD makes their own airbags. They buy the inflators, but they make the airbags. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I mean, maybe -- I think the thing that is so interesting about Magna is you have so many different views in so many different regions and you're in so many different product lines. And so you get this unique perspective on global auto. I guess as you think out 2030, I mean, what excites you or doesn't excite you? And where do you think the industry is going do you think maybe is a little bit more underappreciated?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : So GM announced MOU with Hyundai to work together on, I mean, literally everything. They had a long -- I don't know what they're not working on -- everything, it seems. What's your reaction to that? Surprised? I think we'll see more of that. And are you aware -- and what's your opinion of cooperations between OEMs?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Are they successful?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Name a couple of successful ones?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Stuff you don't see.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : People mention the Ford-GM transmission thing. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 10:10PM, MG.TO - Magna International Inc at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : (inaudible) back in the day. All right. Let's go here. Thank you. Unidentified Participant A quick question on the European tariffs and Chinese EVs coming in. There has been some back and forth, but do you have a perspective on where this will end? And a follow up to that. You've mentioned you can help them sort of enter the -- I guess, some of the others, enter European market. What are some -- can you give us some examples of how you can help them?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : You love doing that. (laughter)

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : At the bar.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Any other questions from the audience? That was a good one, though. Unidentified Participant Anywhere you think you're underpenetrated? You talked about China, Korea, Japan -- any sort of strategic opportunity?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Swamy likes to do deals. You don't need to say anything to that. But he does. He likes to do deals. Veoneer Active Safety, how do shareholders benefit from that now? How long has it been now since you closed on that?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : How is it going? Because when we talk to people in the ADAS world, they say a lot of stuff is changing now, a lot of things with the approach of how these vehicles learn, how they take photons from the environment. And some of them are even putting billions of dollars into data centers powered by nat gas peakers and nukes to train them. So I'm just kind of wondering, first, do you corroborate that statement that in the 14 months since you bought Veoneer, and presumably longer when you start sizing it up, that the world has changed significantly on that side of the market? And if so, what impacts they have on your business and your capital investments in Veoneer?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : It's pushing -- so it's like creating some hesitation or delaying these sourcing decisions?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Where would it differentiate? Where is the integrated Veoneer-Magna solution? Where does it really differentiate in the minds of your OEM customers?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I would imagine cost and quality.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Do you think ADAS as a commodity? It gets commoditized?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Well, Pat, Louis, we're running out of time here. I really appreciate you covering a wide range of topics. Thanks for being a good sport as well and always for supporting the conference.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : There we go. Thank you.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Thanks, guys. We're good.