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Magna (MGA) Surpasses Q2 Earnings and Revenue Estimates

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Magna International Inc. (MGA - Free Report) reported second-quarter 2020 adjusted loss of $1.71 per share, narrower than Zacks Consensus Estimate of a loss of $2.03. Higher-than-expected EBIT from the Complete Vehicles segment can be attributed to this outperformance. Precisely, EBIT from the unit came in at $44 million against the consensus mark of a loss of $9.10 million.

The company posted earnings of $1.59 per share in second-quarter 2019. Lower year-over-year revenues across all segments amid coronavirus woes led to the year-over-year deterioration in the bottom line. Its total revenues declined 57.6% year over year to $4,293 million. However, the reported figure surpassed the Zacks Consensus Estimate of $3,730 million.

Segmental Performances

The Body Exteriors & Structures segment’s revenues dropped 61.7% year over year to $1,623 million for the reported quarter. Lower global light vehicle production amid the COVID-19 pandemic and unfavorable currency translations resulted in soft revenues. Resultantly, the segment incurred a pre-tax loss of $315 million against profit of $341 million in the first quarter.

The Power & Vision segment revenues fell to $1,298 million from the prior-year figure of $2,808 million. In addition to the negative impacts from forex and the coronavirus pandemic, divestiture of the FP&C business also affected revenues. Consequently, pre-tax profit totaled $226 million compared with $201 million recorded in second-quarter 2019.

Revenues in the Seating Systems segment decreased 64% year over year to $524 million in the April-June quarter due to bleak light vehicle production, unfavorable foreign-currency translation impact and net customer-price concessions. Pretax loss was 84 million versus the prior-year profit of $83 million. 

The Complete Vehicles segment’s revenues were down 48% from the prior-year quarter to $933 million amid lower assembly volumes, thanks to the COVID-19 pandemic. Nonetheless, adjusted EBIT grew to $44 million from $43 million a year ago on the back of a favorable mix within certain complete vehicle assembly programs and cost-cut efforts.

Financials & Dividend

Magna had $533 million cash and cash equivalents as of Jun 30, 2020 compared with $1,276 million on Dec 31, 2019. It had a long-term debt of $3,771 million as of Jun 30, 2020, reflecting a rise from $3,062 million recorded on Dec 31, 2019. Cash used for operating activities totaled $1,232 million.

Magna’s board of directors announced a dividend of 40 cents per share for first-quarter 2020, payable on Sep 4 to shareholders of record on Aug 21.

2020 Guidance

Magna expects full-year revenues in the band of $30-$32 billion. Adjusted EBIT margin is anticipated in the range of 2.9-3.3%. The company envisions capex of $1.4 billion for 2020.

Zacks Rank & Key Picks

Magna currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector include BRP Inc. (DOOO - Free Report) , Garrett Motion Inc. (GTX - Free Report) and LCI Industries (LCII - Free Report) , each carrying a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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