Magna International Inc. (NYSE:MGA) Q3 2023 Earnings Call Transcript

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Patrick McCann: Yes, I would just add, in terms of the UAW strike, it is a little more weighted not only Q4 versus Q3, but a little more weighted to BES versus the other segments, so [indiscernible]. If you look at our implied fourth quarter, it really didn’t change that much, so it isn’t really sales impacted really in any one segment all that meaningfully, it’s really just the more weighting on the UAW strike, I think in BES.

Joseph Spak: So is something like an 8-handle a better underlying rate for that business at this point, if we sort of back out some elevated launch activity in the fourth quarter and the strike?

Patrick McCann: Well I mean, we’re implying kind of a range of 5 to 6.5 for the fourth quarter, right?

Joseph Spak: Right, but I thought you just mentioned there’s some unusual stuff in the fourth quarter, at least the strike.

Patrick McCann: Yes, we’re not going to comment on where we’re expecting to go beyond this. We’ll give more color, I think, in February.

Joseph Spak: Okay, thank you.

Operator: Thank you very much. We’ll get to our next question on the line. It is from James Picariello from BNP Paribas. Please go right ahead.

James Picariello: Hi, good morning everyone. Back on the seating [indiscernible], I know you guys don’t provide a backlog, but of course you have one. One of your competitors, also back on the EV topic, one of your competitors, they stated that their new business backlog, about 80% of it for next year was tied to EV programs, and they went ahead and cut that backlog contribution for next year by 20% just based on their perceived visibility or real visibility in what those EV build schedules look like. Just curious what your EV program mix in the new business draw for the coming years, what that could look like in the seating business, and if any other major product categories that are of course powertrain agnostic come to mind in terms of this EV exposure. Thanks.

Swamy Kotagiri: Good morning James. I think one of the things I mentioned overall if look at Magna this year, all content or total sales related to EV platforms is less than 10%, and if you look at the specific question I think you’re talking about in seating, I think Louis, the content for us on EV platforms today in seating is not material–

Louis Tonelli: No.

Swamy Kotagiri: –so we don’t see that impact. Obviously going forward into the outer years, which it’s too premature to comment in terms of volumes because, given just tight operations and so on in outer years as we launch, I think we’ll have to recalibrate with the customers if there is a significant change. Again, going back to my previous comments, we’ll work with them to see how we need to recalibrate and what needs to be really put in place if there is a substantial change.

James Picariello: Okay, understood. Then just one quick on the LG powertrain JV, as we think about the targeted revenue ramp to $1.5 billion or $1.6 billion, whatever the number is over the coming years, just in terms of the customer regional mix of that joint venture, what that looks like.

Swamy Kotagiri: Yes, I think we were roughly talking about a billion this year, Louis, right?

Louis Tonelli: Mm-hmm.

Swamy Kotagiri: If you look at it, the customer mix is between North America and we are getting into Europe, right, and it is in programs that have been already there, and obviously some will be going forward and launching. This is what I would call a building block, which is like the emission and the inverter mature platform, and we think [indiscernible] specific only to a program. There is a certain amount of specificity to a program, but there is also a generalized asset which applies to emissions in general, so I think there is a certain amount of flexibility as we talk about the manufacturing and the engineering related to this, and it’s not tied to one program. Again, going back to–this is where we talked about flexibility there.

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