Magna International, Inc.

Greetings and welcome to the Q4 and year-end 2021 results and 2022 outlook. During the presentation, participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. At that time, if you have a question, just press the 1 followed by the 4 on your telephone. If at any time of the conference you need to reach an operator, you may press the start followed by the 0. As a reminder, today's call is being recorded Friday, February 11, 2022. Now, I would like to turn the conference over to Louis Twinelli, VP of Investor Relations. Please go right ahead.

Thank you. Hello, everyone, and welcome to our conference call covering our 2021 results and our 2022 outlook. Joining me today are Swami Kodagiri, Vince Galiffi, and Pat McCann. Yesterday, our Board of Directors met and approved our financial results for 2021, as well as our financial outlook. We issued a press release this morning outlining each of these. You'll find the press release, today's conference call webcast, The slide presentations go along with the call and our updated quarterly financial review, all in the investor relations section of our website at magna.com. Just before we get started, just as a reminder, the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions, and uncertainties, which may cause the company's actual or future results and performance to be materially different from those expressed or implied in these statements. Please refer to today's press release for a complete description of our safe harbor disclaimer. Please also refer to the reminder slide included in our deck today related to our commentary. This morning, we will cover our 21 highlights as well as our Q4 results. We will then provide our 22 outlook and lastly run through our financial strategy. And with that, I'll pass it over to Swami.

Thank you, Luis. Good morning, everyone. We've been busy over the last few days taking our board through our annual results and our business plans. Today, I'll recap 2021, comment on our results, and address our outlook. 2020 was a very challenging year that was dominated by the global turmoil caused by COVID. In 2021, the auto industry was severely impacted by supply chain disruptions most notably the lack of availability of semiconductor chips. Once again, we found ourselves working closely with our customers to manage through the challenges to mitigate the impact on production. While I'm not happy with our financial results in 2021, when I sit back and think about the efforts and performance of our team, whether it be winning new businesses, launches, or other operational excellence activities, I was extremely pleased with the results we achieved. It is a testament to our people that we managed through yet another difficult operating environment. Our culture of collaboration and execution comes through once again in 21. In 2020, the first half of the year was severely impacted by COVID-related production shutdowns globally, while the second half saw a strong vehicle production rebound. In each of the first three quarters of 2021, we experienced sequential weakening of vehicle production as the semi-chip availability became progressively worse. In addition to the lower production, inefficiencies driven by the unpredictable production schedules of our customers drove higher than typical decremental margins. The fourth quarter saw some sequential recovery in production, but global volumes were still down 17% from the fourth quarter of 2020. As a result of this cadence, our sales of $9.1 billion in the fourth quarter of 2021 were down 14% year over year. However, Organic sales outperformed our underlying markets by 6% in the quarter. EBIT margin declined year over year to 5.6% while increasing from 2.9% in Q3. Our adjusted EPS was $1.30 for the quarter. And free cash flow in Q4 was $729 million ending the year at $1.3 billion. Now, let us look at some highlights for 2021. Keeping our employees safe throughout the pandemic has been and will continue to be our top priority. We have been evolving and updating our protocols and facilitating testing and vaccination programs globally to help protect the health and safety of our employees. We remain focused on three key priorities, building awareness, creating an inclusive workforce, including through training and leveraging tools and recruiting to help remove any bias during screening. To continue to cultivate a culture of learning, we have launched several new education programs for employees, facilitating further development. And among the many awards we received, Magna has been recognized for the fifth consecutive year being named Forbes World's Best Employer for 2021. We never lost sight of the importance of operational excellence. Last year, we committed to being carbon neutral in our European operations by 2025 and globally by 2030. This should place us among industry leaders in Europe, and North America. We managed through the year-long supply chain challenges while working diligently with our customers to minimize production disruptions. And our focus on operational excellence and innovation led to customer recognition. Last year, we received our highest ever customer recognition awards, 122 in total. Now, let me comment on growth. We outgrew our market in 2021 by 4%. This exceeded the outgrowth we anticipated in our initial outlook last year. In fact, we achieved that outgrowth in each of our major regions, North America, Europe, and Asia. And we launched new technologies that have significant growing addressable markets, namely e-drives, advanced driver assist systems, and EV battery enclosures. We expect these product areas to keep driving our growth for many years to come. Finally, I would like to touch on our innovation. We demonstrated the successful commercialization of our innovation activities over the past few years. We were awarded new business in a number of core areas. This includes a recently announced driver monitoring system for a German-based OEM. We won the CES Best Innovation Award for our ICON digital radar, which is going into production this year. We also continued to expand our collaboration with a growing ecosystem of entities to help accelerate time to market for our innovative products. And lastly, our commitment to innovation continues. Over the past year, we increased investments in megatrend areas to position us for the future. Normally, I would be passing off to Vince, and I've heard this statement over many years. Don did it, and I did it for the last quarter. He's here with us. Instead, I'll pass the call to Pat McCann, our new CFO, who will first take us through the financials. But before I do, I would like to thank Vince for continuing to be a mentor to both Pat and I. Pat?