Month: November 2024

CALGARY, AB, Nov. 1, 2024 /CNW/ – 

FINANCIAL HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per common share data)

 

• Revenue for the third quarter of 2024 was $434.6 million, a two percent decrease from the third quarter of 2023 revenue of $444.4 million.
• Revenue by geographic area:
  • Canada – $131.0 million, 30 percent of total;
  • United States – $216.2 million, 50 percent of total; and
  • International – $87.4 million, 20 percent of total.
• Adjusted EBITDA for the third quarter of 2024 was $119.0 million, a one percent increase from Adjusted EBITDA of $117.3 million for the third quarter of 2023.
• Funds flow from operations for the third quarter of 2024 decreased two percent to $116.9 million from $119.6 million in the third quarter of the prior year.
• Net income attributable to common shareholders for the third quarter of 2024 was $5.3 million, up from net loss attributed to common shareholders of $5.2 million for the third quarter of 2023.
• During the third quarter of 2024, $44.7 million of debt was repaid and a total of $135.0 million was repaid during the first nine months of 2024. The Company is on track to achieve its’ stated debt targets as from January 1, 2023 to September 30, 2024, a total of $352.6 million of debt has been repaid leaving $247.4 million of the $600.0 million debt reduction target expected to be achieved by the end of 2025.
• Interest expense decreased by 24 percent to $23.8 million from $31.3 million. The decrease is the result of lower debt levels and reduced effective interest rates.

OPERATING HIGHLIGHTS
(Unaudited)

 

• Canadian drilling recorded 3,861 operating days in the third quarter of 2024, an 18 percent increase from 3,262 operating days in the third quarter of 2023. Canadian well servicing recorded 12,161 operating hours in the third quarter of 2024, a 14 percent increase from 10,624 operating hours in the third quarter of 2023.
• United States drilling recorded 3,065 operating days in the third quarter of 2024, a 14 percent decrease from 3,581 operating days in the third quarter of 2023. United States well servicing recorded 35,518 operating hours in the third quarter of 2024, a 10 percent increase from 32,397 operating hours in the third quarter of 2023.
• International drilling recorded 1,269 operating days in the third quarter of 2024, generally consistent with 1,265 operating days recorded in the third quarter of 2023.

FINANCIAL POSITION HIGHLIGHTS

 

• Total debt, net of cash, was reduced by $123.5 million since December 31, 2023.
• Our debt reduction for 2024 is targeted to be approximately $200.0 million. Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately $600.0 million. If industry conditions change, this target could be increased or decreased.

CAPITAL EXPENDITURE HIGHLIGHTS

 

• Net purchases of property and equipment for the third quarter of 2024 totaled $33.5 million, consisting of $5.0 million in upgrade capital and $32.3 million in maintenance capital, offset by disposition proceeds of $3.8 million. Gross capital expenditures for 2024 are targeted to be approximately $167.0 million, primarily related to maintenance expenditures, opportunistic tubular purchases, and selective growth projects that have been funded by customers. In addition, the Company may consider other upgrade or growth projects in response to customer demand and appropriate contract terms.

This news release contains “forward-looking information and statements” within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Advisory Regarding Forward-Looking Statements” later in this news release. This news release contains references to Adjusted EBITDA, Adjusted EBITDA per common share and working capital. These measures do not have any standardized meaning prescribed by IFRS Accounting Standards (“IFRS”) and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measures from which they are derived or to which they are compared. See “Non-GAAP Measures” later in this news release.

OVERVIEW

Revenue for the third quarter of 2024 was $434.6 million, a two percent decrease from $444.4 million in revenue for the third quarter of 2023. Revenue for the nine months ended September 30, 2024, was $1,257.7 million, a decrease of eight percent from revenue for the nine months ended September 30, 2023, of $1,361.2 million.

Adjusted EBITDA totaled $119.0 million ($0.65 per common share) in the third quarter of 2024, one percent higher than Adjusted EBITDA of $117.3 million ($0.63 per common share) in the third quarter of 2023. For the nine months ended September 30, 2024, Adjusted EBITDA totaled $336.7 million ($1.83 per common share), seven percent lower than Adjusted EBITDA of $361.2 million ($1.96 per common share) in the nine months ended September 30, 2023.

Net income attributable to common shareholders for the third quarter of 2024 was $5.3 million ($0.03 per common share) compared to a net loss attributable to common shareholders of $5.2 million ($0.03 per common share) for the third quarter of 2023. Net loss attributable to common shareholders for the nine months ended September 30, 2024, was $0.5 million ($0.00 per common share), compared to a net income attributable to common shareholders of $9.3 million ($0.05 per common share) for the nine months ended September 30, 2023.

Funds flow from operations decreased two percent to $116.9 million ($0.64 per common share) in the third quarter of 2024 compared to $119.6 million ($0.65 per common share) in the third quarter of the prior year. Funds flow from operations decreased nine percent to $323.6 million ($1.76 per common share) for the nine months ended September 30, 2024, compared to $354.7 million ($1.93 per common share) for the nine months ended September 30, 2023.

The outlook for oilfield services continues to be generally constructive despite the year-over-year decline in oilfield services activity in certain operating regions. The recent completion of the Trans Mountain Pipeline expansion has resulted in increased Canadian industry activity, while the US rig count continues to be depressed in part because of relatively low natural gas commodity prices. Furthermore, there have been several recent oil and natural gas customer mergers and acquisitions (“M&A“) in both the Canadian and the US markets that have impacted drilling programs over the short-term, with customers exercising discipline with their capital programs. However, despite these short-term headwinds, demand for crude oil continues to increase year-over-year. Moreover, OPEC+ nations continue to exercise production and supply discipline in response to market conditions.

Over the near term, geopolitical tensions, hostilities in areas of the Middle East, and the ongoing Russia–Ukraine conflict continue to impact global commodity prices and add uncertainty to the outlook for crude oil supply and commodity prices over the short-term.

The Company’s operating days were consistent for the three months ended September 30, 2024 and declined for the nine months ended September 30, 2024, when compared with the same periods in 2023. Operating activity was negatively impacted in the first nine months of 2024 due to customer capital discipline, the above-mentioned customer M&A activity between oil and natural gas producers in the United States markets and depressed natural gas commodity prices. Offsetting the activity decrease in the United States is an activity increase in Canada, largely as a result of the completion of the Trans Mountain Pipeline expansion.

The average United States dollar exchange rate was $1.36 for the first nine months of 2024 (2023 – $1.35), slightly higher than the prior period.

The Company’s working capital as at September 30, 2024, was a deficit of $8.1 million, compared to a surplus of $15.8 million as at December 31, 2023. The decrease in working capital is the result of lower net income, despite higher operating activity when compared to the fourth quarter of 2023.

The Company’s available liquidity, consisting of cash and available borrowings under its $850.0 million Credit Facility, was $66.3 million as at September 30, 2024.

REVENUE AND OILFIELD SERVICES EXPENSE

Revenue for the three months ended September 30, 2024, totaled $434.6 million, a decrease of two percent from the third quarter 2023 of $444.4 million. Revenue for the nine months ended September 30, 2024, totaled $1,257.7 million, an eight percent decrease from the nine months ended September 30, 2023 of $1,361.2 million.

The decrease in total revenue during the first nine months of 2024 was primarily due to recent M&A activity in the oil and natural gas sector in the United States market, impacting drilling activity, along with reinforced customer discipline with regards to their capital programs. Moreover, depressed natural gas commodity prices also contributed to reduced drilling activity. Offsetting the decrease in the United States was improved activity in the Company’s Canada and international markets.

CANADIAN OILFIELD SERVICES

Revenue increased 21 percent to $131.0 million for the three months ended September 30, 2024, from $108.3 million for the three months ended September 30, 2023. The Company recorded revenue of $362.9 million in Canada for the nine months ended September 30, 2024, an increase of 10 percent from $329.0 million recorded for the nine months ended September 30, 2023.

Canadian revenue accounted for 30 percent of the Company’s total revenue in the third quarter of 2024 (2023 – 24 percent) and 29 percent (2023 – 24 percent) for the first nine months of 2024.

The Company’s Canadian drilling operations recorded 3,861 operating days in the third quarter of 2024, compared to 3,262 operating days for the third quarter of 2023, an increase of 18 percent. For the nine months ended September 30, 2024, the Company recorded 10,064 operating days compared to 9,193 days for the nine months ended September 30, 2023, an increase of nine percent. Canadian well servicing hours increased by 14 percent to 12,161 operating hours in the third quarter of 2024 compared to 10,624 operating hours in the corresponding period of 2023. For the nine months ended September 30, 2024, Canadian well servicing hours remained consistent year over year.

The financial results for the Company’s Canadian operations for the third quarter of 2024 improved along with operating activity, largely as a result of the recent completion of the Trans Mountain Pipeline expansion.

During the first nine months of 2024, the Company transferred 23 under-utilized Canadian drilling rigs into its operations reserve fleet.

UNITED STATES OILFIELD SERVICES

The Company’s United States operations recorded revenue of $216.2 million in the third quarter of 2024, a decrease of 16 percent from the $257.7 million recorded in the corresponding period of the prior year. During the nine months ended September 30, 2024, revenue of $633.2 million was recorded, a decrease of 22 percent from the $809.1 million recorded in the corresponding period of the prior year.

The Company’s United States operations accounted for 50 percent of the Company’s revenue in the third quarter of 2024 (2023 – 58 percent) and 50 percent of the Company’s revenue in the first nine months of 2024 (2023 – 60 percent).

Drilling rig operating days decreased by 14 percent to 3,065 operating days in the third quarter of 2024 from 3,581 operating days in the third quarter of 2023 and decreased by 27 percent to 9,111 operating days in the first nine months of 2024 from 12,500 operating days in the first nine months of 2023. United States well servicing recorded 35,518 operating hours in the third quarter of 2024 which was a 10 percent increase from 32,397 operating hours recorded in the third quarter of 2023. For the first nine months of 2024, well servicing activity increased by seven percent to 97,081 operating hours from 90,961 operating hours in the first nine months of 2023.

Operating and financial results for the Company’s United States operations in the first nine months of 2024 were adversely impacted by the recent customer M&A activity, customer capital discipline and depressed natural gas commodity prices.

During the first nine months of 2024, the Company transferred six under-utilized United States drilling rigs into its reserve fleet.

INTERNATIONAL OILFIELD SERVICES

The Company’s international operations recorded revenue of $87.4 million in the third quarter of 2024, a 12 percent increase from the $78.4 million recorded in the corresponding period of the prior year. International revenues for the nine months ended September 30, 2024, increased 17 percent to $261.7 million from $223.2 million recorded for the nine months ended September 30, 2023.

The Company’s international operations contributed 20 percent of the total revenue in the third quarter of 2024 (2023 – 18 percent) and 21 percent of the Company’s revenue in the first nine months of 2024 (2023 – 16 percent).

International operating days for the three months ended September 30, 2024, totaled 1,269 operating days, fairly consistent with 1,265 operating days in the same period of 2023. For the nine months ended September 30, 2024, international operating days totaled 3,843 operating days compared to 3,616 operating days for the nine months ended September 30, 2023, an increase of six percent.

Operating and financial results from international operations reflect positive industry conditions that supported increased drilling activity and rig revenue rates.

During the first nine months of 2024, the Company transferred one under-utilized international drilling rig into its reserve fleet.

DEPRECIATION

Depreciation expense totaled $91.0 million for the third quarter of 2024 compared with $77.0 million for the third quarter of 2023, an increase of 18 percent. Depreciation expense for the first nine months of 2024 increased by 14 percent, to $261.8 million compared with $229.6 million for the same period of 2023. The increase in depreciation primarily is the result of drilling rigs moving into the reserve fleet since the beginning of the year, which are depreciated on an accelerated basis.

GENERAL AND ADMINISTRATIVE

General and administrative expense decreased one percent to $13.8 million (3.2 percent of revenue) for the third quarter of 2024 compared to $13.9 million (3.1 percent of revenue) for the third quarter of 2023. For the nine months ended September 30, 2024, general and administrative expense totaled $44.4 million (3.5 percent of revenue) compared to $43.1 million (3.2 percent of revenue) for the nine months ended September 30, 2023. General and administrative expense increased primarily due to annual wage increases.

FOREIGN EXCHANGE AND OTHER (GAIN) LOSS

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

INTEREST EXPENSE

Interest expense was incurred on the Company’s Credit and Term Facilities, capital lease and other obligations.

Interest expense decreased by 22 percent for the first nine months of 2024 compared to the same period of 2023, as a result of lower debt levels and reduced effective interest rates. The Company remains committed to disciplined capital allocation and debt repayment.

INCOME TAXES (RECOVERY)

 

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

 

During the three months ended September 30, 2024, the Company generated funds flow from operations of $116.9 million ($0.64 per common share) compared to funds flow from operations of $119.6 million ($0.65 per common share) for the three months ended September 30, 2023, a decrease of two percent. For the nine months ended September 30, 2024, the Company generated funds flow from operations of $323.6 million ($1.76 per common share), a decrease of nine percent from $354.7 million ($1.93 per common share) for the nine months ended September 30, 2023. The decrease in funds flow from operations for the nine months ended September 30, 2024, compared to the same period of 2023, is largely due to the decrease in net income and operating activity year over year.

At September 30, 2024, the Company’s working capital deficit was $8.1 million, compared to a working capital surplus of $15.8 million at December 31, 2023. The decrease in working capital is the result of lower net income, despite higher operating activity compared to the fourth quarter of 2023.

The Company’s existing bank facility provides for total borrowings of $850.0 million, of which $41.8 million was undrawn and available as at September 30, 2024.

INVESTING ACTIVITIES

Net purchases of property and equipment for the third quarter of 2024 totaled $33.5 million (2023 – $29.1 million). Net purchases of property and equipment during the first nine months of 2024 totaled $125.3 million (2023 – $131.9 million). The purchase of property and equipment for the first nine months of 2024 consists of $9.2 million in upgrade and growth capital and $131.4 million in maintenance capital.

FINANCING ACTIVITIES

On October 13, 2023, the Company amended and restated its existing credit agreement with its syndicate of lenders, which provides a revolving Credit Facility and a three-year $369.0 million Term Facility. The amendments include an extension to the maturity date of the now $850.0 million Credit Facility to the earlier of (i) the date that is six months prior to the earliest maturity of any future Senior Notes, and (ii) October 13, 2026. The Credit Facility includes a reduction of the facility by $75.0 million at the end of the fourth quarter of 2024 and a further reduction of $75.0 million by the end of the second quarter of 2025. The final size of the Credit Facility will then be $700.0 million.

The Term Facility requires repayments of at least $27.7 million each quarter beginning in the first quarter of 2024 to the fourth quarter 2025; and then repayments of at least $36.9 million each quarter from the first quarter 2026 to the fourth quarter 2026.

The amended and restated Credit Facility provides the Company with continued access to revolver capacity in a dynamic industry environment.

On June 26, 2024, the Company amended and restated its existing credit agreement with its syndicate of lenders to include a US $50.0 million secured Letter of Credit Facility and various updates regarding the replacement of the Canadian Dollar Offered Rate (“CDOR”) with the Canadian Overnight Repo Rate Average (“CORRA”). Furthermore, the Company finalized a US $25.0 million unsecured Letter of Credit Facility in the third quarter of 2024.

As at September 30, 2024, the amount of available borrowings under the Credit Facility was $41.8 million  As at September 30, 2024, the amount available was US $28.5 million on the Letter of Credit Facility.

The current capital structure of the Company consisting of the Credit Facility and the Term Facility, allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

Covenants

The following is a list of the Company’s currently applicable covenants pursuant to the Credit Facility and the associated calculations as at September 30, 2024:

As at September 30, 2024, the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The amended and restated credit agreement, a copy of which is available on SEDAR+, provides the Company with its Credit Facility and includes requirements that the Company comply with certain covenants including a Consolidated Net Debt to Consolidated EBITDA ratio, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Net Senior Debt to Consolidated EBITDA ratio.

OUTLOOK

Industry Overview

The global outlook for oilfield services continues to be constructive and supports steady demand for services. Crude oil supply and demand fundamentals remain tight but balanced, with moderated supply from OPEC+ nations. However, economic conditions, geopolitical tensions, renewed hostilities in areas of the Middle East, and the ongoing Russia–Ukraine conflict continue to impact global commodity prices and add uncertainty to the global crude demand outlook over the short-term. As a result, global crude prices declined in the third quarter of 2024 and have since been volatile into the fourth quarter with the benchmark price of West Texas Intermediate (“WTI“) averaging US $82/bbl in July, $77/bbl in August, $70/bbl in September and $72/bbl in October.

Over the short-term, depressed natural gas prices and recent customer M&A activity in the Company’s United States operating region have adversely impacted drilling programs. Over the long-term, the Company expects customer consolidation will be positive for oilfield services activity and facilitate relatively consistent drilling programs. Moreover, the results of the upcoming Presidential and Congressional elections in the United States may impact future oilfield activity in the region. Offsetting the prevailing short-term softness in the United States market, Canadian activity has improved year-over-year as result of the completion of the Trans Mountain Pipeline expansion project. Furthermore, the pending activation of the Coastal GasLink Pipeline and several liquefied natural gas (“LNG“) projects, including LNG Canada, are expected to support increased activity in Canada over the medium-to-long term.

The Company remains committed to disciplined capital allocation and debt repayment. The Company has targeted approximately $200.0 million in debt reduction for the 2024 year. In addition, from the period beginning 2023 to the end of 2025, the Company reaffirms its previously announced targeted debt reduction of approximately $600.0 million. If industry conditions change, these targets may be increased or decreased.

Canadian Activity   

Canadian activity, representing 30 percent of total revenue in the first nine months of 2024, increased in the third quarter as operations exited seasonal spring break-up. Activity in Canada is expected to remain steady in the fourth quarter of 2024 and increase in the first quarter of 2025 as operations enter the winter drilling season. In the Canadian market, additional pipeline and transportation capacity and positive market conditions are expected to support strong and steady activity in 2025.

As of October 31, 2024, of our 94 marketed Canadian drilling rigs, approximately 57 percent were engaged under term contracts of various durations. Approximately 43 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, representing 50 percent of total revenue in the first nine months of 2024, improved in the third quarter of 2024 in comparison to the second quarter of 2024. The quarter-over-quarter increase was primarily due to rig activations in the Company’s California and Rockies operating regions. Activity in the United States is expected to remain steady in the fourth quarter of 2024 and into 2025.

As of October 31, 2024, of our 77 marketed United States drilling rigs, approximately 55 percent were engaged under term contracts of various durations. Approximately 10 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, representing 20 percent of total revenue in the first nine months of 2024, was steady in the third quarter as one rig in Oman went on standby and Australia activity decreased by one rig. Offsetting the declines was a one rig addition in Argentina in the third quarter of 2024. International activity is expected to modestly decline in the fourth quarter of 2024 as an additional rig in Oman is expected to go on standby, offset by an anticipated one rig addition in Venezuela.

Activity in the Company’s Middle East segment declined by one rig going on standby in Oman in the third quarter. Activity is expected to decline by a second rig going on standby in Oman in the fourth quarter of 2024. Currently, the Company has one active and two standby rigs in Oman, two rigs active in Bahrain, and two rigs active in Kuwait. Activity is expected to increase in 2025, inasmuch as the two rigs on standby in Oman are expected to commence active operations.

Activity in Australia declined by one rig in the third quarter of 2024 and is expected to remain steady at seven rigs in the fourth quarter.

Operations in Argentina improved by one rig in the third quarter of 2024 and are expected to remain steady at two rigs active in the fourth quarter. Operations in Venezuela, which were dormant for several years, remained steady at one rig active in the third quarter and are expected to improve by one rig to a total of two rigs active in the fourth quarter of 2024. 

As of October 31, 2024, of our 31 marketed international drilling rigs, approximately 58 percent were engaged under term contracts of various durations. Approximately 61 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination. 

RISK AND UNCERTAINTIES

The Company is subject to numerous risks and uncertainties. A summary discussion of certain risks faced by the Company may be found hereinbelow and a fulsome discussion is included under the “Risk Factors” section of the Company’s Annual Information Form (“AIF“) and the “Risks and Uncertainties” section of the Company’s Management’s Discussion &  Analysis (“MD&A“) for the year ended December 31, 2023, which are available under the Company’s SEDAR+ profile at www.sedarplus.com.

Other than as described within this document, the Company’s risk factors and management of those risks have not changed substantially from those as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company’s future business operations or financial condition. If any such potential events, whether described in the risk factors in this document or the Company’s AIF or otherwise actually occur, or described events intensify, overall business, operating results and the financial condition of the Company could be materially adversely affected.

CONFERENCE CALL

A conference call will be held to discuss the Company’s third quarter 2024 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Friday, November 1, 2024. The conference call number is 1-888-510-2154 and the conference call ID is: 11652. A taped recording of the conference call will be available until November 8, 2024, by dialing 1-888-660-6345 and entering the reservation number 11652#. A live broadcast may be accessed through the Company’s website at www.ensignenergy.com/presentations.

Ensign Energy Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI.

Ensign Energy Services Inc.
Consolidated Statements of Financial Position

 

Ensign Energy Services Inc.
Consolidated Statements of (Loss) Income

 

Ensign Energy Services Inc.
Consolidated Statements of Cash Flows

 

Ensign Energy Services Inc.

Non-GAAP Measures

Adjusted EBITDA, Adjusted EBITDA per common share, working capital and Consolidated EBITDA. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared.

Adjusted EBITDA is used by management and investors to analyze the Company’s profitability based on the Company’s principal business activities prior to how these activities are financed, how assets are depreciated, amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets and fair value adjustments on financial assets and liabilities, as the Company does not deem these to relate to its core drilling and well services business. Adjusted EBITDA is not intended to represent income (loss) as calculated in accordance with IFRS.

Consolidated EBITDA 

Consolidated EBITDA, as defined in the Company’s Credit Facility agreement, is used in determining the Company’s compliance with its covenants. The Consolidated EBITDA is substantially similar to Adjusted EBITDA. Consolidated EBITDA is calculated on a rolling twelve-month basis.

Working Capital

Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Certain statements herein constitute forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words “believe”, “anticipate”, “expect”, “plan”, “estimate”, “target”, “continue”, “could”, “intend”, “may”, “potential”, “predict”, “should”, “will”, “objective”, “project”, “forecast”, “goal”, “guidance”, “outlook”, “effort”, “seeks”, “schedule”, “contemplates” or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided herein including, but not limited to, information provided in the “Funds Flow from Operations and Working Capital” section regarding the Company’s expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the “Financial Instruments” section regarding Venezuela and information provided in the “Outlook” section regarding the general outlook for 2024 and beyond, are examples of forward-looking statements.

Forward-looking statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices which may influence customers to modify their capital programs; the status of current negotiations with the Company’s customers and vendors; customer focus on safety performance; royalty regimes and effects of regulation by government agencies; existing term contracts that may not be renewed or are terminated prematurely; the Company’s ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; future operating costs; the general stability of the economic and political environments in the jurisdictions where we operate; inflation, interest rate and exchange rate expectations; pandemics; and impacts of geopolitical events such as the hostilities in the Middle East and between Ukraine and the Russian Federation, and the global community responses thereto; that the Company will have sufficient cash flow, debt or equity sources or other financial resources required to fund its ‎capital and operating expenditures and requirements as needed; that the Company’s conduct and results of ‎operations will be consistent with its expectations; and other matters.

The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company’s services and the ability of the Company’s customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company’s ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; artificial intelligence development and implementation; cyber-attacks; determinations by the Organization of Petroleum Exporting Countries (“OPEC“) and other countries (OPEC and various other countries are referred to as “OPEC+”) regarding production levels; loss of key customers; litigation risks, including the Company’s defence of lawsuits; risks associated with contingent liabilities and potential unknown liabilities; availability and cost of labour and other equipment, supplies and services; business interruption and casualty losses; the Company’s ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company’s oilfield services equipment; availability and cost of financing and insurance; access to credit facilities and debt capital markets; availability of sufficient cash flow to service and repay its debts; impairment of capital assets; the Company’s ability to amend or comply with covenants under the credit facility and other debt instruments; actions by governmental authorities; impact of and changes to laws and regulations impacting the Company and the Company’s customers, and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); safety performance; environmental contamination; shifting interest to alternative energy sources; environmental activism; the adequacy of the Company’s provision for taxes; tax challenges; the impact of, and the Company’s response to future pandemics; workforce and reliance on key management; technology; cybersecurity risks; seasonality and weather risks; risks associated with acquisitions and ability to successfully integrate acquisitions; risks associated with internal controls over financial reporting; the impact of the ongoing hostilities in the Middle East and between Ukraine and the Russian Federation and the global community responses thereto; the results of the upcoming United States Presidential and Congressional elections and other risks and uncertainties that may affect the Company’s business, assets, personnel, operations, revenues or expenses.

In addition, the Company’s operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, pandemics, pandemic mitigation strategies and the impact thereof upon the Company, its customers and its business, ongoing hostilities in the Middle East and between Ukraine and the Russian Federation, related potential future impact on the supply of oil and natural gas to Europe by Russia and the impact of global community responses to the ongoing conflicts, including the impact of shipping through the Red Sea and governmental energy policies, laws, rules or regulations that limit, restrict or impede exploration, development, production, transportation or consumption of hydrocarbons and/or incentivize development, production, transportation or consumption of alternative fuel or energy sources.

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company’s course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

Readers are cautioned that the lists of important factors contained herein are not exhaustive. For additional information on these and other factors that could affect the Company’s business, operations or financial condition, refer to the “Risk Factors” section of the Company’s Annual Information Form for the year ended December 31, 2023 available on SEDAR+ at www.sedarplus.ca.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Ensign Energy Services Inc.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2024/01/c1099.html

• Sales of $10.3 billion decreased in-line with the 4% reduction in global light vehicle production
• Diluted earnings per share were $1.68, up $0.31, largely reflecting recognition of Fisker deferred revenue
• Adjusted diluted earnings per share were $1.28, down $0.18, including $0.10 due to a higher income tax rate
• Normal Course Issuer Bid to purchase up to 10% of our public float of Common Shares, with purchases expected to commence in the fourth quarter of 2024

AURORA, Ontario, Nov. 01, 2024 (GLOBE NEWSWIRE) — Magna International Inc. MGMGA today reported financial results for the third quarter ended September 30, 2024.

Please click HERE for full third quarter MD&A and Financial Statements.

		THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
			2024			2023			2024			2023
Reported
Sales		$	10,280		$	10,688		$	32,208		$	32,343
Income from operations before income taxes		$	700		$	538		$	1,161		$	1,296
Net income attributable to Magna International Inc.		$	484		$	394		$	806		$	942
Diluted earnings per share		$	1.68		$	1.37		$	2.81		$	3.29
Non-GAAP Financial Measures(1)
Adjusted EBIT		$	594		$	615		$	1,640		$	1,680
Adjusted diluted earnings per share		$	1.28		$	1.46		$	3.72		$	4.15
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars
(1) Adjusted EBIT and Adjusted diluted earnings per share are Non-GAAP financial measures that have no standardized meaning under U.S. GAAP, and as a result may not be comparable to the calculation of similar measures by other companies. Further information and a reconciliation of these Non-GAAP financial measures is included in the back of this press release.

“We continue to mitigate industry headwinds including lower production volumes in each of our core regions. Our ongoing initiatives and results to date reinforce our conviction in our free cashflow outlook this year and beyond. As we continuously seek to optimize value creation, we are resuming share repurchases in the fourth quarter – ahead of our prior plan.” – Swamy Kotagiri, Magna’s Chief Executive Officer

THREE MONTHS ENDED SEPTEMBER 30, 2024

We posted sales of $10.3 billion for the third quarter of 2024, a decrease of 4% from the third quarter of 2023. The lower sales largely reflects a 4% decrease in global light vehicle production, including 6% lower production in each of North America and China and a 2% decline in Europe. In addition, sales were negatively impacted by the end of production of certain programs, and divestitures, net of acquisitions, partially offset by the launch of new programs and customer price increases to recover certain higher production input costs.

Adjusted EBIT decreased to $594 million in the third quarter of 2024 compared to $615 million in the third quarter of 2023. This mainly reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, and lower equity income. These were partially offset by higher net favourable commercial items, continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, lower net engineering costs, including spending related to our electrification and active safety businesses and the negative impact of the UAW labour strike during the third quarter of 2023.

Income from operations before income taxes increased to $700 million for the third quarter of 2024 compared to $538 million in the third quarter of 2023, which includes Other (income) expense, net⁽²⁾ items and Amortization of acquired intangibles totaling ($160) million and $28 million in the third quarters of 2024 and 2023, respectively. The most significant item in either period was the positive impact of recognizing $196 million of Fisker deferred revenue as the associated agreements were cancelled in the third quarter of 2024. Excluding Other (income) expense, net and Amortization of acquired intangibles from both periods, income from operations before income taxes decreased $26 million in the third quarter of 2024 compared to the third quarter of 2023, largely reflecting the decrease in Adjusted EBIT.

Net income attributable to Magna International Inc. was $484 million for the third quarter of 2024 compared to $394 million in the third quarter of 2023, which includes Other (income) expense, net⁽²⁾, after tax and Amortization of acquired intangibles totaling $(115) million and $25 million in the third quarters of 2024 and 2023, respectively. Excluding Other (income) expense, net, after tax and Amortization of acquired intangibles from both periods, net income attributable to Magna International Inc. decreased $50 million in the third quarter of 2024 compared to the third quarter of 2023.

Diluted earnings per share were $1.68 in the third quarter of 2024, compared to $1.37 in the comparable period. Adjusted diluted earnings per share were $1.28, down $0.18 from $1.46 for the third quarter of 2023, including $0.10 due to a higher income tax rate. 

In the third quarter of 2024, we generated cash from operations before changes in operating assets and liabilities of $785 million and used $58 million in operating assets and liabilities. Investment activities for the third quarter of 2024 included $476 million in fixed asset additions, $115 million in investments, other assets and intangible assets and $1 million in private equity investments.

⁽²⁾ Other (income) expense, net is comprised of Fisker Inc. [“Fisker”] related impacts (restructuring and impairment of assembly and production assets, the impairment of Fisker warrants, and the recognition of previously deferred revenue), revaluations of certain public company warrants and equity investments, restructuring activities and gain on business combination, during the three and nine months ended September 30, 2023 & 2024. A reconciliation of these Non-GAAP financial measures is included in the back of this press release.

NINE MONTHS ENDED SEPTEMBER 30, 2024

We posted sales of $32.2 billion for the nine months ended September 30, 2024, compared to $32.3 billion for the nine months ended September 30, 2023, a period in which global light vehicle production decreased 1%.

Adjusted EBIT was $1.64 billion for the nine months ended September 30, 2024 compared to $1.68 billion for the nine months ended September 30, 2023. This reflects reduced earnings on lower sales, higher production input costs net of customer recoveries, reduced earnings on lower assembly volumes, acquisitions, net of divestitures, during or subsequent to the first nine months of 2023, and lower equity income. These were partially offset by continued productivity and efficiency improvements, including lower costs at certain underperforming facilities, higher net favourable commercial items, and lower net engineering costs, including spending related to our electrification and active safety businesses.

During the nine months ended September 30, 2024, income from operations before income taxes was $1.16 billion, net income attributable to Magna International Inc. was $806 million and diluted earnings per share were $2.81, decreases of $135 million, $136 million, and $0.48, respectively, each compared to the first nine months of 2023.

During the nine months ended September 30, 2024, Adjusted diluted earnings per share decreased 10% to $3.72, compared to the first nine months of 2023.

During the nine months ended September 30, 2024, we generated cash from operations before changes in operating assets and liabilities of $2.06 billion and invested $333 million in operating assets and liabilities. Investment activities for the first nine months of 2024 included $1.47 billion in fixed asset additions, a $410 million increase in investments, other assets and intangible assets and $22 million in public and private equity investments.

RETURN OF CAPITAL

During the three months ended September 30, 2024, we paid $138 million in dividends.

Our Board of Directors declared a third quarter dividend of $0.475 per Common Share, payable on November 29, 2024 to shareholders of record as of the close of business on November 15, 2024.

OTHER MATTERS

Subject to the approval by the Toronto Stock Exchange, our Board of Directors approved a new Normal Course Issuer Bid (“NCIB”) to purchase up to approximately 28.5 million of our Common Shares, representing approximately 10% of our public float of Common Shares. This NCIB is expected to commence on or about November 7, 2024 and will terminate one year later.

SEGMENT SUMMARY

($Millions unless otherwise noted)	For the three months ended September 30,
	Sales										Adjusted EBIT
		2024			2023		Change					2024			2023		Change
Body Exteriors & Structures	$	4,038		$	4,354		$	(316	)		$	273		$	358		$	(85	)
Power & Vision		3,837			3,745			92				279			221			58
Seating Systems		1,379			1,529			(150	)			51			70			(19	)
Complete Vehicles		1,159			1,185			(26	)			27			(5	)		32
Corporate and Other		(133	)		(125	)		(8	)			(36	)		(29	)		(7	)
Total Reportable Segments	$	10,280		$	10,688		$	(408	)		$	594		$	615		$	(21	)

	For the three months ended September 30,
											Adjusted EBIT as a percentage of sales
												2024			2023		Change
Body Exteriors & Structures												6.8	%		8.2	%		(1.4	)%
Power & Vision												7.3	%		5.9	%		1.4	%
Seating Systems												3.7	%		4.6	%		(0.9	)%
Complete Vehicles												2.3	%		(0.4	)%		2.7	%
Consolidated Average												5.8	%		5.8	%		0.0	%
($Millions unless otherwise noted)	For the nine months ended September 30,
	Sales										Adjusted EBIT
		2024			2023		Change					2024			2023		Change
Body Exteriors & Structures	$	12,932		$	13,333		$	(401	)		$	912		$	1,024		$	(112	)
Power & Vision		11,605			10,530			1,075				575			437			138
Seating Systems		4,289			4,618			(329	)			156			174			(18	)
Complete Vehicles		3,784			4,337			(553	)			74			81			(7	)
Corporate and Other		(402	)		(475	)		73				(77	)		(36	)		(41	)
Total Reportable Segments	$	32,208		$	32,343		$	(135	)		$	1,640		$	1,680		$	(40	)

	For the nine months ended September 30,
					Adjusted EBIT as a percentage of sales
					2024		2023		Change
Body Exteriors & Structures					7.1	%	7.7	%	(0.6	)%
Power & Vision					5.0	%	4.2	%	0.8	%
Seating Systems					3.6	%	3.8	%	(0.2	)%
Complete Vehicles					2.0	%	1.9	%	0.1	%
Consolidated Average					5.1	%	5.2	%	(0.1	)%

For further details on our segment results, please see our Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements.

2024 OUTLOOK

We first disclose a full-year Outlook annually in February, with quarterly updates. The following Outlook is an update to our previous Outlook in August 2024.

Updated 2024 Outlook Assumptions

	Current		Previous
Light Vehicle Production (millions of units)
North America	15.4		15.7
Europe	16.9		17.1
China	28.9		29.0
Average Foreign exchange rates: 1 Canadian dollar equals 1 euro equals	U.S. $0.736 U.S. $1.088		U.S. $0.733 U.S. $1.080

Updated 2024 Outlook

	Current		Previous
Segment Sales
Body Exteriors & Structures	$16.8 – $17.2 billion		$17.3 – $17.9 billion
Power & Vision	$15.1 – $15.4 billion		$15.3 – $15.7 billion
Seating Systems	$5.6 – $5.8 billion		$5.5 – $5.8 billion
Complete Vehicles	$5.2 – $5.4 billion		$4.9 – $5.2 billion
Total Sales	$42.2 – $43.2 billion		$42.5 – $44.1 billion
Adjusted EBIT Margin(3)	5.4% – 5.5%		5.4% – 5.8%
Equity Income (included in EBIT)	$80 – $105 million		$100 – $130 million
Interest Expense, net	Approximately $220 million		Approximately $220 million
Income Tax Rate(4)	Approximately 23%		Approximately 22%
Adjusted Net Income attributable to Magna(5)	$1.45 – $1.55 billion		$1.5 – $1.7 billion
Capital Spending	$2.2 – $2.3 billion		$2.3 – $2.4 billion
Notes: (3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to Total Sales. Refer to the reconciliation of Non-GAAP financial measures in the back of this press release for further information. (4) The Income Tax Rate has been calculated using Adjusted EBIT and is based on current tax legislation. (5) Adjusted Net Income attributable to Magna represents Net Income excluding Other expense, net and amortization of acquired intangible assets, net of tax.

Our Outlook is intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Although considered reasonable by Magna as of the date of this document, the 2024 Outlook above and the underlying assumptions may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth herein. The risks identified in the “Forward-Looking Statements” section below represent the primary factors which we believe could cause actual results to differ materially from our expectations.

Key Drivers of Our Business

Our operating results are primarily dependent on the levels of North American, European, and Chinese car and light truck production by our customers. While we supply systems and components to every major original equipment manufacturer (“OEM”), we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are also important drivers of our results.

OEM production volumes are generally aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: labour disruptions; free trade arrangements and tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory frameworks; and other factors.

Overall vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing, and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels and thus production volumes include: vehicle affordability; interest rates and/or availability of credit; fuel and energy prices; relative currency values; uncertainty as to consumer acceptance of EVs; government subsidies to consumers for the purchase of low- and zero-emission vehicles; and other factors.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Effective July 1, 2023, we revised our calculations of Adjusted EBIT and Adjusted diluted earnings per share to exclude the amortization of acquired intangible assets. Revenue generated from acquired intangible assets is included within revenue in determining net income attributable to Magna. We believe that excluding the amortization of acquired intangible assets from these Non-GAAP measures helps management and investors in understanding our underlying performance and improves comparability between our segmented results of operations and our peers.

The historical presentation of these Non-GAAP measures within this press release has also been updated to reflect the revised calculations.

Adjusted EBIT The following table reconciles net income to Adjusted EBIT:
	THREE MONTHS ENDED SEPTEMBER 30,								NINE MONTHS ENDED SEPTEMBER 30,
		2024				2023				2024				2023
Net Income	$	508			$	417			$	862			$	988
Add:
Amortization of acquired intangible assets		28				32				84				57
Interest expense, net		54				49				159				103
Other (income) expense, net		(188	)			(4	)			236				224
Income taxes		192				121				299				308
Adjusted EBIT	$	594			$	615			$	1,640			$	1,680
Adjusted EBIT as a percentage of sales (“Adjusted EBIT margin”) Adjusted EBIT as a percentage of sales is calculated in the table below:
Sales	$	10,280			$	10,688			$	32,208			$	32,343
Adjusted EBIT	$	594			$	615			$	1,640			$	1,680
Adjusted EBIT as a percentage of sales		5.8	%			5.8	%			5.1	%			5.2	%
Adjusted diluted earnings per share The following table reconciles net income attributable to Magna International Inc. to Adjusted diluted earnings per share:
Net income attributable to Magna International Inc.	$	484			$	394			$	806			$	942
Add (deduct):
Amortization of acquired intangible assets		28				32				84				57
Other (income) expense, net		(188	)			(4	)			236				224
Tax effect on Amortization of acquired intangible assets and Other (income) expense, net		45				(3	)			(57	)			(34	)
Adjusted net income attributable to Magna International Inc.	$	369			$	419			$	1,069			$	1,189
Diluted weighted average number of Common Shares outstanding during the period (millions):		287.3				286.8				287.2				286.6
Adjusted diluted earnings per shares	$	1.28			$	1.46			$	3.72			$	4.15

Certain of the forward-looking financial measures above are provided on a Non-GAAP basis. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. To do so would be potentially misleading and not practical given the difficulty of projecting items that are not reflective of on-going operations in any future period. The magnitude of these items, however, may be significant.

This press release together with our Management’s Discussion and Analysis of Results of Operations and Financial Position and our Interim Financial Statements are available in the Investor Relations section of our website at www.magna.com/company/investors and filed electronically through the System for Electronic Document Analysis and Retrieval + (SEDAR+) which can be accessed at http://www.sedarplus.ca as well as on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which can be accessed at www.sec.gov.

We will hold a conference call for interested analysts and shareholders to discuss our third quarter ended September 30, 2024 results on Friday, November 1, 2024 at 8:00 a.m. ET. The conference call will be chaired by Swamy Kotagiri, Chief Executive Officer. The number to use for this call from North America is 1-800-715-9871. International callers should use 1-646-307-1963. Please call in at least 10 minutes prior to the call start time. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call as well as our financial review summary will be available on our website Friday prior to the call.

TAGS
Quarterly earnings, financial results, vehicle production

INVESTOR CONTACT
Louis Tonelli, Vice-President, Investor Relations
louis.tonelli@magna.com │ 905.726.7035

MEDIA CONTACT
Tracy Fuerst, Vice-President, Corporate Communications & PR
tracy.fuerst@magna.com │ 248.761.7004

TELECONFERENCE CONTACT
Nancy Hansford, Executive Assistant, Investor Relations
nancy.hansford@magna.com │ 905.726.7108

OUR BUSINESS ⁽⁶⁾
Magna is more than one of the world’s largest suppliers in the automotive space. We are a mobility technology company built to innovate, with a global, entrepreneurial-minded team of over 175,000⁽⁷⁾ employees across 343 manufacturing operations and 107 product development, engineering and sales centres spanning 28 countries. With 65+ years of expertise, our ecosystem of interconnected products combined with our complete vehicle expertise uniquely positions us to advance mobility in an expanded transportation landscape. 

For further information about Magna MGAMG, please visit www.magna.com or follow us on social. 

⁽⁶⁾ Manufacturing operations, product development, engineering and sales centres include certain operations accounted for under the equity method.
⁽⁷⁾ Number of employees includes over 162,000 employees at our wholly owned or controlled entities and over 13,000 employees at certain operations accounted for under the equity method.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”). Any such forward-looking statements are intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, strategic objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “assume”, “believe”, “intend”, “plan”, “aim”, “forecast”, “outlook”, “project”, “potential”, “estimate”, “target” and similar expressions suggesting future outcomes or events to identify forward-looking statements. The following table identifies the material forward-looking statements contained in this document, together with the material potential risks that we currently believe could cause actual results to differ materially from such forward-looking statements. Readers should also consider all of the risk factors which follow below the table:

Material Forward-Looking Statement	Material Potential Risks Related to Applicable Forward-Looking Statement
Light Vehicle Production	Light vehicle sales levels Production disruptions, including as a result of labour disruptions Supply disruptions Production allocation decisions by OEMs Free trade arrangements and tariffs Relative currency values Commodities prices Availability and relative cost of skilled labour
Total Sales Segment Sales	Same risks as for Light Vehicle Production above The impact of elevated interest rates and availability of credit on consumer confidence and in turn vehicle sales and production The impact of deteriorating vehicle affordability on consumer demand, and in turn vehicle sales and production Alignment of our product mix with production demand Customer concentration Shifts in market shares among vehicles or vehicle segments Shifts in consumer “take rates” for products we sell
Adjusted EBIT Margin, Free Cash Flow, Net Income Attributable to Magna, and Ability to Repurchase Shares	Same risks as for Total Sales and Segment Sales above Successful execution of critical program launches Operational underperformance Product warranty/recall risk Restructuring costs Impairments Inflationary pressures Our ability to secure cost recoveries from customers and/or otherwise offset higher input costs Price concessions Risks of conducting business with newer EV-focused OEMs Commodity cost volatility Scrap steel price volatility Higher labour costs Tax risks Acquisition integration and synergies
Equity Income	Same risks as Adjusted EBIT Margin, Free Cash Flow, Net Income Attributable to Magna, and Ability to Repurchase Shares above Risks related to conducting business above through joint ventures Risks of doing business in foreign markets Legal and regulatory proceedings Changes in laws

Forward-looking statements are based on information currently available to us and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. While we believe we have a reasonable basis for making any such forward-looking statements, they are not a guarantee of future performance or outcomes. In addition to the factors in the table above, whether actual results and developments conform to our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation:

Macroeconomic, Geopolitical and Other Risks inflationary pressures; interest rates; geopolitical risks; Risks Related to the Automotive Industry economic cyclicality; regional production volume declines; deteriorating vehicle affordability; misalignment between EV production and sales; intense competition; Strategic Risks alignment with “Car of the Future”; evolving business risk profile; technology and innovation; investments in mobility and technology companies; Customer-Related Risks customer concentration; growth with Asian OEMs; growth of EV-focused OEMs; risks of conducting business with newer EV-focused OEMs; dependence on outsourcing; customer cooperation and consolidation; program cancellations, deferrals and reductions in production volumes; complete vehicle assembly business; market shifts; consumer take rate shifts; quarterly sales fluctuations; customer purchase orders; potential OEM production-related disruptions; Supply Chain Risks semiconductor chip supply disruptions and price increases; supply chain disruptions; regional energy supply and pricing; supply base condition; Manufacturing/Operational Risks product launch; operational underperformance; restructuring costs; impairments; labour disruptions; skilled labour attraction/retention; leadership expertise and succession;

Pricing Risks quote/pricing assumptions; customer pricing pressure/contractual arrangements; commodity cost volatility; scrap steel/aluminum price volatility; Warranty/Recall Risks repair/replace costs; warranty provisions; product liability; Climate Change Risks transition risks and physical risks; strategic and other risks; IT Security/Cybersecurity Risks IT/cybersecurity breach; product cybersecurity; Acquisition Risks acquisition of strategic targets; inherent merger and acquisition risks; acquisition integration and synergies; Other Business Risks joint ventures; intellectual property; risks of doing business in foreign markets; relative foreign exchange rates; currency devaluation in Argentina; pension risks; tax risks; returns on capital investments; financial flexibility; credit ratings changes; stock price fluctuation; dividends; Legal, Regulatory and Other Risks antitrust proceedings; legal and regulatory proceedings; claims arising from Fisker bankruptcy; changes in laws; trade agreements; trade disputes/tariffs;  increasing trade protectionism; and environmental compliance.

In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forward-looking statement. Additionally, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements, including the risks, assumptions and uncertainties above which are:

• discussed under the “Industry Trends and Risks” heading of our Management’s Discussion and Analysis; and
• set out in our Annual Information Form filed with securities commissions in Canada, our annual report on Form 40-F filed with the United States Securities and Exchange commission, and subsequent filings.

Readers should also consider discussion of our risk mitigation activities with respect to certain risk factors, which can be also found in our Annual Information Form. Additional information about Magna, including our Annual Information Form, is available through the System for Electronic Data Analysis and Retrieval + (SEDAR+) at www.sedarplus.ca, as well as on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which can be accessed at www.sec.gov.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/a3c24fc7-ed94-4873-98d6-72f35aea9f9f