0001564590-19-037837.txt : 20191025 0001564590-19-037837.hdr.sgml : 20191025 20191025075833 ACCESSION NUMBER: 0001564590-19-037837 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 47 CONFORMED PERIOD OF REPORT: 20191025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20191025 DATE AS OF CHANGE: 20191025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOLIV INC CENTRAL INDEX KEY: 0001034670 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 510378542 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12933 FILM NUMBER: 191167540 BUSINESS ADDRESS: STREET 1: 3350 AIRPORT RD CITY: OGDEN STATE: UT ZIP: 84405 BUSINESS PHONE: 8016299800 MAIL ADDRESS: STREET 1: BOX 70381 STREET 2: SE 107 24 STOCKHOLM CITY: SWEDEN STATE: V7 8-K 1 alv-8k_20191025.htm 8-K alv-8k_20191025.htm
false AUTOLIV INC 0001034670 0001034670 2019-10-25 2019-10-25

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 25, 2019

 

Autoliv, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-12933

 

51-0378542

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

Klarabergsviadukten 70, Section B, 7th Floor,

 

 

Box 70381, Stockholm, Sweden

 

SE-107 24

(Address of principal executive offices)

 

(Zip code)

 

+46 8 587 206 00

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which

registered

Common Stock (par value $1.00 per share)

 

ALV

 

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

1(4)


 

Item 2.02

Results of Operations and Financial Condition.

On October 25, 2019, Autoliv, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference. This press release contains certain references to financial measures identified as “organic sales,” “adjusted operating income,” “adjusted operating margin,” “operating working capital,” “adjusted earnings per share,” “net debt,” “net cash before financing,” “free cash flow,” “cash conversion,” and “leverage ratio,” all of which are adjustments from comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP).  These financial measures, as used herein, differ from financial measures reported under GAAP, and management believes that these financial presentations provide useful supplemental information, which is important to a proper understanding by investors of the Company’s core business results.  These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies. For an explanation of the reasons why management uses these figures, see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on February 21, 2019.

Item 7.01

Regulation FD Disclosure.

On October 25, 2019, the Company issued a press release announcing its financial results for the third quarter of 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The information in Items 2.02 and 7.01 of this Form 8-K and the exhibit attached hereto as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01

Financial Statements and Exhibits.

(d) EXHIBITS

99.1

Press Release of Autoliv, Inc. dated October 25, 2019

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

2(4)


 

EXHIBIT INDEX

 

Exhibit No.

  

Description

 

 

 

99.1

  

Press Release of Autoliv, Inc. dated October 25, 2019.

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

3(4)


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

AUTOLIV, INC.

 

 

 

By:

 

/s/ Anthony J. Nellis

Name:

 

Anthony J. Nellis

Title:

 

Executive Vice President, Legal Affairs and General Counsel

 

 

 

 

Date:  October 25, 2019

 

4(4)

EX-99.1 2 alv-ex991_42.htm EX-99.1 alv-ex991_42.htm

 

Exhibit 99.1

 

 

 

 


 

Q3 Report—2019

 

Q3 2019: Business cycle management yielding results

 

Financial highlights Q3 2019

 

Full Year 2019 indications

$2,028m net sales

 

Around (2)% net sales growth

1.2% organic sales growth*

 

Around 1% organic sales growth

7.6% operating margin

 

Around 9% adj. operating margin

9.0% adj. operating margin*

 

 

$0.98 EPS - a decline of 27%

 

 

$1.30 adj. EPS* - a decline of 4%

 

 

 

Key business developments in the third quarter of 2019

Organic growth outperformed global light vehicle production by 4.6pp mainly due to China and Americas.

Profitability still impacted by global LVP decline and high raw material costs, although less than previous quarter, partly offset by total workforce decline of 800 vs. a quarter ago, or of 1,600 vs. a year ago.

Established new customer collaborations; a North American road safety center with Great Wall Motor and presented next generation passenger airbag in cooperation with Honda.

 

*For non-U.S. GAAP measures see enclosed reconciliation tables. All figures herein refer to continued operations, excluding former Electronics segment, unless stated otherwise. All change figures in this document compare to the same period of previous year, except when stated otherwise.

 

Key Figures

(Dollars in millions, except per share data)

Q3 2019

Q3 2018

Change

9M 2019

9M 2018

Change

Net sales

$2,028

$2,033

(0.3)%

$6,356

$6,485

(2.0)%

Operating income

$154

$193

(20)%

$497

$665

(25)%

Adjusted operating income1)

$183

$194

(5.7)%

$532

$668

(20)%

Adjusted operating margin1)

9.0%

9.5%

(0.5)pp

8.4%

10.3%

(1.9)pp

Earnings per share, diluted2, 3)

$0.98

$1.34

(27)%

$3.50

$5.37

(35)%

Adjusted earnings per share, diluted1, 2, 3)

$1.30

$1.35

(3.7)%

$3.87

$5.40

(28)%

Operating cash flow4)

$195

$238

(18)%

$328

$520

(37)%

Return on capital employed5)

16.2%

20.4%

(4.2)pp

18.0%

20.9%

(2.9)pp

1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 4) For first 9 months 2018 management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 5) Operating income and income from equity method investments, relative to average capital employed.

 

 

Comments from Mikael Bratt,

President & CEO

We experienced continued challenging market conditions in the quarter. Although the rate of decline in light vehicle production slowed down slightly, uncertainty remains high, market outlook by IHS continues to be

 

The cost improvement actions which enabled this performance will continue relentlessly.

We reduced our workforce by an additional 800 in the quarter, or by 1,600 compared to a year ago, despite growing our sales organically* by 1.2%. Our program to reduce indirect labor costs by 5% is developing as planned and we expect it to impact our costs meaningfully as of the fourth quarter 2019.

In addition to LVP and raw material headwinds, the strike at General Motors in North America is also affecting our sales.

Being close to our customers supports our short- and long-term business opportunities and this quarter we announced two new customer collaborations - the North American road safety research lab together with Great Wall Motor and the next generation passenger airbag in cooperation with Honda. Our order intake share remained on a good level in the quarter, supporting a prolonged sales growth outperformance.

As always, it is of utmost importance to focus on quality and execution to secure a strong long-term performance for our company.

revised down and we do not see a turnaround in LVP in the near term.

We continued to outperform light vehicle production, growing organically* about 4.6pp more than LVP in the third quarter, driven mainly by strong development in China and Americas.

Our business cycle management actions are taking effect and the adjusted operating margin* decline year over year was substantially less than in recent quarters, and it improved sequentially. LVP has continued to slide however, and we now assume 6-7% global LVP decline for 2019, which moderates our outlook to around 1% for organic sales growth and to around 9% for adjusted operating margin.

Although I am not pleased with this profit level, we achieved it in the context of LVP expectations declining by 7-8pp in just 9 months.

 

 

 

 


 

Q3 Report—2019

 

Outlook 2019

Our organic sales growth and adjusted operating margin outlook indications for 2019 reflect the continuing high level of uncertainty in the automotive markets and are based on the assumption that global light vehicle production declines by 6-7% in full year 2019 compared to full year 2018.

 

Full Year Indication

 

Full Year Indication

Net sales growth

Around (2)%

Tax rate2)

Around 28%

Organic sales growth

Around 1%

Operating cash flow excl. EC antitrust payment2)

$700-800 million

Adjusted operating margin1)

Around 9%

Capital expenditure, net % of sales

Around 2018 level

R,D&E, net % of sales

Around 2018 level

Leverage ratio at year end

Around 1.7x

1) Excluding costs for capacity alignments, antitrust related matters and separation of our business segments. 2) Excluding unusual items.

The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. Autoliv has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and Autoliv is unable to determine the probable significance of the unavailable information.

Conference call and webcast

An earnings conference call will be held at 2:00 p.m. CET today, October 25, 2019. Information regarding how to participate is available on www.autoliv.com. The presentation slides for the conference call will be available on our website shortly after the publication of this financial report.

 

3


 

Q3 Report—2019

 

Key Performance Trends

 

Sales Development by region

Capex and D&A

 

Adj. operating income and margin*

Operating Cash Flow*

 

Return on Capital Employed

Cash Conversion*

Key definitions ---------------------------------------------------------------------------------------------------------------------

 

 

Capex: Capital Expenditures, net.

D&A: Depreciation and Amortization.

Adj. operating income*: Operating income adjusted for capacity alignments, antitrust related matters and separation of our business segments. Capacity alignments include non-recurring costs related to our structural efficiency and business cycle management programs.

Operating cash flow*: Management estimate for Continuing Operations derived from cash flow including Discontinued Operations. Adjusted for EC antitrust payment in 2019.

Cash conversion*: Free cash flow in relation to net income adjusted for EC antitrust accrual in 2018 and payment in 2019. Free cash flow defined as operating cash flow less capital expenditure, net.

 

 

 

 

4


 

Q3 Report—2019

 

Consolidated sales development

Third quarter 2019

Consolidated sales

 

Third quarter

Reported
(U.S. GAAP)

Currency
effects1)

Organic
change*

(Dollars in millions)

 

2019

2018

Airbag Products and Other2)

 

$1,349.3

$1,357.4

(0.6)%

(1.2)%

0.6%

Seatbelt Products2)

 

$678.4

$675.6

0.4%

(1.9)%

2.3%

Total

 

$2,027.7

$2,033.0

(0.3)%

(1.5)%

1.2%

 

 

 

 

 

 

 

Asia

 

$777.7

$749.1

3.8%

(0.4)%

4.2%

Whereof:

China

$381.7

$351.9

8.5%

(2.7)%

11.2%

 

Japan

$202.4

$196.3

3.1%

4.2%

(1.1)%

 

RoA

$193.6

$200.9

(3.6)%

(0.7)%

(2.9)%

Americas

 

$713.1

$684.8

4.1%

(0.7)%

4.8%

Europe

 

$536.9

$599.1

(10.4)%

(3.7)%

(6.7)%

Total

 

$2,027.7

$2,033.0

(0.3)%

(1.5)%

1.2%

1) Effects from currency translations. 2) Including Corporate and other sales.

First nine months 2019

Consolidated sales

 

First 9 months

Reported
(U.S. GAAP)

Currency
effects1)

Organic
change*

(Dollars in millions)

 

2019

2018

Airbag Products and Other2)

 

$4,232.7

$4,234.9

(0.1)%

(3.2)%

3.1%

Seatbelt Products2)

 

$2,123.7

$2,250.5

(5.6)%

(4.2)%

(1.4)%

Total

 

$6,356.4

$6,485.4

(2.0)%

(3.5)%

1.5%

 

 

 

 

 

 

 

Asia

 

$2,286.1

$2,333.5

(2.0)%

(3.2)%

1.2%

Whereof:

China

$1,061.7

$1,103.5

(3.8)%

(5.1)%

1.3%

 

Japan

$601.6

$606.4

(0.8)%

0.4%

(1.2)%

 

RoA

$622.8

$623.6

(0.1)%

(3.3)%

3.2%

Americas

 

$2,214.2

$2,034.3

8.8%

(0.8)%

9.6%

Europe

 

$1,856.1

$2,117.6

(12.4)%

(6.4)%

(6.0)%

Total

 

$6,356.4

$6,485.4

(2.0)%

(3.5)%

1.5%

1) Effects from currency translations. 2) Including Corporate and other sales.

 

 

Third quarter 2019 development

Sales by product- Airbags

Airbag sales organic growth* was mainly driven by strong performance for driver and knee airbags in North America, steering wheels in Americas and passenger airbags in China. Offsetting declines came mainly from most types of airbags in Europe and from inflators in North America and Japan.

Sales by product - Seatbelts

Seatbelt sales organic growth* was mainly driven by strong performance in China and to a lesser degree in Americas, partly offset by declines in Europe and India. The trend of higher sales of more advanced and higher value-added seatbelt systems continued, especially in China and Rest of Asia.

 

 

 

Sales by region

 

 

 

We grew globally by 1.2% organically*, which is 4.6pp more than light vehicle production (according to IHS). The largest contributor to overall growth was China, followed by North America and South America. The largest organic sales decline was in Europe, followed by India, South Korea and Japan. Our organic sales growth

outperformed LVP by around 17pp in China and by 4.5pp in North America while we underperformed LVP by 7.5pp in Europe and by around 8pp in Japan. In South America we grew organically around 35pp more than LVP, while we outgrew LVP by around 8pp in Rest of Asia.

 

 

5


 

Q3 Report—2019

 

 

Q3 Organic growth*

Americas

Europe

China

Japan

Rest of Asia

Global

Autoliv

4.8%

(6.7)%

11.2%

(1.1)%

(2.9)%

1.2%

Main growth drivers

Honda, GM, Nissan, BMW, Tesla

VW, Renault

Honda, VW, GM

Mazda, Honda, Subaru

Mitsubishi, Renault, Nissan

Honda, VW, GM

Main decline drivers

Daimler, Hyundai/Kia

Daimler, JLR, BMW, Toyota

Geely, Ford, PSA

Mitsubishi, Toyota, Inflators

Hyundai/Kia, Isuzu, Tata, Toyota

Daimler, Hyundai/ Kia, Toyota

 

Light vehicle production development

Change vs same period last year

 

Americas

Europe

China

Japan

Rest of Asia

Global

Third quarter 2019

 

 

 

 

 

 

IHS LVP (Oct 2019)

(1.6)%

0.8%

(5.6)%

6.8%

(10.5)%

(3.4)%

IHS LVP (Jul 2019)

2.5%

2.7%

(4.5)%

11.1%

(3.2)%

(0.1)%

First nine months 2019

IHS LVP (Oct 2019)

(2.8)%

(3.8)%

(12.1)%

4.0%

(5.3)%

(6.0)%

 

6


 

Q3 Report—2019

 

Key launches in the third quarter 2019

Below are some of the key models which have been launched in the third quarter 2019.

 

Subaru Legacy

Land Rover Defender

BMW 1-Series

 

 

 

 

Peugeot 208

Chevrolet Trailblazer

Cadillac CT5

 

 

 

 

 

Ford Puma

BYD Song Pro

Subaru Outback

 

 

Driver and/or Passenger airbags

Seatbelts

Side airbags

Knee airbag

 

 

 

 

 

 

 

 

 

 

 

 

Head/Inflatable Curtain airbags

Pyrotechnical Safety Switch

Pedestrian Airbag

 

 

 

 

 

 

 

 

 

 

 

 

 

Steering Wheel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

Q3 Report—2019

 

Financial development

Selected income statement items

 

Condensed income statement

Third quarter

First 9 months

(Dollars in millions, except per share data)

2019

2018

Change

2019

2018

Change

Net sales

$2,027.7

$2,033.0

(0.3)%

$6,356.4

$6,485.4

(2.0)%

Cost of sales

$(1,648.6)

$(1,646.9)

0.1%

$(5,198.8)

$(5,199.3)

(0.0)%

Gross profit

$379.1

$386.1

(1.8)%

$1,157.6

$1,286.1

(10.0)%

S,G&A

$(97.7)

$(90.0)

8.6%

$(300.2)

$(290.9)

3.2%

R,D&E, net

$(99.1)

$(101.9)

(2.7)%

$(323.5)

$(327.9)

(1.3)%

Amortization of intangibles

$(2.9)

$(2.8)

3.6%

$(8.6)

$(8.5)

1.2%

Other (expense) income, net

$(25.6)

$1.1

n/a

$(28.8)

$6.2

564.5%

Operating income

$153.8

$192.5

(20.1)%

$496.5

$665.0

(25.3)%

Adjusted operating income1)

$182.5

$193.6

(5.7)%

$532.1

$668.3

(20.4)%

Financial and non-operating items, net

$(19.4)

$(21.2)

(8.5)%

$(57.7)

$(54.7)

5.5%

Income before taxes

$134.4

$171.3

(21.5)%

$438.8

$610.3

(28.1)%

Tax rate

36.0%

31.1%

4.9pp

30.1%

23.0%

7.1pp

Net income

$86.0

$118.0

(27.1)%

$306.9

$470.3

(34.7)%

Earnings per share2, 3)

$0.98

$1.34

(26.9)%

$3.50

$5.37

(34.8)%

Adjusted earnings per share1, 2, 3)

$1.30

$1.35

(3.7)%

$3.87

$5.40

(28.3)%

 

 

 

 

 

 

 

Gross margin

18.7%

19.0%

(0.3)pp

18.2%

19.8%

(1.6)pp

S,G&A % of sales

(4.8)%

(4.4)%

0.4pp

(4.7)%

(4.5)%

0.2pp

R,D&E, net % of sales

(4.9)%

(5.0)%

(0.1)pp

(5.1)%

(5.1)%

0.0pp

Operating margin

7.6%

9.5%

(1.9)pp

7.8%

10.3%

(2.5)pp

Adjusted operating margin1)

9.0%

9.5%

(0.5)pp

8.4%

10.3%

(1.9)pp

1) Non-U.S. GAAP measure, excluding costs for capacity alignment, antitrust related matters and separation of our business segments. See reconciliation table. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.

 

 

Third quarter 2019 development

Gross profit declined by $7 million and the gross margin declined by 0.3pp compared to the same quarter 2018. The gross margin was adversely impacted by the decline in global light vehicle production, resulting in a lower utilization of our production assets, and raw material headwinds. This was offset to some degree by organic growth* from launches of new products, which have a lower margin contribution in the early phase of the ramp-up.

S,G&A increased by $8 million, mainly driven by bonus accrual reversals prior year and a mix of minor expense items incurred in the current quarter.

R,D&E, net was close to unchanged in USD terms as well as in percent of sales.

Other (expense) income, net of negative $26 million was $27 million lower than in the prior year, mainly due to accruals relating to future reductions of our indirect workforce.

Operating income decreased by $39 million, as a consequence of the declines in other (expense) income, net and gross profit.

Adjusted operating income* decreased by $11 million, mainly due to the lower gross profit.

Financial and non-operating items, net was close to unchanged at $19 million compared to the prior year.

Income before taxes decreased by $37 million, mainly as a consequence of the lower operating income.

Effective tax rate of 36.0% was 4.9 pp higher than last year primarily due to costs accrued in the quarter related to the indirect workforce reduction program that are not fully tax deductible.

Earnings per share, diluted decreased by 36 cents where the main drivers were 31 cents from higher costs for capacity alignment and 8 cents from lower adjusted operating income.

 

 

 

8


 

Q3 Report—2019

 

Selected Balance Sheet and Cash Flow items

 

Selected Balance Sheet items

Third quarter

(Dollars in millions)

2019

2018

Change

Operating working capital

$619.5

$759.4

(18.4)%

Operating working capital % of sales1)

7.2%

8.8%

(1.6)pp

Cash & cash equivalents

$334.4

$533.7

(37.3)%

Gross Debt2)

$2,105.0

$2,250.5

(6.5)%

Net Debt3)

$1,781.3

$1,724.4

3.3%

Total equity

$1,999.3

$2,053.4

(2.6)%

Leverage ratio

1.8

1.5

20.0%

1) Latest 12 months of net sales. 2) Short- and long-term interest-bearing debt. 3) Short- and long-term debt adjusted for cash and cash equivalents and debt-related derivatives. Non-U.S. GAAP measure. See reconciliation table.

 

Selected Cash Flow items

Third quarter

First 9 months

(Dollars in millions)

2019

2018

Change

2019

20181)

Change

Net income

$86.0

$118.0

(27.1)%

$306.9

$470.3

(34.7)%

Changes in operating assets and liabilities2)

$16.4

$28.0

(41.4)%

$(37.8)

$(220.2)

(82.8)%

Depreciation and amortization

$84.1

$85.1

(1.2)%

$260.1

$253.1

2.8%

Other, net3)

$8.8

$7.1

23.9%

$(200.8)

$17.0

n/a

Operating cash flow

$195.3

$238.2

(18.0)%

$328.4

$520.2

(36.9)%

Capital expenditure, net

$(122.3)

$(117.4)

4.2%

$(358.1)

$(352.7)

1.5%

Free cash flow4)

$73.0

$120.8

(39.6)%

$(29.7)

$167.5

(117.7)%

Cash conversion5)

84.9%

102.4%

(17.5)pp

(9.7)%

35.6%

(45.3)pp

Dividends paid

$(54.2)

$(54.1)

0.2%

$(162.7)

$(160.7)

1.2%

1) Management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 2) 2018 including separation costs. 3) First 9 months 2019 including EC antitrust payment. 4) Operating cash flow less Capital expenditure, net. Non-U.S. GAAP measure. See reconciliation table. 5) Free cash flow relative to Net income. Non-U.S. GAAP measure, see reconciliation table.

 

 

Third quarter 2019 development

Operating working capital* was 7.2% of sales compared to 8.8% of sales a year earlier, where the change mainly was a consequence of a new accounting standard for operating leases and accruals related to future reductions of our indirect workforce. The Company targets that operating working capital in relation to the last 12-month sales should not exceed 10%.

Operating cash flow was $195 million compared to $238 million a year earlier, where the difference of $43 million primarily was due to the $32 million lower net income.

Capital expenditure, net of $122 million was relatively unchanged, reflecting continued high investment requirements in support of the high level of new product launches.

Free cash flow, net* amounted to $73 million compared to $121 million a year earlier, where the decrease of $48 million was mainly due to the lower operating cash flow.

Cash conversion* defined as free cash flow in relation to net income, amounted to 85% compared to 102% in the previous year, as free cash flow declined more than net income.

Net debt* amounted to $1,781 million as of September 30, 2019, which was close to unchanged compared to a year earlier.

Leverage ratio*. Autoliv’s policy is to maintain a leverage ratio commensurate with a strong investment grade credit rating. The Company measures its leverage ratio as net debt* adjusted for pension liabilities in relation to EBITDA. The long-term target is to maintain a leverage ratio of around 1x within a range of 0.5x to 1.5x. As of September 30, 2019, the Company had a leverage ratio of 1.8x, compared to 1.8x at June 30, 2019 and 1.5x at September 30, 2018.

Total equity decreased in the quarter by $38 million compared to June 30, 2019 mainly due to $54 million from dividends and $71 million in currency translation effects partly offset by $86 million in net income.

 

 

9


 

Q3 Report—2019

 

Headcount

 

September 30, 2019

June 30, 2019

September 30, 2018

Headcount

64,868

65,670

66,479

Whereof:  Direct workers in manufacturing

71%

71%

71%

Best cost countries

80%

80%

80%

Temporary personnel

9%

10%

14%

 

 

Compared to June 30, 2019, total headcount (permanent employees and temporary personnel) decreased by 802. The decrease in the quarter was driven by a reduction of both direct and indirect workforce. Compared to a year ago, headcount decreased by 1,611, with close to 80%

of the reduction being in the direct workforce. The headcount reductions reflect the balancing of cost reduction efforts to offset the decline in light vehicle markets and the support of the growth in organic sales* driven by new vehicle program launches.

 

 

 

 

10


 

Q3 Report—2019

 

Key Ratios

 

 

 

 

Third quarter

First 9 months

Latest 12 months

Full Year

 

2019

2018

2019

2018

2018

Income statement

 

 

 

 

 

 

Earnings per share, basic1)

$0.98

$1.35

$3.51

$5.38

$2.44

$4.32

Earnings per share, diluted1, 2)

$0.98

$1.34

$3.50

$5.37

$2.44

$4.31

Gross margin, %3)

18.7

19.0

18.2

19.8

18.5

19.7

Adjusted operating margin, %4)

9.0

9.5

8.4

10.3

9.0

10.5

R,D&E net in relation to sales, %

(4.9)

(5.0)

(5.1)

(5.1)

(4.8)

(4.8)

Balance Sheet

 

 

 

 

 

 

Operating working capital in relation to sales,  %5)

7.2

8.8

7.2

8.8

7.2

7.9

Capital employed, $ in millions6)

3,781

3,778

3,781

3,778

3,781

3,516

Return on total equity, %7)

17.1

23.2

20.7

20.0

10.8

13.0

Return on capital employed, %8)

16.2

20.4

18.0

20.9

14.0

16.8

Cash dividend paid per share

$0.62

$0.62

$1.86

$1.84

$2.48

$2.46

Net debt, $ in millions9)

1,781

1,724

1,781

1,724

1,781

1,619

Leverage ratio10)

1.8

1.5

1.8

1.5

1.8

1.5

Days receivables outstanding11)

75

80

72

76

71

71

Days inventory outstanding12)

37

38

35

35

35

35

Cash flow

 

 

 

 

 

 

Operating Cash flow, $ in millions13)

195.3

238.2

328.4

301.2

617.8

590.6

Depreciation and amortization, $ in millions 13)

84.1

85.1

260.1

308.4

348.8

397.1

Capital expenditures, net in relation to sales, %13)

(6.0)

(5.8)

(5.6)

(6.5)

(5.7)

(6.4)

Free Cash flow, $ in millions 13, 14)

73.0

120.8

(29.7)

(120.2)

126.3

35.8

Cash conversion, %13, 15)

84.9

102.4

(9.7)

(43.8)

58.4

19.5

Direct shareholder return, $ in millions 16)

(54.2)

(54.1)

(162.7)

(160.7)

(216.3)

(214.3)

Other

 

 

 

 

 

 

No. of shares at period-end in millions17)

87.2

87.1

87.2

87.1

87.2

87.1

Average no. of shares in millions2)

87.3

87.4

87.4

87.3

87.4

87.3

1) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 2) Assuming dilution and net of treasury shares. 3) Gross profit relative to sales. 4) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. Non-U.S. GAAP measure, see reconciliation table. 5) Latest 12 months of net sales. Full year 2018 excluding antitrust provision accrual. 6) Total equity and net debt. 7) Net income relative to average total equity. 8) Operating income and income from equity method investments, relative to average capital employed. 9) Non-U.S. GAAP measure, see reconciliation table. 10) Net debt adjusted for pension liabilities in relation to EBITDA. Non-U.S. GAAP measure, see reconciliation table. 11) Outstanding receivables relative to average daily sales. 12) Outstanding inventory relative to average daily sales. 13) Including Discontinued Operations, which had a significant impact through YTD 2018. 14) Operating cash flow less Capital expenditures, net. Non-U.S. GAAP measure, see reconciliation table. 15) Free cash flow relative to Net income. Non-U.S. GAAP measure, see reconciliation table. 16) Dividends paid and Shares repurchased. 17) Excluding dilution and net of treasury shares.

 

 

11


 

Q3 Report—2019

 

Other Items

 

 

 

On September 5, 2019, Autoliv announced the signing of a joint research declaration with Great Wall Motor on the project of North American road safety evaluation in Baoding, China. Autoliv and Great Wall Motor will jointly set up a North America road safety research lab. The lab will combine the global technical and testing resources of both parties and focus on the North American market, at the same time, align with the regulations from road safety authorities, thus to support the implementation of the strategies of Great Wall Motor.

 

On September 16, 2019, Autoliv announced that it strengthened the insights in biomechanics, epidemiology and public health as John Bolte IV and Maria Segui-Gomez joined the Autoliv Research Advisory Board. Maria Segui-Gomez is an acknowledged expert in the field of epidemiology and public health. She is full Professor in Public Health in Spain while holding visitor professorships in the US as Adjunct Associate Professor at Johns Hopkins University, School of Public Health, and as

 

Visiting Professor at University of Virginia School of Medicine. John Bolte IV is Professor at The Ohio State University and Director of the Injury Biomechanics Research Center.

 

On September 23, 2019, Autoliv announced that its interim CFO, Christian Hanke, notified the Company of his intent to resign as the Interim Chief Financial Officer and Vice President Corporate Control to pursue another opportunity outside of Autoliv. Mr. Hanke’s resignation will be effective no later than March 18, 2020. Until the time Mr. Hanke’s resignation becomes effective, he will continue to serve as the Interim Chief Financial Officer and Vice President Corporate Control. The Company expects that Mr. Hanke will remain with the Company through the filing of the Company’s 2019 annual report. The Company is continuing its search for a permanent replacement for the Chief Financial Officer position.

 

On September 27, 2019, S&P Global Ratings announced its downgrade of Autoliv Inc., from A- to BBB+ with outlook negative.

 

 

 

Dividends

On August 19, 2019, Autoliv declared a quarterly dividend to shareholders of 62 cents per share for the fourth quarter 2019, with the following payment schedule:

Ex-date (common stock)

November 19, 2019

Ex-date (SDRs)

November 19, 2019

Record Date

November 20, 2019

Payment Date

December 5, 2019

Next Report

Autoliv intends to publish the quarterly earnings report for the fourth quarter of 2019 on Tuesday, January 28, 2020.

Inquiries: Investors and Analysts

Anders Trapp

Vice President Investor Relations

Tel +46 (0)8 58 72 06 71

Henrik Kaar

Director Investor Relations

Tel +46 (0)8 58 72 06 14

Inquiries: Media

Stina Thorman

Vice President Communications

Tel +46 (0)8 58 72 06 50

 

This information is information that Autoliv, Inc. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on October 25, 2019.

Footnotes

*Non-U.S. GAAP measure, see enclosed reconciliation tables.

Definitions and SEC Filings

Please refer to www.autoliv.com or to our Annual Report for definitions of terms used in this report. Autoliv’s annual report to stockholders, annual report on Form 10‑K, quarterly reports on Form 10‑Q, proxy statements, management certifications, press releases, current reports on Form 8-K and other documents filed with the SEC can be obtained free of charge from Autoliv at the Company’s address. These documents are also available at the SEC’s website www.sec.gov and at Autoliv’s corporate website www.autoliv.com.

 

 

 

 

12


 

Q3 Report—2019

 

“Safe Harbor Statement”

 

 

This report contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc. or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “estimates”, “expects”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “may”, “likely”, “might”, “would”, “should”, “could”, or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words. Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation, changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier, changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment, restructuring and cost reduction initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations,

or restructuring; divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; (including the resolution of the Toyota recall); higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q and any amendments thereto. For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.

 

 

 

13


 

Q3 Report—2019

 

Consolidated Statements of Net Income

 

(Dollars in millions, except per share data)

Third quarter

First 9 months

Latest 12 months

Full Year

(Unaudited)

2019

2018

2019

2018

2018

Airbag and Other products1)

$1,349.3

$1,357.4

$4,232.7

$4,234.9

$5,696.4

$5,698.6

Seatbelt products1)

678.4

675.6

2,123.7

2,250.5

2,852.8

2,979.6

Total net sales

$2,027.7

$2,033.0

$6,356.4

$6,485.4

$8,549.2

$8,678.2

 

 

 

 

 

 

 

Cost of sales

(1,648.6)

(1,646.9)

(5,198.8)

(5,199.3)

(6,966.4)

(6,966.9)

Gross profit

$379.1

$386.1

$1,157.6

$1,286.1

$1,582.8

$1,711.3

 

 

 

 

 

 

 

Selling, general & administrative expenses

(97.7)

(90.0)

(300.2)

(290.9)

(399.6)

(390.3)

Research, development & engineering expenses, net

(99.1)

(101.9)

(323.5)

(327.9)

(408.2)

(412.6)

Amortization of intangibles

(2.9)

(2.8)

(8.6)

(8.5)

(11.4)

(11.3)

Other (expense) income, net

(25.6)

1.1

(28.8)

6.2

(246.1)

(211.1)

Operating income

$153.8

$192.5

$496.5

$665.0

$517.5

$686.0

 

 

 

 

 

 

 

Income from equity method investments

0.4

0.2

1.6

2.8

2.4

3.6

Interest income

0.7

1.3

2.7

4.1

5.5

6.9

Interest expense

(17.1)

(18.9)

(52.6)

(46.2)

(72.5)

(66.1)

Other non-operating items, net

(3.4)

(3.8)

(9.4)

(15.4)

(12.0)

(18.0)

Income from Continuing Operations before income taxes

$134.4

$171.3

$438.8

$610.3

$440.9

$612.4

 

 

 

 

 

 

 

Income taxes

(48.4)

(53.3)

(131.9)

(140.0)

(226.8)

(234.9)

Net income from Continuing Operations

$86.0

$118.0

$306.9

$470.3

$214.1

$377.5

 

 

 

 

 

 

 

Loss from Discontinued Operations, net of income taxes

(195.8)

2.0

(193.8)

Net income

$86.0

$118.0

$306.9

$274.5

$216.1

$183.7

 

 

 

 

 

 

 

Less; Net income from Continuing Operations attributable to non-controlling interest

0.6

0.5

1.0

1.4

1.2

1.6

Less; Net loss from Discontinued Operations attributable to non-controlling interest

(8.3)

(8.3)

Net income attributable to controlling interest

$85.4

$117.5

$305.9

$281.4

$214.9

$190.4

 

 

 

 

 

 

 

Amounts attributable to controlling interest:

 

 

 

 

 

 

Net Income from Continuing Operations

$85.4

$117.5

$305.9

$468.9

$212.9

$375.9

Net Loss from Discontinued Operations, net of income taxes

(187.5)

2.0

(185.5)

Net income attributable to controlling interest

$85.4

$117.5

$305.9

$281.4

$214.9

$190.4

 

 

 

 

 

 

 

Earnings per share Continuing Operations2, 3)

$0.98

$1.34

$3.50

$5.37

$2.44

$4.31

Earnings per share Discontinued Operations2, 3)

$ -

$ -

$ -

$(2.15)

$0.02

$(2.13)

Earnings per share2, 3)

$0.98

$1.34

$3.50

$3.22

$2.46

$2.18

1) Including Corporate and other sales. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from EPS calculation.

 

 

14


 

Q3 Report—2019

 

Consolidated Balance Sheets  

 

 

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

(Dollars in millions, unaudited)

2019

2019

2019

2018

2018

Assets

 

 

 

 

 

Cash & cash equivalents

$334.4

$406.4

$436.6

$615.8

$533.7

Receivables, net

1,656.2

1,695.5

1,749.6

1,667.1

1,784.5

Inventories, net

731.8

736.1

741.1

757.9

758.7

Other current assets

186.4

214.2

183.8

244.6

271.2

Total current assets

$2,908.8

$3,052.2

$3,111.1

$3,285.4

$3,348.1

 

 

 

 

 

 

Property, plant & equipment, net

1,747.9

1,765.0

1,710.9

1,690.1

1,654.8

Investments and other non-current assets

371.1

386.7

384.3

323.5

331.3

Right-of-use assets - operating leases

154.1

165.0

147.3

Goodwill assets

1,383.3

1,388.8

1,388.3

1,389.9

1,391.0

Intangible assets, net

24.3

27.8

30.7

32.7

35.3

Total assets

$6,589.5

$6,785.5

$6,772.6

$6,721.6

$6,760.5

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

Short-term debt

$289.9

$366.8

$437.6

$620.7

$573.0

Accounts payable

900.2

956.6

981.7

1,029.0

992.4

Other current liabilities

1,077.0

1,055.4

1,282.2

1,215.8

1,118.4

Operating lease liabilities - current

37.7

39.6

37.0

Total current liabilities

$2,304.8

$2,418.4

$2,738.5

$2,865.5

$2,683.8

 

 

 

 

 

 

Long-term debt

1,815.1

1,850.2

1,598.1

1,609.0

1,677.5

Pension liability

199.9

202.8

200.4

198.2

204.3

Other non-current liabilities

153.4

150.5

151.1

152.1

141.5

Operating lease liabilities - non-current

117.0

125.9

110.5

Total non-current liabilities

$2,285.4

$2,329.4

$2,060.1

$1,959.3

$2,023.3

 

 

 

 

 

 

Total parent shareholders’ equity

1,986.7

2,024.1

1,960.5

1,883.7

2,040.4

Non-controlling interest

12.6

13.6

13.5

13.1

13.0

Total equity

$1,999.3

$2,037.7

$1,974.0

$1,896.8

$2,053.4

 

 

 

 

 

 

Total liabilities and equity

$6,589.5

$6,785.5

$6,772.6

$6,721.6

$6,760.5


 

15


 

Q3 Report—2019

 

Consolidated Statements of Cash Flow

 

 

   Third quarter

      First 9 months

Latest 12 months

Full Year

(Dollars in millions, unaudited)

2019

2018

2019

20181)

20181)

Net income Continuing Operations

$86.0

$118.0

$306.9

$470.3

$214.1

$377.5

Net loss Discontinued Operations

(195.8)

2.0

(193.8)

Depreciation and amortization

84.1

85.1

260.1

308.4

348.8

397.1

Legal provision2)

210.0

Other, net3)

8.8

7.1

(200.8)

19.7

18.6

29.1

Changes in operating assets and liabilities4)

16.4

28.0

(37.8)

(301.4)

34.3

(229.3)

Net cash provided by operating activities

$195.3

$238.2

$328.4

$301.2

$617.8

$590.6

 

 

 

 

 

 

 

Capital expenditures, net

(122.3)

(117.4)

(358.1)

(421.4)

(491.5)

(554.8)

Acquisitions of businesses and other, net

(72.9)

-

(72.9)

Net cash used in investing activities

$(122.3)

$(117.4)

$(358.1)

$(494.3)

$(491.5)

$(627.7)

 

 

 

 

 

 

 

Net cash before financing5)

$73.0

$120.8

$(29.7)

$(193.1)

$126.3

$(37.1)

 

 

 

 

 

 

 

Net (decrease) increase in short-term debt

(58.6)

(35.1)

(309.4)

374.9

(328.9)

355.4

Issuance of long-term debt6)

(1.7)

243.5

582.2

243.5

582.2

Debt issuance costs

(0.3)

(2.6)

(0.3)

(2.6)

Dividends paid

(54.2)

(54.1)

(162.7)

(160.7)

(216.3)

(214.3)

Common stock options exercised

0.1

0.6

0.3

8.2

0.3

8.2

Dividend paid to non-controlling interests

(1.1)

(1.1)

(2.0)

(1.2)

(2.1)

Capital contribution to Veoneer

7.9

(971.8)

(971.8)

Net cash used in financing activities

$(115.5)

$(80.7)

$(229.7)

$(171.8)

$(302.9)

$(245.0)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

(29.5)

(13.9)

(22.0)

(60.9)

(22.7)

(61.6)

(Decrease) increase in cash and cash equivalents

$(72.0)

$26.2

$(281.4)

$(425.8)

$(199.3)

$(343.7)

Cash and cash equivalents at period-start

406.4

507.5

615.8

959.5

533.7

959.5

Cash and cash equivalents at period-end

$334.4

$533.7

$334.4

$533.7

$334.4

$615.8

1) Including Discontinued Operations. 2) EC antitrust non-cash provision. 3) First nine months 2019 including EC antitrust payment. 4) 2018 including separation costs. 5) Non-U.S. GAAP measure comprised of "Net cash provided by operating activities" and "Net cash used in investing activities". See reconciliation table 6) Reclassification of long term debt.

 


 

16


 

Q3 Report—2019

 

RECONCILIATION OF U.S. GAAP TO NON-U.S. GAAP MEASURES

In this report we sometimes refer to non-U.S. GAAP measures that we and securities analysts use in measuring Autoliv's performance. We believe that these measures assist investors and management in analyzing trends in the Company's business for the reasons given below. Investors should not consider these non-U.S. GAAP measures as substitutes, but rather as additions, to financial reporting measures prepared in accordance with U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

Components in Sales Increase/Decrease

Since the Company generates approximately 75% of sales in currencies other than in the reporting currency (i.e. U.S. dollars) and currency rates have been rather volatile, we analyze the Company's sales trends and performance as changes in organic sales growth. This presents the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates. The tables on page 5 present changes in organic sales growth as reconciled to the change in the total U.S. GAAP net sales.

Operating Working Capital

Due to the need to optimize cash generation to create value for shareholders, management focuses on operationally derived working capital as defined in the table below. The reconciling items used to derive this measure are, by contrast, managed as part of our overall management of cash and debt, but they are not part of the responsibilities of day-to-day operations' management.

 

 

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

(Dollars in millions)

2019

2019

2019

2018

2018

Total current assets

$2,908.8

$3,052.2

$3,111.1

$3,285.4

$3,348.1

Total current liabilities1)

(2,304.8)

(2,418.4)

(2,535.3)

(2,655.5)

(2,683.8)

Working capital

$604.0

$633.8

$575.8

$629.9

$664.3

Cash and cash equivalents

(334.4)

(406.4)

(436.6)

(615.8)

(533.7)

Short-term debt

289.9

366.8

437.6

620.7

573.0

Derivative asset and liability, current

5.9

(3.5)

2.4

(0.8)

1.8

Dividends payable

54.1

54.1

54.0

54.0

54.0

Operating working capital

$619.5

$644.8

$633.2

$688.0

$759.4

1) March 2019 and December 2018 excluding the EC antitrust accrual.

 

 

 

 


 

17


 

Q3 Report—2019

 

Net Debt

As part of efficiently managing the Company’s overall cost of funds, Autoliv from time to time enter into “debt-related derivatives” (DRD) as a part of our debt management. Creditors and credit rating agencies use net debt adjusted for DRD in their analyses of the Company’s debt and therefore we provide this non-U.S. GAAP measure. DRD are fair value adjustments to the carrying value of the underlying debt. Also included in the DRD is the unamortized fair value adjustment related to a discontinued fair value hedge which will be amortized over the remaining life of the debt. By adjusting for DRD, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

 

 

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

(Dollars in millions)

2019

2019

2019

2018

2018

Short-term debt

$289.9

$366.8

$437.6

$620.7

$573.0

Long-term debt

1,815.1

1,850.2

1,598.1

1,609.0

1,677.5

Total debt

$2,105.0

$2,217.0

$2,035.7

$2,229.7

$2,250.5

Cash & cash equivalents

(334.4)

(406.4)

(436.6)

(615.8)

(533.7)

Debt issuance cost/Debt-related derivatives, net

10.7

0.3

8.1

4.9

7.6

Net debt

$1,781.3

$1,810.9

$1,607.2

$1,618.8

$1,724.4

 

 

 

 

 

Dec 31

Dec 31

Dec 31

(Dollars in millions)

 

 

2017

2016

2015

Short-term debt

 

 

$19.7

$216.3

$39.6

Long-term debt

 

 

1,310.7

1,312.5

1,499.4

Total debt

 

 

$1,330.4

$1,528.8

$1,539.0

Cash & cash equivalents

 

 

(959.5)

(1,226.7)

(1,333.5)

Debt issuance cost/Debt-related derivatives, net

 

 

(2.5)

(3.4)

(3.9)

Net debt

 

 

$368.4

$298.7

$201.6

 

 

18


 

Q3 Report—2019

 

Leverage ratio

The non-U.S. GAAP measure net debt is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses this measure to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. For details on leverage ratio refer to the table.

 

 

Sep 30

Dec 31

Sep 30

(Dollars in millions)

2019

2018

2018

Net debt1)

$1,781.3

$1,618.8

$1,724.4

Pension liabilities

199.9

198.2

204.3

Debt per the Policy

$1,981.2

$1,817.0

$1,928.7

 

 

 

 

Net income2)

216.1

183.7

218.9

Less; Net loss, Discontinued Operations2)

(2.0)

193.8

448.8

Net income, Continuing Operations2)

$214.1

$377.5

$667.7

Income taxes2)

226.8

234.9

183.4

Interest expense, net2, 3)

67.0

59.2

54.8

Depreciation and amortization of intangibles2)

348.8

342.0

332.6

Antitrust related matters, capacity alignments and separation costs2)

254.5

216.5

6.7

EBITDA per the Policy

$1,111.2

$1,230.1

$1,245.2

 

 

 

 

Leverage ratio

1.8

1.5

1.5

1) Short- and long-term debt less cash and cash equivalents and debt-related derivatives. 2) Latest 12 months. 3) Interest expense including cost for extinguishment of debt, if any, less interest income.

 

 


 

19


 

Q3 Report—2019

 

Free Cash Flow, Net Cash Before Financing and Cash Conversion

Management uses the non-U.S. GAAP measure free cash flow to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on free cash flow see the reconciliation table below. Management uses the non-U.S. GAAP measure net cash before financing to analyze and disclose the cash flow generation available for servicing external stakeholders such as shareholders and debt stakeholders. For details on net cash before financing, see the reconciliation table below. Management uses the non-U.S. GAAP measure cash conversion to analyze the proportion of net income that is converted into free cash flow. The measure is a tool to evaluate how efficient the Company utilizes its resources. For details on cash conversion, see the reconciliation table below.

 

 

Third quarter

First 9 months

First 9 months

(Dollars in millions)

2019

2018

2019

20181)

20182)

Net income

$86.0

$118.0

$306.9

$274.5

$470.3

Changes in operating assets and liabilities3)

16.4

28.0

(37.8)

(301.4)

(220.2)

Depreciation and amortization

84.1

85.1

260.1

308.4

253.1

Other, net4)

8.8

7.1

(200.8)

19.7

17.0

Operating cash flow

$195.3

$238.2

$328.4

$301.2

$520.2

Capital expenditure, net

(122.3)

(117.4)

(358.1)

(421.4)

(352.7)

Free cash flow5)

$73.0

$120.8

$(29.7)

$(120.2)

$167.5

Acquisitions of businesses and other, net

-

-

-

(72.9)

-

Net cash before financing

$73.0

$120.8

$(29.7)

$(193.1)

$167.5

Cash conversion6)

84.9%

102.4%

(9.7)%

(43.8)%

35.6%

1) Including Discontinued Operations. 2) For Q2 2018 and first six months 2018 management estimate for Continuing Operations based on operations that includes Discontinued Operations. 3) 2018 including separation cost. 4) First nine months 2019 including EC antitrust payment. 5) Operating cash flow less Capital expenditures, net. 6) Free cash flow relative to Net income.

 

 

Latest 12

Full year

Full year

Full year

Full year

(Dollars in millions)

months1)

20181)

20171)

20161)

20151)

Net income

$216.1

$183.7

$303.0

$561.6

$457.5

Changes in operating assets and liabilities2)

34.3

(229.3)

(0.3)

(77.8)

(26.1)

Depreciation and amortization

348.8

397.1

425.8

383.0

319.1

Goodwill impairment charges

-

-

234.2

-

-

Other, net3)

18.6

239.1

(26.8)

1.6

(0.0)

Operating cash flow

$617.8

$590.6

$935.9

$868.4

$750.5

Capital expenditure, net

(491.5)

(554.8)

(569.6)

(498.6)

(449.6)

Free cash flow4)

$126.3

$35.8

$366.3

$369.8

$300.9

Acquisitions of businesses and other, net

-

(72.9)

(127.7)

(227.4)

(141.5)

Net cash before financing

$126.3

$(37.1)

$238.6

$142.4

$159.4

Cash conversion5)

58.4%

19.5%

120.9%

65.8%

65.8%

1) Including Discontinued Operations. 2) 2018 including separation cost. 3) 2019 and 2018 including EC antitrust non-cash provision and payment. 4) Operating cash flow less Capital expenditures, net. 5) Free cash flow relative to Net income.

 

20


 

Q3 Report—2019

 

Items Affecting Comparability

We believe that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items. Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.

 

 

 

Third quarter 2019

Third quarter 2018

(Dollars in millions, except per share data)

Reported
U.S. GAAP


Adjust-

ments1)

Non-U.S.
GAAP

Reported
U.S. GAAP


Adjust-

ments1)

Non-U.S.
GAAP

Operating income

$153.8

$28.7

$182.5

$192.5

$1.1

$193.6

Operating margin, %

7.6

1.4

9.0

9.5

0.0

9.5

Income before taxes from Continuing Operations

$134.4

$28.7

$163.1

$171.3

$1.1

$172.4

Net income attributable to controlling interest from Continuing Operations

$85.4

$28.3

$113.7

$117.5

$0.8

$118.3

Return on capital employed, %2)

16.2

2.9

19.1

20.4

0.1

20.5

Return on total equity, %3)

17.1

5.4

22.5

23.2

0.2

23.4

Earnings per share, Continuing Operations4, 5)

$0.98

$0.32

$1.30

$1.34

$0.01

$1.35

1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Operating income and income from equity method investments, relative to average capital employed. 3) Net income relative to average total equity. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.

 

 

 

First 9 months 2019

First 9 months 2018

(Dollars in millions, except per share data)

Reported
U.S. GAAP


Adjust-

ments1)

Non-U.S.
GAAP

Reported
U.S. GAAP


Adjust-

ments1)

Non-U.S.
GAAP

Operating income

$496.5

$35.6

$532.1

$665.0

$3.3

$668.3

Operating margin, %

7.8

0.6

8.4

10.3

0.0

10.3

Income before taxes from Continuing operations

$438.8

$35.6

$474.4

$610.3

$3.3

$613.6

Net income attributable to controlling interest from Continuing operations

$305.9

$32.6

$338.5

$468.9

$2.6

$471.5

Capital employed

$3,781

$32

$3,813

$3,778

$2.0

$3,780

Return on capital employed, %2)

18.0

1.3

19.3

20.9

0.1

21.0

Return on total equity, % 3)

20.7

2.1

22.8

20.0

0.1

20.1

Earnings per share continuing operations, diluted4, 5)

$3.50

$0.37

$3.87

$5.37

$0.03

$5.40

Total parent shareholders' equity per share

$22.78

$0.37

$23.15

$23.42

$0.03

$23.45

1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Operating income and income from equity method investments continuing operations, relative to average capital employed. 3) Income from continuing operations relative to average total equity. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.

 

 

 

21


 

Q3 Report—2019

 

 

 

 

Latest 12 months

 

 

 

 

Reported
U.S. GAAP


Adjust-ments1)

Non-U.S.
GAAP

Operating income

 

 

 

$517.5

$254.5

$772.0

Operating margin, %

 

 

 

6.1

2.9

9.0

1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments.

 

 

 

Full year 2018

Full year 2017

 

Reported
U.S. GAAP


Adjust-ments1)

Non-U.S.
GAAP

Reported
U.S. GAAP


Adjust-ments1)

Non-U.S.
GAAP

Operating income

$686.0

$222.2

$908.2

$859.6

$39.7

$899.3

Operating margin, %

7.9

2.6

10.5

10.6

0.5

11.1

1) Excluding costs for capacity alignment and antitrust related matters in 2017 and 2018, and separation of our business segments in 2018.

 

 

 

 

 

 

 

 

 

 

Full year 2016

Full year 2015

 

Reported
U.S. GAAP


Adjust-ments1)

Non-U.S.
GAAP

Reported
U.S. GAAP


Adjust-ments1)

Non-U.S.
GAAP

Operating income

$831.0

$34.5

$865.5

$707.7

$166.4

$874.1

Operating margin, %

10.5

0.4

10.9

9.3

2.2

11.5

1) Excluding costs for capacity alignment and antitrust related matters.

 

Items included in Non-U.S. GAAP adjustments

Third quarter 2019

 

Third quarter 2018

 

Adjustment
Millions

Adjustment
Per share

 

Adjustment
Millions

Adjustment
Per share

Capacity alignment

$27.4

$0.31

 

$(0.2)

$(0.00)

Antitrust related matters

0.1

0.00

 

0.2

0.00

Separations costs

1.2

0.01

 

1.1

0.01

Total adjustments to operating income

$28.7

$0.32

 

$1.1

$0.01

Tax on non-U.S. GAAP adjustments1)

(0.4)

0.00

 

(0.3)

(0.00)

Total adjustments to net income

$28.3

$0.32

 

$0.8

$0.01

 

 

 

 

 

 

Weighted average number of shares outstanding - diluted

 

87.3

 

 

87.4

 

 

 

 

 

 

Return on capital employed2, 3)

$114.8

 

 

$4.4

 

Adjustment return on capital employed

  2.9%

 

 

  0.1%

 

 

 

 

 

 

 

Return on total equity4, 5)

$113.2

 

 

$3.2

 

Adjustment return on total equity

  5.4%

 

 

  0.2%

 

1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) After adjustment for annualized Q3 non-U.S. GAAP EBIT adjustment. 3) Operating income and income from equity method investments, relative to average capital employed. 4) Income relative to average total equity. 5) After adjustment for annualized Q3 non-U.S. GAAP Net income adjustment.

 

22


 

Q3 Report—2019

 

 

Items included in Non-GAAP adjustments

First 9 months 2019

 

First 9 months 2018

 

Adjustment
Millions

Adjustment
Per share

 

Adjustment
Millions

Adjustment
Per share

Capacity alignment

$40.5

$0.46

 

$1.0

$0.01

Antitrust related matters

(6.1)

(0.07)

 

1.2

0.01

Separation costs

1.2

0.01

 

1.1

0.01

Total adjustments to operating income

$35.6

$0.40

 

$3.3

$0.03

Tax on non-U.S. GAAP adjustments1)

(3.0)

(0.03)

 

(0.7)

(0.00)

Total adjustments to Income from Continuing operations

$32.6

$0.37

 

$2.6

$0.03

 

 

 

 

 

 

Weighted average number of shares outstanding - diluted

 

                  87.4

 

 

                  87.3

 

 

 

 

 

 

Return on capital employed2, 3)

$47.5

 

 

$4.4

 

Adjustment return on capital employed

  1.3%

 

 

  0.1%

 

 

 

 

 

 

 

Return on total equity4, 5)

$43.5

 

 

$3.5

 

Adjustment return on total equity

  2.1%

 

 

  0.1%

 

1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) After adjustment for annualized non-U.S. GAAP EBIT adjustment. 3) Operating income and income from equity method investments Continuing Operations, relative to average capital employed. 4) Income from Continuing Operations relative to average total equity. 5) After adjustment for annualized non-U.S. GAAP Net income adjustment.

 

 

23


 

Q3 Report—2019

 

Multi-year Summary
Continuing Operations unless noted

 

(Dollars in millions, except per share data)

2018

2017

2016

2015

Sales and Income    

 

 

 

 

Net sales

$8,678

$8,137

$7,922

$7,636

Airbag sales1)

5,699

5,342

5,256

5,036

Seatbelt sales

2,980

2,794

2,665

2,599

Operating income

686

860

831

708

Net income attributable to controlling interest

376

586

558

443

Earnings per share (US$) – basic2)

4.32

6.70

6.33

5.03

Earnings per share (US$) – assuming dilution2, 3)

4.31

6.68

6.32

5.02

Gross margin, %4)

19.7

20.6

20.6

20.5

R,D&E net in relation to sales, %

(4.8)

(4.6)

(4.5)

(4.1)

S,G&A net in relation to sales, %

(4.5)

(5.0)

(5.0)

(4.8)

Operating margin, %5)

7.9

10.6

10.5

9.3

Adjusted operating margin, %6, 7)

10.5

11.1

10.9

11.5

Balance Sheet

 

 

 

 

Operating working capital

478

581

488

525

Days receivables outstanding8)

71

76

70

71

Days inventory outstanding9)

35

35

32

31

Total equity

1,897

4,169

3,926

3,468

Total parent shareholders’ equity per share (US$)

21.63

46.38

41.69

39.22

Current assets excluding cash

2,670

2,598

2,269

2,259

Property, plant and equipment, net

1,690

1,609

1,329

1,265

Intangible assets (primarily goodwill)

1,423

1,440

1,430

1,445

Capital employed

3,516

4,538

4,225

3,670

Net debt7)

1,619

368

299

202

Total assets

6,722

6,947

6,565

6,518

Long-term debt

1,609

1,311

1,313

1,499

Operating working capital in relation to sales,  %

5.5

7.1

6.2

6.9

Return on capital employed, %10, 11)

17

n/a

n/a

n/a

Return on total equity, %11, 12)

13

n/a

n/a

n/a

Total equity ratio, %

28

49

48

46

Cash flow

 

 

 

 

Operating cash flow13)

591

936

868

751

Depreciation and amortization13)

397

426

383

319

Capital expenditures, net13)

555

570

499

450

Capital expenditures, net in relation to sales, %13)

5.7

5.5

4.9

4.9

Free cash flow7, 13, 14)

36

366

369

301

Cash conversion, %7, 13, 15)

19.5

120.8

65.7

65.8

Direct shareholder return13, 16)

(214)

(366)

(203)

(300)

Cash dividends paid per share (US$)

2.46

2.38

2.30

2.22

Other data

 

 

 

 

Number of shares outstanding (million)17)

87.1

87.0

88.2

88.1

Number of employees, December 31

57,700

56,700

55,800

51,300

1) Including steering wheels, inflators and initiators. 2) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 3) Assuming dilution and net of treasury shares. 4) Gross profit relative to sales. 5) Operating income relative to sales. 6) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. Non-U.S. GAAP measure, see reconciliation table. 7) Non-US GAAP measure, for reconciliation see tables above. 8) Outstanding receivables relative to average daily sales. 9) Outstanding inventory relative to average daily sales. 10) Operating income and income from equity method investments, relative to average capital employed. 11) The Company has decided not to recalculate prior periods since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful. 12) Income relative to average total equity. 13) Including Discontinued Operations. 14) Operating cash flow less Capital expenditures, net. Non-U.S. GAAP measure, see reconciliation table. 15) Free cash flow relative to Net income. Non-U.S. GAAP measure, see reconciliation table. 16) Dividends paid and Shares repurchased. 17) At year end, excluding dilution and net of treasury shares.

 

 

24

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Document and Entity Information
Oct. 25, 2019
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Oct. 25, 2019
Entity Registrant Name AUTOLIV INC
Entity Central Index Key 0001034670
Entity Emerging Growth Company false
Entity File Number 001-12933
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 51-0378542
Entity Address, Address Line One Klarabergsviadukten 70, Section B
Entity Address, Address Line Two 7th Floor
Entity Address, Address Line Three Box 70381
Entity Address, City or Town Stockholm
Entity Address, Country SE
Entity Address, Postal Zip Code SE-107 24
City Area Code +46 8
Local Phone Number 587 206 00
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of each class Common Stock (par value $1.00 per share)
Trading Symbol ALV
Name of each exchange on which registered NYSE
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