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STOCKHOLM, Jan. 16, 2024 /PRNewswire/ -- Following Euroclear Sweden's termination of its agreement to act as Withholding Agent, Autoliv, Inc. (NYSE: ALV) and (SSE: ALIVsdb) today announces upcoming changes to its Autoliv, Inc. Swedish Depository Receipts (SDRs). The SDRs will receive a new ISIN[1] code as of February 29, 2024, with updated terms and conditions. Skandinaviska Enskilda Banken (SEB) will assume the role as Withholding Agent in its capacity as issuer of Autoliv SDRs. As Euroclear Sweden is no ...

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Autoliv, Inc. (NYSE:ALV) Q3 2023 Earnings Conference Call October 20, 2023 8:00 AM ET Company Participants Anders Trapp - VP, IR Mikael Bratt - President & CEO Fredrik Westin - CFO Conference Call Participants Emmanuel Rosner - Deutsche Bank Colin Langan - Wells Fargo Mattias Holmberg - DNB Jairam Nathan - Daiwa Giulio Pescatore - BNP Exane Agnieszka Vilela - Nordea Hampus Engellau - Handelsbanken Rod Lache - Wolfe Research Operator Good day, and thank you for standing by. Welcome to the Autoliv Third Quart ...

PART I - FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Autoliv's unaudited condensed consolidated financial statements for the periods ended September 30, 2023, along with detailed notes on accounting policies and financial performance Consolidated Statements of Income (Three Months Ended September 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Change (%) | | :----- | :---------------- | :---------------- | :--------- | | Net Sales | 2,596 | 2,302 | 13% | | Gross Profit | 465 | 383 | 21% | | Operating Income | 232 | 171 | 36% | | Net Income | 134 | 106 | 27% | | Diluted EPS | 1.57 | 1.21 | 30% | Consolidated Statements of Income (Nine Months Ended September 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Change (%) | | :----- | :---------------- | :---------------- | :--------- | | Net Sales | 7,724 | 6,507 | 19% | | Gross Profit | 1,291 | 998 | 29% | | Operating Income | 453 | 429 | 5.5% | | Net Income | 262 | 268 | (2.5%) | | Diluted EPS | 3.04 | 3.06 | (0.5%) | Condensed Consolidated Balance Sheets (As of September 30, 2023 vs. December 31, 2022) | Metric | Sep 30, 2023 (Millions $) | Dec 31, 2022 (Millions $) | | :----- | :------------------------ | :------------------------ | | Total Assets | 7,987 | 7,717 | | Total Current Liabilities | 3,851 | 3,642 | | Total Equity | 2,486 | 2,626 | Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | | :----- | :---------------- | :---------------- | | Net Cash Provided by Operating Activities | 535 | 251 | | Net Cash Used in Investing Activities | (419) | (319) | | Net Cash Used in Financing Activities | (232) | (389) | | Cash and Cash Equivalents at End of Period | 475 | 483 | [1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) The interim unaudited condensed consolidated financial statements are prepared under U.S. GAAP, focusing on Autoliv's single reportable segment of airbag and seatbelt products - The Company has one reportable segment, which includes Autoliv's airbag and seatbelt products and components[24](index=24&type=chunk) - Statements in this report that are not historical fact are forward-looking statements that involve risks and uncertainties[24](index=24&type=chunk) [2. New Accounting Standards](index=11&type=section&id=2.%20New%20Accounting%20Standards) Autoliv adopted ASU 2022-04 on January 1, 2023, requiring disclosure of supplier finance programs, with obligations recorded in Accounts Payable - The Company adopted **ASU 2022-04, Liabilities-Supplier Finance Programs**, as of January 1, 2023[27](index=27&type=chunk) - Autoliv uses an external payment service provider for certain suppliers, with outstanding obligations recorded in **Accounts Payable**[27](index=27&type=chunk) Supplier Finance Program Obligations (Nine Months Ended September 30, 2023) | Metric | Amount (Millions $) | | :----- | :------------------ | | Confirmed obligations outstanding at beginning of period | 314 | | Invoices confirmed during the period | 1,046 | | Confirmed invoices paid during the period | (1,030) | | Confirmed obligations outstanding at end of the period | 330 | [3. Fair Value Measurements](index=12&type=section&id=3.%20Fair%20Value%20Measurements) Autoliv uses derivative financial instruments to mitigate market risk, classifying all derivatives as Level 2 and certain nonrecurring asset measurements as Level 3 - All of the Company's derivatives are classified as **Level 2 financial instruments** in the fair value hierarchy[30](index=30&type=chunk) Derivatives Not Designated as Hedging Instruments (As of September 30, 2023 vs. December 31, 2022) | Metric | Sep 30, 2023 (Millions $) | Dec 31, 2022 (Millions $) | | :----- | :------------------------ | :------------------------ | | Nominal Volume | 2,016 | 2,616 | | Derivative Asset | 13 | 22 | | Derivative Liability | 25 | 15 | Fair Value of Debt (As of September 30, 2023 vs. December 31, 2022) | Metric | Sep 30, 2023 (Millions $) | Dec 31, 2022 (Millions $) | | :----- | :------------------------ | :------------------------ | | Total Long-term Debt (Carrying Value) | 1,277 | 1,054 | | Total Long-term Debt (Fair Value) | 1,262 | 1,027 | | Total Short-term Debt (Carrying Value) | 590 | 711 | | Total Short-term Debt (Fair Value) | 588 | 705 | [4. Income Taxes](index=15&type=section&id=4.%20Income%20Taxes) Autoliv's effective tax rate increased to **33.4%** for the three and nine months ended September 30, 2023, with a **$7 million** net increase in income tax reserves Effective Tax Rate | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | 33.4% | 30.8% | | Nine Months | 33.4% | 31.1% | - During the nine months ended September 30, 2023, the Company recorded a net increase of **$7 million** to income tax reserves for unrecognized tax benefits[41](index=41&type=chunk) - Total unrecognized tax benefits as of September 30, 2023, were **$53 million**, with **$16 million** classified as current and **$37 million** as non-current[41](index=41&type=chunk) [5. Inventories](index=15&type=section&id=5.%20Inventories) Inventories are valued at the lower of cost and net realizable value, totaling **$982 million** net of reserve as of September 30, 2023 Inventories, Net of Reserve (Millions $) | Component | Sep 30, 2023 | Dec 31, 2022 | | :-------- | :----------- | :----------- | | Raw materials | 454 | 445 | | Work in progress | 325 | 350 | | Finished products | 289 | 265 | | Inventory valuation reserve | (87) | (91) | | Total inventories, net | 982 | 969 | [6. Restructuring](index=16&type=section&id=6.%20Restructuring) Autoliv's restructuring reserve totaled **$122 million** as of September 30, 2023, primarily for European footprint optimization activities expected to conclude by 2025 - As of September 30, 2023, approximately **$105 million** of the **$122 million** total restructuring reserve balance is for footprint optimization activities in Europe (Germany and UK)[45](index=45&type=chunk) Employee-Related Restructuring Reserves (Millions $) | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :----------------------------- | | Reserve at beginning of period | 127 | 32 | | Provision - charge | 8 | 118 | | Cash payments | (9) | (24) | | Reserve at end of period | 122 | 122 | [7. Product-Related Liabilities](index=16&type=section&id=7.%20Product-Related%20Liabilities) Autoliv's product-related liabilities, mainly for recall issues, totaled **$120 million** as of September 30, 2023, with a majority covered by **$120 million** in insurance receivables - As of September 30, 2023, the reserve for product-related liabilities was **$120 million**, mainly for recall-related issues[47](index=47&type=chunk)[48](index=48&type=chunk) - A majority of the product-related liabilities are covered by insurance, with total insurance receivables of **$120 million** as of September 30, 2023[47](index=47&type=chunk) - Provisions for the three and nine months ended September 30, 2023, primarily relate to warranty issues, while cash payments mainly relate to the Andrews litigation settlement[47](index=47&type=chunk) [8. Retirement Plans](index=17&type=section&id=8.%20Retirement%20Plans) Net periodic benefit cost for Autoliv's defined benefit plans was **$2 million** for U.S. and **$13 million** for Non-U.S. plans for the nine months ended September 30, 2023, with settlement accounting triggered for the primary U.S. pension plan Net Periodic Benefit Cost (Millions $) | Plan Type | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :-------- | :------------------------------ | :----------------------------- | | U.S. Plans | 1 | 2 | | Non-U.S. Plans | 4 | 13 | - The Company triggered settlement accounting for the primary U.S. pension plan in the third quarter of 2023 due to lump-sum payments exceeding service and interest costs[52](index=52&type=chunk) - The discount rate for the U.S. plan was changed from **5.32% to 5.98%** in Q3 2023 due to re-measurement, with the expected long-term rate of return on plan assets remaining at **5.05%**[52](index=52&type=chunk) [9. Contingent Liabilities](index=18&type=section&id=9.%20Contingent%20Liabilities) Autoliv faces various legal proceedings, including the ARC Inflator Class Action (loss reasonably possible), Honda Buckle Recall (**$27 million** accrual), and ZF Inflator Recall (estimated **$0 to $43 million** potential loss, anticipated immaterial net of insurance) - Autoliv is a defendant in the ARC Inflator Class Action, with a loss determined to be reasonably possible, but no accrual has been made and no estimated range of potential loss can be determined[59](index=59&type=chunk) - For the Honda Buckle Recall, a loss is probable, and the accrual exceeding product liability insurance receivable is **$27 million**[60](index=60&type=chunk) - For the ZF Inflator Recall, a loss is reasonably possible, with an estimated range of **$0 to $43 million**, but anticipated to be immaterial net of insurance claims and claims against ZF[61](index=61&type=chunk) [10. Stock Incentive Plan](index=19&type=section&id=10.%20Stock%20Incentive%20Plan) Eligible employees and directors participate in the 1997 Stock Incentive Plan, with stock-based compensation expense of **$3 million** and **$8 million** for the three and nine months ended September 30, 2023, respectively Stock-Based Compensation Expense (Millions $) | Period | 2023 | 2022 | | :----- | :--- | :--- | | Three Months Ended Sep 30 | 3 | 3 | | Nine Months Ended Sep 30 | 8 | 7 | - Approximately **8 thousand shares** (three months) and **120 thousand shares** (nine months) of common stock from treasury were utilized by the Plan during the periods ended September 30, 2023[64](index=64&type=chunk) [11. Earnings Per Share](index=20&type=section&id=11.%20Earnings%20Per%20Share) Basic and diluted earnings per share for the three months ended September 30, 2023, were **$1.58** and **$1.57**, respectively, and **$3.05** and **$3.04** for the nine months Earnings Per Share (EPS) | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :----------------------------- | | Net income attributable to controlling interest (Millions $) | 134 | 261 | | Basic EPS | 1.58 | 3.05 | | Diluted EPS | 1.57 | 3.04 | [12. Revenue Disaggregation](index=20&type=section&id=12.%20Revenue%20Disaggregation) Autoliv's net sales for the three months ended September 30, 2023, totaled **$2,596 million**, primarily from Airbags, Steering Wheels and Other (**$1,761 million**) and Seatbelt Products and Other (**$835 million**), with Americas as the leading region Net Sales by Products (Millions $) | Product Category | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--------------- | :------------------------------ | :----------------------------- | | Airbags, Steering Wheels and Other | 1,761 | 5,191 | | Seatbelt Products and Other | 835 | 2,533 | | Total Net Sales | 2,596 | 7,724 | Net Sales by Region (Millions $) | Region | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :----------------------------- | | China | 538 | 1,488 | | Asia, excl. China | 495 | 1,449 | | Americas | 918 | 2,665 | | Europe | 646 | 2,122 | | Total Net Sales | 2,596 | 7,724 | [13. Subsequent Events](index=20&type=section&id=13.%20Subsequent%20Events) No reportable events occurred subsequent to September 30, 2023 [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Autoliv's financial condition and results for Q3 and the first nine months of 2023, covering sales growth, profitability, cost reductions, liquidity, and non-U.S. GAAP measures - Autoliv's organic sales growth significantly outperformed Light Vehicle Production (LVP) in Q3 2023, with an **11% organic sales increase** against **3.8% global LVP growth**[77](index=77&type=chunk)[78](index=78&type=chunk) - Adjusted operating income was a new third-quarter record since the 2018 spin-off, with adjusted operating margin increasing from **7.5% to 9.4%** year-over-year[77](index=77&type=chunk)[78](index=78&type=chunk) - The company detailed intentions to reduce its indirect workforce by up to **2,000**, expecting annual cost reductions of around **$35 million** in 2024, **$65 million** in 2025, and **$85 million** when fully implemented[77](index=77&type=chunk)[81](index=81&type=chunk) [Executive Overview](index=22&type=section&id=Executive%20Overview) Autoliv reported strong Q3 2023 performance with significant organic sales growth, record adjusted operating income, and a focus on structural cost reductions and Chinese OEM market penetration - Organic sales growth continued to significantly outperform LVP, and adjusted operating income was a new third-quarter record since the spin-off in 2018[77](index=77&type=chunk) - In the first nine months, sales to fast-growing domestic OEMs in China increased by **more than 50%** year over year[77](index=77&type=chunk) - Full-year sales indication increased due to better-than-expected LVP development, despite the UAW strike[77](index=77&type=chunk) [Business and Market Condition Update for the Third Quarter 2023](index=23&type=section&id=Business%20and%20market%20condition%20update%20for%20the%20third%20quarter%202023) Global LVP grew **3.8%** in Q3 2023, with inflationary cost pressures largely offset by customer compensations, and Autoliv expects a full-year **20%** tax rate due to reorganization - Global light vehicle production growth was **3.8%** year-over-year in Q3 2023, with continued gradual improvement in call-off volatility, though still higher than pre-pandemic levels[79](index=79&type=chunk) - Most inflationary cost pressure in Q3 2023 was offset by customer price and other compensations; raw material cost impact was negligible[80](index=80&type=chunk) - Autoliv expects its full-year 2023 tax rate to be around **20%**, down from previous expectations, due to ongoing reorganization of global functions and European operations[81](index=81&type=chunk) [Results of Operations (Three Months Ended September 30, 2023 vs. 2022)](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) Autoliv's Q3 2023 net sales increased **13%** to **$2,596 million** with **11%** organic growth, leading to a **36%** rise in operating income to **$232 million** and **30%** diluted EPS growth to **$1.57** Key Financial Ratios (Q3 2023 vs. Q3 2022) | Metric | Q3 2023 | Q3 2022 | | :----- | :------ | :------ | | Gross Margin (%) | 17.9% | 16.7% | | Operating Margin (%) | 8.9% | 7.4% | | Return on Total Equity (%) | 21.3% | 16.8% | | Return on Capital Employed (%) | 24.2% | 18.0% | | Headcount at period-end | 71,200 | 67,800 | Sales Development (Three Months Ended September 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Reported Change (%) | Organic Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :----------------- | | Airbags, Steering Wheels and Other | 1,761 | 1,510 | 17% | 15% | | Seatbelt Products and Other | 835 | 792 | 5.5% | 2.6% | | Total Net Sales | 2,596 | 2,302 | 13% | 11% | Sales by Region (Three Months Ended September 30) | Region | 2023 (Millions $) | 2022 (Millions $) | Reported Change (%) | Organic Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :----------------- | | Asia | 1,033 | 955 | 8.1% | 12% | | Americas | 918 | 794 | 16% | 11% | | Europe | 646 | 552 | 17% | 8.5% | | Global LVP Growth | N/A | N/A | N/A | 3.8% | [Results of Operations (Nine Months Ended September 30, 2023 vs. 2022)](index=27&type=section&id=NINE%20MONTHS%20PERIOD%20ENDED%20SEPTEMBER%2030%2C%202023%20COMPARED%20WITH%20NINE%20MONTHS%20PERIOD%20ENDED%20SEPTEMBER%2030%2C%202022) For the first nine months of 2023, net sales grew **19%** to **$7,724 million** with **19%** organic growth, while operating income increased **5.5%** to **$453 million**, and net income decreased **2.5%** to **$262 million** due to 'Other income (expense), net' changes Sales Development (Nine Months Ended September 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Reported Change (%) | Organic Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :----------------- | | Airbags, Steering Wheels and Other | 5,191 | 4,226 | 23% | 23% | | Seatbelt Products and Other | 2,533 | 2,281 | 11% | 11% | | Total Net Sales | 7,724 | 6,507 | 19% | 19% | Sales by Region (Nine Months Ended September 30) | Region | 2023 (Millions $) | 2022 (Millions $) | Reported Change (%) | Organic Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :----------------- | | Asia | 2,937 | 2,544 | 15% | 21% | | Americas | 2,665 | 2,225 | 20% | 16% | | Europe | 2,122 | 1,738 | 22% | 20% | | Global LVP Growth | N/A | N/A | N/A | 9.1% | - Other income (expense), net was negative **$115 million** in the first nine months of 2023, compared to positive **$91 million** in the prior year, which included an **$80 million** gain from property sale and **$20 million** from a patent litigation settlement[104](index=104&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Autoliv's trade working capital decreased to **$1,303 million**, operating cash flow increased to **$535 million**, free cash flow improved to **$117 million**, and the leverage ratio improved to **1.3x**, maintaining **$1.6 billion** in liquidity Liquidity and Capital Metrics (Millions $) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Trade Working Capital | 1,303 | 1,314 | | Operating Cash Flow (9M) | 535 | 251 | | Free Cash Flow (9M) | 117 | (69) | | Net Debt | 1,375 | 1,288 | | Leverage Ratio | 1.3x | 1.6x | - As of September 30, 2023, Autoliv's cash balance was around **$0.5 billion**, and including committed, unused loan facilities, its liquidity position was around **$1.6 billion**[107](index=107&type=chunk) - Total equity decreased by **$5 million** compared to September 30, 2022, due to dividend payments and stock repurchases, partly offset by net income and positive currency translation effects[107](index=107&type=chunk) [Non-U.S. GAAP Measures](index=30&type=section&id=NON-U.S.%20GAAP%20MEASURES) Autoliv utilizes non-U.S. GAAP measures like adjusted operating income, margin, and EPS to provide supplemental information and improve comparability, excluding specific items such as capacity alignments and litigation settlements Adjusted Operating Income & EPS (Three Months Ended Sep 30) | Metric | U.S. GAAP (Millions $) | Adjustments (Millions $) | Non-U.S. GAAP (Millions $) | | :----- | :--------------------- | :----------------------- | :------------------------- | | Operating Income | 232 | 11 | 243 | | Operating Margin (%) | 8.9% | 0.4% | 9.4% | | Diluted EPS | 1.57 | 0.09 | 1.66 | Adjusted Operating Income & EPS (Nine Months Ended Sep 30) | Metric | U.S. GAAP (Millions $) | Adjustments (Millions $) | Non-U.S. GAAP (Millions $) | | :----- | :--------------------- | :----------------------- | :------------------------- | | Operating Income | 453 | 133 | 586 | | Operating Margin (%) | 5.9% | 1.7% | 7.6% | | Diluted EPS | 3.04 | 1.44 | 4.48 | - Adjustments to operating income for the nine months ended September 30, 2023, primarily include **$122 million** for capacity alignments, **$8 million** for the Andrews litigation settlement, and **$3 million** for antitrust-related matters[115](index=115&type=chunk) [Full Year 2023 Indications](index=34&type=section&id=Full%20year%202023%20indications) Autoliv projects full-year 2023 organic sales growth of around **17%**, an adjusted operating margin of **8.5%-9%**, a tax rate of around **20%**, operating cash flow of around **$900 million**, and capital expenditures at around **6%** of sales Full Year 2023 Indications | Financial Measure | Indication | | :---------------- | :--------- | | Organic sales growth | Around 17% | | Foreign currency impact on net sales | Around 1% positive | | Adjusted operating margin | Around 8.5%-9% | | Tax rate | Around 20% | | Operating cash flow | Around $900 million | | Capital expenditures, net % of sales | Around 6% | - The outlook assumes the UAW strike is not prolonged beyond what is included in the S&P Global October outlook[126](index=126&type=chunk) [Other Recent Events](index=36&type=section&id=Other%20recent%20events) Autoliv announced key product launches and strategic collaborations in Q3 2023, alongside headcount reduction initiatives and the repurchase of **1.23 million** shares of common stock - Key product launches in the nine months ended September 30, 2023, included airbags, seatbelts, and steering wheels for models like BMW 5-series/i5, Honda Elevate, Volvo EX30, and Rolls Royce Spectre[129](index=129&type=chunk) - Autoliv China and Great Wall Motor announced an intention to collaborate on advanced technologies, including overhead passenger airbags and airbags for zero gravity seats[130](index=130&type=chunk) - Autoliv repurchased and retired **1.23 million shares** of common stock at an average price of **$97.23 per share** in Q3 2023 under its 2022-2024 stock repurchase program[130](index=130&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes occurred in quantitative and qualitative market risk disclosures as of September 30, 2023, compared to the prior annual report - No material changes to market risk disclosures as of September 30, 2023[132](index=132&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=37&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Autoliv's management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of September 30, 2023[133](index=133&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the fiscal quarter[133](index=133&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Information on legal proceedings is incorporated by reference from Note 9, 'Contingent Liabilities,' in Part I, Item 1 of this Quarterly Report - Information on legal proceedings is incorporated by reference from Note 9, 'Contingent Liabilities,' in Part I, Item 1[135](index=135&type=chunk) [ITEM 1A. RISK FACTORS](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors were reported as of September 30, 2023, compared to the Company's prior annual report - No material changes to risk factors as of September 30, 2023[136](index=136&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Autoliv repurchased **1,233,868** common shares at an average price of **$97.23** under its 2022-2024 stock repurchase program during the three months ended September 30, 2023 Common Stock Repurchases (Three Months Ended September 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share (USD) | | :----- | :------------------------------- | :--------------------------------- | | July 1-31, 2023 | 96,900 | 100.42 | | August 1-31, 2023 | 773,175 | 96.45 | | September 1-30, 2023 | 363,793 | 98.12 | | Total | 1,233,868 | 97.23 | | Maximum Number of Shares Yet May Be Purchased Under the Plans or Programs | 13,400,109 | N/A | - The stock repurchase program, approved on November 16, 2021, authorizes the Company to repurchase up to **$1.5 billion** or up to **17 million common shares** between January 2022 and the end of 2024[138](index=138&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=38&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to Autoliv, Inc. for the current reporting period [ITEM 4. MINE SAFETY DISCLOSURES](index=38&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Autoliv, Inc. for the current reporting period [ITEM 5. OTHER INFORMATION](index=38&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2023 - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2023[140](index=140&type=chunk) [ITEM 6. EXHIBITS](index=39&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including XBRL documents, corporate governance, debt agreements, and CEO/CFO certifications - Exhibits include Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File[143](index=143&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Key exhibits include Autoliv's Restated Certificate of Incorporation, Third Restated By-Laws, various Indentures and Note Purchase and Guaranty Agreements, and certifications from the CEO and CFO[145](index=145&type=chunk)

Financial Data and Key Metrics Changes - The company reported a record operating cash flow of $379 million for Q2 2023, significantly improving from the previous year and the first quarter of 2023 [6][14][20] - Adjusted operating income increased by over 70% to $212 million from $124 million year-over-year, with an adjusted operating margin of 8%, up 2 percentage points from the same period last year [14][16] - The debt leverage ratio decreased to 1.3 times from 1.6 times in the previous quarter, supporting shareholder return ambitions [6][21] Business Line Data and Key Metrics Changes - Consolidated net sales reached $2.6 billion, a 27% increase year-over-year, driven by price, volume, and mix [11][16] - The gross margin improved by 180 basis points compared to the first quarter, attributed to higher labor efficiency and stable light vehicle production [8][14] - The company experienced a significant increase in organic sales growth, outperforming global light vehicle production by approximately 11 percentage points in Q2 [12][13] Market Data and Key Metrics Changes - Regional sales split showed Asia accounted for 37%, Americas for 35%, and Europe for 28%, with China's share increasing to 19% from 17% last year [12] - Global light vehicle production is projected to increase by 5.1% in 2023, with North America expected to see an 8% increase [22][23] - The company outperformed light vehicle production growth in various regions, including China by 23 percentage points and Japan by 22 percentage points [13] Company Strategy and Development Direction - The company is accelerating structural cost reductions, including a headcount reduction of around 1,100 employees, to enhance competitiveness and financial targets [10][11] - Focus on safety technology development continues, with new product launches expected to drive future growth [7][15] - The company aims for a gradual improvement in adjusted operating margin throughout 2023, with significant price compensation expected in Q4 [9][24] Management's Comments on Operating Environment and Future Outlook - Management noted an improving global supply chain environment, contributing to better customer call-off volatility [5] - The company maintains a conservative outlook for light vehicle production growth, incorporating potential risks from UAW negotiations [26][28] - Management expressed confidence in achieving a significant full-year increase in cash flow and adjusted operating income [9][24] Other Important Information - The company paid a dividend of $0.66 per share and repurchased 475,000 shares during the quarter [6][17] - The structural cost reduction plan is expected to yield savings of $25 million in 2024, increasing to $75 million when fully implemented [11][58] Q&A Session Summary Question: Light vehicle production assumptions and risks - Management increased the light vehicle production outlook from 3% to 4% for the year, reflecting improved year-to-date developments, while still incorporating risks from UAW negotiations [26][28] Question: Compensation details and expectations for the second half - Compensation received in the first half was in line with expectations, with a higher share of lump sum settlements compared to the previous year [36] Question: Demand situation and underlying demand levels - Management indicated that there is a backlog in demand, with inventory levels historically low, particularly in the US [38] Question: Structural cost reduction plan details - The $75 million savings mentioned is related to the recent headcount reduction announcement, with more actions expected in the future [49][50] Question: Pricing contribution to organic growth - Management did not provide specific breakdowns on pricing contributions but indicated that pricing negotiations are ongoing [57] Question: Operating leverage and margin sustainability - Management noted that operating leverage is influenced by volume growth and that the current environment allows for potential higher leverage [67][70]

More Life Lived More Lives Saved – More Life Lived ...

Financial Performance - Net sales for the three months ended June 30, 2023, increased to $2.635 billion, up 26.6% from $2.081 billion in the same period in 2022[9] - Gross profit for the three months ended June 30, 2023, rose to $447 million, a 37.1% increase from $326 million in the same period in 2022[9] - Net income attributable to controlling interest for the three months ended June 30, 2023, was $53 million, down 32.9% from $79 million in the same period in 2022[9] - Comprehensive income attributable to controlling interest for the three months ended June 30, 2023, was $12 million, compared to a loss of $40 million in the same period in 2022[13] - Net income for the six months ended June 30, 2023, was $127 million, compared to $163 million in the same period in 2022[19] - Net income for the three months ended March 31, 2023, was $74 million, and for the three months ended June 30, 2023, it was $53 million[20] - Net income attributable to controlling interest was $53 million and $127 million for the three and six months ended June 30, 2023, respectively, compared to $79 million and $162 million in 2022[66] - Basic and diluted earnings per share were $0.61 and $1.48 for the three and six months ended June 30, 2023, respectively, compared to $0.91 and $1.86 in 2022[66] Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2023, decreased to $475 million from $594 million as of December 31, 2022[16] - Net cash provided by operating activities for the six months ended June 30, 2023, was $334 million, a significant increase from $19 million in the same period in 2022[19] - Expenditures for property, plant, and equipment were $268 million for the six months ended June 30, 2023, compared to $254 million in the same period in 2022[19] - Proceeds from long-term debt were $556 million for the six months ended June 30, 2023, compared to $269 million in the same period in 2022[19] - Cash dividends declared for the three months ended June 30, 2023, were $56 million[20] - The company issued a five-year €500 million Eurobond in Q1 2023 and repaid the same amount in Q2 2023[34] Balance Sheet Items - Receivables, net as of June 30, 2023, increased to $2.189 billion from $1.907 billion as of December 31, 2022[16] - Total current assets as of June 30, 2023, increased to $3.898 billion from $3.714 billion as of December 31, 2022[16] - Total liabilities as of June 30, 2023, increased to $5.401 billion from $5.092 billion as of December 31, 2022[16] - Total equity as of June 30, 2023, was $2,557 million, compared to $2,558 million as of June 30, 2022[20] - Total inventories, net of reserve, as of June 30, 2023, were $947 million, compared to $969 million as of December 31, 2022[40] - The fair value of long-term debt as of June 30, 2023, was $1,268 million, compared to a carrying value of $1,290 million[35] Segment and Geographic Performance - The company has one reportable segment, which includes Autoliv's airbag and seatbelt products and components[22] - Total net sales for the three and six months ended June 30, 2023 were $2.635 billion and $5.127 billion, respectively, compared to $2.081 billion and $4.206 billion in 2022[69] - Net sales in China for the three and six months ended June 30, 2023 were $497 million and $950 million, respectively, compared to $363 million and $810 million in 2022[69] - Net sales in the Americas for the three and six months ended June 30, 2023 were $916 million and $1.747 billion, respectively, compared to $738 million and $1.431 billion in 2022[69] - Net sales in Europe for the three and six months ended June 30, 2023 were $751 million and $1.476 billion, respectively, compared to $611 million and $1.186 billion in 2022[69] Restructuring and Liabilities - Approximately $105 million out of the $127 million restructuring reserve balance as of June 30, 2023, is attributed to footprint optimization activities in Europe, expected to conclude by 2025[42] - Reserve for product-related liabilities increased to $178 million at the end of June 2023, up from $141 million at the beginning of the period, primarily due to warranty and recall issues[44][45] - Total insurance receivables for product-related liabilities stood at $169 million as of June 30, 2023[44] - The company accrued $14 million in Q4 2021 and an additional $5 million in Q3 2022 for a product liability lawsuit, with a final settlement resulting in an $8 million excess over insurance receivables[57] - The company faces a class action lawsuit related to ARC inflators, but no accrual has been made as the potential loss cannot be determined[58] - Product warranty and recall reserves are based on the company's best estimates, but actual costs could differ materially from recorded estimates[53] - The company maintains insurance programs for potential recall and product liability claims, although coverage may not be sufficient for all possible claims[55] - Vehicle manufacturers are increasingly requiring suppliers to bear warranty and recall costs, which could lead to material future expenses[53] - The Company accrued $27 million for the Honda Buckle Recall, reflecting self-insurance retention costs and deductibles, with potential losses possibly differing materially from the accrued amount[60] - Volvo recalled approximately 762,000 vehicles due to ZF Inflator malfunctions, with potential losses estimated between $0 to $43 million, though net losses are expected to be immaterial after insurance and claims against ZF[61] Shareholder and Stock Information - Weighted average number of shares outstanding, net of treasury shares, for the three months ended June 30, 2023, was 85.6 million, down from 87.2 million in the same period in 2022[10] - Cash dividend per share declared for the three months ended June 30, 2023, was $0.66, up from $0.64 in the same period in 2022[10] - Stock repurchased and retired for the three months ended June 30, 2023, amounted to $41 million[20] - Stock-based compensation expense for RSUs and PSUs was $5 million and $8 million for the three and six months ended June 30, 2023, respectively, compared to $3 million and $5 million for the same periods in 2022[63] - The Company utilized 20,000 and 112,000 shares of common stock from treasury stock for the Plan during the three and six months ended June 30, 2023, respectively, compared to 16,000 and 138,000 shares in 2022[64] Tax and Accounting - The effective tax rate for Q2 2023 was 35.8%, with discrete tax items having a favorable impact of 4.5%[38] - The company adopted ASU 2022-04 as of January 1, 2023, requiring disclosure of supplier finance program obligations, with payment terms ranging between 30 and 165 days, and a weighted average of 130 days[25] - Confirmed obligations outstanding at the end of the period as of June 30, 2023, were $333 million, with $680 million in invoices confirmed and $661 million paid during the period[26] - Gains recognized in other non-operating items for derivative instruments not designated as hedging instruments were $13 million for Q2 2023 and $8 million for the six months ended June 30, 2023[31] - The fair value of derivatives not designated as hedging instruments as of June 30, 2023, was $10 million for assets and $8 million for liabilities, with a nominal volume of $1,710 million[32] Retirement and Benefit Plans - Net periodic benefit cost for U.S. retirement plans was $0 million for the three months ended June 30, 2023, compared to $4 million in the same period of 2022[48] - Net periodic benefit cost for non-U.S. retirement plans was $6 million for the three months ended June 30, 2023, compared to a gain of $1 million in the same period of 2022[48] - The discount rate used to determine U.S. net periodic benefit cost increased from 5.09% to 5.32% in Q2 2023 due to settlement accounting[49]

Financial Data and Key Metrics Changes - The consolidated net sales for Q1 2023 reached $2.5 billion, a record for the first quarter, representing a 17% increase year-over-year despite a $77 million currency headwind [10][15] - Adjusted operating income improved from $68 million to $131 million, with an adjusted operating margin of 5.3%, up 2.1 percentage points from the same period last year [12][15] - Operating cash flow was negative $46 million, a decrease of $116 million compared to the same period last year, primarily due to adverse working capital effects [13][19] Business Line Data and Key Metrics Changes - Organic sales grew by over 20%, significantly outperforming light vehicle production growth, which increased by around 6% year-over-year [6][11] - The company experienced strong sales growth across regions, with Asia accounting for 38%, Americas 33%, and Europe 29% of total sales [10] Market Data and Key Metrics Changes - The share of sales from China decreased from 21% to 18% year-over-year, attributed to a significant decline in light vehicle production in the region [10] - The company expects to outperform global light vehicle production by approximately 12 percentage points for the full year 2023 [12] Company Strategy and Development Direction - The company is expanding production capacity in Vietnam to support growth in Asia, particularly in airbags and cushions [8] - A commitment to sustainability was highlighted with the issuance of a €500 million green bond to fund climate-related projects [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in Europe due to inflationary pressures and customer volatility but expressed confidence in gradual improvement in operating margins throughout 2023 [7][9] - The company anticipates a full-year adjusted operating margin of around 8.5% to 9% and expects operating cash flow to reach approximately $900 million [26] Other Important Information - The leverage ratio increased to 1.6 times, reflecting a higher net debt relative to trailing adjusted EBITDA [20] - The company plans to continue its share repurchase program while considering various factors including cash flow outlook and debt rating [21] Q&A Session Summary Question: Impact of labor cost recoveries in Q1 - Management indicated it is too early to provide specific percentages regarding labor cost recoveries, but progress is being made in line with expectations [31] Question: Steel price increases and contract renegotiation - Management noted that while steel prices have increased, they have a better balance in contract structures to manage this without significant impact on profitability [33][35] Question: Currency impact on operating income - The negative impact from currency was primarily due to the appreciation of the Mexican peso against the U.S. dollar, affecting transactional currency effects [38] Question: Operating conditions in Europe - Management described the operating environment in Europe as still challenging, with some volatility remaining despite improvements [42] Question: Drivers of margin improvement - Management expects top-line growth, price adjustments, and stabilization of operations to contribute to margin improvement throughout the year [49] Question: SG&A costs and future expectations - SG&A costs increased due to higher headcount and inflation, but management aims to keep these costs lean relative to sales growth [56] Question: Customer production stability - Management indicated that customer production has improved but is not yet normalized, with variability across different customers [60] Question: Pricing tailwind from cost negotiations - Management expects pricing to be a significant contributor to organic growth, with more than 90% of contracts renegotiated to account for cost inflation [71]

More Lives Saved – More Life Lived Earnings Call Presentation 1 st Quarter 2023 April 21, 2023 April 21, 2023 ALV – Q1-2023 Earnings Call and Webcast Copyright Autoliv Inc., All Rights Reserved Public More Life Lived 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 forwardlooking statements include those that address activities, events or developments tha ...