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Investment Rating - The report does not explicitly mention the investment rating for Autoliv (ALV) [1][2][3] Core Views - Autoliv's Q2 2024 revenue was $2.2 billion, up 4% YoY, with China OEM sales in China increasing by 39% YoY [1] - The company expects improved profitability in H2 2024, with adjusted operating margins projected to reach 11%-12% [2][15] - Autoliv plans to reduce indirect headcount by 2,000 in 2024, saving $50 million in related costs [2][15] Financial Performance - Q2 2024 sales were $2.6 billion, up 1% YoY, with operating income of $221 million, up 4% YoY [2][5] - Gross profit was $475 million, up 6% YoY, with a gross margin of 18.2%, up 1.3pp YoY [2][5] - Operating cash flow was $340 million, down $39 million YoY [2][6] - Adjusted EBITDA increased by $11 million YoY [5] Market and Capacity - Sales distribution: Asia 37%, Americas 34%, Europe 29% [2] - China OEM sales accounted for 38% of total China sales, up 39% YoY and 25% QoQ [2][18] - Light vehicle production declined 1% YoY, with strong performance in Japan, other Asian regions, and Europe [2][16] Cost Improvements - Direct labor efficiency improvements and indirect labor reductions contributed to a 0.3pp increase in gross margin YoY and QoQ [2][5] - The company expects to save $50 million in 2024 through headcount reductions [2][15] Customer Collaboration - Autoliv is strengthening partnerships with fast-growing Chinese OEMs and has signed a strategic cooperation agreement with XPeng Huitian [2][16] Shareholder Returns - Over the past 12 months, Autoliv returned approximately $810 million to shareholders through dividends and share repurchases [2][12] - The company has reduced its outstanding shares by nearly 9% since initiating its share repurchase program in 2022 [12] Sustainability - Autoliv is collaborating with the UN Road Safety Fund to enhance motorcycle safety and aims to save 100,000 lives annually [2][13] - The company has eliminated SF6 in steering wheel production and is increasing the use of renewable energy and 100% recycled polyester for airbag cushions [14] Guidance - Autoliv expects organic sales growth of 2% in 2024, with adjusted operating margins of 9.5%-10% and operating cash flow of approximately $1.1 billion [2][15] - The company forecasts a tax rate of around 28% for 2024 [15]

Core Viewpoint - Autoliv, Inc. reported earnings results on July 19, 2024, missing both top- and bottom-line estimates, leading to a significant decline in share price, which had already been falling since late May 2024 [1][19]. Earnings Results - Net sales decreased by 1.1% year-over-year to $2.61 billion, approximately $130 million below analyst estimates [2]. - Adjusted EPS fell by 3% compared to the previous year, reaching $1.87, which is $0.34 below expectations [2]. Sales Performance - Organic sales growth was 0.7%, outperforming global light vehicle production (LVP) by 1.4% [4][7]. - The company performed well in Asia (excluding China) and Europe, but underperformed in China and the Americas due to lower LVP driven by weaker vehicle sales [6][9]. Profitability - Despite declining sales, Autoliv improved its profitability, with gross profit margin increasing to 18.2% from 17.0% year-over-year, and adjusted operating profit margin rising to 8.5% from 8.0% [13][12]. - The primary driver of profitability improvements was cost reduction measures, including a 5% reduction in headcount [13][12]. Guidance and Outlook - For the full year 2024, the company anticipates around 2% organic sales growth, with a negative FX effect of about 1% on net sales [10]. - The adjusted operating margin is expected to be between 9.5% and 10.0%, with operating cash flow projected at approximately $1.1 billion [10]. Valuation - Autoliv's stock is currently trading at a significant discount compared to the consumer discretionary sector median and its own historical valuation, making it attractive from a valuation perspective [14][18]. - The company has been returning value to shareholders through dividends and share buybacks, with a current quarterly dividend of $0.68, corresponding to an annual yield of 2.8% [16][18]. Conclusion - The stock price decline is attributed to slowing sales, a challenging macroeconomic environment, unfavorable FX developments, and missing analyst estimates [19]. - Potential interest rate cuts in the U.S. could positively impact consumer confidence and demand for automobiles, which may benefit Autoliv [19]. - Overall, the stock is considered attractive for long-term investors [20].

Core Viewpoint - Autoliv, Inc. is currently rated as a Hold due to disappointing Q2 performance and unfavorable 2024 guidance, although there are potential improvements expected from cost management and sales growth in the Chinese market [1][9]. Financial Performance - Autoliv's Q2 2024 revenue decreased by 1.1% year-over-year to $2,605 million, marking a 4.6% miss against market expectations of $2.73 billion [3]. - The company's normalized earnings per share (EPS) for Q2 2024 was $1.87, reflecting a 2.9% decline year-over-year and a 15.5% shortfall compared to analysts' consensus of $2.21 [3][4]. - Autoliv's operating margin for Q2 2024 was 4.84%, which was 138 basis points below the consensus forecast, with a year-over-year improvement narrowing from 252 basis points in Q1 2024 to 44 basis points [4]. Full-Year Guidance - The company revised its FY 2024 organic revenue growth guidance down from 5% to 2%, and the operating margin guidance was lowered from 10.5% to 9.75% [6]. - Autoliv's updated outlook assumes a global light vehicle production decline of around 3%, which is worse than the previously expected 1% decline, negatively impacting sales and operating margins [6]. Cost Management Initiatives - Autoliv is on track with its structural cost reduction activities, aiming to double annual cost savings from $50 million this year to $100 million next year, and eventually to $130 million [7]. - The company's gross margin improved by 1.3 percentage points quarter-over-quarter and 1.2 percentage points year-over-year to 18.2% in Q2 2024, indicating progress in cost management [7]. Market Position in China - Autoliv's sales in China from domestic OEMs increased to 38% in Q2 2024, up from 20% in Q1 2022, reflecting a strategic shift towards domestic manufacturers [8]. - The company reported a 39% year-over-year and 25% quarter-over-quarter increase in sales generated from Chinese OEMs, suggesting a potential for improved performance in the Chinese market [8]. Valuation Insights - Autoliv is currently trading at a normalized P/E of 11.1 times, with a consensus FY 2023-2028 normalized EPS CAGR forecast of 12.6 times, resulting in a PEG ratio of 0.88 times, indicating a 12% discount to a fair PEG multiple of 1 [9].

Core Insights - Autoliv Inc. reported second-quarter 2024 adjusted earnings of $1.87 per share, missing the Zacks Consensus Estimate of $2.44 and reflecting a 3% year-over-year decline [1] - The company’s net sales for the quarter were $2.61 billion, falling short of the Zacks Consensus Estimate of $2.77 billion and decreasing by 1.1% year over year [1] - Organic sales increased by 0.7% year over year but were below the expected 5.6% due to reduced light vehicle production in the Americas and China [1] Segmental Performance - Airbags and Associated Products segment sales totaled $1.75 billion, missing projections of $1.87 billion and declining by 0.6% year over year, with notable declines in passenger and knee airbags [2] - Seatbelts and Associated Products segment sales reached $858 million, down 2.2% from the prior year and below the expected $909 million, primarily due to decreased organic sales in the Americas and China [2] - Regional sales in the Americas were $893 million, missing estimates of $971.3 million and decreasing by 2.6% year over year [2] - European sales totaled $761 million, missing forecasts of $787.7 million but increasing by 1.4% year over year [2] - Sales in China were $468 million, below projections of $525.3 million and down 5.9% year over year [3] - Sales in the Rest of Asia amounted to $483 million, up 2.6% year over year but missing the expected $498 million [3] Financial Position - As of June 30, 2024, Autoliv had cash and cash equivalents of $408 million and long-term debt of $1.54 billion [4] - The operating cash flow for the quarter was $340 million, with capital expenditures of $146 million, resulting in a free cash flow of $194 million [4] - The company paid a dividend of 68 cents per share and repurchased $1.31 million shares during the quarter [4] Revised 2024 Guidance - Autoliv revised its full-year 2024 organic sales growth forecast to around 2%, down from the previous expectation of 5% [5] - The adjusted operating margin is now anticipated to be in the range of 9.5-10%, reduced from the earlier projection of 10.5% [5] - Operating cash flow expectations for 2024 have been lowered to $1.1 billion from $1.2 billion [5]

Core Insights - Autoliv, Inc reported worse-than-expected second-quarter financial results, with a sales decline of 1.1% year-on-year to $2.605 billion, missing the analyst consensus estimate of $2.74 billion [1] - Adjusted EPS of $1.87 also fell short of the analyst consensus estimate of $2.23 [1] - The company lowered its FY24 organic sales growth outlook from 5% to around 2% and adjusted operating margin guidance from 10.5% to around 9.5% - 10% [2] Financial Performance - Second-quarter FY24 sales were $2.605 billion, a decline of 1.1% year-on-year [1] - Adjusted EPS was reported at $1.87, missing the expected $2.23 [1] - Operating cash flow is expected to be $1.1 billion [2] Market Reaction - Autoliv shares fell by 10.1%, closing at $97.66 following the announcement [2] - Analysts adjusted their price targets, with Baird maintaining a Neutral rating and lowering the target from $128 to $111, while B of A Securities maintained a Buy rating and reduced the target from $145 to $133 [2] Management Commentary - The President and CEO, Mikael Bratt, stated that the company remains on track with strategic initiatives but faced lower-than-expected light vehicle production due to weaker sales and inventory adjustments, particularly in June [1]

More Lives Saved More Life Lived Earnings Call Presentation 2nd Quarter 2024 July 19, 2024 July 19, 2024 ALV – Q2 2024 Earnings Call and Webcast Copyright Autoliv Inc., All Rights Reserved Public 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 that Autoliv, Inc. or it ...

Financial Data and Key Metrics - Net sales decreased by 1% YoY to $2.6 billion, driven by unfavorable currency translation effects, lower light vehicle production, and a negative regional and customer mix [11][12] - Adjusted operating income increased by 4% YoY to $221 million, with the adjusted operating margin improving by 50 basis points to 8.5% [11][21] - Operating cash flow was $340 million, $39 million lower than Q2 2023, which was unusually strong due to working capital reversals [11][24] - Gross margin improved by 130 basis points YoY and sequentially, supported by higher direct labor efficiency and cost reductions [10][21] - Leverage ratio improved to 1.2x, despite $250 million in shareholder returns during the quarter [7][26] Business Line Performance - Sales to domestic Chinese OEMs increased by 39% YoY and accounted for 38% of total sales in China, up from 20% in early 2022 [15] - Safety Content per Vehicle (CPV) is on track to grow by around 10% from 2022 to 2024 for both global and domestic Chinese OEMs [16] - The company signed a strategic cooperation agreement with XPENG AEROHT, a Chinese flying car innovator, to pioneer safety solutions for future mobility [7] Market Performance - Global light vehicle production was 3 percentage points lower than expected, with significant reductions in Europe, Japan, and China [8][13] - Sales in China underperformed by 7 percentage points due to declining production from key global customers and strong growth in low Autoliv content models [14][16] - The company outperformed global light vehicle production by 140 basis points, driven by strong performance in Japan, Rest of Asia, and Europe [14] Strategy and Industry Competition - The company is focused on reducing its indirect workforce by up to 2,000 employees, targeting $50 million in savings for 2024 [5] - Autoliv is strengthening its position with fast-growing domestic Chinese OEMs, which now account for 55% of China's light vehicle production, up from 40% in early 2022 [15] - The company expects a record number of product launches in 2024, with six models produced in China, reflecting its strong position in the region [17] Management Commentary on Operating Environment and Outlook - Management expects sequential margin improvement in H2 2024, targeting an adjusted operating margin of 11% to 12%, supported by stable light vehicle production, cost control, and customer compensations [32][69] - Full-year 2024 guidance was adjusted to reflect a 3% decline in global light vehicle production, with organic sales growth expected at around 2% [32] - The company remains committed to its around 12% adjusted operating margin target and high shareholder returns, supported by strong cash flow and balance sheet efficiency [7][32] Other Key Information - The company phased out sulfur hexafluoride (SF6) in steering wheel production, reducing Scope 1 and 2 emissions by 6% [19] - Autoliv developed airbag cushions made from 100% recycled polyester, contributing to its net-zero greenhouse gas emissions target by 2040 [20] - The company entered into a $125 million revolving credit facility with Standard Chartered Bank, maturing in 2029 [27] Q&A Session Summary Question: Why is the decremental margin at the higher end of the range? - The decremental margin is at the higher end due to lower light vehicle production and a slight headwind from raw materials [36][37] Question: How much of the mix headwind is expected in H2 2024? - The mix headwind is expected to be around negative 1% for the full year, with improvements in China offsetting some of the negative trends [39][40] Question: What is the view on light vehicle production and price compensation? - The company is more cautious on Europe due to economic headwinds, while price compensation negotiations remain detailed and evidence-driven [44][45] Question: Is the out-of-period compensation a timing issue? - The out-of-period compensation is a timing issue, with $6 million negotiated in Q2 2024 retroactively applied to Q1 2024 [48][49] Question: What drives the expected margin improvement in H2 2024? - Margin improvement is driven by higher light vehicle production, cost control, customer compensations, and structural initiatives, offset by raw material headwinds [69][70] Question: What are the cost reduction opportunities? - The company targets $50 million in indirect cost savings for 2024, ramping up to $130 million when fully implemented, with $40 million in year-over-year savings [75] Question: How should we think about market outgrowth? - The company focuses on organic growth of 4% to 6%, driven by light vehicle production growth, content growth, and additional business opportunities [78]

Core Insights - Autoliv reported a decline in second-quarter sales due to a slump in car demand, leading to a reduction in its guidance for the year [1] - The company missed both quarterly profit and revenue estimates, with adjusted earnings per share (EPS) at $1.87 and revenue down 1.1% year-over-year to $2.61 billion [1] - Autoliv has revised its full-year organic sales growth outlook down to approximately 2% from the previous estimate of about 5% and adjusted its operating margin forecast to around 9.5% to 10% from about 10.5% [3] Company Performance - CEO Mikael Bratt indicated that light vehicle production with key customers was lower than expected, particularly in June, due to weaker sales and inventory adjustments [2] - The company anticipates a 5.5% decline in worldwide light vehicle production for the third quarter and a 2.2% decrease for the entire year of 2024 [3] - Following the announcement, Autoliv's shares fell approximately 8% to $99.82, marking the lowest level in eight months [3]

Group 1: Profitability and Sales Performance - Profitability improved in Q2 despite a slight decline in net sales, driven by better pricing and cost reductions, with indirect headcount reduced by 1,100 [1] - The company outperformed LVP significantly in Asia excluding China and in Europe, supported by product launches and better pricing, while slightly underperforming in the Americas due to reduced production from key customers [1] Group 2: Market Dynamics in China - The company expanded its business with domestic Chinese OEMs, which accounted for 38% of China sales in Q2, with a 39% year-over-year sales growth and a 25% increase compared to the previous quarter [2] - Despite the growth with domestic OEMs, the overall market in China developed unfavorably, leading to a 7 percentage point underperformance due to significant production declines from key global customers [2] Group 3: Financial Guidance and Outlook - The company remains focused on achieving an adjusted operating margin target of around 12%, while slightly adjusting the full year 2024 guidance due to changes in LVP and customer mix [3] - A significant increase in profitability is expected in the second half of the year, with an adjusted operating margin projected at around 11-12% compared to 8.0% in the first half [3] - Positive developments in cash flow and balance sheet support the company's commitment to high shareholder returns [3]