Autoliv(ALV) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements for Q2 and H1 2024, covering income, balance sheets, cash flows, and detailed notes Consolidated Statements of Income Consolidated Statements of Income (Unaudited) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,605M | $2,635M | $5,220M | $5,127M | | Gross profit | $475M | $447M | $917M | $826M | | Operating income | $206M | $94M | $400M | $221M | | Net income attributable to controlling interest | $138M | $53M | $265M | $127M | | Net earnings per share – diluted | $1.71 | $0.61 | $3.23 | $1.47 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $3,703M | $3,974M | | Cash and cash equivalents | $408M | $498M | | Total assets | $8,010M | $8,332M | | Total current liabilities | $3,785M | $4,035M | | Long-term debt | $1,540M | $1,324M | | Total equity | $2,311M | $2,570M | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $462M | $334M | | Net cash used in investing activities | ($286M) | ($267M) | | Net cash used in financing activities | ($269M) | ($168M) | | Net decrease in cash and cash equivalents | ($90M) | ($119M) | Notes to the Financial Statements - In February 2024, the Company issued 5.5-year notes for €500 million with a 3.625% coupon, maturing in August 2029. In April 2024, the Company repaid $297 million of US Private Placement debt[32] - The effective tax rate for the six months ended June 30, 2024 was 25.5%, down from 33.4% for the same period in 2023[35] - The restructuring reserve balance was $189 million as of June 30, 2024, primarily related to the global structural cost reduction program initiated in Europe in 2023[39] - The Company is involved in a multi-district litigation regarding ARC airbag inflators and is also monitoring a NHTSA initial decision to recall approximately 52 million ARC and Delphi inflators. A loss is considered reasonably possible for both matters, but no accrual has been made as an estimate of potential loss cannot be determined[55][56] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 and H1 2024 financial results, noting improved profitability from cost reductions and better pricing, and provides full-year 2024 guidance Executive Overview Q2 2024 Financial Highlights | Metric | Value | Change vs. Q2 2023 | | :--- | :--- | :--- | | Net Sales | $2,605M | -1.1% | | Organic Sales Growth | 0.7% | N/A | | Operating Margin | 7.9% | +4.3pp | | Adjusted Operating Margin | 8.5% | +0.5pp | | EPS | $1.71 | +178% | | Adjusted EPS | $1.87 | -3% | - Profitability improvement was driven by better pricing and successful cost reductions, including a reduction of 1,100 indirect headcount since the program's start. The leverage ratio improved to 1.2x[72] - The company underperformed in China due to an unfavorable market mix, where models with low Autoliv content grew strongly while key global customers' production declined. However, sales to domestic Chinese OEMs grew by 39% YoY[72] Results of Operations Q2 2024 vs. Q2 2023 Sales Development | Region | Organic Sales Growth | LVP Growth | Out/Under Performance | | :--- | :--- | :--- | :--- | | Americas | (2.8)% | (0.5)% | (2.3)pp | | Europe | 1.6% | (6.1)% | +7.7pp | | China | (2.8)% | 4.5% | (7.3)pp | | Asia excl. China | 10.0% | (2.6)% | +12.6pp | | Global | 0.7% | (0.7)% | +1.4pp | H1 2024 vs. H1 2023 Sales Development | Region | Organic Sales Growth | LVP Growth | Out/Under Performance | | :--- | :--- | :--- | :--- | | Americas | 0.7% | (0.3)% | +1.0pp | | Europe | 2.6% | (3.4)% | +6.0pp | | China | 1.6% | 5.6% | (4.0)pp | | Asia excl. China | 9.1% | (4.6)% | +13.7pp | | Global | 3.0% | (0.3)% | +3.3pp | - In Q2 2024, operating income increased to $206 million from $94 million in Q2 2023, primarily due to lower capacity alignment accruals ($14 million in Q2'24 vs $109 million in Q2'23) and a $28 million increase in gross profit[88][89] Liquidity and Capital Resources Cash Flow Summary (Six Months Ended June 30) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Operating Cash Flow | $462M | $334M | | Capital Expenditure, net | ($286M) | ($267M) | | Free Cash Flow | $176M | $66M | - As of June 30, 2024, the company's liquidity position was approximately $1.5 billion, including a cash balance of $0.4 billion and committed, unused loan facilities[100] - The leverage ratio (Net Debt + Pension Liabilities / Adjusted EBITDA) improved to 1.2x as of June 30, 2024, compared to 1.3x a year earlier[100][112] Full Year 2024 Guidance Full Year 2024 Financial Indication | Financial Measure | Indication | | :--- | :--- | | Organic sales growth | Around 2% | | Foreign currency impact on net sales | Around 1% negative | | Adjusted operating margin | Around 9.5-10.0% | | Tax rate | Around 28% | | Operating cash flow | Around $1.1 billion | | Capital expenditures, net (% of sales) | Around 5.5% | Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to market risk disclosures since its 2023 Annual Report on Form 10-K - No material changes to market risk disclosures have occurred since the 2023 Form 10-K filing[123] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of June 30, 2024[124] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[124] PART II - OTHER INFORMATION Legal Proceedings This section refers to Note 9 of the financial statements for a summary of ongoing legal proceedings arising in the ordinary course of business - Information regarding legal proceedings is incorporated by reference from Part I, Item 1, Note 9 'Contingent Liabilities'[126] Risk Factors The company reports no material changes to the risk factors previously disclosed in its 2023 Annual Report on Form 10-K - No material changes to risk factors have occurred since the 2023 Form 10-K filing[127] Unregistered Sales of Equity Securities and Use of Proceeds This section details common stock repurchases during Q2 2024 as part of the publicly announced stock repurchase program Stock Repurchases (Q2 2024) | Period | Total Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | April 1-30, 2024 | — | — | | May 1-31, 2024 | 779,394 | $124.67 | | June 1-30, 2024 | 530,212 | $118.56 | - The stock repurchase program, announced in November 2021, authorizes repurchases up to $1.5 billion or 17 million shares, whichever comes first, through the end of 2024[129] Other Information The company reports no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2024 - During the three months ended June 30, 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[131] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files, referencing previously filed documents - The report includes certifications from the CEO and CFO as required by the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[132]