3 rd Quarter 2018 Financial Results

Transcription

1 3 rd Quarter 2018 Financial Results Earnings Conference Call and Webcast 1

2 Safe Harbor Statement This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of All statements contained in this report other than statements of historical fact, including without limitation, statements regarding management s examination of historical operating trends and data, estimates of future sales (including estimates related to order intake), operating margin, cash flow, taxes or other future operating performance or financial results, are 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. We have based these forward-looking statements on our current expectations and assumptions and/or data available from third parties about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. New risks and uncertainties arise from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Factors that could cause actual results to differ materially from these forward-looking statements include, without limitation, the following: cyclical nature of automotive sales and production; changes in general industry and market conditions or regional growth or decline; the ability of the Company to achieve the intended benefits from its separation from its former parent; our ability to be awarded new business or loss of business from increased competition; higher raw material, energy and commodity costs; component shortages; changes in customer and consumer preferences for end products; market acceptance of our new products; higher than anticipated costs and use of resources related to developing new technologies dependence on and relationships with customers and suppliers; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; costs or difficulties related to the integration of any new or acquired businesses and technologies; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; 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 future litigation, regulatory actions or investigations or infringement claims; our ability to protect our intellectual property rights; tax assessments by governmental authorities and changes in our taxes; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; and other risks and uncertainties contained in our quarterly report and the disclosures made in the Company s Information Statement included in the current report on Form 8-K filed with the Securities and Exchange Commission (the SEC ) on July 2, For any forward-looking statements contained in this report 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 revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. 2

3 Business Environment Near-term macro and other headwinds Factors affecting near-term light vehicle production WLTP stricter, harmonized emissions testing Negative developments in Chinese vehicle sales Trade barriers and tariffs along with US SAAR concerns Negative currency fluctuations Mainly due to a stronger US$ Delays in certain customer programs SOP* delays of up to 2 years and slower ramp-ups on certain models are impacting 2019 through 2021 * Start of Production 3

4 Strong Customer progress since Investor Day Expanding our broad and diversified Customer base Active Safety* Customer RADAR VISION ADAS ECU LiDAR RoadScape Driver Monitoring Features (Software) Customer 1 Customer 2 Customer 3 Customer 4 New Order New Order Customer 5 New Tech. Qual. Customer 6 Customer 8 New Order Customer 9 New Tech. Qual. Customer 10 New Tech. Qual. Customer 11 New Orders Customer 12 New Bid List Customer 13 Customer 14 New Bid List Customer 15 Customer 17 New Bid List New Bid List Customer 18 Customer 19 Customer 21 New Bid List New Bid List Customer 22 Customer 23 Total Bid List Technical Qualification Awarded Business Updates Since 2018 Investor Day 2 nd Driver Monitoring customer 6 th Vision customer 4 th ADAS ECU customer 3 rd Brake contract with D3 based OEM Product area adds; Bid List with 9 new customers Tech. Qual. with 3 new customers Orders with 3 new customers New customer in Brake Systems on Bid List and Tech. Qual. Blue = Status as of September 2017 CMD, Red = Customer Progression Since September 2017 CMD through May 2018 Investor Day, Update as of Quarter-end September 30, 2018 (text) 4

5 Capitalizing on Our Market Opportunity Continued strong order intake and new customer wins Active Safety 3 important wins during Q3 18 LTM* Order Intake Q3 ~$1.1B ~25% increase from 2017 New Business awards 6 in Active Safety During Q3 18 Strong start to Q4 18 Order Intake LTM through October 19, 2018 ~$1.3B average annual sales (1) ADAS ECU award with a major global OEM for Robo-taxi 1 st Software only award with major global OEM Additional business awards with existing customers in; Vision award from 6 th customer Mono and Stereo vision Radar RoadScape Radar Large incumbent win with major global OEM ADAS ECU RCS * Last Twelve Months, (1) $ value represents expected average annual sales from respective years order intake, disclosure of orders will not be made regularly, based on when the orders were awarded whereof RCS (Restraint Control Systems), VNBS (Veoneer Nissin Brake Systems) and AS (Active Safety). 5

6 Investing In Our Ecosystem Hiring of ~370 engineers during the third quarter Engineers hired LTM* ~1,000 where ~70% Software RD&E $54M YoY* increase YTD 18** Zeus Super Computer 1 st launch in 2021 with Zenuity software Zeus Super Computer Developed for L4 Automotive grade Autonomous driving applications Up to 27 sensor inputs from around the vehicle More than 25 times the performance of state of the art L2 systems Artificial intelligence capability for camera data up to 16 cameras Host for Zenuity software features Utilizes NVIDIA Xavier SoC, DRIVE OS and DDPX reference design * Last Twelve Months and Year over Year, ** Year to Date 2018 (first nine months). 6

7 Progress Update to Our Previously Announced Targets Strong long-term revenue growth and profitability outlook Revenues Short-term perspective Continued strong order intake momentum particularly in Active Safety Volume reductions due to industry slowdown in growth Challenging end-markets expected to continue into H1 19 Medium and long-term perspective Start of production delays and slower ramp-ups with certain customer contracts Downside risk to 2020 sales target, Active Safety remains on-track to exceed $1 billion Upside to 2022 sales target due to increased customer progress mainly in Active Safety Operating Margin Increased RD&E cost is the main driver More engineering efforts in current projects state of the art complex business wins Increased engineering headcount and higher development spend to capture additional growth opportunities Resulting in a delay in break-even profitability by one to two years 7

8 Third Quarter Highlights Near-term macro environment impacting operating results Operating Results slightly lower than plan Q3 18 Organic Sales* decline 4.7% with currency headwind 2.4%, operating loss of $58M impacted by ~$50M lower than expected sales FY 18 indication Organic Sales to decline ~5% with currency tailwind ~1%, Q4 18 sales similar to Q3 18 and RD&E expense ~$20M increase from Q3 18 levels Order intake continues at a strong pace ~$1.1 billion on an annual basis over the LTM** Expanding customer opportunities and product portfolio (L3/L4 systems, ADAS ECU, LiDAR, DMS, Roadscape/V2X) Investments for Growth Hired ~370 engineers during Q3 18 Further RD&E investments required to capture Active Safety opportunities * Non-U.S. GAAP measure ** Average Annual sales on a Last Twelve Month basis as of September 30,

9 Veoneer Group Third Quarter Financial Highlights Dollars in Millions (except where specified) Net Sales Gross Profit % RD&E, net % Operating Loss % EBITDA* % CapEx % Q3 18 Q3 17 $526 $567 $(40) $ % $ % $(58) (11.0)% $(31) (5.9)% $52 9.9% $ % $ % $(16) (2.8)% $10 1.9% $20 3.5% Chg. vs Comments $(10) (0.4) pp $ pp $(42) (8.2) pp $(41) (7.7) pp $32 6.4pp Organic sales* $(27) where of Active Safety +$12 Currency $(14) Volume and product mix impact from organic sales, net currency effects were negligible Hired ~370 Associates in engineering during Q3 and around 1,000 over the LTM** Volume and product mix impact, higher RD&E and additional standalone costs, minor currency benefit D&A relatively unchanged including lower amort. of intangibles offset by increase in depreciation Higher expenditures in equipment and infrastructure to support future sales growth * Non U.S. GAAP measure, ** Last Twelve Months 9

10 Key Figures for the Quarter Q3 Organic Sales* (4.7)% Reported Sales (7.1)% Q3 Gross Margin 18.8% RD&E 20.7% Q3 Operating Margin (11.0)% EBITDA* Margin (5.9)% Full Year Indication** Organic Sales ~(5)% Consolidated Sales ~(4)% Operating Loss ~$20M increase Q4 18 from Q3 18 levels * Non U.S. GAAP measure ** Full Indication % change is based on change from

11 Refined Organization from December 1, 2018 Next step as a Standalone Company Drivers for Change Stronger Customer Focus Drive Product Development and Road Maps Simplify organization for speed and transparency Key Changes Customers will be individually served through business units Introduction of a CTO function driving R&D and Product Development Segments: Electronics and Brakes remain 11

12 Thank You! 12