4 th Quarter 2018 Financial Results

Transcription

1 4 th 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 Highlights Macro environment remains mixed and uncertain Record Order intake in 2018 Average annual sales > $1.2B Equates to lifetime order value of ~$5.9B Factors affecting our market outlook LVP uncertainty in Western Europe, China and North America L2/L2+ Driver Support will be a more important market for a longer period L4/L5 AV 1 has a longer and more uncertain timeline than previously anticipated Market adjustment initiative Actively reviewing our investment priorities and the focus of our product portfolio Determine the most effective way to allocate capital and meet these new market realities New program launches Strong launch outlook in Q4 19 and continuing into 2020 SOP 2 delays of up to 2 years, slower ramp-ups on certain models will impact Autonomous Vehicles, 2 Start of Production, 3

4 Customer Status Active Safety as of December 31, 2017 Customer Radar Vision 1 ADAS ECU LIDAR RoadScape Driver Monitoring Features (Software) Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 8 Customer 9 Customer 10 Customer 11 Customer 12 Customer 13 Customer 14 Customer 15 Customer 17 Customer 18 Customer 19 Customer 21 Customer 22 Customer 23 Total Bid List Technical Qualification Awarded Business 1 Mono and Stereo vision with VNE Algorithms 4

5 Customer Status Active Safety as of December 31, 2018 Customer Radar Vision 1 ADAS ECU LIDAR RoadScape Driver Monitoring Features (Software) Customer 1 Customer 2 Customer 3 Active Safety Milestones in 2018 Customer 4 Customer 5 Customer 6 Customer 8 Customer 9 Customer 10 Customer 11 Customer 12 Customer 13 Customer 14 Customer 15 Customer 17 Customer 18 Customer 19 Customer 21 Customer 22 Customer 23 Total Q Q Q Q2/Q Q Q Full year Order Intake close to $900M well above current market share and close to 2 times 2017 Significant LiDAR contract with a major Global OEM and a standalone Feature Software order Second Level 4 ECU order from a major Global OEM Fourth customer with ADAS ECU order from a major Global OEM, new customer Radar order Second Mono-Vision order with the same major Global OEM, added our sixth Vision customer First Driver Monitoring system order with a major Global OEM and now 2 nd DMS award First Level 3 System order in China with Radar, Camera, ADAS ECU, and Software Bid List Technical Qualification Awarded Business 1 Mono and Stereo vision with VNE Algorithms 5

6 Successful Customer Expansion Across All Products Areas Active Safety Number of Customers Restraint Control Systems Number of Customers ~20% 24 Brake Systems Number of Customers 14 ~43% ~33% ~30% A 2018A 2017A 2018A 2017A 2018A Bid List Technical Qualification Awarded Business Bid List Technical Qualification Awarded Business 6

7 Capitalizing on Our Market Opportunity Record order intake in 2018 and new customer wins Active Safety 3 important wins during Q4 18 LiDAR Award with a major global OEM for Robo-taxi Software 1 st software only award with global OEM Radar Award with new major global OEM FY 18 Order Intake 1 >$1.2B ~40% increase from FY 17 New Customer awards ~33% increase Active Safety in FY 18 Overall Highlights during 2018 Awarded L3 contract with Geely and Feature Software with a global OEM Significant Driver Monitoring and LiDAR awards with a major global OEM 6 th Vision customer added including award with a major global OEM ADAS ECU for Robo-taxi application Lifetime order value for Veoneer ~$5.9B in2018 Lifetime order value in Active Safety ~$3.8B in Order intake $ value represents estimated average annual sales from documented new business; disclosure of order intake will not be made regularly; RCS *Restraint Control Systems), BCS (Brake Control Systems). 7

8 Investing In Our Ecosystem Hiring of ~350 engineers during the fourth quarter Engineers hired FY 18 ~1,100 RD&E FY 18 ~$90M LiDAR 1 st launch in 2021 LiDAR for Autonomous Vehicle application where ~70% Software increase vs. FY 17 with major global OEM Major global OEM Commercialize automotive grade surround view LiDAR system Utilizing Velodyne s scalable LiDAR reference design and core 3D firmware technology Design and manufacture massproduction LiDAR system Primary commercial and technical interface with the customer 8

9 Highlights - Fourth Quarter 2018 Near-term macro environment impacting operating results Operating Results Organic Sales 1 declined ~9% and currency headwind in-line with expectations Operating loss of $75M as expected Operating cash flow Q4 18 $1M mainly due to strong working capital Record Order intake in 2018 Average annual sales > $1.2B, equates to lifetime order value of ~$5.9B Active Safety order intake close to $900M of average annual sales, equates to lifetime order value of ~$3.8B Active Safety order intake was almost 2 times 2017, well above current market share Restraint Control Systems order intake significantly above current market share of ~25% Investments for Growth Continued RD&E investments required to capture Active Safety opportunities Hired ~350 engineers during the quarter CapEx investments of $65M during the quarter, ~12% of sales Launched mono-vision with Geely during the quarter 1 Non-U.S. GAAP measure 9

10 Veoneer Group Fourth Quarter Financial Highlights Dollars in Millions (except where specified) Net Sales Gross Profit % RD&E, net % Operating Loss % EBITDA 1 % CapEx % Q4 18 Q4 17 $535 $593 $(58) $ % $(132) 24.7% $(75) (14.0)% $(47) (8.8)% $ % $ % $(95) 16.0% $(244) (41.1)% $(216) (36.4)% $40 6.7% Chg. vs Comments $(15) (0.5) pp $(37) 8.7 pp $ pp $ pp $25 5.4pp Organic sales 1 $(56)M where of Active Safety $5M Currency $(1)M Volume and product mix impact causing lower organic sales, net currency effects were negligible Hired ~350 Associates in engineering during Q4 and around 1,100 during 2018 Volume and product mix impact, higher RD&E and additional standalone costs, currency benefit ~$4M, $234M one-time goodwill impairment charge in 2017 D&A unchanged Higher CapEx in equipment and infrastructure to support future sales growth 1 Non U.S. GAAP measure 10

11 Record Order Intake in 2018 Estimated lifetime order value ~$5.9B Order Intake implications on Organic Sales* growth General leadtime is 2 to 4 years to develop an order to production Active Safety and Restraint Control Systems order intake from 2013 to 2015 is reflected in our 2017 to 2019 organic sales Strong order intake in 2016 to 2018 will primarily impact 2020 to 2022 organic sales, with initial benefit in late Order intake $ value represents estimated average annual sales from documented new business; disclosure of order intake will not be made regularly. 11

12 2019 Key Launches and Mid-Cycle Model Facelifts including all major product areas A-Class Coupe/Sedan Honda Fit Geely Emgrand GS Ford Explorer Factors impacting 2019 Organic Sales 1 Mercedes EQ C F-Series Super Duty Honda CRV Geely Key Launches and facelifts represent 10 to 15% of annual sales and an average CPV of ~$135 Mercedes GLC Mercedes GLS Honda BEV Mercedes GLB Chinese OEM Hyundai Sonata BMW mono-vision programs wind-down during 2019 to 2021 Radar temporary negative mix from 24Ghz to 77Ghz Veoneer based vision launches ramping-upduring 2019 to Non U.S. GAAP measure 12

13 Full Year 2018 and 2019 Outlook Key Figures FY 18 Organic Sales 1 ~(5)% Reported Sales ~(4)% FY 18 Gross Margin 19.3% RD&E 20.9 FY 18 Operating Margin ~(9)% EBITDA 1 Margin ~(4)% FY 19 Outlook 2 Organic Sales 1 Flat to slightly down for FY 19, sequential increase into H2 19 Operating Margin and Operating Cash Flow Weaker H1 19 with improvement in H Non U.S. GAAP measure, 2 Full Year 2019 Outlook change is based on change from

14 Thank You! 14