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8-K/A - 8-K/A - Veoneer, Inc. | d609376d8ka.htm |
Exhibit 99.1
Stockholm, Sweden, July 27, 2018 (NYSE: VNE and SSE: VNE-SDB)
Financial Report April June 2018
Business Highlights
| Active Safety organic sales* growth of 11% |
| Strong order intake over the last 12 months of approximately $1.1 billion on an annualized basis |
| Expanding customer bid activity across the product portfolio |
| Sourced major mono-vision contract and first driver monitoring business with major global OEMs |
| Continued investments for growth |
Key Figures
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||
Dollars in millions, | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||||||
(except where specified) |
$ | % | $ | % | $ | $ | % | $ | % | $ | ||||||||||||||||||||||||||||||
Net Sales |
$ | 572 | $ | 579 | ($ | 7 | ) | $ | 1,166 | $ | 1,162 | $ | 4 | |||||||||||||||||||||||||||
Gross Profit / Margin |
$ | 112 | 19.6 | % | $ | 120 | 20.7 | % | ($ | 8 | ) | $ | 223 | 19.1 | % | $ | 233 | 20.1 | % | ($ | 10 | ) | ||||||||||||||||||
RD&E, net / % of Sales |
$ | 119 | 20.8 | % | $ | 102 | 17.6 | % | $ | 17 | $ | 225 | 19.3 | % | $ | 189 | 16.3 | % | $ | 36 | ||||||||||||||||||||
Operating Loss / Margin |
($ | 48 | ) | -8.4 | % | ($ | 12 | ) | -2.1 | % | ($ | 36 | ) | ($ | 64 | ) | -5.5 | % | ($ | 22 | ) | -1.9 | % | ($ | 42 | ) | ||||||||||||||
EBITDA / Margin |
($ | 21 | ) | -3.7 | % | $ | 12 | 2.1 | % | ($ | 33 | ) | ($ | 9 | ) | -0.8 | % | $ | 42 | 3.6 | % | ($ | 51 | ) |
Comments from Jan Carlson, Chairman, President and CEO
We are proud that the spin-off of Veoneer from Autoliv, Inc. was successfully completed according to schedule. Veoneer is now the worlds largest pure-play company focused on Advanced Driving Assistance Systems (ADAS) and Automated Driving (AD). We are well capitalized and positioned to capture growth and value from this long-term megatrend in the automotive industry.
Our current top priorities are order intake, execution of our current business and the competitiveness of our technology portfolio.
Our strong order intake over the last 12 months is expected to generate lifetime sales of well over $5 billion. Since our Investor Day in late May, we have secured 15 new orders across all of our product areas, leading to a current annual order intake at a similar level as at the end of the quarter. This includes small but strategically important orders with two new customers for Vision, Radar and Driver Monitoring in the rapidly growing market for active safety products in China. This is in addition to our previously announced major business wins during the quarter in vision and driver monitoring.
We currently see increased customer activity across our product portfolio, as well as higher than anticipated take rates for Active Safety products. These early market indicators are encouraging and if we conclude that they are likely to affect our previously announced sales targets for 2022 and beyond, they may also heighten our short-term investment needs.
Our technology portfolio is generally well positioned. Our in-house developed vision products are highly competitive, and we have the next generation products just around the corner. We are winning business in the new growth area of driver monitoring systems, and including the software developed by Zenuity we are positioning Veoneer to be a full system supplier for ADAS and AD.
The anticipated 2018 organic sales decline is mainly a result of our shift in vision product strategy in late 2013, combined with the phase-out of certain contracts in Restraint Control and Brake Systems. In line with previously communicated plans, we expect most of the anticipated strong growth from the current order intake, including Restraint Control and Brake Systems, to begin in late 2019, then stepping up in 2020 and beyond.
We begin as a NYSE and Nasdaq Stockholm listed company with a strong balance sheet of around $1 billion of cash, giving us the ability to continue to effectively invest for growth and tackle potential downturns in the market until we reach positive operating margin and cash flow.
Veoneers purpose is to create trust in mobility. Through our unique combination of automotive safety and technical competence we will work relentlessly to support our customers navigating in the current unparalleled change that is taking place in the automotive industry.
An earnings conference call will be held at 13:00 p.m. (CET) today, July 27, 2018. To follow the webcast or to obtain the pin code and phone number, please access www.veoneer.com. The earnings call slides will be available on our website prior to the earnings conference call. See also the MD&A in the Form 10Q report and the Non-U.S. GAAP Financial Measures section on page 9 of this earnings release for further disclosures.
* For these non-U.S. GAAP financial measures, and any others marked with an * throughout this earnings release, see the reconciliation tables in this earnings release, including the Non-U.S. GAAP Financial Measures section on page 9. See the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking organic sales non-U.S. GAAP financial measure.
Page 1 (10) | 27 July 2018 |
Financial Overview for the Quarter
Sales by Product
Consolidated Net Sales | Three Months Ended June 30 | Components of Change vs. Prior Year | ||||||||||||||||||||||||||||||
Dollars in millions, | US GAAP Reported | Currency | Organic1) |
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(except where specified) |
2018 | 2017 | Chg. $ | Chg.% | $ | % | $ | % | ||||||||||||||||||||||||
Restraint Control Systems |
$ | 246 | $ | 266 | ($ | 19 | ) | -7 | % | $ | 11 | 4 | % | ($ | 31 | ) | -12 | % | ||||||||||||||
Active Safety |
$ | 215 | $ | 191 | $ | 24 | 12 | % | $ | 4 | 2 | % | $ | 20 | 11 | % | ||||||||||||||||
Brake Systems |
$ | 111 | $ | 122 | ($ | 11 | ) | -9 | % | $ | 4 | 3 | % | ($ | 15 | ) | -12 | % | ||||||||||||||
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Total |
$ | 572 | $ | 579 | ($ | 7 | ) | -1.2 | % | $ | 19 | 3.3 | % | ($ | 26 | ) | -4.5 | % |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Income Statement
Cash Flow and Balance Sheet
Page 2 (10) | 27 July 2018 |
Segment Overview for the Quarter
Electronics
Three Months Ended June 30 | Components of Change vs. Prior Year | |||||||||||||||||||||||||||||||||||||||
Dollars in millions, | 2018 | 2017 | US GAAP Reported | Currency | Organic1) | |||||||||||||||||||||||||||||||||||
(except where specified) |
$ | % | $ | % | Chg. $ | Chg.% | $ | % | $ | % | ||||||||||||||||||||||||||||||
Net Sales |
$461 | $457 | $4 | 0.9 | % | $15 | 3.2 | % | ($11 | ) | -2.4 | % | ||||||||||||||||||||||||||||
Operating Loss / Margin |
($31 | ) | -6.7 | % | ($7 | ) | -1.5 | % | ($24 | ) | ||||||||||||||||||||||||||||||
Segment EBITDA / Margin |
($13 | ) | -2.8 | % | $10 | 2.2 | % | ($23 | ) | |||||||||||||||||||||||||||||||
Associates |
6,404 | 5,466 | 938 |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Brake Systems
Three Months Ended June 30 | Components of Change vs. Prior Year | |||||||||||||||||||||||||||||||||||||||
Dollars in millions, | 2018 | 2017 | US GAAP Reported | Currency | Organic1) | |||||||||||||||||||||||||||||||||||
(except where specified) |
$ | % | $ | % | Chg. $ | Chg.% | $ | % | $ | % | ||||||||||||||||||||||||||||||
Net Sales |
$111 | $123 | ($12 | ) | -9.7 | % | $4 | 3.3 | % | ($16 | ) | -13.0 | % | |||||||||||||||||||||||||||
Operating Loss / Margin |
($4 | ) | -3.6 | % | ($1 | ) | -0.8 | % | ($3 | ) | ||||||||||||||||||||||||||||||
Segment EBITDA / Margin |
$5 | 4.5 | % | $6 | 4.9 | % | ($1 | ) | ||||||||||||||||||||||||||||||||
Associates |
1,502 | 1,636 | (134 | ) |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Page 3 (10) | 27 July 2018 |
Financial Overview Year to Date
Sales by Product
Consolidated Net Sales | Six Months Ended June 30 | Components of Change vs. Prior Year | ||||||||||||||||||||||||||||||
Dollars in millions, | US GAAP Reported | Currency | Organic1) | |||||||||||||||||||||||||||||
(except where specified) |
2018 | 2017 | Chg. $ | Chg.% | $ | % | $ | % | ||||||||||||||||||||||||
Restraint Control Systems |
$ | 514 | $ | 537 | ($ | 23 | ) | -4 | % | $ | 30 | 6 | % | ($ | 53 | ) | -10 | % | ||||||||||||||
Active Safety |
$ | 427 | $ | 383 | $ | 45 | 12 | % | $ | 14 | 4 | % | $ | 31 | 8 | % | ||||||||||||||||
Brake Systems |
$ | 225 | $ | 242 | ($ | 18 | ) | -7 | % | $ | 10 | 4 | % | ($ | 28 | ) | -11 | % | ||||||||||||||
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Total |
$ | 1,166 | $ | 1,162 | $ | 4 | 0.3 | % | $ | 53 | 4.6 | % | ($ | 50 | ) | -4.3 | % |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Income Statement
Cash Flow and Balance Sheet
Associates
Page 4 (10) | 27 July 2018 |
Segment Overview Year to Date
Electronics
Six Months Ended June 30 | Components of Change vs. Prior Year | |||||||||||||||||||||||||||||||||||||||
Dollars in millions, (except where specified) |
2018 $ |
% | 2017 $ |
% | US GAAP Reported | Currency $ |
% | Organic1) $ |
% | |||||||||||||||||||||||||||||||
Chg. $ | Chg.% | |||||||||||||||||||||||||||||||||||||||
Net Sales |
$ | 941 | $ | 920 | $ | 21 | 2.3 | % | $ | 44 | 4.8 | % | ($ | 23 | ) | -2.5 | % | |||||||||||||||||||||||
Operating Loss / Margin |
($ | 32 | ) | -3.4 | % | ($ | 9 | ) | -1.0 | % | ($ | 23 | ) | |||||||||||||||||||||||||||
Segment EBITDA / Margin |
$ | 4 | 0.4 | % | $ | 36 | 3.9 | % | ($ | 32 | ) | |||||||||||||||||||||||||||||
Associates |
6,404 | 5,466 | 938 |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Brake Systems
Six Months Ended June 30 | Components of Change vs. Prior Year |
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Dollars in millions, | 2018 | 2017 | US GAAP Reported | Currency | Organic1) | |||||||||||||||||||||||||||||||||||
(except where specified) | $ | % | $ | % | Chg. $ | Chg.% | $ | % | $ | % | ||||||||||||||||||||||||||||||
Net Sales |
$ | 225 | $ | 245 | ($ | 20 | ) | -8.2 | % | $ | 10 | 4.0 | % | ($ | 30 | ) | -12.2 | % | ||||||||||||||||||||||
Operating Loss / Margin |
($ | 12 | ) | -5.3 | % | ($ | 3 | ) | -1.2 | % | ($ | 9 | ) | |||||||||||||||||||||||||||
Segment EBITDA / Margin |
$ | 7 | 3.1 | % | $ | 16 | 6.5 | % | ($ | 9 | ) | |||||||||||||||||||||||||||||
Associates |
1,502 | 1,636 | (134 | ) |
1) | Non-U.S. GAAP measure reconciliation for Organic Sales |
Page 5 (10) | 27 July 2018 |
Outlook for 2018
Other Topics and Events
Page 6 (10) | 27 July 2018 |
Consolidated Income Statement
(Dollars in millions, except per share data) |
Three Months Ended June 30 | Six Months Ended June 30 | Last 12 Months |
Full Year 2017 |
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(Unaudited) |
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Net sales |
$ | 572 | $ | 579 | $ | 1,166 | $ | 1,162 | $ | 2,326 | $ | 2,322 | ||||||||||||
Cost of sales |
(460) | (459) | (943) | (929) | (1,870) | (1,856) | ||||||||||||||||||
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Gross profit |
$ | 112 | $ | 120 | $ | 223 | $ | 233 | $ | 456 | $ | 466 | ||||||||||||
Selling, general & administrative expenses |
(37) | (26) | (68) | (55) | (123) | (110) | ||||||||||||||||||
Research, development & engineering expenses, net |
(119) | (102) | (225) | (189) | (411) | (375) | ||||||||||||||||||
Goodwill impairment charges |
| | | | (234) | (234) | ||||||||||||||||||
Amortization of intangibles |
(6) | (5) | (11) | (24) | (24) | (37) | ||||||||||||||||||
Other income |
2 | 1 | 17 | 13 | 12 | 8 | ||||||||||||||||||
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Operating loss |
$ | (48) | $ | (12) | $ | (64) | $ | (22) | $ | (324) | $ | (282) | ||||||||||||
Loss from equity method investments |
(16) | (8) | (30) | (8) | (53) | (31) | ||||||||||||||||||
Interest income |
1 | | 1 | | 1 | 0 | ||||||||||||||||||
Interest expense |
(1) | | (1) | | (1) | (0) | ||||||||||||||||||
Other non-operating items, net |
1 | 1 | 1 | 0 | (0) | (1) | ||||||||||||||||||
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Loss before income taxes |
$ | (63) | $ | (19) | $ | (93) | $ | (30) | $ | (377) | $ | (314) | ||||||||||||
Income tax expense |
(3) | (11) | (10) | (22) | (18) | (30) | ||||||||||||||||||
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Net loss |
$ | (66) | $ | (30) | $ | (103) | $ | (52) | $ | (395) | $ | (344) | ||||||||||||
Less: Net loss attributable to non-controlling interest |
(3) | (2) | (8) | (4) | (131) | (127) | ||||||||||||||||||
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Net loss attributable to controlling interest |
$ | (63) | $ | (28) | $ | (95) | $ | (48) | $ | (264) | $ | (217) | ||||||||||||
Net loss per share basic2, 3) |
$ | (0.72) | $ | (0.32) | $ | (1.09) | $ | (0.55) | $ | (3.03) | $ | (2.49) | ||||||||||||
Weighted average number of shares outstanding (in millions) |
87.13 | 87.13 | 87.13 | 87.13 | 87.13 | 87.13 |
1) | Including Corporate and other sales. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from EPS calculation. |
Consolidated Balance Sheet
(Dollars in millions, unaudited) |
June 30 2018 |
March 31 2018 |
December 31 2017 |
June 30 2017 |
March 31 2017 |
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Assets |
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Cash & cash equivalents |
$ | 980 | | | | | ||||||||||||||
Receivables, net |
439 | 504 | 460 | 475 | 452 | |||||||||||||||
Inventories, net |
157 | 161 | 154 | 162 | 157 | |||||||||||||||
Related party receivables |
71 | 0 | | 0 | 0 | |||||||||||||||
Prepaid expenses and contract assets |
29 | 41 | 34 | 36 | 28 | |||||||||||||||
Other current assets |
23 | 0 | | 2 | 5 | |||||||||||||||
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Total current assets |
$ | 1,699 | $ | 706 | $ | 648 | $ | 675 | $ | 642 | ||||||||||
Property, plant & equipment, net |
415 | 398 | 362 | 343 | 336 | |||||||||||||||
Investments |
134 | 159 | 98 | 120 | | |||||||||||||||
Goodwill |
291 | 291 | 292 | 511 | 510 | |||||||||||||||
Intangible assets, net |
109 | 121 | 122 | 130 | 133 | |||||||||||||||
Deferred tax assets |
30 | 32 | 30 | 20 | 20 | |||||||||||||||
Related party notes receivables |
| 0 | 76 | 81 | 66 | |||||||||||||||
Other non-current assets |
71 | 54 | 34 | 26 | 20 | |||||||||||||||
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Total assets |
$ | 2,749 | $ | 1,761 | $ | 1,662 | $ | 1,906 | $ | 1,727 | ||||||||||
Liabilities and equity |
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Accounts payable |
279 | 325 | 323 | 326 | 313 | |||||||||||||||
Related party payables |
47 | 6 | 5 | 8 | 4 | |||||||||||||||
Accrued expenses |
216 | 213 | 195 | 189 | 197 | |||||||||||||||
Income tax payable |
12 | 42 | 41 | 35 | 34 | |||||||||||||||
Other current liabilities |
30 | 36 | 26 | 53 | 47 | |||||||||||||||
Short-term debt |
0 | 24 | 0 | 4 | 12 | |||||||||||||||
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Total current liabilities |
$ | 584 | $ | 646 | $ | 590 | $ | 615 | $ | 607 | ||||||||||
Related party long-term debt |
13 | 36 | 62 | 31 | 12 | |||||||||||||||
Pension liability |
19 | 14 | 14 | 14 | 16 | |||||||||||||||
Deferred tax liabilities |
20 | 17 | 17 | 17 | 19 | |||||||||||||||
Other non-current liabilities |
11 | 10 | 22 | 2 | 0 | |||||||||||||||
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Total non-current liabilities |
$ | 63 | $ | 77 | $ | 115 | $ | 64 | $ | 47 | ||||||||||
Equity |
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Common stock |
87 | | | | | |||||||||||||||
Additional paid-in capital |
1,915 | | | | | |||||||||||||||
Net Former Parent Investment |
| 917 | 844 | 1,011 | 856 | |||||||||||||||
Accumulated other comprehensive income (loss) |
(13) | | (8) | (24) | (24) | |||||||||||||||
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Total Equity |
$ | 1,989 | $ | 917 | $ | 836 | $ | 987 | $ | 832 | ||||||||||
Non-controlling interest |
113 | 121 | 121 | 240 | 241 | |||||||||||||||
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Total Equity and non-controlling interests |
$ | 2,102 | $ | 1,038 | $ | 957 | $ | 1,227 | $ | 1,073 | ||||||||||
Total liabilities, Parent Equity and non-controlling interests |
$ | 2,749 | $ | 1,761 | $ | 1,662 | $ | 1,906 | $ | 1,727 |
Page 7 (10) | 27 July 2018 |
Consolidated Cash Flow Statement
Three Months Ended June 30 | Six Months Ended June 30 | Last 12 Months |
Full Year 2017 |
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(Dollars in millions, unaudited) |
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Operating activities |
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Net loss |
$ | (66) | $ | (30) | $ | (103) | $ | (52) | $ | (395) | $ | (344) | ||||||||||||
Depreciation and amortization |
$ | 27 | $ | 24 | $ | 55 | $ | 64 | $ | 110 | $ | 119 | ||||||||||||
Goodwill, impairment charge |
| | | | $ | 234 | $ | 234 | ||||||||||||||||
Contingent consideration write-down |
| | $ | (14) | $ | (13) | $ | (14) | $ | (13) | ||||||||||||||
Other, net |
$ | (3) | $ | (17) | $ | 3 | $ | (20) | $ | 16 | $ | (7) | ||||||||||||
Change in operating assets and liabilities |
$ | (43) | $ | (20) | $ | (105) | $ | (14) | $ | (81) | $ | 10 | ||||||||||||
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Net cash used in operating activities1) |
$ | (85) | $ | (43) | $ | (164) | $ | (35) | $ | (130) | $ | (1) | ||||||||||||
Investing activities |
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Net decrease in related party notes receivable |
| $ | (15) | $ | 76 | $ | (7) | $ | 81 | $ | (2) | |||||||||||||
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Capital expenditures |
$ | (40) | $ | (23) | $ | (71) | $ | (50) | $ | (131) | $ | (110) | ||||||||||||
Equity method investment |
$ | 1 | $ | (112) | $ | (71) | $ | (112) | $ | (84) | $ | (125) | ||||||||||||
Proceeds from sale of property, plant and equipment |
$ | 2 | $ | 2 | $ | 4 | $ | 5 | $ | 6 | $ | 7 | ||||||||||||
Net cash used in investing activities |
$ | (37) | $ | (148) | $ | (62) | $ | (164) | $ | (128) | $ | (230) | ||||||||||||
Financing activities |
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Net increase in short-term debt including related party |
$ | (23) | $ | (9) | | | $ | 4 | $ | (4) | ||||||||||||||
Cash provided at separation by Former Parent |
$ | 980 | | $ | 980 | | | | ||||||||||||||||
Net transfers from Former Parent |
$ | 168 | $ | 179 | $ | 275 | $ | 179 | $ | 280 | $ | 184 | ||||||||||||
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Repayments and other changes in related party long-term debt |
$ | (23) | $ | 20 | $ | (49) | $ | 20 | $ | (18) | $ | 51 | ||||||||||||
Net cash provided by financing activities |
$ | 1,102 | $ | 190 | $ | 1,206 | $ | 199 | $ | 1,239 | $ | 232 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
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Increase in cash and cash equivalents |
$ | 980 | | $ | 980 | | $ | 980 | | |||||||||||||||
Cash and cash equivalents at beginning of year |
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Cash and cash equivalents at end of year |
$ | 980 | | $ | 980 | | $ | 980 | |
1) | Non-U.S. GAAP measure comprised of Operating Cash Flow is the equivalent to Net cash provided by operating activities. |
Key Ratios
Dollars in millions, |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
(except where specified) |
2018 | 2017 | 2018 | 2017 | ||||||||||||
Gross margin, %1) |
19.6 | 20.7 | 19.1 | 20.1 | ||||||||||||
SG&A % |
6.5 | 4.5 | 5.8 | 4.7 | ||||||||||||
RD&E % |
20.8 | 17.6 | 19.3 | 16.3 | ||||||||||||
Operating margin, %2) |
(8.4 | ) | (2.1 | ) | (5.5 | ) | (1.9 | ) | ||||||||
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Depreciation and Amortization, % |
4.7 | 4.1 | 4.7 | 5.5 | ||||||||||||
EBITDA, %3) |
(3.7 | ) | 2.1 | (0.8 | ) | 3.6 | ||||||||||
Capital Expenditures, % |
7.0 | 4.0 | 6.1 | 4.3 | ||||||||||||
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Net working capital4) |
135 | 60 | 135 | 60 | ||||||||||||
Shareholders equity5) |
1,989 | 987 | 1,989 | 987 | ||||||||||||
Cash and cash equivalents |
980 | | 980 | | ||||||||||||
Weighted average number of shares outstanding (in millions)6) |
87.13 | 87.13 | 87.13 | 87.13 | ||||||||||||
Loss per share6) |
$ | (0.72 | ) | $ | (0.32 | ) | $ | (1.09 | ) | $ | (0.55 | ) | ||||
Total parent shareholders equity per share |
$ | 22.83 | $ | 11.33 | 22.83 | 11.33 | ||||||||||
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No. of Associates at period-end7) |
6,691 | 5,980 | 6,691 | 5,980 | ||||||||||||
No. of Total Associates at period-end8) |
7,937 | 7,102 | 7,937 | 7,102 | ||||||||||||
Days receivables outstanding9) |
82 | 75 | 80 | 75 | ||||||||||||
Days inventory outstanding10) |
21 | 21 | 21 | 21 |
1) | Gross profit relative to sales. 2) Operating income relative to sales. 3) See EBITDA reconciliation to net income on page 6. 4) Total current assets excluding cash minus total current liabilities. 5) Excluding non-controlling interest. 6) Basic number of shares used to compute net loss per share. Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from the EPS calculation. 7) Employees with a continuous employment agreement, recalculated to full time equivalent heads. 8) Includes temporary hourly personnel. 9) Outstanding receivables relative to average daily sales. 10) Outstanding inventory relative to average daily sales. |
Page 8 (10) | 27 July 2018 |
Non-U.S. GAAP Financial Measures
Non-U.S. GAAP financial measures are reconciled throughout this press release and in our quarterly report on Form 10Q filed with the Securities and Exchange Commission.
In this report we refer to organic sales or changes in organic sales growth, a non-U.S. GAAP financial measure that we, investors and analysts use to analyze the Companys sales trends and performance. We believe that this measure assists investors and management in analyzing trends in the Companys business because the Company generates approximately 65% of sales, a significant amount of sales, in currencies other than in U.S. dollars (its reporting currency) and currency rates have been and can be rather volatile. Additionally, the Company has historically made several acquisitions and divestitures. Organic sales and organic sales growth presents the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates on the Companys performance. The tables in this report present changes in organic sales growth as reconciled to the change in the total U.S. GAAP net sales.
The Company also uses in this report EBITDA, a non-U.S. GAAP financial measure, which represents the Companys net income excluding interest expense, income taxes, depreciation and amortization. The Company also uses Segment EBITDA, a non-U.S. GAAP financial measure, which represents the Companys EBITDA which has been further adjusted on a segment basis to exclude certain corporate and other items. We believe that EBITDA and Segment EBITDA are useful measures for management, analysts and investors to evaluate operating performance on a consolidated and reportable segment basis, because it assists in comparing our performance on a consistent basis. The tables below provide reconciliations of net income to EBITDA and Segment EBTIDA.
The Company also uses in this report net working capital, a non-U.S. GAAP financial measure, which is defined as current assets (excluding cash and cash equivalents) less current liabilities. Management uses this measure to improve its ability to assess liquidity at a point in time. The table below provides a reconciliation of current assets and liabilities to net working capital.
Investors should not consider these non-U.S. GAAP measures as substitutes, but rather as additions, to financial reporting measures prepared in accordance with U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.
The forward looking non-U.S. GAAP financial measure used in this report is provided on a non-U.S. GAAP basis. Veoneer has not provided a U.S. GAAP reconciliation of this measure because items that impact this measure, such as foreign currency exchange rates, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and Veoneer is unable to determine the probable significance of the unavailable information.
Reconciliations of Segment EBITDA, EBITDA and Net Working Capital
Segment EBITDA | ||||||||||||||||
Dollars in millions, (except where specified) |
Three Months Ended June 30 |
Six Months Ended June 30 |
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2018 | 2017 | 2018 | 2017 | |||||||||||||
Electronics |
($ | 13) | $ | 10 | $ | 4 | $ | 36 | ||||||||
Brake Systems |
$ | 5 | $ | 6 | $ | 7 | $ | 16 | ||||||||
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Segment EBITDA |
($ | 8) | $ | 16 | $ | 11 | $ | 52 | ||||||||
Corporate and other |
($ | 13) | ($ | 4) | ($ | 20) | ($ | 10) | ||||||||
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EBITDA |
($ | 21) | $ | 12 | ($ | 9) | $ | 42 |
EBITDA to Net Loss | ||||||||||||||||
Dollars in millions, (except where specified) |
Three Months Ended June 30 |
Six Months Ended June 30 |
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2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Loss |
($ | 66) | ($ | 30) | ($ | 103) | ($ | 52) | ||||||||
Depreciation and amortization |
$ | 27 | $ | 24 | $ | 55 | $ | 64 | ||||||||
Loss from equity method investments |
$ | 16 | $ | 8 | $ | 30 | $ | 8 | ||||||||
Interest and other non-operating items, net |
($ | 1) | ($ | 1) | ($ | 1) | | |||||||||
Income tax expense |
$ | 3 | $ | 11 | $ | 10 | $ | 22 | ||||||||
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EBITDA |
($ | 21) | $ | 12 | ($ | 9) | $ | 42 |
Working Capital to Net Working Capital | ||||||||||||||||
Dollars in millions, (except where specified) |
As of | |||||||||||||||
June 30, 2018 | March 31, 2018 | December 31, 2017 | June 30, 2017 | |||||||||||||
Total current assets |
$ | 1,699 | $ | 706 | $ | 648 | $ | 675 | ||||||||
Total current liabilities |
$ | 584 | $ | 646 | $ | 590 | $ | 615 | ||||||||
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Working capital |
$ | 1,115 | $ | 60 | $ | 58 | $ | 60 | ||||||||
Cash and cash equivalents |
($ | 980) | $ | 0 | $ | 0 | $ | 0 | ||||||||
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Net working capital |
$ | 135 | $ | 60 | $ | 58 | $ | 60 |
Definitions
Order Intake Average annualized sales of documented new business awards based on the estimated average annual product volumes, average annual sales price for such product, and exchange rates.
Page 9 (10) | 27 July 2018 |
Safe Harbor
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this report other than statements of historical fact, including without limitation, statements regarding managements 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; 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 Companys Information Statement included in the current report on Form 8-K filed with the Securities and Exchange Commission (the SEC) on July 2, 2018.
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.
Page 10 (10) | 27 July 2018 |