UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to |
Commission File No.:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes:
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of April 18, 2022, there were
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 forward-looking statements include those that address activities, events or developments that Autoliv, Inc. (“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such 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.
Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation: general economic conditions, including inflation; the impacts of the coronavirus (COVID-19) pandemic on the Company’s financial condition, business operations, operating costs, liquidity, competition and the global economy; disruptions and impacts relating to the ongoing conflict between Russia and Ukraine; changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier; global supply chain disruptions, including port, transportation and distribution delays or interruptions; supply chain disruptions and component shortages impacting the Company or the automotive industry; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment: restructuring and cost reduction and efficiency initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation, civil judgements or financial penalties 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 pending or future litigation or infringement claims and the availability of insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; our ability to meet our sustainability targets, goals and commitments; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified in Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, Item 1A “Risk Factors” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
For any forward-looking statements contained in this 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 update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.
2
INDEX |
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4 |
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4 |
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1. |
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9 |
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2. |
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9 |
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3. |
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10 |
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4. |
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13 |
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5. |
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13 |
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6. |
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14 |
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7. |
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14 |
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8. |
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15 |
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9. |
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16 |
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10. |
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19 |
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11. |
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19 |
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12. |
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19 |
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13. |
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20 |
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14. |
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20 |
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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21 |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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31 |
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31 |
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32 |
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32 |
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32 |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
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33 |
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33 |
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33 |
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33 |
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34 |
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3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
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Three Months Ended March 31, |
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2022 |
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2021 |
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$ |
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$ |
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( |
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( |
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Gross profit |
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Selling, general and administrative expenses |
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( |
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( |
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Research, development and engineering expenses, net |
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( |
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( |
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Amortization of intangibles |
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( |
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( |
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Other income (expense), net1) |
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( |
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Operating income |
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Income from equity method investment |
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Interest income |
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Interest expense |
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( |
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( |
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Other non-operating items, net |
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( |
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( |
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Income before income taxes |
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Income tax expense |
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( |
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( |
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Net income |
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Less: Net income attributable to non-controlling interest |
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Net income attributable to controlling interest |
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$ |
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$ |
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Net earnings per share – basic2) |
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$ |
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$ |
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Net earnings per share – diluted2) |
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$ |
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$ |
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Weighted average number of shares outstanding, net of |
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Weighted average number of shares outstanding, |
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Cash dividend per share – declared |
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$ |
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$ |
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Cash dividend per share – paid |
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$ |
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$ |
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2)
(see Note 11 to the unaudited condensed consolidated financial statements).
See Notes to the unaudited Condensed Consolidated Financial Statements.
4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in millions)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss) before tax: |
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Change in cumulative translation adjustments |
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Net change in unrealized components of defined benefit plans |
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Other comprehensive income (loss), before tax |
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( |
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Tax effect allocated to other comprehensive loss |
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( |
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Other comprehensive income (loss), net of tax |
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( |
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Comprehensive income |
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Less: Comprehensive income attributable to |
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Comprehensive income attributable to |
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$ |
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$ |
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See Notes to the unaudited Condensed Consolidated Financial Statements.
5
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
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As of |
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March 31, 2022 |
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December 31, 2021 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Inventories, net |
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Prepaid expenses and accrued income |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Intangible assets, net |
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Other non-current assets |
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Total assets |
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Liabilities and equity |
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Short-term debt |
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Accounts payable |
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Accrued expenses |
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Operating lease liabilities - current |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Pension liability |
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Operating lease liabilities - non-current |
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Other non-current liabilities |
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Total non-current liabilities |
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Common stock |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Treasury stock |
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( |
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( |
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Total controlling interest's equity |
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Non-controlling interest |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See Notes to the unaudited condensed consolidated financial statements.
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Operating activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation and amortization |
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Gain on divestiture of property |
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( |
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Deferred income taxes |
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Other, net |
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( |
) |
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Net change in operating assets and liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Investing activities |
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Expenditures for property, plant and equipment |
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( |
) |
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( |
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Proceeds from sale of property, plant and equipment |
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Net cash used in investing activities |
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( |
) |
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( |
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Financing activities |
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Net increase in short-term debt |
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Decrease in long-term debt |
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( |
) |
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( |
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Dividends paid |
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( |
) |
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Stock repurchased |
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( |
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Common stock options exercised |
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Net cash (used in) provided by financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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(Decrease) increase in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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See Notes to unaudited condensed consolidated financial statements.
7
CONSOLIDATED STATEMENTS OF TOTAL EQUITY (UNAUDITED) (Dollars in millions)
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Common |
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Additional |
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Retained |
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Accumulated |
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Treasury |
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Total |
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Non- |
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Total |
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Balances at December 31, 2021 |
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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$ |
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Comprehensive Income: |
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Net income |
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Foreign currency translation |
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Pension liability |
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Total Comprehensive Income |
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— |
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— |
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— |
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Stock repurchased and retired |
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( |
) |
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( |
) |
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( |
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( |
) |
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( |
) |
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Stock-based compensation |
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Cash Dividends |
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( |
) |
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( |
) |
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( |
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Balances at March 31, 2022 |
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Common |
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Additional |
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Retained |
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Accumulated |
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Treasury |
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Total |
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Non- |
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Total |
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Balances at December 31, 2020 |
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
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||||||
Comprehensive Loss: |
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Net income |
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Foreign currency translation |
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( |
) |
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( |
) |
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( |
) |
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( |
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Pension liability |
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Total Comprehensive Income |
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— |
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— |
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( |
) |
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— |
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Stock-based compensation |
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Balances at March 31, 2021 |
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
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See Notes to the unaudited Condensed Consolidated Financial Statements.
8
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are presented in millions of dollars, except for per share amounts)
March 31, 2022
1. BASIS OF PRESENTATION
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as the prior year audited consolidated financial statements and all adjustments considered necessary for a fair presentation have been included in the consolidated financial statements. All such adjustments are of a normal recurring nature. The results for the interim period are not necessarily indicative of the results to be expected for any future period or for the fiscal year ending December 31, 2022.
The Condensed Consolidated Balance Sheet as of December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements.
The Company has
Certain amounts in the condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts. Certain amounts in prior periods have been reclassified to conform to current year presentation.
Statements in this report that are not of historical fact are forward-looking statements that involve risks and uncertainties that could affect the actual results of the Company. A description of the important factors that could cause Autoliv’s actual results to differ materially from the forward-looking statements contained in this report may be found in this report and Autoliv’s other reports filed with the Securities and Exchange Commission (the “SEC”). For further information, refer to the consolidated financial statements, footnotes and definitions thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
2. NEW ACCOUNTING STANDARDS
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”).
The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s consolidated financial statements.
Adoption of new accounting standards
None that had or are expected to have a material impact on the Company.
Accounting standards issued but not yet adopted
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance, which increases the transparency of government assistance, including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. ASU 2021-10 is effective for business entities for annual periods beginning after December 15, 2021, and early adoption is permitted. The amendments in this Update should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions. The Company believes that the pending adoption of ASU 2021-10 will have a minor impact on the disclosures to the consolidated financial statements.
9
3. FAIR VALUE MEASUREMENTS
Assets and liabilities measured at fair value on a recurring basis
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, short-term debt and other current financial assets and liabilities approximate their fair value because of the short-term maturity of these instruments.
The Company uses derivative financial instruments (“derivatives”) as part of its debt management to mitigate the market risk that occurs from its exposure to changes in interest rates and foreign exchange rates. The Company does not enter into derivatives for trading or other speculative purposes. The Company’s use of derivatives is in accordance with the strategies contained in the Company’s overall financial policy. All derivatives are recognized in the consolidated financial statements at fair value. For certain derivatives, hedge accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does not meet the hedge accounting requirements, although each hedge is entered into applying the same rationale concerning mitigating market risk that occurs from changes in interest rates and foreign exchange rates.
The degree of judgment utilized in measuring the fair value of the instruments generally correlates to the level of pricing observability. Pricing observability is impacted by several factors, including the type of asset or liability, whether the asset or liability has an established market and the characteristics specific to the transaction. Instruments with readily active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, assets rarely traded or not quoted will generally have less, or no, pricing observability and a higher degree of judgment utilized in measuring fair value.
All the Company’s derivatives are classified as Level 2 financial instruments in the fair value hierarchy. Level 2 pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
The carrying value is the same as the fair value as these instruments are recognized in the consolidated financial statements at fair value. Although the Company is party to close-out netting agreements (“ISDA agreements”) with all derivative counterparties, the fair values in the tables below and in the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 have been presented on a gross basis. According to the ISDA agreements, transaction amounts payable to a counterparty on the same date and in the same currency can be netted. The amounts subject to netting agreements that the Company chose not to offset are presented below.
Derivatives designated as hedging instruments
There were
10
Derivatives not designated as hedging instruments
Derivatives not designated as hedging instruments relate to economic hedges and are marked to market with all amounts recognized in the Consolidated Statements of Income. The derivatives not designated as hedging instruments outstanding as of March 31, 2022 and December 31, 2021 were foreign exchange swaps.
For the three months period ended March 31, 2022 and 2021, the gains (losses) recognized in other non-operating items, net were $
For the three months period ended March 31, 2022 and 2021, the gains (losses) recognized as interest expense were immaterial.
The tables below present information about the Company’s derivative financial assets and liabilities measured at fair value on a recurring basis (dollars in millions).
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As of |
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March 31, 2022 |
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December 31, 2021 |
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Fair Value Measurements |
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Fair Value Measurements |
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Description |
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Nominal |
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Derivative |
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Derivative |
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Nominal |
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Derivative |
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Derivative |
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Derivatives not designated as hedging |
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Foreign exchange swaps, less |
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$ |
|
1) |
$ |
|
2) |
$ |
|
3) |
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$ |
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4) |
$ |
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5) |
$ |
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6) |
||||||
Total derivatives not designated |
|
$ |
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|
$ |
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|
$ |
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$ |
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$ |
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|
$ |
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||||||
2) Net amount after deducting for offsetting swaps under ISDA agreements is $
3) Net amount after deducting for offsetting swaps under ISDA agreements is $
4) Net nominal amount after deducting for offsetting swaps under ISDA agreements is $
5) Net amount after deducting for offsetting swaps under ISDA agreements is $
6) Net amount after deducting for offsetting swaps under ISDA agreements is $
11
Fair Value of Debt
The fair value of long-term debt is determined either from quoted market prices as provided by participants in the secondary market or for long-term debt without quoted market prices, estimated using a discounted cash flow method based on the Company’s current borrowing rates for similar types of financing. The Company has determined that each of these fair value measurements of debt reside within Level 2 of the fair value hierarchy.
The fair value and carrying value of debt is summarized in the table below (dollars in millions).
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As of |
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|||||||||||||
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March 31, 2022 |
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December 31, 2021 |
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Carrying |
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Fair |
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Carrying |
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Fair |
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||||
Long-term debt |
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Bonds |
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$ |
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$ |
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$ |
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$ |
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Loans |
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Total long-term debt |
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Short-term debt |
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Short-term portion of long-term debt |
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||||
Overdrafts and other short-term debt |
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||||
Total short-term debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
1)
Assets and liabilities measured at fair value on a nonrecurring basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also has assets and liabilities in its balance sheet that are measured at fair value on a nonrecurring basis, including certain long-lived assets, including equity method investments, goodwill and other intangible assets, typically as it relates to impairment.
The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets.
For the three months period ended March 31, 2022 and 2021, the Company did
12
4. INCOME TAXES
The effective tax rate for the three months period ended March 31, 2022 was
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and non-U.S. jurisdictions. At any given time, the Company is undergoing tax audits in several tax jurisdictions covering multiple years. The Company is no longer subject to income tax examination by the U.S. federal income tax authorities for years prior to 2015. With few exceptions, the Company is no longer subject to income tax examination by U.S. state or local tax authorities or by non-U.S. tax authorities for years before 2010.
As of March 31, 2022, the Company is not aware of any proposed income tax adjustments resulting from tax examinations that would have a material impact on the Company’s condensed consolidated financial statements. The conclusion of such audits could result in additional increases or decreases to unrecognized tax benefits in some future period or periods.
During the three months period ended March 31, 2022, the Company recorded a net increase of $
5. INVENTORIES
Inventories are stated at the lower of cost (“FIFO”) and net realizable value. The components of inventories were as follows (dollars in millions):
|
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As of |
|
|||||
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in progress |
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|
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|
||
Finished products |
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||
Inventories |
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|
||
Inventory valuation reserve |
|
|
( |
) |
|
|
( |
) |
Total inventories, net of reserve |
|
$ |
|
|
$ |
|
||
13
6. RESTRUCTURING
As of March 31, 2022, approximately $
The table below summarizes the change in the balance sheet position of the employee-related restructuring reserves (dollars in millions). The restructuring reserve balances are included within Accrued expenses in the Condensed Consolidated Balance Sheets. The changes in the employee-related reserves have been charged against Other income (expense), net in the Consolidated Statements of Income. Restructuring costs other than employee related costs are immaterial for all periods presented.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Reserve at beginning of the period |
|
$ |
|
|
$ |
|
||
Provision - charge |
|
|
|
|
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|
||
Provision - reversal |
|
|
( |
) |
|
|
( |
) |
Cash payments |
|
|
( |
) |
|
|
( |
) |
Translation difference |
|
|
( |
) |
|
|
( |
) |
Reserve at end of the period |
|
$ |
|
|
$ |
|
||
The Company is exposed to product liability and warranty claims in the event that the Company’s products fail to perform as represented and such failure results, or is alleged to result, in bodily injury, and/or property damage or other loss. The Company has reserves for product risks. Such reserves are related to product performance issues, including recalls, product liability and warranty issues. For further explanation, see Note 9. Contingent Liabilities below.
For the three months ended March 31, 2022, provisions and cash payments primarily relate to warranty related issues. For the three months ended March 31, 2021, provisions and cash paid primarily related to warranty related issues. As of March 31, 2022, the reserve for product related liabilities mainly relate to recall related issues.
Pursuant to the agreements entered into in connection with the spin-off of Veoneer, Inc. on June 29, 2018 (collectively, the “Spin-off Agreements”), Autoliv is required to indemnify Veoneer for recalls related to certain qualified Electronics products. As of March 31, 2022, the indemnification liabilities associated with Veoneer are approximately $
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Reserve at beginning of the period |
|
$ |
|
|
$ |
|
||
Change in reserve |
|
|
|
|
|
|
||
Cash payments |
|
|
( |
) |
|
|
( |
) |
Translation difference |
|
|
( |
) |
|
|
( |
) |
Reserve at end of the period |
|
$ |
|
|
$ |
|
||
14
8. RETIREMENT PLANS
The components of total Net Periodic Benefit Cost associated with the Company’s defined benefit retirement plans are as follows (dollars in millions):
U.S. Plans |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
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2021 |
|
||
Service cost |
|
$ |
|
|
$ |
|
||
Interest cost |
|
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|
|
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|
||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
Amortization of actuarial loss |
|
|
|
|
|
( |
) |
|
Settlement loss |
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|
|
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|
||
Net Periodic Benefit Cost |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
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|
||
Non-U.S. Plans |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Service cost |
|
$ |
|
|
$ |
|
||
Interest cost |
|
|
|
|
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|
||
Expected return on plan assets |
|
|
|
|
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|
||
Amortization of actuarial loss |
|
|
|
|
|
|
||
Settlement gain |
|
|
( |
) |
|
|
|
|
Net Periodic Benefit Cost |
|
$ |
|
|
$ |
|
||
The Service cost component in the tables above is reported among other employee compensation costs in the Consolidated Statements of Income. The remaining components - Interest cost, Expected return on plan assets, Amortization of actuarial loss and Settlement loss - are reported as Other non-operating items, net in the Consolidated Statements of Income. Settlement accounting has been triggered because the lump-sum payments made during the quarter exceeded the sum of service cost and interest cost for the major U.S. plan. Due to the settlement accounting, the obligation and plan assets for this U.S. plan have been re-measured as of March 31, 2022, which resulted in a lower net pension liability of $
15
9. CONTINGENT LIABILITIES
Legal Proceedings
Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, it is the opinion of management that the various legal proceedings and investigations to which the Company currently is a party will not have a material adverse impact on the consolidated financial position of Autoliv, but the Company cannot provide assurance that Autoliv will not experience material litigation, product liability or other losses in the future.
ANTITRUST MATTERS
Authorities in several jurisdictions have conducted broad, and in some cases, long-running investigations of suspected anti-competitive behavior among parts suppliers in the global automotive vehicle industry. These investigations included, but are not limited to, the products that the Company sells. In addition to concluded matters, authorities of other countries with significant light vehicle manufacturing or sales may initiate similar investigations.
PRODUCT WARRANTY, RECALLS AND INTELLECTUAL PROPERTY
Autoliv is exposed to various claims for damages and compensation if its products fail to perform as expected. Such claims can be made, and result in costs and other losses to the Company, even where the product is eventually found to have functioned properly. Where a product (actually or allegedly) fails to perform as expected or is defective, the Company may face warranty and recall claims. Where such (actual or alleged) failure or defect results, or is alleged to result, in bodily injury and/or property damage or other loss, the Company may also face product liability and other claims. There can be no assurance that the Company will not experience material warranty, recall or product (or other) liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall practices. A warranty, recall or product-liability claim brought against the Company in excess of its insurance may have a material adverse effect on the Company’s business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the repair or replacement costs of products when the product supplied did not perform as represented by us or expected by the customer. Accordingly, the future costs of warranty claims by customers may be material. However, the Company believes its established reserves are adequate.
16
In addition, as vehicle manufacturers increasingly use global platforms and procedures, quality performance evaluations are also conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having a small financial impact) may cause a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new orders, which may have a material adverse impact on the Company’s results of operations.
The Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent based on our prior claims experience. The Company’s insurance policies generally include coverage of the costs of a recall, although costs related to replacement parts are generally not covered. In addition, a number of the agreements entered into by the Company, including the Spin-off Agreements, require Autoliv to indemnify the other parties for certain claims. Autoliv cannot assure that the level of coverage will be sufficient to cover every possible claim that can arise in our businesses or with respect to other obligations, now or in the future, or that such coverage always will be available should we, now or in the future, wish to extend, increase or otherwise adjust our insurance.
Product Liability:
On
The Company believes the District Court’s verdict was in error, including the grossly high punitive damages award, and has filed a post-trial motion with the District Court asking for reconsideration of the verdict. To the extent its post-trial motion is denied, the Company also plans to appeal the verdict.
17
The Company has determined that a loss with respect to this litigation is probable and in the fourth quarter of 2021 accrued $
Specific Recalls:
In the fourth quarter of 2020, the Company was made aware of a potential recall by one of its customers (the “Unannounced Recall”). The Company continues to evaluate this matter with its customer. The Company has determined pursuant to ASC 450 that a loss with respect to the Unannounced Recall is probable and has accrued an amount that is reflected in the total product liability accrual in the fourth quarter of 2020. The amount by which the product liability accrual exceeds the product liability insurance receivable with respect to the Unannounced Recall is $
Volvo Car USA, LLC (together with its affiliates, “Volvo”) has recalled approximately
Intellectual Property:
The Company utilizes technologies in its products, which may be subject to intellectual property rights of third parties. While the Company does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the Company has sold products that infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result thereof. Such claims could be material.
The table in Note 7. Product-Related Liabilities above summarizes the change in the balance sheet position of the product-related liabilities.
18
10. STOCK INCENTIVE PLAN
Eligible employees and non-employee directors of the Company participate in the Autoliv, Inc.1997 Stock Incentive Plan (“the Plan”), as amended and receive Autoliv stock-based awards which include stock options (“SOs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”).
For the three months ended March 31, 2022, the Company recorded approximately $
The computation of basic and diluted EPS under the two-class method is set forth in the table below. Anti-dilutive shares outstanding were immaterial for all periods presented below.
|
|
Three Months Ended March 31, |
|
|||||
(In millions, except per share amounts) |
|
2022 |
|
|
2021 |
|
||
Numerator: |
|
|
|
|
|
|
||
Basic and diluted: |
|
|
|
|
|
|
||
Net income attributable to controlling interest |
|
$ |
|
|
$ |
|
||
Participating share awards with dividend |
|
|
|
|
|
|
||
Net income applicable to common |
|
|
|
|
|
|
||
Earnings allocated to participating |
|
|
|
|
|
|
||
Net income attributable to common |
|
$ |
|
|
$ |
|
||
Denominator: 1) |
|
|
|
|
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|
||
Basic: Weighted average common stock |
|
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|
||
Add: Weighted average stock options/ |
|
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|
||
Diluted: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net earnings per share - basic |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Net earnings per share - diluted |
|
$ |
|
|
$ |
|
||
1)
The Company purchases finished goods from Veoneer, a related party until April 1, 2022. For the three months ended March 31, 2022, related party purchases from Veoneer amounted to $
Amounts due to and due from related party as of March 31, 2022 and December 31, 2021 were as follows (dollars in millions).
|
|
As of |
|
|||||
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
Related party receivables1) |
|
$ |
|
|
$ |
|
||
Related party payables2) |
|
|
|
|
|
|
||
Related party accrued expenses3) |
|
|
|
|
|
|
||
1)
2)
3)
19
13. REVENUE DISAGGREGATION
The Company’s disaggregated revenue for the three months period ended March 31, 2022 and 2021 were as follows (dollars in millions).
Net Sales by Products |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Airbag Products and Other1) |
|
$ |
|
|
$ |
|
||
Seatbelt Products1) |
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
||
1) Including Corporate and other sales. |
|
|
|
|
|
|
||
|
|
|
|
|
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|
||
|
|
|
|
|
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|
||
Net Sales by Region |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
China |
|
$ |
|
|
$ |
|
||
Japan |
|
|
|
|
|
|
||
Rest of Asia |
|
|
|
|
|
|
||
Americas |
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
||
Contract Balances
Contract assets relate to the Company's rights to consideration for work completed but not billed (generally in conjunction with contracts for which revenue is recognized over time) at the reporting date on production parts and is included in Other current assets in the Condensed Consolidated Balance Sheet. The contract assets are reclassified into the receivables balance when the rights to receive payments become unconditional. The net change in the contract assets balance, reflecting the adjustments needed to align revenue recognition for work completed but not billed, for the three months period ended March 31, 2022 and 2021 were not material in any period.
14. SUBSEQUENT EVENTS
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the United States Securities and Exchange Commission (the “SEC”) on February 22, 2022. Unless otherwise noted, all dollar amounts are in millions.
Autoliv, Inc. (“Autoliv” or the “Company”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal operating subsidiaries, Autoliv AB and Autoliv ASP, Inc.
Through its operating subsidiaries, Autoliv is a supplier of automotive safety systems with a broad range of product offerings, including modules and components for passenger and driver airbags, side airbags, curtain airbags, seatbelts, steering wheels and pedestrian protection systems.
Autoliv’s filings with the SEC, including this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements and all of our other reports and statements, and amendments thereto, are available free of charge on our corporate website at www.autoliv.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC (generally the same day as the filing).
The primary exchange market for Autoliv’s securities is the New York Stock Exchange ("NYSE") where Autoliv’s common stock trades under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts ("SDRs") are traded on Nasdaq Stockholm’s list for large market cap companies under the symbol “ALIV SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv shares are traded on Nasdaq OMX PHLX and on NYSE Amex Options under the symbol “ALV”.
Autoliv’s fiscal year ends on December 31.
EXECUTIVE OVERVIEW
The Company's sales outperformed global LVP by around 3pp (IHS Markit April 2022) in the quarter, despite adverse regional mix effects, and the Company expects increased outperformance for the remainder of the year. The Company's balance sheet remains strong, and the leverage ratio (Non-U.S. GAAP measure) remains within the Company's target range. The Company paid a dividend of $0.64 per share and started repurchasing shares under its three-year stock repurchase program.
The first quarter of 2022 saw adverse impacts on an already distressed global supply chain, leading to increased cost inflation as well as lower global LVP. At the same time, customer demand visibility decreased, and customer call-off volatility increased leading to significantly higher premium freight and transportation costs. As a result of this, the Company's sales and profitability were lower than expected at the beginning of the quarter. Raw material cost increases impacted the Company's operating margin negatively, by more than 5 percentage points and adding effects from logistical bottlenecks and premium freight, the margin headwind was more than 7pp in the quarter.
In response to the increasingly difficult market conditions, the Company further strengthened its cost control measures, implemented a hiring freeze and accelerated other cost savings and footprint activities.
The Company's strategic roadmap is on track and yielding results. The Company recently announced capacity alignments and footprint actions in Japan, Europe and Americas. In the quarter, the Company divested one property in Japan and closed one plant in South Korea. The Company continues to adjust direct labor to a lower demand level.
The Company continues focused discussions with its customers regarding cost inflation compensation claims, which include price increases and other recoveries. The Company believes its price increases will begin to offset the cost inflation from around mid-year. However, the Company expects the second quarter adjusted operating margin to be weaker than in the first quarter, as the Company expects cost inflation to increase faster than cost compensations in the second quarter.
The Company's new indication of a 2022 full year organic sales growth of around 12-17% and an adjusted operating margin of 5.5-7% is based on the assumptions that global LVP will grow 0-5% and that the Company achieves its targeted cost compensation effects along with some market stabilization. Based on this, the Company believes its ongoing actions should bring the Company back on track towards its mid-term adjusted operating margin target.
21
Financial highlights in the first quarter of 2022
Key business developments in the first quarter of 2022
Business update relating to COVID-19 and the war in Ukraine
COVID-19
The COVID-19 pandemic continued to impact the Company's business in the first quarter of 2022 through limited LVP by its customers caused by global semiconductor shortage and other industry supply chain disruptions. First quarter of 2022 saw global LVP decline year over year by around 4% (according to IHS Markit April 2022). The lower LVP negatively impacted the Company's sales and profitability. Supply chain disruptions that led to lower customer demand visibility and material changes to customer call-offs with short notice also negatively impacted the Company's production efficiency and profitability in the quarter. Rising raw material costs amounted to more than 5pp in operating margin headwind in the first quarter, of which a small part was offset by commercial customer recoveries.
Direct COVID-19 related costs, such as personal protective equipment, quarantine costs and similar items, were around $2 million in the first quarter 2022. Governmental support in connection with furloughing, short-term work weeks, and other similar activities was around $7 million in the quarter.
Pandemic related lockdowns in China throughout March resulted in significant loss of production and adversely impacted sales and profitability. It is currently unclear how long this lockdown policy will continue.
The Company expects the current industry-wide semiconductor supply shortage to be a limiting factor for the LVP recovery in 2022. The Company also expects that current price environment could lead to raw material costs of up to 6pp in operating margin headwind for the full year of 2022, with similar year over year impact in all quarters. The Company is currently in discussions with its customers regarding price increases and believes product price increases should gradually offset the cost inflation, mainly beginning to have effect from around mid-year.
In response to the increased challenging market conditions, the Company continues with strict cost control measures, a hiring freeze and accelerated cost savings and footprint activities. In addition to recently announced capacity alignments and footprint actions in Japan, Europe and Americas. the Company is reducing direct labor and closing one plant in South Korea. The Company also divested a property in Japan. The situation is monitored closely, and further actions are being evaluated.
22
The war in Ukraine
The direct impact of the war in Ukraine is relatively limited. In 2021, sales in Russia were less than 1.0% of total sales. The Company has one facility with less than 200 employees in Russia, mainly supplying to international OEMs with manufacturing in Russia. The Company's net assets in Russia, mainly USD cash items, amount to around $15 million. The Company has no operations in Ukraine. The Company has identified four sub-suppliers in Ukraine and is supporting its suppliers in relocating that sourcing. The Company has been able to fulfill its delivery commitments to its customers.
The war is impacting European LVP negatively due to component shortages. It is the Company's understanding that actions are being undertaken by the impacted suppliers to relocate sourcing and that this shortage situation is likely to gradually improve in coming quarters.
Non-U.S. GAAP financial measures
Some of the following discussions refer to non-U.S. GAAP financial measures: see reconciliations for “Organic sales”, “Trade working capital”, “Net debt”, “Leverage ratio”, “Adjusted operating income”, “Adjusted operating margin” and “Adjusted earnings per share, diluted” provided below. Management believes that these non-U.S. GAAP financial measures provide supplemental information to investors regarding the performance of the Company’s business and assist investors in analyzing trends in the Company's business. Additional descriptions regarding management’s use of these financial measures are included below. Investors should consider these non-U.S. GAAP financial measures in addition to, rather than as substitutes for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial measures have been identified as applicable in each section of this report with a tabular presentation reconciling them to the most directly comparable U.S. GAAP financial measures. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.
23
RESULTS OF OPERATIONS
Overview
The following table shows some of the key ratios management uses internally to analyze the Company's current and future financial performance and core operations as well as to identify trends in the Company’s financial conditions and results of operations. We have provided this information to investors to assist in meaningful comparisons of past and present operating results and to assist in highlighting the results of ongoing core operations. These ratios are more fully explained below and should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
Autoliv’s management uses the Return on capital employed (ROCE) and Return on total equity (ROE) measures for purposes of comparing its financial performance with the financial performance of other companies in the industry and providing useful information regarding the factors and trends affecting the Company’s business. As used by the Company, ROCE is annualized operating income and income from equity method investments, relative to average capital employed. The Company believes ROCE is a useful indicator of long-term performance both absolute and relative to the Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its peers.
ROE is the ratio of annualized income (loss) relative to average total equity for the periods presented. The Company’s management believes that ROE is a useful indicator of how well management creates value for its shareholders through its operating activities and its capital management.
KEY RATIOS
(Dollars in millions, except per share data)
|
|
Three Months Ended |
|
|||||
|
|
or As of March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Total parent shareholders’ equity per share |
|
$ |
30.43 |
|
|
$ |
28.68 |
|
Capital employed 1) |
|
|
3,731 |
|
|
|
3,635 |
|
Net debt 2) |
|
|
1,057 |
|
|
|
1,115 |
|
|
|
|
|
|
|
|
||
Trade working capital8) |
|
|
1,352 |
|
|
|
1,487 |
|
Trade working capital relative to sales, %9) |
|
|
15.9 |
|
|
|
16.6 |
|
Receivables outstanding relative to sales, %10) |
|
|
21.5 |
|
|
|
20.6 |
|
Inventory outstanding relative to sales, %11) |
|
|
10.7 |
|
|
|
9.5 |
|
Payables outstanding relative to sales, %12) |
|
|
16.3 |
|
|
|
13.5 |
|
|
|
|
|
|
|
|
||
Gross margin, % 3) |
|
|
13.6 |
|
|
|
20.4 |
|
Operating margin, % 4) |
|
|
6.3 |
|
|
|
10.6 |
|
|
|
|
|
|
|
|
||
Return on total equity, % 5) |
|
|
12.5 |
|
|
|
25.4 |
|
Return on capital employed, % 6) |
|
|
14.6 |
|
|
|
26.3 |
|
|
|
|
|
|
|
|
||
Headcount at period-end 7) |
|
|
64,800 |
|
|
|
66,600 |
|
1) Total equity and net debt.
2) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below.
3) Gross profit relative to sales.
4) Operating income relative to sales.
5) Net income relative to average total equity.
6) Operating income and income from equity method investments, relative to average capital employed.
7) Employees plus temporary, hourly personnel.
8) Outstanding receivables and outstanding inventory less outstanding payables. See calculation of this non-U.S. GAAP measure in the table below.
9) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales.
10) Outstanding receivables relative to annualized quarterly sales.
11) Outstanding inventory relative to annualized quarterly sales.
12) Outstanding payables relative to annualized quarterly sales.
24
three months ended March 31, 2022 COMPARED WITH three months ended March 31, 2021
Consolidated Sales Development
(dollars in millions)
|
|
Three Months Ended March 31, |
|
|
|
|
|
Components of change in net sales |
|
|||||||||||
|
|
2022 |
|
|
2021 |
|
|
Reported |
|
|
Currency |
|
|
Organic 3) |
|
|||||
Airbag products and Other2) |
|
$ |
1,381 |
|
|
$ |
1,463 |
|
|
|
(5.6 |
)% |
|
|
(4.1 |
)% |
|
|
(1.6 |
)% |
Seatbelt products 2) |
|
|
744 |
|
|
|
779 |
|
|
|
(4.6 |
)% |
|
|
(4.5 |
)% |
|
|
0.0 |
% |
Total |
|
$ |
2,124 |
|
|
$ |
2,242 |
|
|
|
(5.3 |
)% |
|
|
(4.2 |
)% |
|
|
(1.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Asia |
|
$ |
857 |
|
|
$ |
877 |
|
|
|
(2.2 |
)% |
|
|
(3.7 |
)% |
|
|
1.4 |
% |
Whereof: China |
|
|
447 |
|
|
|
414 |
|
|
|
7.9 |
% |
|
|
2.1 |
% |
|
|
5.8 |
% |
Japan |
|
|
178 |
|
|
|
211 |
|
|
|
(15.5 |
)% |
|
|
(10.6 |
)% |
|
|
(5.0 |
)% |
Rest of Asia |
|
|
232 |
|
|
|
252 |
|
|
|
(7.9 |
)% |
|
|
(7.5 |
)% |
|
|
(0.4 |
)% |
Americas |
|
|
692 |
|
|
|
687 |
|
|
|
0.8 |
% |
|
|
0.1 |
% |
|
|
0.7 |
% |
Europe |
|
|
575 |
|
|
|
679 |
|
|
|
(15.3 |
)% |
|
|
(9.3 |
)% |
|
|
(6.0 |
)% |
Total |
|
$ |
2,124 |
|
|
$ |
2,242 |
|
|
|
(5.3 |
)% |
|
|
(4.2 |
)% |
|
|
(1.1 |
)% |
1) Effects from currency translations.
2) Including Corporate and Other sales.
3) Non-U.S. GAAP measure.
Sales by product - Airbags, Steering Wheels and Other
All major product categories declined organically (Non-U.S. GAAP measure) in the quarter except front center airbags. The largest contributor to the decline was side airbags and steering wheels, followed by driver airbags and inflatable curtains.
Sales by product - Seatbelts
The main contributor to Seatbelt products organic decline (Non-U.S. GAAP measure) was Europe with Americas declining slightly, partly offset by growth in China and Rest of Asia.
Sales by region
The Company's global organic sales (Non-U.S. GAAP measure) declined by around 1% compared to the LVP decline of 4% (according to IHS Markit April 2022). The 3pp outperformance was despite negative geographical mix effects as LVP in higher content per vehicle markets such as Europe and Japan declined more than lower CPV markets such as China. The Company outperformed LVP by more than 12pp in Europe, by more than 7pp in Japan, by more than 3pp in Americas and by around 1.5pp in Rest of Asia. The Company underperformed by almost 2pp in China, an effect of that domestic OEMs’ LVP increased by 17% vs. only 1% for global OEMs.
First quarter of 2022 organic growth1)
|
|
Americas |
|
|
Europe |
|
|
China |
|
|
Japan |
|
|
Rest of |
|
|
Global |
|
||||||
Autoliv |
|
|
0.7 |
% |
|
|
(6.0 |
)% |
|
|
5.8 |
% |
|
|
(5.0 |
)% |
|
|
(0.4 |
)% |
|
|
(1.0 |
)% |
Main growth drivers |
|
Stellantis |
|
|
Toyota |
|
|
Honda, Toyota, Geely |
|
|
Honda, Mitsubishi |
|
|
Honda, Tata |
|
|
Stellantis, Toyota |
|
||||||
Main decline drivers |
|
Nissan, Honda |
|
|
BMW, Volvo |
|
|
WV, Great Wall, GM |
|
|
Nissan, Toyota |
|
|
Nissan, Hyundai/Kia |
|
|
Nissan, VW |
|
||||||
1) Non-U.S. GAAP measure.
25
Light Vehicle Production Development
Change first quarter of 2022 versus first quarter of 2021
|
|
Americas |
|
|
Europe |
|
|
China |
|
|
Japan |
|
|
Rest of Asia |
|
|
Global |
|
||||||
LVP1) |
|
|
(2.5 |
)% |
|
|
(18 |
)% |
|
|
7.6 |
% |
|
|
(12 |
)% |
|
|
(1.9 |
)% |
|
|
(4.0 |
)% |
1) Source: IHS Markit April 2022.
Earnings
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
(Dollars in millions, except per share data) |
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
Net Sales |
|
$ |
2,124 |
|
|
$ |
2,242 |
|
|
|
(5.3 |
)% |
Gross profit |
|
|
288 |
|
|
|
458 |
|
|
|
(37.1 |
)% |
% of sales |
|
|
13.6 |
% |
|
|
20.4 |
% |
|
|
(6.9)pp |
|
S, G&A |
|
|
(115 |
) |
|
|
(108 |
) |
|
|
7.2 |
% |
% of sales |
|
|
(5.4 |
)% |
|
|
(4.8 |
)% |
|
|
0.6 |
pp |
R, D&E, net |
|
|
(107 |
) |
|
|
(107 |
) |
|
|
0.4 |
% |
% of sales |
|
|
(5.0 |
)% |
|
|
(4.8 |
)% |
|
|
0.3 |
pp |
Amortization of Intangibles |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(45.3 |
)% |
Other income (expense), net |
|
|
70 |
|
|
|
(4 |
) |
|
|
1,730 |
% |
Operating income |
|
|
134 |
|
|
|
237 |
|
|
|
(43.3 |
)% |
% of sales |
|
|
6.3 |
% |
|
|
10.6 |
% |
|
|
(4.2)pp |
|
Adjusted operating income1) |
|
|
68 |
|
|
|
237 |
|
|
|
(71.3 |
)% |
% of sales |
|
|
3.2 |
% |
|
|
10.6 |
% |
|
|
(7.4)pp |
|
Financial and non-operating items, net |
|
|
(15 |
) |
|
|
(20 |
) |
|
|
(24.2 |
)% |
Income before taxes |
|
|
119 |
|
|
|
217 |
|
|
|
(45.1 |
)% |
Income taxes |
|
|
(36 |
) |
|
|
(60 |
) |
|
|
(40.0 |
)% |
Tax rate |
|
|
30.3 |
% |
|
|
27.7 |
% |
|
|
2.6 |
pp |
Net income |
|
|
83 |
|
|
|
157 |
|
|
|
(47.1 |
)% |
Earnings per share, diluted2) |
|
|
0.94 |
|
|
|
1.79 |
|
|
|
(47.3 |
)% |
Adjusted earnings per share, diluted1),2) |
|
|
0.45 |
|
|
|
1.79 |
|
|
|
(74.8 |
)% |
1) Non-U.S. GAAP measure, excluding costs for capacity alignment and gain on sale of property.
2) Assuming dilution, when applicable, and net of treasury shares. Participating share awards with right to receive dividend equivalents are under the two-class method excluded from the EPS calculation.
First quarter of 2022 development
Gross profit decreased by $170 million, and the gross margin decreased by 6.9pp compared to the same quarter 2021. The gross margin decrease was primarily driven by more than 5pp adverse effects from higher raw material costs and significantly higher costs for premium freight.
S,G&A costs increased by $7 million compared to the prior year, mainly relating to investments in personnel and IT and improvement projects partly offset by positive FX translation effects.
R,D&E, net costs were unchanged at $107 million. In relation to sales, R,D&E costs increased to 5.0% from 4.8%.
Other income (expense), net improved by $74 million compared to prior year, mainly due to around $80 million gain from the sale of a property in Japan, partly offset by around $10 million in capacity alignment provision for the closure of a plant in South Korea.
Operating income decreased by $103 million compared to the same period in 2021, mainly as a consequence of the lower gross profit, partly offset by the improved Other income (expense).
Adjusted operating income (Non-U.S. GAAP measure) decreased by $169 million versus prior year, mainly due to lower gross profit. The difference of $66 million versus operating income is mainly due to around $80 million in gain from the sale of a property in Japan partly offset by around $12 million in total provisions for the closure of a plant in South Korea.
Financial and non-operating items, net, improved by $5 million, mainly due to lower interest expense, net.
Income before taxes decreased by $98 million compared to the prior year, mainly due to the lower operating income partly offset by improved financial and non-operating items, net.
26
Tax rate was 30.3%, compared to 27.7% in the same period last year, mainly due to less favorable country mix.
Earnings per share, diluted decreased by $0.85 compared to a year earlier, where the main drivers were $1.39 from lower adjusted operating income (Non-U.S. GAAP measure) partly mitigated by $0.49 from capacity alignment, $0.05 from financial items and $0.03 from lower tax.
NON-U.S. GAAP MEASURES
The Company believes that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items. Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.
Reconciliation of U.S. GAAP financial measures to “Adjusted operating income”, “Adjusted operating margin” and “Adjusted Earnings per share, diluted”
(Dollars in millions, except per share data)
|
|
Three Months Ended March 31, 2022 |
|
|
Three Months Ended March 31, 2021 |
|
||||||||||||||||||
|
|
Reported |
|
|
Adjustments1) |
|
|
Non-U.S. |
|
|
Reported |
|
|
Adjustments1) |
|
|
Non-U.S. |
|
||||||
Operating income |
|
$ |
134 |
|
|
$ |
(66 |
) |
|
$ |
68 |
|
|
$ |
237 |
|
|
$ |
— |
|
|
$ |
237 |
|
Operating margin, % |
|
|
6.3 |
% |
|
|
(3.1 |
)% |
|
|
3.2 |
% |
|
|
10.6 |
% |
|
|
— |
|
|
|
10.6 |
% |
Earnings per share, diluted |
|
$ |
0.94 |
|
|
$ |
(0.49 |
) |
|
$ |
0.45 |
|
|
$ |
1.79 |
|
|
$ |
— |
|
|
$ |
1.79 |
|
1) Including costs for capacity alignment and gain on sale of property in Japan.
Items included in Non-U.S. GAAP adjustments
(Dollars in millions, except per share data)
|
|
Three Months Ended March 31, 2022 |
|
|
Three Months Ended March 31, 2021 |
|
||||||||||
|
|
Millions |
|
|
Per share |
|
|
Millions |
|
|
Per share |
|
||||
Capacity alignment1) |
|
$ |
(66 |
) |
|
$ |
(0.76 |
) |
|
$ |
— |
|
|
$ |
— |
|
Total adjustments to operating income |
|
|
(66 |
) |
|
|
(0.76 |
) |
|
|
— |
|
|
|
— |
|
Tax on non-U.S. GAAP adjustments2) |
|
|
23 |
|
|
|
0.26 |
|
|
|
— |
|
|
|
— |
|
Total adjustments to net income |
|
$ |
(43 |
) |
|
$ |
(0.49 |
) |
|
$ |
— |
|
|
$ |
— |
|
1) Whereof gain on sale of property in Japan of $80 million.
2) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).
The Company uses the non-U.S. GAAP measure “Trade working capital,” as defined in the table below, in its communications with investors and for management’s review of the development of the trade working capital cash generation from operations. The reconciling items used to derive this measure are, by contrast, managed as part of the Company’s overall cash and debt management, but they are not part of the responsibilities of day-to-day operations’ management.
27
Calculation of “Trade working capital”
(Dollars in millions)
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
March 31, 2021 |
|
|||
Receivables, net |
|
$ |
1,824 |
|
|
$ |
1,699 |
|
|
$ |
1,846 |
|
Inventories, net |
|
|
913 |
|
|
|
777 |
|
|
|
856 |
|
Accounts payable |
|
|
(1,385 |
) |
|
|
(1,144 |
) |
|
|
(1,215 |
) |
Trade working capital |
|
$ |
1,352 |
|
|
$ |
1,332 |
|
|
$ |
1,487 |
|
The non-U.S. GAAP measure “Net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses this measure to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. For details on leverage ratio refer to the table below.
Reconciliation of U.S. GAAP financial measure to “Net debt”
(Dollars in millions)
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
March 31, 2021 |
|
|||
Short-term debt |
|
$ |
347 |
|
|
$ |
346 |
|
|
$ |
291 |
|
Long-term debt |
|
|
1,647 |
|
|
|
1,662 |
|
|
|
2,039 |
|
Total debt |
|
|
1,994 |
|
|
|
2,008 |
|
|
|
2,330 |
|
Cash and cash equivalents |
|
|
(938 |
) |
|
|
(969 |
) |
|
|
(1,254 |
) |
Debt issuance cost/Debt-related derivatives, net |
|
|
1 |
|
|
|
13 |
|
|
|
39 |
|
Net debt |
|
$ |
1,057 |
|
|
$ |
1,052 |
|
|
$ |
1,115 |
|
Management uses the non-U.S. GAAP measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company's long-term target for the leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) is 1.0x with the aim to operate within the range of 0.5x to 1.5x. For details and calculation of leverage ratio, refer to the table below.
Calculation of “Leverage ratio”
(Dollars in millions)
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
March 31, 2021 |
|
|||
Net debt1) |
|
$ |
1,057 |
|
|
$ |
1,052 |
|
|
$ |
1,115 |
|
Pension liabilities |
|
|
172 |
|
|
|
197 |
|
|
|
239 |
|
Debt per the Policy |
|
|
1,229 |
|
|
|
1,248 |
|
|
|
1,354 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net income2) |
|
|
363 |
|
|
|
437 |
|
|
|
271 |
|
Income taxes 2) |
|
|
153 |
|
|
|
177 |
|
|
|
127 |
|
Interest expense, net2,3) |
|
|
53 |
|
|
|
57 |
|
|
|
69 |
|
Other non-operating items, net2) |
|
|
5 |
|
|
|
7 |
|
|
|
23 |
|
Income from equity method investments2) |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
Depreciation and amortization of intangibles2) |
|
|
391 |
|
|
|
394 |
|
|
|
381 |
|
Capacity alignments and antitrust related matters2) |
|
|
(58 |
) |
|
|
8 |
|
|
|
98 |
|
EBITDA per the Policy (Adjusted EBITDA) |
|
$ |
905 |
|
|
$ |
1,077 |
|
|
$ |
964 |
|
Leverage ratio |
|
|
1.4 |
|
|
|
1.2 |
|
|
|
1.4 |
|
1) Net debt (non-U.S. GAAP measure) is short- and long-term debt and debt-related derivatives, less cash and cash equivalents.
2) Latest 12-months.
3) Interest expense, net including cost for extinguishment of debt, if any, less interest income.
28
Headcount
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
March 31, 2021 |
|
|||
Total headcount |
|
|
64,800 |
|
|
|
60,600 |
|
|
|
66,600 |
|
Whereof: |
|
|
|
|
|
|
|
|
|
|||
Direct personnel in manufacturing |
|
|
47,000 |
|
|
|
43,000 |
|
|
|
48,700 |
|
Indirect personnel |
|
|
17,800 |
|
|
|
17,600 |
|
|
|
17,900 |
|
Temporary personnel |
|
|
9.4 |
% |
|
|
7.8 |
% |
|
|
9.9 |
% |
Trade working capital (Non-U.S. GAAP measure, see reconciliation table above) was reduced by $135 million compared to the same period last year, where the main drivers were related to $170 million higher accounts payables and $22 million in lower receivables, net, partly offset by $57 million in increased inventories, net.
Operating cash flow decreased by $116 million to $70 million compared to the same period last year, mainly due to lower net income.
Capital expenditure, net decreased by $76 million, which mainly reflects $95 million in proceeds from the sale of property, plant and equipment. Capital expenditure, net in relation to sales was 0.8% versus 4.1% a year earlier.
Operating cash flow less capital expenditures, net was $53 million, compared to $93 million a year earlier. The decline was due to the lower operating cash flow, partly offset by the property sale in Japan.
Net debt (Non-U.S. GAAP measure, see calculation above) was $1,057 million as of March 31, 2022, which was $58 million lower than a year earlier and $5 million higher compared to December 31, 2021.
Liquidity position. As of March 31, 2022, our cash balance was around $0.9 billion, and including committed, unused loan facilities, our liquidity position was around $2.0 billion.
Leverage ratio (Non-U.S. GAAP measure, see calculation above). As of March 31, 2022, the Company had a leverage ratio of 1.4x, compared to 1.4x as of March 31, 2021, as both the net debt (Non-U.S. GAAP measure) decreased and the 12 months trailing adjusted EBITDA decreased.
Total equity increased by $153 million compared to March 31, 2021, mainly due to $363 million from net income, partially offset by dividends of $220 million and share repurchases of $18 million.
Headcount. By March 31, 2022, total headcount decreased by 1,800 compared to a year earlier. The indirect workforce decreased by around 0.6% while the direct workforce decreased by around 3.5%. Compared to December 31, 2021, total headcount increased by around 6.9%, reflecting customer demand recovery expectations going into the new year. Direct workforce increased by around 9.3%, and the indirect workforce increased by 1.1%.
Full year 2022 indications
The Company's outlook indications for 2022 reflects continuing uncertainty in the automotive markets and are mainly based on its customer call-offs and global LVP outlook of a full year 2022 global LVP growth of 0-5% and that the Company achieves its targeted cost compensation effects along with some market stabilization.
Financial measure |
|
Full year indication |
Organic sales growth |
|
Around 12-17% |
FX impact on sales |
|
Around 3% negative |
Adjusted operating margin 1) |
|
Around 5.5-7% |
Tax rate 2) |
|
Around 30% |
Operating cash flow 3) |
|
$750-850 million |
Capex, net % of sales |
|
Around 5.5% |
1) Excluding costs for capacity alignments, antitrust related matters and other discrete items. |
||
2) Excluding unusual tax items. |
||
3) Excluding unusual items. |
||
This report includes content supplied by IHS Markit Automotive; Copyright © Light Vehicle Production Forecast, April, 2022. All rights reserved.
29
The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. The Company has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and the Company is unable to determine the probable significance of the unavailable information.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial position, results of operations or cash flows.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The Company’s future contractual obligations have not changed materially from the amounts reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
OTHER RECENT EVENTS
Key launches in the first quarter of 2022
Opel Astra: Steering Wheel, Driver/Passenger Airbags, Side Airbags and Seatbelts. Available as EV/PHEV.
Renault Megane E-Tech: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Front Center Airbag and Seatbelts.
Subaru WRX: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Pedestrian Airbag and Seatbelts.
Suzuki Glanza/Baleno: Side Airbags and Head/Inflatable Curtain Airbags.
Toyota Aygo X: Side Airbags and Head/Inflatable Curtain Airbags.
Nio ET7: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Front Center Airbag, Seatbelts and Pyrotechnical Safety Switch. Available as EV/PHEV.
Mazda CX-50: Steering Wheel, Driver/Passenger Airbags, Side Airbags and Head/Inflatable Curtain Airbags.
Lexus LX: Side Airbags, Head/Inflatable Curtain Airbags and Seatbelts.
Alfa Romeo Tonale: Seatbelts. Available as EV/PHEV.
Other Items
30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of March 31, 2022, there have been no material changes to the information related to quantitative and qualitative disclosures about market risk that were provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation has been carried out, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
31
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of our business, we are subject to legal proceedings brought by or against us and our subsidiaries.
See Part I, Item 1, "Financial Statements, Note 9 Contingent Liabilities" of this Quarterly Report on Form 10-Q for a summary of certain ongoing legal proceedings. Such information is incorporated into this Part II, Item 1—"Legal Proceedings" by reference.
ITEM 1A. RISK FACTORS
Except as set forth below, as of March 31, 2022, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
We are currently operating in a period of significant macro-economic uncertainty, including global disruption of LVP due to supply-chain disruptions and COVID-related lockdowns and increasing inflationary pressures and commodity costs. Although we have minimum operations in Russia, the war in Ukraine and the current COVID-related lockdowns in China are exacerbating commodity cost increases, supply chain challenges and volatility with our customers’ production schedules. If the war in Ukraine continues for a lengthy period or spreads or the COVID-related lockdowns in China continue for a lengthy period or spread, it may have a materially negative impact on our business and results of operations.
The macro-economic uncertainty has been exacerbated by the war in Ukraine. Although the length and impact of the ongoing war is highly unpredictable, it exacerbated volatility in commodity prices, inflationary pressures, credit markets, foreign exchange rates and supply chain disruptions. Furthermore, governments in the United States, United Kingdom, Canada and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Existing or additional sanctions could further adversely affect the global economy further disrupt the global supply chain. Inflation is also currently high world-wide and may continue for an unforeseen time.
Due in part to the negative impact of the war in Ukraine and the current COVID lock-downs in China, we have experienced exacerbated increases in raw materials and increased costs for transportation, energy, and commodities. Although we are negotiating with our customers with respect to these additional commodity costs increases, commercial negotiations with our customers may not be successful or may not offset all of the adverse impact of higher transportation, energy and commodity costs. Additionally, even if we are successful with respect to negotiations with customers relating to commodity cost increases, there may be delay before we recover any increased costs. These may have a material negative impact on our business and results of operations.
For additional information see Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.
32
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Stock repurchase program
The following table provides information with respect to common stock repurchases by the Company during the three months period ended March 31, 2022.
|
|
New York Stock Exchange (NYSE) |
|
|
|
|
||||||
Period |
|
Total Number of Shares Purchased (1) |
|
|
Average Price Paid per Share (USD) (2) |
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Program (3) |
|
|||
January 1-31, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
17,000,000 |
|
February 1-28, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
17,000,000 |
|
March 1-31, 2022 |
|
|
234,757 |
|
|
$ |
76.36 |
|
|
|
16,765,243 |
|
(1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. For accounting purposes, shares repurchased under our stock repurchase programs are recorded based upon the settlement date of the applicable trade. An additional 27,226 shares were repurchased but not settled as of March 31, 2022, and thus not included in the table above.
(2) Average price paid per share includes costs associated with the repurchases.
(3) On November 16, 2021, the Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million shares, whichever comes first, between January 2022 and the end of 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
33
ITEM 6. EXHIBITS
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
4.1 |
|
|
|
|
|
4.2 |
|
|
|
|
|
4.3 |
|
|
|
|
|
4.4 |
|
|
|
|
|
4.5 |
|
|
|
|
|
4.6 |
|
|
|
|
|
4.7 |
|
|
|
|
|
4.8 |
|
|
|
|
|
4.9 |
|
|
|
|
|
4.10 |
|
|
|
|
|
4.11 |
|
|
|
|
|
4.12* |
|
|
|
|
|
4.13* |
|
|
|
|
|
4.14* |
|
|
|
|
|
10.1*+ |
|
34
|
|
|
10.2*+ |
|
|
|
|
|
31.1* |
|
|
|
|
|
31.2* |
|
|
|
|
|
32.1* |
|
|
|
|
|
32.2* |
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document – The instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the inline XBRL document. |
|
|
|
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
104* |
|
Cover Page Interactive Data File (embedded within the inline XBRL document). |
|
|
|
* Filed herewith.
+ Management contract or compensatory plan.
35
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: April 22, 2022
AUTOLIV, INC.
(Registrant)
By: |
|
/s/ Fredrik Westin |
|
|
Fredrik Westin |
|
|
Chief Financial Officer |
|
|
(Duly Authorized Officer and Principal Financial Officer) |
36