UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2024

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.: 001-12933

 

AUTOLIV, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware		51-0378542
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
Klarabergsviadukten 70, Section B7
Box 70381,
Stockholm, Sweden		SE-107 24
(Address of principal executive offices)		(Zip Code)

+46 8 587 20 600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock (par value $1.00 per share)		ALV		New York Stock Exchange

 

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. Yes: ☒ No: ☐

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). Yes: ☒ No: ☐

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.

 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

 

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: ☐ No: ☒

 

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, 2024, there were 81,374,584 shares of common stock of Autoliv, Inc., par value $1.00 per share, outstanding.

 

 

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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; 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 specific to the automotive industry or the Company; disruptions and impacts relating to the ongoing war between Russia and Ukraine and hostilities in the Middle East; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment: restructuring, 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; 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 and other 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 judgments 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; the conditions necessary to hit our financial targets; 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, 2023, filed with the SEC on February 20, 2024.

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.

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INDEX
PART I - FINANCIAL INFORMATION		4
ITEM 1. FINANCIAL STATEMENTS		4
1.	Basis of Presentation	9
2.	New Accounting Standards	10
3.	Fair Value Measurements	11
4.	Income Taxes	14
5.	Inventories	14
6.	Restructuring	14
7.	Product-Related Liabilities	15
8.	Retirement Plans	15
9.	Contingent Liabilities	16
10.	Stock Incentive Plan	18
11.	Earnings Per Share	18
12.	Revenue Disaggregation	18
13.	Subsequent Events	18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		30
ITEM 4. CONTROLS AND PROCEDURES		30
PART II - OTHER INFORMATION		31
ITEM 1. LEGAL PROCEEDINGS		31
ITEM 1A. RISK FACTORS		31
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		31
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		31
ITEM 4. MINE SAFETY DISCLOSURES		31
ITEM 5. OTHER INFORMATION		31
ITEM 6. EXHIBITS		32

 

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in millions, except per share data)

 

		Three Months Ended March 31,
		2024				2023
Net sales		$	2,615			$	2,493
Cost of sales			(2,172	)			(2,113	)
Gross profit			443				379
Selling, general and administrative expenses			(132	)			(132	)
Research, development and engineering expenses, net			(113	)			(116	)
Other income (expense), net			(4	)			(4	)
Operating income			194				127
Income from equity method investment			2				2
Interest income			5				2
Interest expense			(26	)			(19	)
Other non-operating items, net			(1	)			(2	)
Income before income taxes			174				109
Income tax expense			(47	)			(34	)
Net income1)			127				74
Less: Net income attributable to non-controlling interest			0				0
Net income attributable to controlling interest		$	126			$	74
Net earnings per share – basic		$	1.53			$	0.86
Net earnings per share – diluted		$	1.52			$	0.86
Weighted average number of shares outstanding, net of    treasury shares (in millions)			82.3				86.1
Weighted average number of shares outstanding,    assuming dilution and net of treasury    shares (in millions)			83.0				86.3
Cash dividend per share – declared		$	0.68			$	0.66
Cash dividend per share – paid		$	0.68			$	0.66

1) For the three months periods ended March 31, 2024 and 2023, the aggregate transaction gain (loss) included in net income for the period were $(6) million and $(5) million, respectively.

 

 

 

 

 

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in millions)

 

		Three Months Ended March 31,
		2024				2023
Net income		$	127			$	74
Other comprehensive income (loss) before tax:
Change in cumulative translation adjustments			(47	)			36
Net change in unrealized components of defined benefit plans			6				(0	)
Other comprehensive (loss), before tax			(40	)			35
Tax effect allocated to other comprehensive income (loss)			(1	)			0
Other comprehensive (loss), net of tax			(42	)			35
Comprehensive income			85				110
Less: Comprehensive income (loss) attributable to    non-controlling interest			0				0
Comprehensive income attributable to    controlling interest		$	85			$	110

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)

 

		As of
		March 31, 2024				December 31, 2023
Assets
Cash and cash equivalents		$	569			$	498
Receivables, net			2,194				2,198
Inventories, net			997				1,012
Prepaid expenses and accrued income			180				173
Other current assets			71				93
Total current assets			4,011				3,974
Property, plant and equipment, net			2,192				2,192
Operating lease right-of-use assets			177				176
Goodwill and intangible assets, net			1,381				1,385
Other non-current assets			564				606
Total assets			8,324				8,332
Liabilities and equity
Short-term debt			310				538
Accounts payable1)			1,855				1,978
Accrued expenses			1,129				1,135
Operating lease liabilities - current			41				39
Other current liabilities			323				345
Total current liabilities			3,658				4,035
Long-term debt			1,830				1,324
Pension liability			149				159
Operating lease liabilities - non-current			134				135
Other non-current liabilities			111				109
Total non-current liabilities			2,224				1,728
Common stock			86				88
Additional paid-in capital			1,018				1,044
Retained earnings			2,226				2,289
Accumulated other comprehensive loss			(537	)			(496	)
Treasury stock			(364	)			(368	)
Total controlling interest's equity			2,428				2,557
Non-controlling interest			13				13
Total equity			2,442				2,570
Total liabilities and equity		$	8,324			$	8,332

1) Amount of obligations confirmed under the Company's Supplier Finance Program that remains unpaid is reported as Accounts Payable in the Condensed Consolidated Balance Sheets. Amount of obligations outstanding as of March 31, 2024 and December 31, 2023 are $324 million and $333 million, respectively.

 

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)

 

		Three Months Ended March 31,
		2024				2023
Operating activities
Net income		$	127			$	74
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			96				92
Other, net			14				(10	)
Net change in operating assets and liabilities			(114	)			(202	)
Net cash provided by (used in) operating activities			122				(46	)
Investing activities
Expenditures for property, plant and equipment			(140	)			(144	)
Proceeds from sale of property, plant and equipment			0				0
Net cash used in investing activities			(140	)			(143	)
Financing activities
Net decrease in short-term debt			(227	)			(135	)
Proceeds from long-term debt			534				533
Dividends paid			(56	)			(57	)
Stock repurchased			(160	)			(42	)
Common stock options exercised			0				0
Net cash provided by financing activities			92				300
Effect of exchange rate changes on cash and cash equivalents			(3	)			7
Net increase in cash and cash equivalents			71				119
Cash and cash equivalents at beginning of period			498				594
Cash and cash equivalents at end of period		$	569			$	713

 

See Notes to unaudited Condensed Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF TOTAL EQUITY (UNAUDITED) (Dollars in millions)

 

 

 

 

 

	Common stock				Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Treasury stock				Total controlling interest's equity				Non- controlling interest				Total equity
Balances at December 31, 2023	$	88			$	1,044			$	2,289			$	(496	)		$	(368	)		$	2,557			$	13			$	2,570
Comprehensive Loss:
Net income										126												126				0				127
Foreign currency translation   adjustment														(46	)							(46	)			(0	)			(47	)
Pension liability														5								5								5
Total Comprehensive Income		—				—				126				(41	)			—				85				0				85
Retired and repurchased shared		(1	)			(26	)			(134	)											(161	)							(161	)
Stock-based compensation																		4				4								4
Cash dividends declared										(56	)											(56	)							(56	)
Balances at March 31, 2024	$	86			$	1,018			$	2,226			$	(537	)		$	(364	)		$	2,429			$	13			$	2,442

 

	Common stock				Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Treasury stock				Total controlling interest's equity				Non- controlling interest				Total equity
Balances at December 31, 2022	$	91			$	1,113			$	2,310			$	(522	)		$	(379	)		$	2,613			$	13			$	2,626
Comprehensive Income:
Net income										74												74				0				74
Foreign currency translation    adjustment														36								36				0				36
Pension liability														(0	)							(0	)							(0	)
Total Comprehensive Income		—				—				74				35				—				110				0				110
Stock repurchased and retired		(0	)			(9	)			(33	)											(42	)							(42	)
Stock-based compensation																		3				3								3
Cash dividends declared										(57	)											(57	)							(57	)
Balances at March 31, 2023	$	91			$	1,105			$	2,295			$	(487	)		$	(376	)		$	2,627			$	14			$	2,641

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

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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, 2024

 

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There were no reportable events subsequent to March 31, 2024.

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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, 2023, filed with the United States Securities and Exchange Commission (the “SEC”) on February 20, 2024. 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.

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”, “Free cash flow”, “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.

 

 

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EXECUTIVE OVERVIEW

We delivered record first quarter sales, outperforming global light vehicle production (LVP) growth by 6pp. We outperformed in all regions, including China despite a negative LVP mix development with domestic Chinese OEMs growing by 17% and global OEMs declining by 5%. It is encouraging that our sales in India grew organically by 27%. Sales in India are now larger than in South Korea, accounting for more than 4% of our global sales.

We delivered results in line with what we previously communicated, despite LVP being 1pp below what was expected three months ago, and we are on track to deliver on our full year outlook. We expect a record number of product launches in 2024, despite some OEMs changing certain vehicle model launch plans, mainly for EV platforms.

Profitability continued to improve significantly, driven mainly by volume growth and cost reductions. Restructuring activities are yielding results with indirect headcount declining by around 1,000, or by more than 5%, in the past 12 months.

Our continued focus on balance sheet efficiency is supporting our strong performance for cash flow, cash conversion, and return on capital employed.

We are particularly pleased with our leverage ratio of 1.3x, which declined significantly compared to a year ago, despite returning $0.7 billion to shareholders and investing in footprint optimization and growth.

 

To support future growth, we are currently investing in increased capacity in Vietnam, China and India.

We are facing inflationary pressure again this year and we continue to expect compensation for what is in excess of what we can offset through normal productivity measures. The discussions with our customers are progressing according to plan.

As we have previously communicated, we expect the seasonality of past years to likely continue in 2024, with a gradual improvement throughout the year, leading to a full year adjusted operating margin (Non-U.S. GAAP measure) of around 10.5%. Key drivers for the full year margin progression are organic growth, our structural and strategic cost reduction initiatives, and a lower call-off volatility.

The 2024 development we expect should set up a solid base towards a continued high level of shareholder returns and our target of around 12% adjusted operating margin (Non-U.S. GAAP measure).

Financial highlights in the three months period ended March 31, 2024

Change figures below compare to the same period of the previous year, except when stated otherwise.

 

$2,615 million net sales

5% net sales increase

5% organic sales growth (Non-U.S. GAAP measure, see reconciliation table below)

7.4% operating margin

7.6% adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below)

$1.52 earnings per share, 77% increase

$1.58 adjusted earnings per share (Non-U.S. GAAP measure, see reconciliation table below), 76% increase

 

 

 

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Key business developments in the three months period ended March 31, 2024

Change figures below compare to the same period of the previous year, except when stated otherwise.

 

Business and market condition update for the first quarter 2024

Supply Chain

In the first quarter, global light vehicle production declined year-over-year by around 1% (according to S&P Global April 2024). Call-off volatility was lower compared to a year earlier, as supply chains are less strained compared to a year ago. However, volatility did not improve compared to the fourth quarter 2023, and is still higher than pre-pandemic levels, and low customer demand visibility and changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability in the quarter. We expect call-off volatility in 2024 on average to be lower than it was in 2023 but remain higher than the pre-pandemic level.

Inflation

In the first quarter 2024, cost pressure from labor and other items had a negative impact on our profitability. Most of the inflationary cost pressure was offset by price increases and other customer compensations in the quarter. Raw material price changes had a negligible impact on our profitability in the first quarter 2024. We expect the effects of raw material price changes in 2024 to be negligible for the full year. We expect continued cost pressure from inflation relating mainly to labor, especially in Europe and the Americas. We continue to execute on productivity and cost reduction activities to offset these cost pressures and will continue to seek inflation compensation from our customers.

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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. The Company has 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 the Company's Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The Company'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,
		2024				2023
Trade working capital1)			1,336				1,409
Trade working capital relative to sales, %2)			12.8	%			14.1	%
Receivables outstanding relative to sales, %3)			21.0	%			21.1	%
Inventory outstanding relative to sales, %4)			9.5	%			9.9	%
Payables outstanding relative to sales, %5)			17.7	%			16.9	%
Gross margin, %6)			16.9	%			15.2	%
Operating margin, %7)			7.4	%			5.1	%
Capital employed8)			4,003				4,118
Net debt9)			1,562				1,477
Return on total equity, %10)			20.2	%			11.3	%
Return on capital employed, %11)			19.7	%			13.0	%
Headcount at period-end12)			70,100				71,300

1) Outstanding receivables and outstanding inventory less outstanding payables. See calculation of this non-U.S. GAAP measure in the table below.

2) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales.

3) Outstanding receivables relative to annualized quarterly sales.

4) Outstanding inventory relative to annualized quarterly sales.

5) Outstanding payables relative to annualized quarterly sales.

6) Gross profit relative to sales.

7) Operating income relative to sales.

8) Total equity and net debt.

9) 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.

10) Net income relative to average total equity.

11) Operating income and income from equity method investments, relative to average capital employed.

12) Employees plus temporary, hourly personnel.

 

 

 

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three months period ended March 31, 2024 COMPARED WITH three months period ended March 31, 2023

 

 

Consolidated Sales Development

(dollars in millions)

 

		Three Months Ended March 31,												Components of change in net sales
		2024				2023				Reported change				Currency effects 1)				Organic 3)
Airbags, Steering Wheels and Other2)		$	1,781			$	1,673				6.5	%			(0.5	)%			7.0	%
Seatbelt products and Other2)			834				820				1.7	%			(0.5	)%			2.2	%
Total		$	2,615			$	2,493				4.9	%			(0.5	)%			5.4	%
Americas		$	893			$	831				7.5	%			2.9	%			4.6	%
Europe			770				725				6.1	%			2.4	%			3.7	%
China			460				453				1.7	%			(4.8	)%			6.5	%
Asia excl. China			491				483				1.7	%			(6.6	)%			8.2	%
Total		$	2,615			$	2,493				4.9	%			(0.5	)%			5.4	%

1) Effects from currency translations.

2) Including Corporate sales.

3) Non-U.S. GAAP measure.

Sales by product - Airbags, Steering Wheels and Other

Sales for all major product categories increased organically (Non-U.S. GAAP measure, see reconciliation table above) in the quarter. The largest contributor to the increase was steering wheels, followed by inflatable curtains, side airbags, and driver airbags.

Sales by product - Seatbelts and Other

Sales for Seatbelt Products and Other increased organically (Non-U.S. GAAP measure, see reconciliation table above) in the Americas, Asia excluding China and Europe, while it declined in China.

Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 5.4% compared to the global LVP decrease of 0.9% (according to S&P Global, April 2024). The 6.3pp outperformance was mainly driven by new product launches and higher prices carried over from last year.

Our organic sales growth outperformed LVP growth by 15pp in Asia excluding China, by 6.1pp in Europe, by 4.9pp in the Americas, and by 1.4pp in China. LVP growth in China was heavily tilted to domestic OEMs with typically lower safety content. Domestic OEM LVP in China grew by 17% while LVP declined by 5% for global OEMs.

First quarter of 2024 organic growth1)

		Americas		Europe		China		Asia excl. China		Global
Autoliv		4.6%		3.7%		6.5%		8.2%		5.4%
Main growth drivers		Toyota, Mercedes, Ford		Mercedes, BMW, Toyota		Volvo, Chery, BMW		Hyundai, Tata, Honda		Mercedes, Toyota, Hyundai
Main decline drivers		Stellantis, GM		Ford, Renault, Volvo		Honda		Nissan, Renault, Mazda		Stellantis, Nissan

1) Non-U.S. GAAP measure.

 

 

Light Vehicle Production Development

Change first quarter of 2024 versus first quarter of 2023

 

		Americas		Europe		China		Asia excl. China		Global
LVP1)		(0.3)%		(2.4)%		5.1 %		(6.9)%		(0.9)%

1) Source: S&P Global, April 2024.

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Earnings

 

		Three Months Ended March 31,
(Dollars in millions, except per share data)		2024				2023				Change
Net Sales		$	2,615			$	2,493				4.9	%
Gross profit			443				379				17	%
% of sales			16.9	%			15.2	%			1.7	pp
S, G&A			(132	)			(132	)			(0.0	)%
% of sales			(5.0	)%			(5.3	)%			0.2	pp
R, D&E, net			(113	)			(116	)			(3.1	)%
% of sales			(4.3	)%			(4.7	)%			0.4	pp
Other income (expense), net			(4	)			(4	)			11	%
Operating income			194				127				52	%
% of sales			7.4	%			5.1	%			2.3	pp
Adjusted operating income1)			199				131				51	%
% of sales			7.6	%			5.3	%			2.3	pp
Financial and non-operating items, net			(20	)			(18	)			10	%
Income before taxes			174				109				60	%
Income taxes			(47	)			(34	)			36	%
Tax rate			27.0	%			31.6	%			(4.6	)pp
Net income			127				74				70	%
Earnings per share, diluted2)			1.52				0.86				77	%
Adjusted earnings per share, diluted1,2)			1.58				0.90				76	%

1) Non-U.S. GAAP measure, excluding effects from capacity alignments and antitrust related matters.

2) Assuming dilution, when applicable, and net of treasury shares.

 

First quarter of 2024 financial development

Gross profit increased by $63 million, and the gross margin increased by 1.7pp compared to the same quarter 2023. The gross profit increase was primarily driven by volume growth, price increases and lower costs for production overhead and premium freight. This was partly offset by wage inflation and adverse foreign currency exchange effects.

S,G&A costs were unchanged compared to the prior year, positively impacted by lower costs for professional service which was offset by higher costs for personnel, as wage inflation outpaced the headcount reductions. S,G&A costs in relation to sales decreased from 5.3% to 5.0%.

R,D&E, net costs decreased by $4 million compared to the prior year, mainly due to higher engineering income. R,D&E, net in relation to sales decreased from 4.7% to 4.3%.

Other income (expense), net was unchanged at $4 million compared to the same period last year.

Operating income increased by $67 million compared to the same period in 2023, mainly due to the increase in gross profit.

Adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) increased by $68 million compared to the prior year, mainly due to higher gross profit.

Financial and non-operating items, net was negative $20 million compared to negative $18 million a year earlier. The difference was mainly due to increased interest expense as the result of higher debt and higher interest rates.

Income before taxes increased by $65 million compared to the prior year, mainly due to the increase in operating income.

Tax rate was 27.0% compared to 31.6% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 2.5pp. Discrete tax items, net, increased the tax rate by 0.8pp in the same period last year.

Earnings per share, diluted increased by $0.66 compared to a year earlier. The main drivers were $0.52 from higher operating income and $0.10 from lower income taxes.

 

 

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LIQUIDITY AND CAPITAL RESOURCES

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. 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, 2023, filed with the SEC on February 20, 2024.

 

First quarter of 2024 development

Changes in operating working capital was $114 million negative in the first quarter, compared to $202 million negative in the same period the prior year. The $88 million improvement was mainly driven by smaller negative effects on cash flow from receivables and other assets, partly offset by increased negative effects from payables and accrued expenses.

Other, net was $14 million positive in the first quarter, mainly related to deferred income taxes and other. The $10 million negative in Other, net in the same period the prior year mainly related to deferred income taxes.

Operating cash flow increased by $168 million to $122 million compared to the same period last year, mainly due to lower increase in working capital and higher net income.

Capital expenditure, net decreased by $3 million compared to the same period the previous year. Capital expenditure, net in relation to sales was 5.4% versus 5.7% a year earlier.

Free cash flow (Non-U.S. GAAP measure, see reconciliation table below) improved by $171 million compared to the same period the prior year, mainly due to the improved operating cash flow.

Trade working capital (Non-U.S. GAAP measure, see reconciliation table below) decreased by $73 million compared to the same period last year, where the main drivers were $172 million in higher accounts payable partly offset by $88 million in higher accounts receivables and $12 million in higher inventories. In relation to sales, trade working capital decreased from 14.1% to 12.8%.

Leverage ratio (Non-U.S. GAAP measure, see reconciliation table below) As of March 31, 2024, the Company had a leverage ratio of 1.3x compared to 1.6x as of March 31, 2023, as the 12 months trailing adjusted EBITDA (Non-U.S. GAAP measure, see reconciliation table below) increased more than the net debt (Non-U.S. GAAP measure, see reconciliation table below) increased.

Liquidity position As of March 31, 2024, our cash balance was around $0.6 billion, and including committed, unused loan facilities, our liquidity position was around $1.7 billion.

Total equity as of March 31, 2024, decreased by $199 million compared to March 31, 2023. This was mainly due to $225 million in dividend payments and stock repurchases including taxes of $476 million, as well as $63 million in negative currency translation effects, partly offset by $541 million from net income.

 

 

 

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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, 2024												Three Months Ended March 31, 2023
		Reported U.S. GAAP				Adjustments1)				Non-U.S. GAAP				Reported U.S. GAAP				Adjustments1)				Non-U.S. GAAP
Operating income		$	194			$	5			$	199			$	127			$	4			$	131
Operating margin, %			7.4	%			0.2	%			7.6	%			5.1	%			0.2	%			5.3	%
Earnings per share, diluted		$	1.52			$	0.05			$	1.58			$	0.86			$	0.03			$	0.90

1) Effects from capacity alignments and antitrust related matters.

Items included in Non-U.S. GAAP adjustments

(Dollars in millions, except per share data)

 

		Three Months Ended March 31, 2024								Three Months Ended March 31, 2023
		Millions				Per share				Millions				Per share
Capacity alignments		$	2			$	0.03			$	3			$	0.04
Antitrust related matters			3				0.03				1				0.01
Total adjustments to operating income			5				0.06				4				0.05
Tax on non-U.S. GAAP adjustments1)			(1	)			(0.01	)			(1	)			(0.01	)
Total adjustments to net income		$	4			$	0.05			$	3			$	0.03

1) 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.

Calculation of “Trade working capital”

(Dollars in millions)

 

		March 31, 2024				December 31, 2023				March 31, 2023
Receivables, net		$	2,194			$	2,198			$	2,106
Inventories, net			997				1,012				986
Accounts payable			(1,855	)			(1,978	)			(1,683	)
Trade working capital		$	1,336			$	1,232			$	1,409

 

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Management uses the non-U.S GAAP measure "Net debt" 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, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore the Company provides this non-U.S. GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

Reconciliation of U.S. GAAP financial measure to “Net debt”

(Dollars in millions)

 

		March 31, 2024				December 31, 2023				March 31, 2023
Short-term debt		$	310			$	538			$	577
Long-term debt			1,830				1,324				1,601
Total debt			2,140				1,862				2,179
Cash and cash equivalents			(569	)			(498	)			(713	)
Debt issuance cost/Debt-related derivatives, net			(9	)			3				12
Net debt		$	1,562			$	1,367			$	1,477

 

 

The non-U.S. GAAP measure “Net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. 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, 2024				December 31, 2023				March 31, 2023
Net debt1)		$	1,562			$	1,367			$	1,477
Pension liabilities			149				159				159
Debt per the Policy			1,711				1,527				1,636
Net income2)			541				489				416
Income taxes 2)			136				123				176
Interest expense, net2,3)			83				80				60
Other non-operating items, net2)			1				3				4
Income from equity method investments2)			(5	)			(5	)			(4	)
Depreciation and amortization of intangibles2)			381				378				359
Capacity alignments, antitrust related matters and the Andrews litigation settlement2)			231				230				10
EBITDA per the Policy (Adjusted EBITDA)		$	1,369			$	1,297			$	1,021
Leverage ratio			1.3				1.2				1.6

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.

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Management uses the non-U.S. GAAP measure “free cash flow” to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on the calculation of free cash flow, see the table below. Management uses the non-U.S. GAAP measure “cash conversion” to analyze the proportion of net income that is converted into free cash flow. The measure is a tool to evaluate how efficiently the Company utilizes its resources. For details on cash conversion, see the table below.

 

Calculation of “Free Cash Flow”

(Dollars in millions)

 

		Three Months Ended March 31,
		2024				2023
Net income		$	127			$	74
Changes in operating working capital			(114	)			(202	)
Depreciation and amortization			96				92
Other, net			14				(10	)
Operating cash flow			122				(46	)
Capital expenditure, net			(140	)			(143	)
Free cash flow1)		$	(18	)		$	(189	)
Cash conversion2)		n/a				n/a
1) Operating cash flow less Capital expenditures, net.
2) Free cash flow relative to Net income.

 

Headcount

 

		March 31, 2024				December 31, 2023				March 31, 2023
Total headcount			70,100				70,300				71,300
Whereof:
Direct personnel in manufacturing			52,500				52,400				52,700
Indirect personnel			17,600				17,800				18,600
Temporary personnel			10	%			11	%			11	%

 

As of March 31, 2024, total headcount (Full Time Equivalent) decreased by 1,200 compared to a year earlier. The indirect workforce decreased by 1,000, or by 5.4%, mainly reflecting our structural reduction initiatives. The direct workforce decreased by 0.4%, despite sales growing organically by 5% compared to a year earlier.

Compared to December 31, 2023, total headcount (FTE) decreased by 0.2%. Indirect headcount decreased by 200, or by 1.1% while direct headcount increased by 0.1%.
 

 

 

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Full year 2024 guidance

Our 2024 guidance is mainly based on our customer call-offs, a full year 2024 global LVP decline of around 1%, the achievement of our targeted cost compensation effects, and a sustained reduction in customer call-off volatility.

 

Financial measure		Full year indication
Organic sales growth		Around 5%
Foreign currency impact on net sales		Around 0%
Adjusted operating margin 1)		Around 10.5%
Tax rate 2)		Around 28%
Operating cash flow 3)		Around $1.2 billion
Capital expenditures, net % of sales		Around 5.5%
1) Excluding effects from capacity alignments, antitrust related matters and other discrete items.
2) Excluding unusual tax items.
3) Excluding unusual items.

This report includes content supplied by S&P Global; Copyright © Light Vehicle Production Forecast, April 2024. All rights reserved.

 

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 and gains 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.

 

Other recent events

Key launches in the three months period ended March 31, 2024

Other Items

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, 2024, 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, 2023, filed with the SEC on February 20, 2024.

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.

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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

As of March 31, 2024, 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, 2023, filed with the SEC on February 20, 2024.

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, 2024.

 

		New York Stock Exchange (NYSE)
Period		Total Number of Shares Purchased (1)				Average Price Paid per Share (USD) (2)				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)				Maximum Number of Shares that Yet May Be Purchased Under the Plans or Programs (3)
January 1-31, 2024			—			$	—				5,111,824				11,888,176
February 1-29, 2024			528,771			$	113.51				5,640,595				11,359,405
March 1-31, 2024			841,286			$	118.84				6,481,881				10,518,119

(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.

(2) The average price paid per share in U.S. dollars exclude brokerage commissions and other costs of execution.

(3) On November 16, 2021, the Company announced that its Board of Directors approved a stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million common 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

 

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ITEM 6. EXHIBITS

 

Exhibit No.		Description
3.1		Autoliv’s Restated Certificate of Incorporation, as amended, incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 22, 2015).
3.2		Autoliv’s Third Restated By-Laws, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-12933, filing date December 18, 2015).
4.1		Indenture, dated March 30, 2009, between Autoliv, Inc. and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to Autoliv’s Registration Statement on Form 8-A (File No. 001-12933, filing date March 30, 2009).
4.2		Second Supplemental Indenture (including Form of Global Note), dated March 15, 2012, between Autoliv, Inc. and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-12933, filing date March 15, 2012).
4.3		Form of Note Purchase and Guaranty Agreement dated April 23, 2014, among Autoliv ASP, Inc., Autoliv, Inc. and the purchasers named therein, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 25, 2014).
4.4		Amendment and Waiver 2014 Note Purchase and Guaranty Agreement, dated May 24, 2018, among Autoliv, Inc., Autoliv ASP, Inc. and the noteholders named therein, incorporated herein by reference to Exhibit 4.4 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
4.5		Agency Agreement dated June 26, 2018 among Autoliv, Inc., Autoliv ASP, Inc. and HSBC Bank PLC, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
4.6		Amended and Restated Agency Agreement, dated February 22, 2022, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein, incorporated herein by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 22, 2022).
4.7*		Base Listing Particulars Agreement, dated March 6, 2024, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein.
4.8*		Amended and Restated Programme Agreement, dated March 6, 2024, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein.
4.9*		General Terms and Conditions for Swedish Depository Receipts in Autoliv, Inc. representing common shares in Autoliv, Inc., effective as of April 8, 2024, with Skandinaviska Enskilda Banken AB (publ) serving as custodian.
10.1*+		Form of Employee 2024 restricted stock units grant agreement promised under Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated.
10.2*+		Form of Employee 2024 performance share units grant agreement promised under the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated.
31.1*		Certification of the Chief Executive Officer of Autoliv, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*		Certification of the Chief Financial Officer of Autoliv, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*		Certification of the Chief Executive Officer of Autoliv, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of the Chief Financial Officer of Autoliv, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – The instance document does not appear in the Interactive Date File as its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104		Cover page formatted as Inline XBRL and contained in Exhibit 101.

* Filed herewith.

+ Management contract or compensatory plan.

 

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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 26, 2024

AUTOLIV, INC.

(Registrant)

 

By:		/s/ Fredrik Westin
		Fredrik Westin
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

 

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