AUTOLIV, INC. 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 endedDecember 31, 2020 filed with theUnited States Securities and Exchange Commission (the "SEC") onFebruary 19, 2021 . Unless otherwise noted, all dollar amounts are in millions.Autoliv, Inc. ("Autoliv" or the "Company") is aDelaware corporation with its principal executive offices inStockholm, Sweden . The Company functions as a holding corporation and owns two principal operating subsidiaries,Autoliv AB andAutoliv ASP, Inc.
Through its operating subsidiaries,
Autoliv's filings with theSEC , 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 theSEC (generally the same day as the filing). The primary exchange market forAutoliv's securities is theNew York Stock Exchange ("NYSE") whereAutoliv'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 inAutoliv shares are traded onNasdaq OMX PHLX and on NYSE Amex Options under the symbol "ALV".
EXECUTIVE OVERVIEW
The adverse business trends from earlier in the year accelerated in the third quarter. Supply shortages of semiconductors and other components led to a third quarter global LVP decline of 20% vs. a year earlier, which was 17pp lower than what was expected at the beginning of the quarter (according to IHS Markit,October 2021 ). The decline in LVP, unpredictable changes in customer call-offs and higher raw material costs resulted in reduced profitability despite significant cost control measures, including headcount reductions. The Company outperformed the global LVP by almost 8pp, significantly reducing the impact of the 20% drop in LVP. The Company had a record number of new launches in the quarter and expects a full year record as well. This includes products to a large number of electrified vehicles, a market that amounted to around 10% of the Company's total sales last year. The Company expects an almost doubling of sales to this market in 2021. The Company is satisfied with its order intake for the first nine months of the year and that the Company continues to implement the projects and actions needed to support its growth opportunities and journey to reach the next level of profitability as expressed by the Company's medium term targets. Despite the challenging environment, the Company's leverage ratio (Non-U.S. GAAP measure) remains well within its target range and the Company declared and paid a dividend of$0.62 per share in the quarter. Through successful mitigation efforts, the raw materials headwind in the third quarter was slightly lower than expected. However, the Company sees new raw material headwinds, including higher magnesium and resin costs, which means it still expects a full year operating margin headwind from raw materials of around 130 basis points. The Company expects supply disruptions to continue to impact LVP negatively in the fourth quarter, and although there are some indications of moderate improvement in semiconductor availability inAsia andNorth America , visibility remains poor. 19
-------------------------------------------------------------------------------- The Company is planning and implementing stricter measures to mitigate the current adverse business headwinds, including capacity alignments inEurope and the US. However, as a result of the significantly reduced LVP outlook for the year, the Company is adjusting its full year indication. Based on an assumption of around 0% global LVP growth for the full year 2021, the Company expects an organic sales growth (Non-U.S. GAAP measure) of around 8% and an adjusted operating margin (Non-U.S. GAAP measure) of around 8%. With the Company's relentless focus on quality and execution as well as mitigating near term headwinds, the Company continues to drive forward towards its medium term targets. This and more will be explored at the Company's virtual CMD onNovember 16, 2021 .
Financial highlights in the third quarter of 2021
12% organic sales decline (Non-
5.4% operating margin
5.6% adjusted operating margin (Non-
Key business developments in the third quarter of 2021
? Significant organic sales decline (Non-U.S. GAAP measure) as global LVP declined by 20% vs. Q3 last year (according to IHS MarkitOctober 2021 ). Sales decreased organically by 12%, yet outperformed global LVP by almost 8pp, mainly due to product launches and positive vehicle mix effects and despite negative geographical mix effects. All regions outperformed LVP by 6-16pp. ? Profitability declined due to the lower sales and higher raw material costs. Adjusted operating margin (Non-U.S. GAAP measure) declined by 4.5pp to 5.6%. Return on capital employed declined to 10.5% and return on equity declined to 9.3%. ? Strong balance sheet and leverage ratio well within target range. Operating cash flow of$188 million and operating cash flow less capital expenditure, net of$77 million support continued balance sheet improvement. A dividend of$0.62 per share was declared and paid in the quarter. Net debt (Non-U.S. GAAP measure) declined, resulting in a leverage ratio (Non-U.S. GAAP measure) of 1.1x. 20 --------------------------------------------------------------------------------
Business update relating to COVID-19 pandemic and other matters
The COVID-19 pandemic continued to impact the Company's business in the third quarter 2021 indirectly through limited LVP by its customers caused by global semiconductor shortage and other industry supply chain disruptions. Third quarter 2021 global LVP was around 17% lower than expected at the beginning of the quarter (according to IHS MarkitOctober 2021 ). The lower than anticipated LVP negatively impacted the Company's sales and profitability. Supply chain disruptions leading to low customer demand visibility and material changes to call-offs with short notice also negatively impacted the Company's production efficiency and profitability in the quarter. Direct COVID-19 related costs, such as personal protective equipment, quarantine costs, premium freight and other items, were around$3 million in Q3 2021 and around$11 million for the first nine months of 2021. Governmental support in connection with furloughing, short-term work weeks, and other similar activities was not material to the Company's financial results in Q3 2021 or in the first nine months of 2021. The Company expects the current industry-wide semiconductor supply shortage will continue to negatively impact LVP, and hence its sales and profitability, in the fourth quarter of 2021. A stabilization of such supply may not emerge until in 2022. The Company also expects adverse cost development from rising raw material prices through the remainder of 2021 and into 2022.Volvo Cars has recalled a large number of vehicles globally, relating to the malfunction of inflators produced by ZF. The recalled ZF inflators were included in airbag modules supplied byAutoliv toVolvo Cars . The ZF inflator in question uses a different formula of gas generant than the formula thatAutoliv uses in its inflators. No liability accrual has been made.Autoliv anticipates that any losses net of insurance claims and claims against ZF will be immaterial. In response to ongoing challenging market conditions,Autoliv management continued to implement strict cost control measures in the third quarter 2021, including the capacity alignments of certain production operations inEurope and the US. The Company continues to monitor the situation closely and further actions are being evaluated.
Non-
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 EPS" 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 withU.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 comparableU.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. 21 --------------------------------------------------------------------------------
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.
KEY RATIOS
(Dollars in millions, except per share data)
Three Months Ended Nine Months Ended
or As of September 30, or As of September 30,
2021 2020 2021 2020
Total parent shareholders' equity per
share $ 29.25 $ 24.05 $ 29.25 $ 24.05
Capital employed 1) 3,738 3,686 3,738 3,686
Net debt 2) 1,165 1,573 1,165 1,573
Trade working capital8) 1,421 1,418 1,421 1,418
Trade working capital relative to
sales, %9) 19.2 17.4 19.2 17.4
Receivables outstanding relative to
sales, %10) 21.3 19.8 21.3 19.8
Inventory outstanding relative to
sales, %11) 12.5 8.8 12.5 8.8
Payables outstanding relative to sales,
%12) 14.6 11.2 14.6 11.2
Gross margin, % 3) 16.3 19.6 18.7 15.1
Operating margin, % 4) 5.4 8.6 8.2 1.5
Return on total equity, % 5) 9.3 19.4 16.9 0.0
Return on capital employed, % 6) 10.5 18.7 18.1 2.7
Headcount at period-end 7) 62,000 65,300 62,000 65,300
1) Total equity and net debt.
2) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular
presentation reconciling this non-
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-
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.
22
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three months ended
Consolidated Sales Development
(dollars in millions)
Three Months Ended September 30, Components of change in net sales
Reported Currency
2021 2020 change effects 1) Organic 3)
Airbag products and
Other2) $ 1,199 $ 1,332 (9.9 )% 2.2 % (12.1 )%
Seatbelt products 2) 647 706 (8.3 )% 3.3 % (11.6 )%
Total $ 1,847 $ 2,037 (9.3 )% 2.6 % (11.9 )%
Asia $ 778 $ 806 (3.5 )% 3.3 % (6.9 )%
Whereof: China 414 425 (2.5 )% 7.4 % (10.0 )%
Japan 160 180 (11.4 )% (3.2 )% (8.3 )%
Rest of Asia 204 201 1.4 % 0.5 % 0.9 %
Americas 596 693 (14.1 )% 2.2 % (16.3 )%
Europe 473 538 (12.0 )% 1.9 % (13.9 )%
Total $ 1,847 $ 2,037 (9.3 )% 2.6 % (11.9 )%
1) Effects from currency translations.
2) Including Corporate and Other sales.
3) Non-
Sales by product - Airbags
All major product categories within Airbags declined organically (Non-
Sales by product - Seatbelts
The main contributor to Seatbelt products organic decline (Non-
Sales by region
The Company's global organic sales declined by 12% (Non-U.S. GAAP measure, see reconciliation table above) compared to the LVP decline of 20% (according to IHS MarkitOctober 2021 ). The almost 8pp outperformance was largely due to product launches, partly offset by negative geographical mix effects as LVP in higher content per vehicle markets such asEurope andNorth America declined more than lower CPV markets such asChina and Rest ofAsia . All regions outperformed LVP by 6-16pp. LVP in all major regions declined by between 13 and 30%.
Third quarter of 2021 organic growth1)
Rest of
Americas Europe China Japan Asia Global
Autoliv (16 )% (14 )% (10 )% (8 )% 0.9 % (12 )%
Main growth Toyota, Ford Hyundai/Kia Xpeng,
Mitsubishi, Mitsubishi, Mitsubishi, Tata,
drivers Ford, Chery Nissan Toyota, Tata Mahindra
Main decline Honda, Stellantis, VW, VW, Great Honda, Toyota, Hyundai/Kia, Honda, VW,
drivers Nissan, GM Renault Wall, Honda Mazda SsangYong, GM Stellantis
1) Non-U.S. GAAP measure.
23
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Change third quarter of 2021 vs. third quarter of 2020
Global LVP1) (23 )% (30 )% (16 )% (24 )% (4.8 )% (20 )%
1) Source: IHS Markit
Earnings
Three Months Ended September 30,
(Dollars in millions, except per share data) 2021 2020 Change
Net Sales $ 1,847 $ 2,037 (9.3 )%
Gross profit 301 400 (24.8 )%
% of sales 16.3 % 19.6 % (3.3)pp
S, G&A (101 ) (92 ) 9.9 %
% of sales (5.5 )% (4.5 )% (1.0)pp
R, D&E, net (98 ) (102 ) (4.0 )%
% of sales (5.3 )% (5.0 )% (0.3)pp
Amortization of Intangibles (2 ) (2 ) (0.6 )%
Other income (expense), net (1 ) (29 ) (98.2 )%
Operating income 99 175 (43.2 )%
% of sales 5.4 % 8.6 % (3.2)pp
Adjusted operating income1) 103 206 (49.7 )%
% of sales 5.6 % 10.1 % (4.5)pp
Financial and non-operating items, net (12 ) (26 ) (52.5 )%
Income before taxes 87 149 (41.5 )%
Tax rate 30.9 % 33.5 % (2.6)pp
Net income 60 99 (39.3 )%
Earnings per share, diluted2) 0.68 1.12 (39.4 )%
Adjusted earnings per share, diluted1),2) 0.73 1.48 (50.7 )%
1) Non-
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.
Third quarter of 2021 development
Gross profit decreased by
S,G&A costs increased by
R,D&E, net costs decreased by
Other income (expense), net improved by
Operating income decreased by
Adjusted operating income (Non-
Financial and non-operating items, net, improved by
Income before taxes decreased by
24
--------------------------------------------------------------------------------Tax rate was 30.9%, compared to 33.5% in the same period last year, where last year was impacted by unfavorable country mix.
Earnings per share, diluted decreased by$0.44 compared to a year earlier, where the main drivers were$1.17 from lower adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) partly mitigated by$0.31 from lower costs for capacity alignment costs and antitrust related matters,$0.26 from lower tax and$0.16 from financial items.
nine months ended
Consolidated Sales Development
(dollars in millions)
Nine Months Ended September 30, Components of change in net sales
Reported Currency
2021 2020 change effects 1) Organic 3)
Airbag products and
Other 2) $ 3,973 $ 3,188 24.6 % 3.6 % 21.1 %
Seatbelt products 2) 2,139 1,743 22.7 % 5.1 % 17.6 %
Total $ 6,111 $ 4,931 23.9 % 4.1 % 19.8 %
Asia $ 2,449 $ 1,991 23.0 % 4.7 % 18.3 %
Whereof: China 1,228 989 24.2 % 8.2 % 16.0 %
Japan 546 488 11.9 % (0.8 )% 12.7 %
Rest of Asia 675 514 31.2 % 3.3 % 27.9 %
Americas 1,903 1,579 20.5 % 1.6 % 18.9 %
Europe 1,760 1,361 29.4 % 6.1 % 23.2 %
Total $ 6,111 $ 4,931 23.9 % 4.1 % 19.8 %
1) Effects from currency translations.
2) Including Corporate and Other sales.
3) Non-U.S. GAAP measure. Sales by product - Airbags All major product categories within Airbags grew strongly organically (Non-U.S. GAAP measure) in the first nine months with exception of inflators. The largest contributor to growth was steering wheels and inflatable curtains, followed by passenger airbags, driver airbags and side airbags.
Sales by product - Seatbelts
Seatbelts showed strong organic (Non-
Sales by region The global organic sales growth of 20% (Non-U.S. GAAP measure, see reconciliation table above) was 10pp better than LVP (according to IHS MarkitOctober 2021 ). Sales increased organically in all regions. The largest organic sales increase drivers wereEurope andAmericas , followed byChina , Rest ofAsia andJapan . The Company's organic sales development outperformed LVP in all regions - by 18pp inEurope , by 11pp inJapan , by 9pp inAmericas , by 7pp inChina and by 3pp in Rest ofAsia .
First nine months 2021 Organic growth1)
Americas Europe China Japan Rest of Asia Global
Autoliv 19 % 23 % 16 % 13 % 28 % 20 %
Main growth drivers Toyota, VW, Stellantis, GM, Great Wall, Mitsubishi, Mitsubishi, Toyota,
Stellantis, Ford Daimler Xpeng Toyota, Nissan Suzuki, Tata Stellantis, GM
Main decline drivers Subaru n/a VW, Hyundai/Kia, Honda SsangYong BYD, SsangYong
BYD
1) Non-U.S. GAAP measure.
25
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Change vs. same period last year
Americas Europe China Japan Rest of Asia Global
LVP1) 9.6 % 5.5 % 8.7 % 1.2 % 25 % 9.7 %
1) Source: IHS Markit
Earnings
Nine Months Ended September 30,
(Dollars in millions, except per share data) 2021 2020 Change
Net Sales $ 6,111 $ 4,931 23.9 %
Gross profit 1,143 745 53.4 %
% of sales 18.7 % 15.1 % 3.6 pp
S, G&A (319 ) (284 ) 12.6 %
% of sales (5.2 )% (5.8 )% 0.6 pp
R, D&E, net (311 ) (292 ) 6.4 %
% of sales (5.1 )% (5.9 )% 0.8 pp
Amortization of Intangibles (8 ) (8 ) 0.0 %
Other income (expense), net (5 ) (86 ) (94.5 )%
Operating income 500 75 564 %
% of sales 8.2 % 1.5 % 6.7 pp
Adjusted operating income1) 506 170 197 %
% of sales 8.3 % 3.5 % 4.8 pp
Financial and non-operating items, net (44 ) (62 ) (29.1 )%
Income before taxes 456 13 n/a
Tax rate 29.5 % 104.4 % (74.9)pp
Net income (loss) 322 (1 ) n/a
Earnings (loss) per share, diluted2) 3.65 (0.02 ) n/a
Adjusted earnings per share, diluted1),2) 3.72 0.95 291 %
1) Non-
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 nine months 2021 development
Gross profit increased by$398 million and the gross margin increased by 3.6pp compared to the same period 2020. The gross margin increase was primarily driven by higher sales and direct material and labor productivity. S,G&A increased by$35 million , mainly relating to higher personnel costs due to extensive furloughing the prior year, adverse FX effects and increased IT and project costs.
R,D&E, net increased by
Other income (expense), net improved by$81 million compared to a year earlier, mainly due to$94 million in lower capacity alignment accruals, partly offset by adverse effects from FX effects and lower government income.
Operating income improved by
Adjusted operating income (Non-
Financial and non-operating items, net improved by around
26
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Income before taxes improved by
Tax rate was 29.5%, compared to 104.4% the prior year when last year was impacted by unfavorable country mix.
Earnings (loss) per share, diluted increased by$3.67 where the main drivers were$3.85 from higher adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below),$1.02 from lower costs for capacity alignment costs and antitrust related matters and$0.19 from financial items, offset by$1.38 from higher tax.
LIQUIDITY AND CAPITAL RESOURCES
Third quarter of 2021 development
Trade working capital (Non-U.S. GAAP measure, see calculation below) was almost unchanged compared to the same period last year, where the main drivers were mainly related to$208 million in increased inventories as a consequence the low demand visibility and supply chain challenges, offset by$41 million reduction of receivables and$164 million in increased accounts payables. Operating cash flow decreased by$164 million to$188 million compared to the same period last year, mainly due to lower net income and less positive effects from changes in operating working capital. Capital expenditure, net increased by 46%, which mainly reflects that the level in the prior year was still low due to the pandemic. Capital expenditure, net in relation to sales was 6.0% vs. 3.8% a year earlier. Operating cash flow less capital expenditure, net was$77 million , compared to$276 million a year earlier. The decline was due to the lower operating cash flow and higher capital expenditure, net.
Net debt (Non-
Liquidity position. AtSeptember 30, 2021 , our cash balance was$0.9 billion , and including committed, unused loan facilities, our liquidity position was$2.0 billion . Leverage ratio (Non-U.S. GAAP measure, see calculation below). As ofSeptember 30, 2021 , the Company had a leverage ratio of 1.1x, compared to 2.4x atSeptember 30, 2020 as the net debt decreased substantially and the 12 months trailing adjusted EBITDA (Non-U.S. GAAP measure) increased substantially.
Total equity increased by
First nine months 2021 development
Operating cash flow was$437 million compared to$380 million a year earlier. The increase of$57 million was primarily due to positive effects from the higher net income, partly offset by negative effects from changes in operating working capital. Capital expenditure, net of$301 million was 32% higher than a year earlier, which mainly reflects that the level in the prior year was still low due to the pandemic. Capital expenditure, net in relation to sales was 4.9% compared to 4.6% in the same period 2020.
Operating cash flow less capital expenditure, net amounted to
27
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NON-
Reconciliation ofU.S. GAAP financial measures to "Adjusted operating income", "Adjusted operating margin" and "Adjusted EPS" (Dollars in millions, except per share data) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Reported Reported U.S. Non-U.S. U.S. Non-U.S. GAAP Adjustments1) GAAP GAAP Adjustments1) GAAP Operating income$ 99 $ 4$ 103 $ 175 $ 31$ 206 Operating margin, % 5.4 0.2 5.6 8.6 1.5 10.1 Earnings per share, diluted 0.68 0.05 0.73 1.12 0.36 1.48 1) Including costs for capacity alignment and in 2020 antitrust related matters. Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Reported Reported U.S. Non-U.S. U.S. Non-U.S. GAAP Adjustments1) GAAP GAAP Adjustments1) GAAP Operating income$ 500 $ 6$ 506 $ 75 $ 95$ 170 Operating margin, % 8.2 0.1 8.3 1.5 2.0 3.5 Earnings (loss) per share, diluted 3.65 0.06 3.72 (0.02 ) 0.97 0.95 1) Including costs for capacity alignment and in 2020 antitrust related matters. Items included in Non-U.S. GAAP adjustments (Dollars in millions, except per share data) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Millions Per share Millions Per share Capacity alignment $ 4 $ 0.05 $ 31 $ 0.36 Antitrust related matters - - 0 0.00 Total adjustments to operating income 4 0.05 31 0.36 Tax on non-U.S. GAAP adjustments1) 0 0.00 (0 ) (0.00 ) Total adjustments to net income $ 4 $ 0.05 $ 31 $ 0.36 1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Millions Per share Millions Per share Capacity alignment $ 6 $ 0.06 $ 94 $ 1.08 Antitrust related matters - - 0 0.01 Total adjustments to operating income 6 0.06 95 1.09 Tax on non-U.S. GAAP adjustments1) (0 ) (0.00 ) (10 ) (0.12 ) Total adjustments to net income $ 6 $ 0.06 $ 85 $ 0.97
1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).
28
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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)
September 30, December 31, September 30,
2021 2020 2020
Receivables, net $ 1,575 $ 1,822 $ 1,616
Inventories, net 922 798 714
Accounts payable (1,076 ) (1,254 ) (912 )
Trade working capital $ 1,421 $ 1,366 $ 1,418
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)
September 30, December 31, September 30,
2021 2020 2020
Short-term debt $ 364 $ 302 $ 1,026
Long-term debt 1,687 2,110 2,007
Total debt 2,051 2,411 3,033
Cash and cash equivalents (903 ) (1,178 ) (1,477 )
Debt issuance cost/Debt-related
derivatives, net 18 (19 ) 17
Net debt $ 1,165 $ 1,214 $ 1,573
In 2021, the EBITDA calculation was redefined to exclude other non-operating
items and income from equity method investments. EBITDA and Leverage ratio in
prior periods have been recalculated resulting in minor adjustments. The
Company's policy is to maintain a leverage ratio commensurate with a strong
investment grade credit rating. The Company measures its leverage ratio as net
debt adjusted for pension liabilities in relation to adjusted EBITDA. The
long-term target is to maintain a leverage ratio of around 1.0x within a range
of 0.5x to 1.5x.
Calculation of "Leverage ratio"
(Dollars in millions)
September 30, December 31, September 30,
2021 2020 2020
Net debt1) $ 1,165 $ 1,214 $ 1,573
Pension liabilities 231 248 239
Debt per the Policy 1,396 1,462 1,812
Net income2) 511 188 155
Income taxes 2) 224 103 68
Interest expense, net2,3) 62 68 66
Other non-operating items, net2) 14 25 17
Income from equity method investments2) (3 ) (2 ) (1 )
Depreciation and amortization of
intangibles2) 400 371 359
Capacity alignments and antitrust related
matters2) 10 99 108
EBITDA per the Policy (Adjusted EBITDA) $ 1,217 $ 852 $ 771
Leverage ratio 1.1 1.7 2.4
1) Net debt (non-
2) Latest 12-months.
3) Interest expense, net including cost for extinguishment of debt, if any, less interest income.
29
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Headcount
September 30,
September 30, 2021 June 30, 2021 2020
Total headcount 62,000 64,500 65,300
Whereof:
Direct personnel in manufacturing 44,200 46,400 47,300
Indirect personnel 17,900 18,000 18,000
Temporary personnel 7.7 % 9.1 % 8.8 %
By September 30, 2021 , total headcount decreased by 3,300 compared to a year
earlier, reflecting a lower production. The indirect workforce decreased by
around 0.6% while the direct workforce decreased by around 6.6%. Compared to
June 30, 2021 , total headcount decreased by around 3.9%. This was driven by a
decrease of around 4.7% of the direct workforce reflecting a lower LVP, while
the indirect workforce decreased by 0.6%.
Full year 2021 indications
The Company's outlook indications for 2021 reflect continuing uncertainty in the
automotive markets and are mainly based on the Company's customer call-offs and
global LVP outlook according to IHS Markit, indicating a full year 2021 global
LVP growth of around 0%.
Financial measure Full year indication
Net sales growth Around 11%
Organic sales growth Around 8%
Adjusted operating margin 1) Around 8%
R,D&E, net % of sales Around 5%
Tax rate 2) Around 30%
Operating cash flow 3) Around USD 700m
Capex, net % of sales Below 6%
Organic growth vs LVP growth Around +8pp1) Excluding costs for capacity alignments and antitrust related matters. 2) Excluding unusual tax items. 3) Excluding unusual items.
This report includes content supplied by
The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. The Company has not provided aU.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 endedDecember 31, 2020 filed with theSEC onFebruary 19, 2021 . 30 --------------------------------------------------------------------------------
OTHER RECENT EVENTS
Key launches in the third quarter of 2021
Kia Sportage: Driver/Passenger Airbags, Seatbelts and Head/Inflatable Curtain Airbags.
Toyota Corolla Cross: Steering Wheel, Driver/Passenger Airbags, Side Airbags and Seatbelts.
VW Taigo: Steering Wheel, Driver/Passenger Airbags, Front Center Airbag and Seatbelts.
Fiat Pulse: Steering Wheel, Driver/Passenger Airbags, Side Airbags and Seatbelts.
Rivian R1T: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Seatbelts and Knee Airbag.
Nissan Frontier: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags and Knee Airbag.
Wey Latte: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Front Center Airbag, Seatbelts, Knee Airbag and Pyrotechnical Safety Switch.
Toyota Aqua: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags and Seatbelts.
Other Items
? OnAugust 19, 2021 ,Autoliv announced that its Board of Directors declared a quarterly dividend of$0.62 per share for the third quarter of 2021, which was paid onSeptember 24, 2021 to the Company stockholders of record on the close of business onThursday, September 9, 2021 . ? OnSeptember 22, 2021 ,Autoliv announced that it strengthened its insights in automotive safety and the wider mobility safety arena, asBryan Reimer andHasse Johansson joined theAutoliv Research Advisory Board .Bryan Reimer , Ph.D., is a Research Scientist in theMIT Center for Transportation and Logistics , a researcher in the AgeLab, and the Associate Director of TheNew England University Transportation Center atMIT . Bryan's research seeks to develop theoretical and applied insights into driver behavior, an area that is highly important forAutoliv .Hasse Johansson is a member of theAudit and Risk Committee atAutoliv and a member of the Board of Directors at the Company since 2018. He has a background asEVP Research & Development at Scania and experience of transformational innovation relating to automation, electrification, and connectivity, which are all vital areas forAutoliv . 31
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