VNE - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the Veoneer Q3 2018 Earnings Presentation. Today's conference is being recorded. At this time I would like to turn the conference over to Thomas Jönsson. Please go ahead, sir.

Thomas Jönsson

Thank you very much Odra, and welcome everyone to our third quarter 2018 earnings presentation.

have Financial President myself, Officer, Communications IR. we Carlson; CEO, Thomas Stockholm and Chief our Mathias in our and Chairman, Jan Jönsson, Here Hermansson; and

third will on our our are the in targets. making financial particularly After results and our around on also comment some During session, provide Q&A progress we on we link and available Veoneer on slides look CEO intake and short-term. this, commentary earnings the the progress our our call, on commentary and today's long-term the some quarter order towards results, Then are homepage mid will will site. remain a course for line on of CFO of Web corporate our through

we that follows. we Safe integrated the the an is if Harbor Q&A of which turn this includes part page, have presentation, Statement, So

the are filed to these the call PM. quarterly press will Reconciliations During we at conclude presentation, and of that some non-U. measures. We disclosed X:XX intend in the GAAP SEC. XX-Q S. will figures this reference release with be

kindly ask the our everybody microphone Jan to limit please? two questions. themselves would And now with over I So CEO, Jan, Carlson. turn to that, I to

Jan Carlson

everybody call. to Thank you, Thomas. Welcome today's

and our would progress while Before dedication significant for up order great the we get during to time like we support and at same with the today running, get entire intake. started I company our and thank the to Veoneer team customers third quarter

-- other headwinds. with Looking to and our business some near macro these term environment

third on uncertainty fluctuations the sales also in near as in vehicle as into vehicle the growth continue Europe could creating light around effect are term first-half drag a and the despite of strong production of immune prospects, we U.S. vehicle light which SAAR quarter. to development production, are the and China, negative XXXX. said the in WLTP production before, well Western we've As underlying The as we our saw during company's the not

the these to affecting the things U.S. in of second-half dollar this sales fluctuations All currency year. mainly during related of our are results financial and

to start launch a longer we sales XXXX Veoneer some see long-term even challenges, further complete engineering a will we very and through if see these production a little and Looking ramp-ups take for the the to strong materialize. delays we impacting XXXX the as readiness, need growth revenue optimistic future slower medium-term, to with and of Despite still profitability. little

the of of pleased Looking now Investor progress since June. to beginning the progress our at very May with on and end next our customer we're customer our slide, Day

third equivalent Our the intake X.X around of strong on basis. lifetime in last through end contracts months. XX tailing over the the to billion order This sales average is billion quarter the $X.X is XX-month roughly

contracts secured portfolio. resulted which customers, And and in the to months, the and four two including we with LiDAR. These ADAS Xth a summary, illustrated table, we new have text increased by all we with significantly Robo-taxi OEM. in Monitoring based now the with list. point customer competitive we this on all pursuit written over nine includes and on customers, Detroit third These strong application. last our very our customers, have Vision become brake call. penetration our seem taking the added Driver are As our have product earnings a additional Xth customers last bid our ECU to customers satisfied to exception Three to in of In activities instance mentioned customers, new orders the have areas technically our qualified three product relevant Xnd the lastly, an system

order our a continued October pace. strong on Looking momentum into next has page, the now intake at

the over are a vision, premium sales OEM, we reinforces satisfied record with XX and more fluctuates RoadScape, our First to software our level OEMs and and order is we they first Mono existing important Stereo Zenuity end has to for of should supplying average capable XXXX with both weeks of scaleable, Feature the than stack Controlled in but mentioned wins have only the award intake order intake up annual And is mind stepped a months. customers Radar, features full-year. that last have only which three did $X.X additionally, quarter-to-quarter the Software ECUs secured business as additional ADAS and month-to-month This the very result that have October, that Systems. high lacking. of We maybe on of Restraint quarter During before, in not keep billion and

engineering now important investing differentiator technology marketplace. for is in on to an next the in page, engineering Looking Veoneer and the

During this months. the $XX that software call believe hired means we increase now this we around increase third X,XXX compared XX XXXX. million XXXX. XXX that our we over We as are our indicated the to be last million have expense by XX We around which RD&E hired approximately year will XX% the engineers, last earnings now quarter, engineers, skilled year-over-year by time where would during conclude

our now launch on Zenuity update I page. we the market will the this controlled NVIDIA Super software our target all provide stack units Xavier quarter, progress to Zeus on Computer targets during driving and This key Based unit grade for the control to During technology hosts and of these applications. the autonomous XXXX. to previously-announced automotive a introduced developments, next platform. the We utilizes

order slight sales along upside target, total $X active billion certain target, in wins. XXXX we business the to our and particularly $X later we strong exceed comments, our downside we the delays our XXXX sales Based and in intake, total likely strong with sales active remains a and in customer result As reach risk safety portfolio, the customer $X introductory sales to production slightly therefore some sales. I in some are relationships in developments in see a $X expected safety this, These potential ramp-ups active for start in of mentioned previously on billion track attractiveness the my than billion Despite models, delays on the short-term billion anticipated. XXXX. slower see to of safety of to in

signs to that growth quarter-to-quarter deviate two these for business, system further intend intake to for While to around our now To of Mathias, further higher sales from further future timing in quarter. investments communicated. our This forecast. leadership difficult encouraging, order X% safety, the it to significantly zero means future investments the active that making can income advanced support are we I and we will the investment later than know intake, exact we for in the over operating order continued anticipate and increase comments decision previously our CFO one turn growth target years now between reaching to RD&E. long-term

Mathias Hermansson

Thank move you, the we for slide next can and if to the quarter Jan, highlights.

our for Jan around we As slightly the XXXX. operating our third performance declined same quarter Overall affecting X% to near-term anticipated. than where the as mentioned adversely quarter results net earlier is short-term macro by compared in environment the was sales consolidated

is internal our loss quarter result some look this into consequence quarter. was $XXX lower However, At slightly the than was the the our million than operating this of details then Slide X. further lower of the in sales million the expectations. on the following sales $XX beginning for roughly of million expected higher the we slides, If $XX

can standalone cost first The look upon the third time a as -- we Veoneer where quarter as full company. was

from Our and expectations. as line $XX headwind RD&E $X sale The million company of decline in cost largely developed quarter comprised lower quarter increase $XX to $XX and to course. of $XX expected is the increase profit a of organic $XX the largely volume increase gross decline the $XX costs of compared sales million million was QX same our additional were attributable million higher last of The a currency sales was X.X% this or standalone organic million. associated as to from SG&A quarter. with X.X% a of the the being million was currency to or as was mix in last in year listed an and in mainly than related mainly product $XXX with net year the with own impact effects decline million year-on-year minor year-over-year million and

at operating of was slightly minus in positive than tiny for impact million better expected. difference quarter. this in gave previous level was A revenues, with with the the quarter communication. and we is in look CapEx $XX single-digit The flow you If percentage was ended a high particularly line cash our working capital the which

in major are our the our the continued on sales indication have XXXX. sales as Consolidated half decline XXXX around XXXX we X% reducing rather following our decline be full-year of lower compared markets the organic X% second on second are based to and the and market of U.S. previous updated slides, XXXX, Looking the the a earlier the due we around in to declining our for half during strengthening conditions net the to the LVP of sales indications. indications. Consequently, of than XXXX than full-year -- dollar of our in weaker indication now expected now now full-year to

around quarter In largely and hiring addition, consolidated at Based are for year sales the the we RD&E XXXX we net engineers rather to to quarter indication, $XX the full-year the for year-over-year net from X%. X% as increase now to mentioned. last Jan to sales earlier quarter rather third of current the same this levels million translation on the flat expected expect all full-year the remain the to than due the third This X% as tailwind full-year compared decline XXXX around as is fourth to than reduced anticipated.

cash of aim to long-term And a are to liquidity, we over any clear, the need additional ahead solid Lastly, no given $XXX able to advantage we order that position to be we updated to with the as opportunity financial today investments of conservative raise million of a few have outlined. continue on attractive full in course, take we us. we to well-financed words even have have see capital this be and

we acquisitions May also weakness. liquidity I short-term think excess in and Going buffer. fair our capitalization is say Investor buffer a have the would And as as well by to now that increasing RD&E bolt-on at in being our said it's investments providing Day this our back what used to cover

will turn to So Jan some now I comments. closing back for

Jan Carlson

to on organizational taking out I the Thank we release probably step of refining many we you, drivers the you product important are structure affect you equally and refinement transparency update a our speed company press segments, simplify create difficulty] seen our product live regarding of that an segments. roadmaps give our sent wanted as electronic brake to as are to announced and Matthias. and company within organization standalone our electronics change that yesterday an [technical a yesterday turning We for by cost next into The organization systems. our stronger page organization. the have organization the improve not with refinement as major By reporting will product efficiency. this to and just the development a This and

today's would guide us like now with would we the So, the through turning I instructions back this thank for remarks, by to open the A A. page, Q formal say word concludes and to Q call and you. this you, I And and that the the for leave to presentation that session, for up Odra,

Operator

We'll first Thank at Leiker go Instructions] to you. [Operator David Baird.

David Leiker

morning, Hi, good everyone.

Jan Carlson

you, to good David. morning Hi,

David Leiker

of in There Sorry, good dig at there. flatter expecting the guess. comments like sounds out what happening are XXXX, slower curve you I was you then wondering -- I pace I -- wanted just are there than it some than and about the the there. drill I the I rate win is think contract into of pushing three targets you say the of was what's to timing know, more each there's little you detail XXXX ramp bit delays if those of just of thought. would -- things we new launches, is afternoon a you, wins the that for heard to down exactly

Jan Carlson

essentially two parts. It's

pushed are our in production take ramp, our at product is are of validation pace. place ramp-up the meaning the launch the technology same essentially the the delayed in at essentially time. original thereby Some and of needs that driving and the to meaning start out, readiness our program and cost also on time But and the the connected our the same that models to programs

to come contributing However, pace. is the this. at sales factor will slower one That

is that the orders that other a to order contributing to factor XXXX you get orders recall Day for May order XXXX get diminishing sales good already The is when the concluding if in reviewing the we that and we even Investor at if order intake we all is for that this. to zero strong will not today, intake, booked generate down and have other that said factor in to book is getting are nearly

David Leiker

then if in or can level safety is projects? the your know, characterize is level X is of look at related, type level And you Okay. this business, those whether it of X delays, ADAS we X X level you it act part

Jan Carlson

It's X of type X level level projects.

David Leiker

Okay. seemed slower pulling more forward than people your up, -- in one you're And seen ramping expected. win of because one, the when just RD&E the were it these RD&E rates slower wins we'd then quickly seem and launches those that going bigger to the was also last this happen, face or

This storefront need and they So spend that? a bit little seems different.

Jan Carlson

ramps and be to that order it's have the we not slower are intake. board across clear we seeing lower that think I Well,

intake are a here some the -- strong to models a throughout is that essentially are programs board What few our plan. and here. we think across order all This is clear according we are I order mention seeing launches seeing to be book. in we not the a are delay

David Leiker

Okay.

Jan Carlson

for the we strong And efforts the programs are we case. of engineering intake. -- mix is mentioned them. it's but the engineering a also or facing here planned, Those strong taking throughout order to more year, support order strong somewhat it's have essentially but have also complex both the we of is order than one intake the intake are several that a originally under driver we But in that a facing, this in are have that is stronger intake our that we increase

David Leiker

very you for Okay, Thank your great. much time.

Jan Carlson

you. Thank

Operator

Handelsbanken. Andreas move We'll Åkerlund next at to

Andreas Åkerlund

geared is about you previously and send me business significant the Two Robo-taxi talking much Thank this bit still for is so questions could and and question. first that saying level source and much. cars I'm a your software you Handelsbanken. maybe four, you making passenger decision wish for redundancy with about very this if a the you're I a discus, of the are little source. noticed using opportunity my in LiDAR development to to maybe change talk also your asset camera primary That's

Jan Carlson

a here the control we that software. and here. There hardware, advance ADAS this ADAS also is work. not this is that Yes, not for tight which so is application and control that a is are that This this that a unit this change computer an producing, are we of side with itself it's doing a hardware an the very on is is submitted cooperation the OEM majority

Andreas Åkerlund

level no you from software So there's five guys.

Jan Carlson

our No, from there ended five is level case. no software

Andreas Åkerlund

on to and safety much is understanding this push electronics maybe and this Thanks. Can how back talk the the still for the maybe much you future and center clear about of little and an to in this and bit Controlled discuss if test outlook change be if I a here also is can to how out. it active come also would Restraint phase since that playing made get

Jan Carlson

order so to is And here now and Control is mentioned in softer in XXXX, are Restraint This in joint comes so program will we intake XXXX well delayed and a up have and water delay, the ups as Controlled the that ramp have our said the causing models That and large one is very to will related ramp years to this we to way very Restraint its where good essentially pushed few happen side. then are take major extent strong. in period this the on is ago I it's is models all to delayed. that this ramp as push on platform if out launch on before we it side safety seeing on active on when due out is this an and that Restraint intake Restraint happen order Control to a start and models right that to look the active that some we and Control as slower but intake you the that are order see from

Andreas Åkerlund

say which it me, the you sales get also driver back will that in would to or the for for is increasing organic on a expansion or profitability lower of or the operating lower certified this final So target business from is is leverage profitability growth. into the change more major

Jan Carlson

lower it's said of And sales, it profits but a of we see combination lower the gross you increased the as majority investment. related to is

Andreas Åkerlund

especially way Right this the and time, problems any just any seeing clarify if that related this we're one to on for OEMs. me German delay on to

Jan Carlson

No, it's that. not related to

what to of or here is to we now I we launches light are customers to see delayed strategic say market on not here in risk related can more our or uncertainty years the adjustments than see any think it's this two it's about talking the pattern facing production can current that you very so out, WLTP vehicle that hard matters that.

Andreas Åkerlund

Okay, much. very thank you

Jan Carlson

you. Thank

Operator

next our question Vijay take at We'll Rakesh from Mizuho.

Vijay Rakesh

guess just still great fair but of you like a on are is of can the been validation times been trending last Yes, color you know to and just if what some the order time with all slower and ramps couple did questions. give quarter. ramp has it for as up on about say a us talked is orders some intake start Thanks. I I are the have the year-on-year extending so

Jan Carlson

to now the right talking is also a good basis it with are we trailing as has quarter mentioned four. the and start $X.X trailing intake delays the order up, we of validation the of the story. nothing and on so intake on ongoing there for even situation delay their today, on model this that month ramp the of XX when it month of part related X.X, on we're order a do look about now, to the you to or we that's as to If it's on billion comes XX mentioned so This quarterly program

end mentioning intake on LCM from XX-month. but made very the it that's big the important year also vary ended and line can there strong the thing quarter, on we time all order another into that billion basis of of previous a is because the for date that was remember quarters today sometimes and a discreet Now the of than to that have LCM trailing how last and may they've certain very orders strong it all very XXXX as basis time-to-time higher remember and note to $X.X trend so us is not

Vijay Rakesh

when on that sooner what regulation or you say Got you would it plays and on the still are think having how see resolving the that WLTP side that of lot expect you to do but elevate emission do to recertification OEMs I going out?

Jan Carlson

testing they I up the visibility give one certain saying view two say I are when very have now this and you. We honest ramping of of have to some I'm right stay intuit this we little through models this be on talk others customers, is to now right are out but am and don't some with our and speculating customers their good most are to a

Vijay Rakesh

question Got looks on on, software last pipeline some how software idea it the us you and about vents, going the side forward? give can you talked some the

Jan Carlson

one we as said and have we our are earnings are said on for Well, customers involvement. working two Zenuity we last software, in we for before call between working

before get the yearend year one before the to here still are working and. We hope to on customer

up still in is that running. So

Vijay Rakesh

Alright, thanks.

Jan Carlson

you. Thank

Operator

Capital our from Markets. Joseph next at RBC And Spak question comes

Joe Hyatt

that like sales Hyatt is your to the be any metrics requirements guidance is Joe if you for are, you. that, about I for requirements be Spak, R&D you're forward forward. really could some question increased guys should about sort sensitivity funding we are the right raise don't in on moving release do quick cash capital the hear there like that cash you new like of Mathias of to Joe looking like additional burn moving any new to on some for however to think that understand required thank see on just how now This business think Yes, warn we because in need you so capital funding your burn to saying should we'd how know new kind

Mathias Hermansson

I'm that two thanks. getting Right, point. things to

this of acquisition bolt-on something. have company come cash we're well I of call in I and them bolt-on they the fairly fourth to weaker we these the to had managing to you that do that, will we ramp when quarter looking way and When third acquisition the cash one think top as it. if before strong look that to on we're look also want may quarterly I then when that we think as them you in history we to CapEx is outflows, up quarter I continue you operating the think little best mentioned at think flows on at to remember acquisitions link that see the of back done bit that, about the that obviously productions. look that you you the is well we some and almost may we've capital the talked cash some at flows And to it probably of we saw are comes I capital probably think in into

quarterly I think actually way if cash that is to at look net follow flows. easiest you

Joe Hyatt

what would from these acquisition raise a bolt-on push enough squeeze guys as then bolt-ons And there a to about I mean become bolt-on you if kind capital Okay, willing an you or perspective. cash starts on says we look, when that's you to think on are helpful. off would the you attractive then the see cash of guys,

Jan Carlson

it. I just to to this think little now right need I bit talk but this right early we any we're and for business talk early right into it's way about it's now don't now a see months too think about three

Joe Hyatt

That's helpful. Okay, thank you.

Jan Carlson

Thanks.

Operator

go Golrang SEB. at We'll Eric next

Eric Golrang

you. Thank

on there you only on, software OEM global Zenuity the there clarity with talk some First the first about major on side. with except a

Jan Carlson

Yes.

Eric Golrang

two. means the that of that one of Sort

Jan Carlson

an of not bigger a the have No, this the like feature that we LX software program set. like a beyond one of two software it's is system, feature the software that part is so that we're take saw where we a that about, talking

Eric Golrang

bigger will I of the one the potential two for one. so then you're still open see, sourced ones

Jan Carlson

but I we're this the that aim didn't take I for one say was with year. lost working with

Eric Golrang

that Okay, teams to mean happens there and around these wait business but second now we though until order even question, coming in sort I could could until to out then should XXXX XXXX as terms XX pickup into to you growing actually you trying turn when have the the of on even organically some doing that in have now anecdotes before we is at with wait XXXX? point will

Jan Carlson

We towards the have the Day in is our statement XXXX this. in and was probably yesterday they affect of said that predominantly out come in change you of XXXX that end recall and Investor XXXX going that and now XXXX to this ramp come essentially coming will in with that

Eric Golrang

thank Okay, you.

Operator

at Stanley. We'll Greer to go Victoria Morgan next

Victoria Greer

through correctly $XXX free about maybe $XXX X.X% on you've breakeven to Couple right a calculating the negative million that about will a free two an the flow on that side, roughly think could say on magnitude one those when pretty you your cash delaying would negative talk another balance that, on cash for or that's raise as years, about be that breakeven talking capital about target, or if a we and got slightly want to so cash EBIT cash the that please should additional if need sales numbers about and significant of and of because if margin, just significant to achieve help two flow, think the the but quarter EBIT us point you afternoon. I sheet pretty change what the great? be expectations secondly at at it's then to year exact negative free I'm Good the you're you XXXX and think later but to million say no fill time

Jan Carlson

Those have If get upside coming earlier fair you to target. and and the to That coming during some of earlier XXXX the upside through. we other on XX be so mark are risk a of rather or opportunity XX, then is have numbers we XXXX four billion risk there now times if later each will closer see opportunity than XXXX look XX. the that have than to than is downside meaning moved target risk XX

Victoria Greer

So sometimes during XX okay. for the billion, $X

Mathias Hermansson

think you your to we of plans is project when we and now. Mathias, there's of XXXX is that question, what XXXX given at will the yet it and coming indication things that kind second not mentioned the the gives statement up and think and down a mostly up we we when about audience. decent had end standing, our on is of that in full down we I as onset And you in confident to so way started that the increasing for the I liquidity in now up the Hi, as much model lot think obviously well you and out But we've and are remarks that mainly for incremental the well we're uncertainty I my earlier what probably obviously using have is it still here our made in for that, a down. buffer or estimate buffer paid or how

of lot changes. could I a see So,

Victoria Greer

give EBIT zero by to numbers that's margin roughly? some sort just have around that free would cash a maybe about it if say let's But thought of I started $XXX the flow a right million us negative I

Mathias Hermansson

it I if you and funding that think you the Zenuity its then of mean I have should outside I the CapEx. we also think two look about things at is

we back we on I have development long change how think specifics those think our I capital given if some don't look you I see term think material. markets there that's to

Victoria Greer

Okay, All right. Thank you.

Mathias Hermansson

Thanks.

Operator

We'll go next to Ashik Jefferies. Kurian at

Ashik Kurian

the going to try one. again question. first got Thanks I'm I've was for what asking. taking two my Victoria

will flow cash you rethink is at two two to if being target. redone EBIT I adequate breakeven flow free cases would mean have read or initially breakeven when still breakeven said after, I And that up could which free previously $X revised you to breakeven cash billion you are give to years the billion from billion decided would funding been number one to what $X.X think be exercise. down exercise as still you have be color us some now the the the after has we'll said we you revised the looking can I would also the $X that think a on if funding years initially achieved been Veoneer what

Jan Carlson

I you out first go largely can from two. figure second strange now so one it's helpful. think think question on I it's to to the think but, little think was around it's bit I answer. And four the obviously the closer backwards speculate it's After one forward think questions, but at I I think probably question I frank to that doing from probably

Ashik Kurian

implying in on improvement that the you ready XXXX? The your all be the XXXX you step more into mean XXXX it order effective order increased fourth seems intake. in the that the you guiding terms have would second we increase maybe that you is flattish would I have last in expected strong baked R&D what check right the questions probably like quarter the on or growth the placing spending intake or have to assume R&D lawsuits and targets but losses of revenue will seems just you're on XXXX drivers then probably the is you're deliver I ongoing an on are have up And in should R&D what I I intake XXXX you order into the level is then in following as and there further because R&D for your but control of it to think travel what extrapolate against and and granted would in even that have and what like is you on

Jan Carlson

your sorry think years one probably well as will probably The I think over and in we what -- also twice? say. extrapolate increasing see union we first the as right it if the sorry into R&D two in got now bear the you again trend, part the to next order see we I running mind over the that really in to that would something the year, forgot that second and our I you you May should cost, next the one first new first you that XXXX and repeat almost which in I try coming I think effect so pointing think, question costs, the thing can I this that income I think fourth as main stock from R&D should that quarter that is have

Ashik Kurian

more beyond to that the and see No, right just up what seem what is on or we hit target, the the increased XXXX losses the first out criteria continue stepping on factored is is check the because that you to risk of question just what R&D to to with you you the coming should could your the is are like least that, order and what cost spend increase. increasing criteria is at have so R&D R&D because handed to you you have basically internal the you intake are XXXX know control curious which

Mathias Hermansson

order obviously our we intake I driving that there that's there the think see the so basically good is work original we than obviously. one a and stronger is have in to think aspects it thing more plan, which three then had are of

bit that And some projects also are from little good elements think ones, of third kind stronger we we I accelerate the a R&D and to on that obviously see I so think that think in the running our that. one Vision that we there's we that are the those traction new we initially orders, pure than were see also anticipated. our and also so spend on particularly complex, three development, of business different is to quite higher increase build us product want some cost so I the fairly

Jan Carlson

think see technology and innovation speed of fast the how for in it's that this and customer and here innovation demand all essence R&D there we driver industry I the the is in moving.

the for If applications. look our to to showed controller area book for during now we you hope business capture being to advanced and the here order computing here track able first quarter record ADAS by an that robot

it be to per a the for We be driver demand And of this four requiring applications. to R&D able and orienting. requirement part is but is our basic the demonstrating are customer for Supercomputer level

Ashik Kurian

you. thank Yes,

Operator

We'll at Johnson go next to Brian Barclays.

Brian Johnson

and Florida Mobius so and and much Bosh, them sunshine active lines an light probably I safety, or think ask always are Intel along you competition so afternoon, see ADAS of as we resellers our there is Hyundai, your good competition the active and enjoy year. by be competitive to primary alternative, who Denzel related certainly your where invite can with dominated about forth. landscape there's time Yes, Magno OEMs might winds. the looking or for you the do conference night want in Mobileye in this time particularly most your your when Winds, and these its when are you're restock you et cetera, a at market vision the of more to they you Conti, as wins, it's about

Jan Carlson

sure intakes and I not on by that think nation competitor. market, longer dominant there order I'm market and on this a how is one we them both new see that

this competition to integration looking like technology Mobileye we they on even been where others we how more vision think than that and have a systems are Intel is on so we a that's actually belief. But that I little where meet with strong system compete depending all have that. win is to area very may we in related the we situation we side able those are compete relatively in computing where level out product and in area advanced radar bit them on speaking and and compete where that's our boxes but and

Brian Johnson

is an over which is where you if just of autonomous give early of metric and us world on has late Okay, Zenuity apologized of on a from road the in collar been it the whole certainly update second fire, rolled another question because you fairly becoming terms fleet in did supplier of can driving obviously then car where this. truck at company of over there confusing but are side. autonomous is Progress the us then both opportunities any pursuing frankly are for look between obviously course people the partner and companies of but them Volvo, kind efforts companies the how and are different of two car company truck it Volvo and

Jan Carlson

that And for road around thirty And each daily cars are communicated we we in over running. terabytes that as them related we directly where to to have we in are up vehicle hire collect on we people Zenuity continuing of data a XXX eight all been and the Zenuity. are total of

and We people we there in have expected to by around now people are XXX be Zenuity. around XXX

together so course beyond we corporation So program our are with a really good on with we and OEM of in to people we the we the with then we where Volvo also work out Zenuity. is really that and we that no what between change that the seven working levels plan so on same pursuits is communicated. allowed car other that to this attraction took commenting we and lot to have are where But of were of earlier stay so in making Volvo a relationships have with, on good we area communicated LX we at five no that until still deviations have that and Zenuity no that from progress do, seek in one the according

Brian Johnson

other or partners? stakes many in automakers quarter GMs an to other stake crews or open for equity about took in equity corresponded technology you talking any the Okay, are

Jan Carlson

or we'll an it's how it I'll happen if and may be a one by will may auto there come see the say so on evaluated board, commenting of or and course, if will. such when here any earnings proposals that to be case call on that

Brian Johnson

Okay, thank you.

Jan Carlson

Thank you.

Operator

[indiscernible]. next go We'll

Unidentified Analyst

good the afternoon, so stands momentum intake that mean of just vision bit player. well Mobileye basically but on your given as ecosystem competitive the does here could touched if the in market you're in you a for landscape this we actually the that Yes, already of kind vision upon here, that terms I elaborate order of taking of customers current majority the from

Jan Carlson

Mobileye XX, today been out, sales with the leader cases so case. believe, you they products, for been We out a could were as area around terms company the be much, Yes, because much share or in say earlier so that are they we their may years sales their have at market in higher. more XX much that definitely some in definitely have is acknowledge

order relatively since fast short be to today with find with and the have We strong very able sides intake into catch be I such and to suites from been in time. period able it up to condition encouraging out position get to XXXX our our of that our compete

difference as how investments, this be based focus, might maybe product of course, off that the build-up really and possible, see But the Mobileye on it like on. in later recoupment we look payoff, from heavy engineering investments materialize taking paying is and the R&D between will This will resources we sales Of in order that the and later that on we see there heavy will so. are us making so intake. heavy we Mobileye see so

Unidentified Analyst

you. thank Right,

going that question feature final some have could here, the a strategic set? sales software first will feature priorities, with color software sale here more change your for that level the Just I X on if whole Thomson, we dedicated than the mean is on something rather

Jan Carlson

have more other instead priorities of avenue may part major a would OEMs is as maybe that we will careful sales intuitive a approach wouldn't we should for is the we feature apply this but change interesting maybe it our whole software set you a I well no market change bit tell look going it can may That strategic for different, I validated. that say OEMs for strategic and certain to existing little more features stacks. and software or full as there of but where

Unidentified Analyst

Thank you.

Operator

move we Agnieszka Vilela Next Nordea will to Markets. at

Agnieszka Vilela

how you Thank of Thank two lower have now? you. through regarding face kind they is guidance, right upside you. have to Number I one being fact questions. guidance XXXX can that that company see given is confidence your the the

Jan Carlson

have out that plan if that's is vehicle on the at year to fact if what actually IHS light hold that numbers the to, production on than but something on have do us varying The are we you targets. look the based some an due we and guidance baseline for is we the order give cycle base the you given traditionally to have intake The to of will to whole have upside market, are customer we comparable. course anticipated seeing exceed for stronger interest the vary to opportunity the XX and that us this we fact

Agnieszka Vilela

cost what or you. organization, kind you they of that? you be your if on enhancements refinement comment can that with then say and see the of Thank do from will cost associated operational an And coming you. Thank savings

Jan Carlson

bit business in comment also separately running such a engineering people company savings order little units customer on of this cannot delivery the intake their the within also even a to for it customer activities application drive and a much of that course different and short call the for main customer drive task. will company group entrepreneurial through financials. as customer quality as be further We customers activities, each which you and be such, There when attention will responsibility will the strong and can as full production will organization having

product significant here product. The overview will us will the seeing product better of organization the it to advantage product that demand scale development generation be led reporting me on This portfolio take time dedicated stand into a different us give consolidated of line. from being directly a is next will other CPO will will we part have by to that give effect, customers

us thereby So efficiencies we hope some and give scale that cost be that would matters.

that those are So change. two the we're driving things with the major

Agnieszka Vilela

Okay, thanks.

Operator

McNally next will Chris to Evercore. at We move

Chris McNally

guys. much so you Thank

gets you profitability investment XXXX XXXX the years investment weakness to I'm with pretty it wanted just on QX a talked could the I factors spoke little about that moves it's I reiterate it the some but but actual sure the bit to Just obviously the slightly you the lower, mean make should be moving that fixed being production which or the because the so targets, first that is to out is higher multiple you then? two annualized, just about more target is question, by debt for on production the in of sure important,

Jan Carlson

the the declining, investments. are and of risk moves profit it it, part gross the the target it affected that thereby there the but one majority combination of downside is by the investments the so and between was of is it two out years While majority

level increase think coming we I very three ourselves in are customer from as on four annualized increase quarter level income to the Mathias quarter to an in four probably are it's talk that the the exiting quarter as and $XX million right we onwards. XXXX to remind is alluded here R&D now the and we about not important seeing

at, not here to net one really at it's probably XXXX. for effect the gross right effect So the that look you should look the is

Chris McNally

a big billion in that Okay, to previous the $X some discuss not X.X well, XXXX $X.X billion. the I range of if clear. that you're and is breaking go and that's because for going year like billion that's is at ex XXXX cadence you're so billion and sounds Flex when revenue jump we gross the the downside second RCS non-ADAS, really from roughly at lot you between the ADAS non-ADAS look as don't $X.X question to target of $X discussed level, ADAS, obviously talking relatively of to is the XXXX billion was know $X when to next great, then about billion of in you timing business, roughly where could the a growth breaking so $X think sort And right it of I just about

XXXX just may So just that little when of second bit inflection, half a but be thoughts? your it's updated of some

Jan Carlson

and so us mix saying that and lines the it's seen product here where have not products it hard that into between in something into and decline XXXX describe okay, different business RCS I'm that the intake not but due a here for details, and to in that ADAS could into the RCS then go a order be to like development easy XXXX. taking mix business of continued growth so are all it's temporarily we onto Well, to you weaker of weaker our is

a both those We areas. seeing good in are intake of order

mentioning orders We taking break are control during also quarter. here also the

year taking So orders order that in this view, with trajectory so coming all becoming XXXX, now otherwise three next we during from we come point leverage in leave the an on a when they this to generally mix our there beyond of sold good some intake are we're to remember were is beyond earnings that XXXX this capital at a it's call January outlook time areas back maybe but upcoming though that on change market there discuss the may is year.

Chris McNally

Okay, that's great.

of you're good some is can taking of specifically where now a the in situation about orders legacy for some reselling on? we order, growth so So think Restraint but XXXX it that draining the

Jan Carlson

Yes, that's like right.

Chris McNally

you thank so much. Great,

Operator

will at we Research. Galves move Dan to Next Wolfe

Dan Galves

have my may in questions thanks Most one SG&A the more see Hi, on got company costs do public QX? be the been housekeeping increases guys. right you kind answered, or of standalone level level, we of for

Jan Carlson

the kind this that to I in you is level some quarter the moving I wings not think forward the should ones. think normal material that go of will assume

Dan Galves

relaxing second you strategically owned and a of is more Okay, comments dense environments, commute robo-taxi more the autopilot be can kind just can of different to get then kind different focused pursuit got so past areas levels I is it and very mean are highway the looks urban more of people it path type in know kind and targeting on automation you Zenuity to to future targeting two like those of both these which they seems talk pass of like systems about there's then of vehicle paths? and any on on focus consumer

Jan Carlson

path a that up you if four not decline. level slides two pilot presented highway through yet on but that five look is trajectory at is but Zenuity later moved path there the we to and major three level is at and also Day is the the stage Capital Markets at in the that Zenuity then two, further by the further level on from The

Dan Galves

my Okay, questions. very got much Thanks it. taking for

Jan Carlson

to last okay take we're up course, we so hour coming will the question. the Of here,

Operator

will And SEB. Eric Golrang that at be

Eric Golrang

three the you high production as quick assessment? does between a four and order it's to nominally talked just years that of you've up closer follow so lead end seems time three lot It talk a it correct two to that start to

Jan Carlson

it's four years. between and think three I

Eric Golrang

Thank you.

Jan Carlson

on a business order, orders, type shorter. definitely type depends complex RCS four orders orders of system It component bit other related to may type and of more somewhat the system of little programs three be

Eric Golrang

Thanks.

Jan Carlson

Thank you.

Operator

session. turn the Q&A the conclude I'll to any does management conference remarks. That for back over closing

Jan Carlson

you participation Thanks. our XXXX to next to again to earnings you Thank I also on forward but look your Odra. XX, seeing in much, to at We for everyone call very talk for here. interesting conference thank look during planned tentatively would questions forward January quarter road like today. and this shows you

of season. at good you talk year, you take next So to January a the holiday end meantime wish Everybody in and care. I the

Operator

today's your participation. conclude does that for conference. thank And Again, you

Arriver Holdco (VNE) 25 Oct 182018 Q3 Earnings call transcript