VNE - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Q4 2018 Earnings Release Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. [Operator Instructions] I must advise you the call is being recorded today, Wednesday, the 13th of February, 2019. to Carlson. conference like speaker to now Jan today, would hand over the your I ahead. go Please

Thomas Jönsson

All right. very Thank you much, Steve.

before Here and it's takes briefly IR, Communications over. Jan to kick actually off the Thomas Jönsson, call

fourth our to everybody, welcome, quarter earnings call XXXX presentation. So

we in CEO, Chief Mathias So Officer, Chairman, myself, and Carlson; our Stockholm, said, President have as Thomas Financial Hermansson; here and Jan Jönsson.

market will Veoneer, adjustment business environment, look CFO on XXXX remain turn product will outlook. making in our our provide in During will And back who will on our we the general on then line portfolios, that financial results CEO, after today's the progress initiatives Then over for and our some some Q&A call, on we're commentary taking. comment on our intake, particular CEO order this, we're to session.

course, Of corporate our link are a through slides homepage on of the available website.

turn we that is if the which we page, statement, and So the harbor presentation part the safe here today. to this this presentation includes integrated have an next of follows Q&A

with to we these at will of GAAP SEC. p.m. here. that non-U.S. measures also the quarterly be some intend call PST. release reference reconciliations XX-K will filed presentation, in We and are The press conclude disclosed figures the the the the X:XX During

please So Carlson. Jan CEO, questions each. I Jan, now to yourself over please? to ask our to With turn everybody X limit that, it I will

Jan Carlson

earnings call during I much energy call and team Thank you It's by quality their Veoneer Veoneer. today's entire out and the focus very the for for to and Thomas, like everybody, appreciated. very thanking to much, would welcome, start XXXX. today's dedication

to record which we of ended are billion than estimated of billion. order intake We order value equates lifetime average $X.X more annual around pleased XXXX with $X.X that a sales, an very

the Europe, the SAAR a development of underlying environment, and vehicle we of in of Western sales to and continued priorities. rapid production vehicle are and China business uncertain negative and change soft demand Looking effects U.S. somewhat around expected mix a weak uncertainty half light production industry XXXX. in see in first The our to WLTP light the create

the the to half. improve situation We expect second during

view we compared slightly XXXX. flat for to light be to XXXX as However, to the down production vehicle

several expected. with seems This and forward has product long-term led then Despite allocate into capital XXXX enter longer growth to to of have a and And these we last trajectory and X see the that and strong organic the vehicles time. cost our take our months, part great our and Level the we focus realization new towards portfolio a review Over us more to industry autonomous originally than market actively come during most definite will and to shift driver look more Safety customers. confidence of the effective that focus with way this industry X+ latter into important support in the the challenges, be priorities these year, conversations leading identify and and means the realities. to Level through enthusiasm investment meet market XXXX XXXX targets. to a strong of based This will for longer towards Active addressable core our X on period Level systems our X

over the Looking customer to happy slide. our years. next extremely the with We're progress X last

and But Active we next As if product at Safety Safety in see end the the XXXX during slide made we page, our areas. we status a most point, this to in Active customers immediately across reference can customer flip illustrates improvement the XXXX. of

order well of features estimate This Safety and intake that XXXX ADAS quality in awards our including record and Safety developed Level of more intake an our level wins market our to around billion. lifetime Monitoring, Our product Active Roadscape to our our estimated million Safety particularly We customer in with increased new Vision with to with controllers, $XXX close XXXX. wins. and LiDAR, Radar of positioning Veoneer was Active in standalone not Zenuity. than order and of order but of only increased Driver areas in systems is pleased applications. is intake of above X+ value by or vehicles order Active order systems during in XXXX our intake We're also XX% the the equivalent We current established order systems, Xx our almost customer share and presence autonomous certain related order Robo-taxi $X.X

include addition, to various Active in Safety features we XX% Zenuity orders estimate our side. the of from XXXX software In around

Looking on across X progress XXXX we detail We main now improvement during slide. next see customer more into areas. the made on can product our the overall

Brake earlier, alluded the and base to more Systems, our in In we by awards awards, Active the we we offerings base added new XX% for approximately to Safety, XX%. customer leadership As increased Restraint XX% customer by by increased OEM customer increased of have of position, a Systems, the offerings our Chinese we market approximately list and we XX%. base Control customer our we than for increased where our our the offerings lastly, customer local and a by

Looking intake page. overall now on our to the order next

of for color was increase to organic be on awards, drove current performance to record combination $X.X intake outperformance, with of historical our XXXX. as will in on Based Veoneer on, and order In Later to more our as We record a annual our order $X.X it least a how our intake estimate more share. intake a provide the billion. lifetime order as order order as strong Restraint equates in year-over-year opportunities we above in our to compared ahead Mathias market us, value this Systems XX% the than at billion XXXX. sales, addition significantly intake of our to impacts Active around XXXX estimate These average Systems Brake Safety growth. Control

engineering Investing will next continue in for to now an technology slide. the engineering in on and be differentiator important Looking to marketplace. the Veoneer

XXX turn us We X,XXX and around engineers, on the LiDAR last scalable within brings excludes that software surround is engineers design, fourth expense program view hired during year software XXXX. Velodyne This now earnings with role commercialize compared the our to our over we XXXX indicated level of Tier increase here R&D support engineers. which grade customer. to required Hermansson, during to and a X an technical years and mind X,XXX to in autonomous speak this CFO, Mathias reference X XX% product awarded Veoneer's develop close This quarter, that Zenuity. about interface our OEM, standard in automotive on XXXX, our the the the numbers. future approximately to last Keep the where where will call based million estimate more our $XX results major growth. XXXX finished application. as engineering global million. were are as we this to engineers, program now We lastly, to order at to over launch a I is by would which to sales the vehicle $XXX XXXX we'll intake strong into And financial around we significant is it During commercial

Mathias Hermansson

you, Jan. Thank

to So X. slide then the page flip

increased the mentioned As our with currently large combined quarter low order strong investments prior have. book a levels we, on to the we we continued in levels reflect have significant RD&E order to XXXX, earlier, execute the to intake

the impacted development also XX% quarter all overall consolidated the course, in came same of are, the industry. peers our in as to sales the the in net by macro-environment as $XXX fourth compared LVP as expected decline a and in at The quarter XXXX. We million,

However, a from increase the million sequential around quarter. of $XX previous

highlighted Vision with X% of by during and hampered organic first Honda. FCA million and the RD&E, expand in of expectation Our line call. increases due loss Western and with in the our In the growth with $XX the Active our our WLTP fourth business Europe, quarter, the during quarter following mix Safety the conference was Geely last in effect internal customer sales we was Radar to overshadowed launch operating

[indiscernible] timing last was hard working year, than effects our to strong in capital to which assets the million year. mainly in and this operating the Since in our improved efficiency quarter, end $XX with liabilities we million capital. and we of the Lastly, cash had have flow positive some summer, due of $X continued work listing operating more

the Looking following the into some details quarter on slide. now further for

decline from quarter. were as by and as sales on line were increase in was is of $XX mainly in million costs the unchanged minor sales minor the increase currency as we decline the XX% or a same $XXX of the last sales course, of the million decrease $XX around to million, as year-over-year of last CapEx million with company from was impact of the profit organic of onwards. million, an quarter. compared our over in planned with of profit. the year net of caused million year-over-year million to related, currency SG&A summer I versus $XX driven attributable $XX volume in X%, the mainly of RD&E essentially standalone gross comprised million associated Our by again, last This additional and being $XX decrease Systems as, was effects mix QX. quarter the fourth gross $XX The mentioned, sales had quarter increased communication is $XX mainly of Systems and quarter. year Then $XX was, of was million product The Brake organic to here effects Control Restraint the

our will during then revenue therefore, previous intake on year into If moving as X% we And comment forward. sales line CapEx full and page, communication. or cash evolved just ended our with a However, year the of million we I of the little in $XXX $XXX bit around million with this growth the how balance. order flip was year

intake mentioned sales between to from and weak had XXXX organic has As earlier, we our order XXXX. XXXX impacted the negatively XXXX

later impacting organic onwards deliveries the years from year, coming over this particularly X part QX year will last this strong continue intake to sales start our revenues, to growth drive ahead years. and the and Looking order the the of for our

on the key some now Looking to slide. growth following the drivers of

to represent drive mentioned. our of organic up This key and technology. from with lead XX% just effects launches the to We facelifts and outlook launches word from XX final now strong mitigated the content down lineup of temporary on from slide, extent range high the Jan. facelifts, end will ramp between growth, for some will of to however, these of program low And LVP, over per Radar content the estimate $XXX BMW shift in that's gigahertz launches have vehicle the XX models have but is, current is by on $XXX; the of and depending XXXX, negative the we take around these our vision model however, the and average to rates to sales step all previously we summarized I gigahertz The vehicle as have. XX% some impact annual up and span which of in I legacy between the the Mono per $XX and is hand business Combined, the end.

Jan Carlson

you, Mathias. Thank

see the Turning the for outlook for page, some XXXX we numbers and XXXX. also

growth this to the in in estimated expect production deliveries return being year leads This light time, Our Europe. Western months to we and year, production current an XXXX. see customer resulting vehicle us the to the the XXXX half slightly decline as 'XX. weaker that this of currently to At full China in and call-offs flat down first light and second in of in reflect stabilize vehicle demand to during a X demand we compared situation during anticipate

organic flat XXXX are the sequentially of be estimate to translation to half the XXXX, sales expected and to to currency improve sales full be Our first compared for from year then the the in relatively to sequentially slightly the year-over-year of approximately full we while remain albeit flat XXXX. XXXX, year second half second estimate negative of Consequently, XXXX. as X% decline during half impact we decline our the the

our result we half operating implementation our in and adjustment margin during with first the initiatives combination sales development, of a market As expect XXXX, and during R&D of flow year. week the a of cash

second the is an weaker than the to of with expected XXXX. quarter quarter XXXX anticipated first improvement The fourth half during be in

initiatives net to our cash that positive reaches we about cash the requirements our funding of here, company flow. expect execution we successful Assuming earlier talked until cover the

our acquisitions. would beyond conditions additional underlying However, increases term near if further if or business be funding intake we the may required order make if deteriorate expectations

next the page. looking Now onto

and We Q&A. call, the the like to comments end it would we have up now to open today's come of for of formal

Steve, you, So Thank I Q&A turn the the to back session. call to moderate you.

Operator

we first The of Instructions] question today from comes have the Brian [Operator line Johnson.

Brian Johnson

couple of Yes, questions. a

in First, pilot, I your you're what where particular, kind it co-piloting, that of about Level mean reprioritizing move auto call it's struck driving, by resources. they but language just does your X+ the to hint,

from business? how RD&E couple what imply of talking Zenuity And a resources the just towards about where if given light core are, given any, this levers, redirecting away the financials So near-term second, are around improve in but Does your the the Level about? you, opportunity, anything expense profitability, that to subquestions. X+ you're of especially shift are

Jan Carlson

When we articles us and could be and resources It what to the around Level of that Level in in as a of it Okay. the of for I has very And time. think comes would on resources or customers. on skilled talents we needed the this leverage playing saw and software period also needs at of, is that would Zenuity a I it focus X+ has pushed course, Zenuity, on lot we it are increased in the well with many but and, to launched is very X+, of scale XXX time driver I the Level in product a systems. our same there talent around see more organization talk people regards focus expect new a Level with our and prioritization when particular, to out X been see comes and being focus for comes overall, that forward airbag proud Zenuity, also X. year, in think announcements there advanced many going in with here, an systems on of been of And very L companies And of the on how favor, ADAS cameras, industry CES, impact the several effect a have that support are towards might Level our it X+ and R&D and pool X+, of think we last When demand to it much prioritization in radars, efficiency that. when we of lot some the very controllers. improvement controllers reprioritization we those December appreciated to leverage much the inside we by

Brian Johnson

question you, kind think mean, around what just that you out, maybe billion, so kind different. And you are if intake. the you, And Okay. those second your midterm? intake if of are sales average you lifetime even take mean go order of sort sale, just, calculations do the I XXXX of $X.X cycles the revised implies is order for wrong towards if of, tracking are of if values our product XXXX, What does your guidance? about

Jan Carlson

we This $X.X said, are those First said, lifetime sales, we the you maybe or so effect market set as of close said But to of in said $X think you, are think it's around some lifetime well all, an or when be I I are misheard that, was, we billion, billion it's to that an are $X.X targets you initiatives towards it's Having the the billion revised billion sales $X.X lifetime as they of targets into with revised also directionally as sales. taking. billion, we where targets. down maybe conditions now October. I operationally, those is operationally look initiatives well of that to are little average to may well annual the are point, road that look that out you coming if tracking the sales $X.X billion. targets, more effect again, looking the and at tracking I we likely and I tracking $X.X of to we than think trajectory we And and you are, that it

Operator

question Engellau from the Hampus comes Handelsbanken. line of next from The today

Hampus Engellau

have I questions. X

the major is available on the How Safety orders. orders. Stereo? was against is now? Active to there Mono in of system much my here Mono that side, the major grasp question Stereo Second million is trending USDXXX Or And this from off vision part the turn what's the in are X starting issues your you around market? years the questions. How mix Those just on Is part? the compared many market? First, how

Jan Carlson

Okay. All right.

you Safety, of haven't more breakdown Active first details million. If given we the the the around $XXX you take the part, any

expect a market our increase We to significant compared million be $XXX the to share.

increased big time. $XXX specifically still our have activities So us here Stereo many an give that. Besides it increasing customers. million period a and we and for definitely the still of When a it gains. out we will details and to interest on it's increased long there, share that, Stereo I vision no expect on that on probably is very are Stereo market cameras seeing Mono, to numbers and is be share the on there giving you comes Mono,

that's Stereo vision product of interest good. clear, the very but has So been

Hampus Engellau

do just follow-up there. one I Can

On are Level Mono you is, the X+ Level X for comment achieving system? plus, the

Jan Carlson

Yes, we doing are that.

when with Mono a out Level call Stereo achieving using Level that, also a camera, much in very on these system-related on This and X+ you of that are of is very are. X+. we X X But products. the blend it's fused fused Mono a Radar Mono camera cameras, the vision these we quite much both much cameras, a very as doing when business, do also systems standard. with or It's [indiscernible] We equipment are system the take sense We consequence a often, where it's order. you Mono, depending of

Operator

And the Mizuho. Vijay today on next question line comes the from from Rakesh

Vijay Rakesh

fiscal at your grew your for Safety presentation, XX% order, looking intake year-on-year. intake you order order Just Active said 'XX, or

color up XX% think color. LiDAR some there? said if year-on-year. wondering the saw noted give you in I This you more pick pickup, you'd I and that more up but you year, can in just QX, any software QX,

Jan Carlson

like in talked as back-end it, about fourth of in that back-end run be a XXXX early is might talk to comes looks And we a that about things XXXX. lot loaded. looks this also it the to was about strong as throughout year but We it early Little for XXXX talk may had it's had loaded We it because the good We as actually both looks as that but a even when too QX, it had order XXXX, order, to back-end now. quarter. loaded. happen, intake

Vijay Rakesh

with here on you the of QX, are I for headcount pretty OpEx hiring through year. a expect side, 'XX? had chunk in nice kind And most done X,XXX so we pretty to the you it. go stabilize saw here. much Got that the Should as you of

Jan Carlson

looking are into We this.

initiatives. said, here, we're through looking As we

right We to of we'll organization. the new how consequence running much it, X We to up are the a set going now of that organization estimate forward. us and hire what extent we, and will setting here those show will priorities we have and that and we gains efficiency that continue

absolutely are We capture determined talent. to

have good lot of We people. a

We capture gains that we the through look of very and of on engineering the the, talent and our to Veoneer, that. should overall, pool and to are efficiency out have resource. have the also we course, on we continue But proud in side the

Operator

today from comes Golrang line Erik the from The SEB. of next question

Erik Golrang

one, Safety XX% Active that questions. first orders last of you software Zenuity? of element hear the Two some correctly, I said from And the did you year kind included

Jan Carlson

Yes.

Erik Golrang

Okay.

to? to I clarify or... you're some question, maybe, nevertheless, is at the tracking targets but margins a that you expect what them operationally you don't, Say towards specific Could what that this bit just and be point. for refer Second means target, and said revised, you

Jan Carlson

that. that. We do do really cannot really I cannot Yes,

in investments, as expectations We more of industry will renewing the the portfolio in an we product a the we our seeing of consequence. impact. are are we the seeing L as consequence, change towards And are are that change a X+. prioritization have doing and And market,

at these is, it's comment revise for and not having that is likely towards it's all in that it. if I is everyone what is But of see in but we of market I But important. target think too targets and time going we hear that be market the change on we important continued point said, it, to traction, said as what working consequences to with through, some definitely it So, are it's our operationally going to good seeing that are change will market. said, I early

Erik Golrang

end, a to the you lead given up say directionally, just I the follow times, there. efficiency least, investment concerns to But it at more and industry to Okay. operational other trend saying rather sales. might where about, you're profitability I about more you're than guess, one the be heading. in guess, and the able into thinking gains what you that follow end, it's have looking need And you're potentially in

So or earlier margins the out net, further that time? in more is on

Jan Carlson

We are organization at call. Remember, that new a this December XX. not launched in we quantifying

this and working of stabilizing books. get, are place that in get execute people we're order seeing gains that We about the to good that hard seeing out And here are and expecting right we putting it. will it's the to on tremendously

So the be Brian on question as in earlier us about call, stage. let back asked the leverage. the here But later with that

that will fusion focused leverage on Of of increased course, course, if will, of in more the X+ fashion. also the get controllers and cameras be an of that type L radars core out ADAS systems, in and of products we

Operator

today from Lindeberg next question from comes Carnegie. The Viktor

Viktor Lindeberg

on Maybe product programs potential topic revenue target following the up revisions. launch and of

That's any so to understand likely or you that on shift taken Just the you year have to my is or in demand? relating first cancellations past the will question. seen already orders it have

Jan Carlson

any we things. see such don't No. No,

We of software. are seeing an quality increased awareness aspect of the

the an functional safety seeing and increased when safety your importance and hardware. awareness are We of you design software functional of

that increased that drill we some more you long for a have if down efforts. seeing the about time projects, will in been But So cancellations. areas on lot we focus the some no talking are a require

Viktor Lindeberg

the awards contract and have a awarded in 'XX. Okay, map still unchanged, for presentation customer I at of But be business awarded your status year-over-year. in QX that's looking XXXX, just on seems on to the it heat then now your LiDAR, the was business LiDAR XXXX number been and clear. And you

client a So or is has of change is, it what here? happened

Jan Carlson

customer. the It's same

is. as see orders the here same so through that's awarded being we why it been So chart you the have customer,

Operator

James today from question of KeyBanc Markets. next Capital from comes line The Picariello the

James Picariello

was dead on in of the which a of any that $X And for as play? have clearly the Just kind Is that target communicated of as in last well? quarter as billion horse sales to framework was last impact $X still XXXX, billion quarter. the that beat plus here, does

Jan Carlson

whip said, I on the dead I'll horse and As repeat here. the

are the that We that I say order we targets. with also And towards targets. operationally intake see, working are those towards directionally tracking we well and those

So that there. no is is, there change

James Picariello

then product And elaborate press priorities, Veoneer's get the release, extent speaking we you improve in of Okay. related are free should cash can half, internally cash there? liquidity. or on the little the your the focus to just to to initiatives flow What the you've then identified. review portfolio. flow on adjustment context in your back And exactly in to what remarks to more investment you market prepared And a expect that you mentioned just the context of or

You confidence free be cash on flow able that your you'll mentioned until to positive. you cash become investments hand fund with net

there. bridge the get to trying just So

Jan Carlson

more also out here, is infusion more to most have a take and, stage, portfolio et and need be a in understand and there upon path we the that impact cameras, And more advanced will the and that meaning get, road, basis. of more reviewing this down products, will core pushed granular L understand seen granular we are industry No, be but advanced will self-driving a That will us the levels the of an likely based systems will of later time, is period down X+ radars as I as industry to more for I and this of right a financial that of systems to be, entire the on road now. cetera. mean product our be

Operator

of The today line Erik question from Pareto next comes from Securities. Paulsson the

Erik Paulsson

Pareto. was about Erik, wondering XXXX. during hired I your is This engineers

and based during the based year, the or salary with in see here X,XXX QX. And are to do hired actually? going You be future? you are XXX to or problem a et the during those people cetera, find I inflation, think Where

Jan Carlson

this to Very globe. essentially be can think very able of people, in the environment I around recruit to the, here engineers. proud find X,XXX we're them where Well, skilled we

here We in Sweden. have major centers Vision

We have in we this Radar see centers proud to are U.S., the happening. and major extremely

and R&D countries. course, of certain find are, of also areas, The applicable, is part here traction for we're the our footprint right be as through and talent. the talent use as to We intelligence, this. activities for we looking us can most where our and important right to is is the look best-cost going a it But much new also through go successful good But with able to organization advanced keep so. of have you et when in now part artificial And into whole this get to up to doing initiative cetera. we a the algorithms been

Operator

today from the from line next question Research. The comes Steven Fox of Cross

Steven Fox

I questions. had X

get to a I off, just sense your raise. trying First self-funding for to further was capital ability reach your goals another without

the give I is us to but Can level? then margin I'm funds, potential error with cash is error, not you the have for follow-up. current what sense downside the and a And what of needing sure your zone around upside some provided more You a safety that?

Mathias Hermansson

here. Mathias

should we with these those initiatives it the to, intake think the then that some for that alluded of the I we that we accelerating given have and well sufficient Obviously, things. way write in with order we that. think we kind Jan as of as I have that is the execute look caveat upon release headroom

Steven Fox

of shifting does just et building orders the talking out on we sort you that more about you established metrics. are could terms the there's, that the of that or past. R&D talking just do technology play the create Okay. core Does that in you're makes be Can whether work that cetera? camera some the new you offerings think more some required, have? radar more different How guys operating specific in less leverage, offers, financial done towards And you've leverage and on of in you then from

Jan Carlson

stronger Well, a can engineering. there more what on efforts of the into we if portfolio, utilize application focus product or is on product, were talking about the you of course

different and of intake development, to that If more allocate engineering. for that to products application variety development activities of and technology wide course, for you hire drive have needs need to spectrum and core wide people you order of will a you a

So the of with system momentum us for try game market for towards the the use look we applications. customer to whole our of the more here name the of shift that have orders, L to and the through keep are engineers is system up initiatives, more X+ but there

Operator

from comes of Macquarie. The Maynard from Um next question today the line

Maynard Um

you through self-driving what to when take up? the think talk about are driving you talked realization be And self-driving and that anticipated. here the for will now? full expensive are than specific are growing more costs You previously the cars longer Can going be dynamics there about timeline

Jan Carlson

I think touch little have truly envelop on the complexities, reliable utmost to before of functional important. to bit validation systems the the here it safety conditions is for a and Well, have the you make more,

but into effort the I more has beginning, that think understood from going estimated. everybody it's, into it you than probably the that initially coming it, realize

the complexity other is of The product. the thing

think also is that I is something that happening there.

think give it is I we this come. the should step by that the take will self-driving X the an What So more ability that Level will cars industry and remember to step.

and where believe, portfolio system. validation, core the for and where have heart can for product more Veoneer also product get everyone, such. the in safe good is of can driver this doing benefit because in you get more step-wise, way if it's favor the get as in plays in You execute robust we you is develop data so, where industry to a qualified, our the and thereby a you charge, for the the you take we and it's In it

Maynard Um

a there you do your if so? what priorities raise Great. have And cash, need us for Can net to options M&A, on just my second of kind are? comment. And on what you to then remind is do question your cash

Jan Carlson

it's discrete that's, Yes, situation.

additional It's collaborations that in We time the are very do monitor otherwise, or is something interest that will, bigger we to same. that specific looking of have it's road other time at is will impact example when technology down But we're we things. and of interest going some a we L look in be more and cameras, network and up will an point one as to we and give for is present. cars or right it. self-driving some of X+, will some into in that controllers, on the for think scale. to or definitely way the be will we XG that connectivity an long for running But technologies period When any factors extent things. that important already looking area to to a think you and to LiDARs are time where One the is hard ADAS of radars, will describe

Operator

of Agnieszka line question comes next Nordea. from from Vilela The the

Agnieszka Vilela

I have BMW. Starting the questions. X with

of One what XXXX, sales wind you you? down for quantify in of Can 'XX. it just have kind vision on impact will

Jan Carlson

on for I here, the do here down diminishing. will it, 'XX can't will cuff that wind It will I be into but sequentially sorry through right I'm think 'XX. that that, it and

Agnieszka Vilela

But nothing on Active to think substantial growth Safety? the for your

Jan Carlson

no. No,

Agnieszka Vilela

it the of my of fair is for you million of you second CFO $XXX operating I XXXX. expectations on workforce? to on will Okay. do there of the going organization, the kind COO reduce when for And for quarter run and want And assume to R&D any team? are efficiencies also you that implement R&D leaving your speak Is be your OpEx, And really, kind perceive extra possibility costs cost. what also costs then about then kind for per forward? to rate question your a And had

Mathias Hermansson

year, the It's Mathias end look first upon think half here. should with that's cost year your the a for I that the, RD&E way we run in that, rate I is outlook, If I in start the we think and it's engineering that similar on think in specific, just just income likely Remember, seasonality side, the will be be it to also QX remember, say. also, that's I for levels wise growth our you what lower. can largely

be QX we far So will that. impacted more as can as say

Jan Carlson

You available numbers had here and COO leaving, leaving on all question those relevant the be leaving, individual a don't specifically comment the cases to in specifically we statement. Mathias proxy will

Operator

Capital RBC today line from from Joseph next Spak Markets. question comes The the of

Joseph Spak

X questions. The first,

one the back and first really some cash I relates, flow. The of commentary guidance guess, to

the in related first that market adjustment cash there flow initiatives. You weak to it line in the also implementation to had operating a referring half, margin of is

us, cash help that? cost you like can associated So with the what's

Mathias Hermansson

early bit say. anything that specified to a of little haven't it's we and think, I too

Joseph Spak

to in that but how 'XX that about how Okay. Then level? 'XX I think Level do you spent in Is $XX you are can what does think Veoneer, about in $XXX And then XXXX, given contributions in a, Zenuity just the right contributed to And the 'XX? X+, if you what shift affect CapEx. contribute about, tell million the the planning us: to for like anything. to talked that million you what JV sort plans we base in you on of

Mathias Hermansson

don't difference from is this at plan. there currently we stage, I what think think any I major

Joseph Spak

as Is it the a comment to contribution or that to related Zenuity? the CapEx

Mathias Hermansson

Sorry, the contribution. Zenuity

Joseph Spak

you what did similar in So to 'XX.

Mathias Hermansson

would where think run rate, all the little a we I I bit. growing know, been because it's say, Oh

Jan Carlson

As use here Zenuity an lot activities for extremely talked contribution our a that lot see about of that a a for software demand X+, valuable needs. and lot market Zenuity demand the and order new and a is we need into XX% there of orders said is pool, of of the before, for for before talent and we Zenuity intake and is Zenuity the we including lot

Joseph Spak

Okay. And CapEx?

Jan Carlson

Yes.

side, the today. is CapEx give on we can single estimate you best the high the This it's level. digit On

Joseph Spak

to an think for is use, required a it Does it's to it so, Robo-taxi as is said the And LiDAR because, the commercial the some I called Okay. meaning initiative as question the relates vehicle? first same is grade last, be you I consumer a of LiDAR commercial from I get then just around that order to you grade, a language if for would automotive second goal with mean, and the that mean it, clarification but OEM order? it think

Jan Carlson

as questions. volume and other the is on it's for grade use is Well, Robo-cap same a for yes application here the it the grade commercial and And both X absolutely is automotive the It use. commercial the production. Velodyne industrialization an as for such the great application [indiscernible] absolute our is is X automotive for technology Tier and and contribution here technology any

Operator

comes The from next David from Kelley of the today question Jefferies. line

David Kelley

it delays. projects? pushed Level is out? the Is follow-up on X timelines And specific? being Or customer Level a and X or Just customers project any about seeing you solely this are industry-wide autonomous that the abandon is

Jan Carlson

gone a the before, said you complex, realize it's predominantly delayed, absolutely main as X more it getting and can push the I by It's path and see. any I'd more is out, not people is I means. think, It's L think that

we the being a There that able as the had we is at different with not you by themselves. [indiscernible] bit to market. in formal here X Level a Level mass We passenger remember have a the about X, And is the that different about where with market a L X that Robo-cap needs character talk is for volume working market, priorities. same cars drive for way different and to talked timeline, for that

David Kelley

up like Safety for about Driver X+? is Okay, and Driver to great. the addressable looks and market And foresee at Monitoring the autonomous? increased I maybe Active just Driver a application fully looking Monitoring? and how map. heat Level project follow in guess, think Level there? you a like Or business Monitoring you're winning bids year-over-year tied And X we Do should It that

Jan Carlson

Yes.

seeing same Level part of in being X+, not We an definite X, the in definitely Level to having a as the Monitoring Driver ingredient are X+ as are maybe Level need but system. Monitoring we seeing Driver

L the because integrators technology the to also to to system board you we by mode. to it's would get this so And on say, like in scenario suppliers, as on, and L doing and you the carmakers before the X+ validate in such to the technology think I so turn timeline. it also or and industry as need the X learn and the in it we, use

Operator

Unfortunately, Morgan Theodore. Jairam from question his line. response going release to from no line line Daiwa The have the next today The Nathan comes from next from just from Market. we question I'm Capital the of Theodore comes of Stanley. Sousza

Jairam Nathan

Just what the from here. this lot related new I understood, CapEx following on, new CapEx for, capacity a year Brake Joe on probably of Systems. to at was the question business The, from from the

that other the explain is you would be? going some of components replaced getting of initiatives what by forward? kind could So If CapEx

Mathias Hermansson

I think for last right you're year. absolutely

few as year of last fairly that I that business continued towards [indiscernible] half CapEx first Safety think the building that, what up years. see taken orders particularly for this is the than volume I Active it's general the think we've for we buildup the well And other for will high program. all production Brake over

Jairam Nathan

beyond bulge So XXXX is done rate Brake run kind can of business once you there a the long-term that like us is with? provide

Mathias Hermansson

of terms should percentage anything in come of it's, down. if revenue think I [indiscernible]

Jairam Nathan

Okay.

could of, why would, one you R&D Okay. the from is, go would, you And other the or down see comment kind up. was customers reimbursements reasons about that coming of the R&D OEMs you as

you're that year did about? some So see you on and year, to is of last this track how that thinking

Mathias Hermansson

followed. just you repeat we question, the Could not I'm really sure

Jairam Nathan

would And So you still that reimbursements customers expense are also, to, could, seen, up, could would come you guys because on for your track have would had go said that? R&D increase. you down partly from

Mathias Hermansson

go now just think, said seasonal up, as that QX, effect a I think I I we that I also expect well. it's to we guess, we think it generally, said what think but I

between So up down the and income is go going the quarters. to

Jan Carlson

income and high quarter because, how see, I engineering is, year down is X. what like then but That round, that that's you is industry the it's of in in coming all know it seasonality that is it can any is. why Normally income is don't engineering working

Operator

The next Bank. question Deutsche from Rosner comes from Emmanuel

Emmanuel Rosner

we are both So in of in performance your release to and sure the on second And cash just tell in sort there of expect Can what our initiatives remarks and enough half and us way should initiatives well. a of you in mentions terms have press benefits what then initiative a as way timeline? these future mention the make as improve to you multiple what are? the that

Jan Carlson

put initiatives new organization said, we Well, looking of, a as we are through place. in we

customer organization product that strong L and based We are a on focus through putting very X.

during to We the this and X+. through the the even are in focus, looking value dollar today. year-end, but based as but the should this that overall of and efficiency year-end by year, we company. as we we're highest also are are a percentage And numbers of give half I our L can't this is doing et ourselves get to product this extent customer seeing focus, more are product see gains or investment reviewing upon priorities portfolio towards seeing, out toward of seeing second we and you improvements a cetera, what any

Emmanuel Rosner

self-driving to a on specifically that, investment your Safety you broader specifically, growing faster business? of in the lines Active organization? Safety way review a be are this like sort capital deemphasizing priorities, what's reviewing the is a further the result across than timeline, towards investment as as within a of is non-active this you And product expected? you Could unlock Or

Jan Carlson

more is month and reviewing right the we we an on that to Well, we X looking only little and moving old moving have fast environment standing portfolio of our are the than a that are a bit course, entire we and company reviewing are or product X feet, company, we now we are extremely our position. in are, months

talent pool should the only customers, use order our as good in, Safety, the We of with be limited Active but, are out course, will across And board. resources can. we to the, that best traction good using of as of and have much not our we intake, as

Emmanuel Rosner

timeline to and you whether hear from specific of decisions we on what expect those and sort enough? actions can the are around And

Jan Carlson

set specifically haven't on this timeline out one. We any

the products and after We we and will you the we July we in as then information those of will after as And around opportunities give meantime, the again to course. I'm definitely and second discuss sure talk have also ask will questions on, during April in it. quarters. much first can quarter calls

Thomas Jönsson

more probably Just one have here. minutes X question a reminder that left, we than so no it's

Operator

comes today question Galves line Wolfe. of from next the the And Dan from

Daniel Galves

flattish course over 'XX on that worse than QX operating sequentially. will be that the saying are of QX development, sales you're the margin XXXX, On of

be first should during causing that what's the anything engineering simply about? income half? it or Is is lower operating to So else weakening referred we thinking margin this the of you there

Mathias Hermansson

things, X speaking. are there generally think I

is pure the one the it normal leverage [indiscernible]. think, one of overhead production I think the towards is end I year of the and operating seasonality, the second on

Daniel Galves

key on it. launches comment as rate an there XX% and of kind of to question on XX, of basis from where run an these my facelifts. And annual up indication I of revenue is, Got about finish much coming on a truly slide revenue? thought, interesting incremental XXXX is Okay. XX% may how then, was sales that I guess,

Jan Carlson

around It's an that, That's X/X maybe XX% say, and hard. incremental. is estimate. that between I would it's

Daniel Galves

I Okay, got was target cash income? more remind timeline than the it. somewhat And believe to of us it one. quick you operating laid breakeven to flow later just one breakeven. that you've out Can to get get to the

Jan Carlson

positive. We said X have after about EBIT year

Thomas Jönsson

Okay.

we are at think and I So the of hour out time.

Jan Carlson

like, will we XX, All discussed quarter everybody planned right. well, your be the all for everybody and give we very place and so then call. that That questions. the first you much, to now here, for you possibly earnings take would interest this much everybody very Thank I And thank again, on Thomas. meantime, as good April the at in challenging I on Veoneer our call year. will goodbye. different as next and we have here of topics updates earnings thank wish we for much Monday, can to In XXXX, course,

Operator

Thank much. today. for you does Thank you the very for participating. conclude That conference

disconnect. You may all

Arriver Holdco (VNE) 14 Feb 192018 Q4 Earnings call transcript