VNE - Earnings call transcript Q1 2021

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Operator

Hello and welcome to the Veoneer Q1 Reports 2021. Throughout the call, all participants will be in listen-only mode, so there's no need to mute individual lines. And afterwards, there'll be a question-and-answer session. I'll now hand the floor to Thomas Jonsson. Please begin your meeting.

Thomas Jönsson

Mark, conference everybody call much, quarter our very earnings XXXX and you and to welcome first Thank webcast presentation.

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

the an Ray and call, provide will through financial outlook line earnings will our results Q&A are on and walk some as then highlights Jan launches the commentary XXXX our today's on available link our you on on During usual, remain business the And for and we'll a provide corporate website. of on current session. comment and update slides technology. release Then, the our and homepage through

the integrated Q&A is Safe Harbor to moving here So, statement, part includes any this have an presentation that and follows today. the next we of which page,

some Chief presentation, be call quarterly of to disclosed turn limit figures over at way, we are as will the to is CET, the During I'll PM With that so GAAP yourselves X:XX and Officer, reference reconciliations the SEC. measures This these with the release XX-K our and in Executive in intended Jan, can non-US press published Carlson. please. please questions that, work two we questions. our as conclude to Jan many possible. That it will

Jan Carlson

of my as side from to you you, Thomas, and all welcome Thank well.

business first highlights Now turning the the this the for have On we page. quarter. page,

correct. quarter, took call-offs, on cautious place beginning production our view on light the beginning priority of associates, measures our directionally proved We put that the continue current COVID-XX of customer safety at and the while we of to a the to thereby are situation. health closely, overall be the the our very we based in to first vehicle monitor pandemic, the which pandemic reinforcing with At we adapting the

the IHS geographic on While beginning forecast will was that the the further mix on shifted significantly, the and shift with I in essentially of slide. at the quarter, growth global mix the production the elaborate line bit next light regional a vehicle

strong continued our by outlook, our these we delivery growth cost Our and global outperformed cost full-year our Semiconductor outperformance with continue sales by we This light Market Based we organic buildup our the from for for terms quarter quarter first production of cash temporary the accelerate which percentage challenges balance together control X XX% million. cash our a strong versus the Initiative growth efficiencies operations, program. expect XXXX. the percentage and $XXX Adjustments on constraints our for anticipate in ended sales offset initiatives, to able vehicle mid-teens to adds and industry. organic vehicle Through create to with to for points. light were costs the supply an in production growth

for China, Additionally, This during to which the generation step customer active years, important a a fourth as quarter, an radar. joint also is engine coming added safety monovision, China, in be includes the software we and new perception over expected venture growth is global the our market.

continued Veoneer a overall, underlying despite successful quarter and the for uncertainties So, volatility. market

Now, slide. next the production light looking the development more into vehicle on

forecast be the fourth with view from XX% quarter. light right. production As approximately the heading by from decreased the X.X vehicle proved quarter points global towards IHS and cautious percentage the into mentioned, our to approximately decreased January sequentially LVP The Markit's

the However, production the overshadows mix. overall in growth light shift regional the vehicle significant

respectively. were light the XX% of than expectations X%, quarter, in down of As America XX% Europe, compared beginning from to to and the the and North more production sales, which makes vehicle IHS up close Veoneer's

our shift had organic of sales, sales China, This effect While on was up XX%. only the gross geographic temporary makes XX% global of XX% and Veoneer first the growth which margin mix during up adverse but quarter. LVP, a

to higher. in for XX content times Veoneer, and is America North be compared higher up as approximately X For to Europe Active per times Safety, And China. our vehicle it can

mix Active will as Safety's improve this future growth in accelerates. sales our We the organic effect expect

the second quarter, light into expected a decline QX, is from percentage approximately production to X by ahead which Looking the vehicle reflects year-over-year increase. XX% points sequentially

high the XXXX. expected, to shortages compared produced as approximately XX Volatility least expected to XX% continue are to XXXX, full-year linger at is vehicles uncertainty the of XXXX. through For vehicles around second the half an is XXXX increase into in quarter million produced from of XX reaching likely million remain second and semiconductor

well million in the XXXX on key reflected mid-term after of that well very in $XXX year these on two for sales. of comes the sales. $X.X us billion million sales this XXXX And years around for on and when is achieve just the track. are Executing Veoneer. Turning annual also is target a launches like annual this I'm slide reflects launches launch say represented new important pleased to we $XXX page, XXXX, to The XXXX of

industry at perception the During this our to the end first environment. in-house including launches the slippage no quarter, we our of saw fourth our generation vision, year launched different have launch with from according challenging vehicle And schedule, developed of platforms OEMs eight algorithms. virtually despite six we will

software. software for important NCAP became an of technology Polestar safety good a the car few making global This seen have we over X the next progress track months the tests. Veoneer. number And Arriver which for last X, are as and customer in is strong on the In create point runs Euro that on are to proof page, progress looking highlighted. We challenger we generation March, ADAS current leading

system well advanced hardware XX of Qualcomm and fully well. software also ADAS master launched have perception around is and resolution pilot system by track operating and running discussions Qualcomm challenges software the drive progressing at eight is Tier-Xs integrated The stereo Arriver, Veoneer's contains far accuracy. on very radar and Mercedes with XXX-meters unit with EQS up on XX automated AD vision Veoneer's comprised the so camera our functions contains collaboration driving. supreme Snapdragon recently we gigahertz first and with And range the platform Our angular fourth distance with generation OEMs. to high had system, highly the

in all progress. solid all, So,

We two integration years. key to areas that advanced take ready will and are many systems OEMs programs, the are Safety for on and to Active drive market

I formal So, to financial presentations now highlights. my for for Please, turn here stop the it over and Ray. Ray

Ray Pekar

the with of the million financial $XXX on line approximately Net points. market our first X the which the at next are quarter, strong million to program million. of growth resulted highlights strong growth which headwind now expectations $X of $X in internal XX% extra continued a of to approximately loss quarter. operating supply our slide, $XXX during over approximately million, with MAI our currency Looking sales ongoing of a percentage beginning of the were chain we and sales organic costs includes an of related represents The pleased performance disruptions and the quarter sales for the in

continued Also, cash million essentially quarter of our flow $XX without identify this for reduce reduction at in compromising the expectations year-over-year strong million to investments of our to to in beginning quarter illustrated capital the changing continue by of cost opportunities line environment, the $XXX future expenditure control. in growth, engineering fast was launches end the Our cash due position our focus. at strong with the as we our

solid performance prepare investments continued overall, during the as and make sales organic for growth we quarter So, first future. for strategic the

Looking on quarter next further details slide. first into the the

ECUs $XX million $XX compared the Safety sales was for Active growth growth Brake Our organic was the million organic and to of or mainly million was or $XX million other RCS organic where growth major XX%, for XX%, the prior was organic areas, million. increase as $XX organic of increase growth The sales product $XX quarter sales due the all the to the across year. was

of the translation In divestiture $XX addition, $XX million Asia offset essentially the million. net of currency VNBS impact impact

of sales Our million cost Zenuity step-up by million net lower $XX $XX costs approximately currency $XXX offset gross and decreased the by production due strong our the were quarter quarter to of partially benefit of disruptions the net in $XX the of overhead the million, from were build-up supports chain organic RD&E the and of by million $X effect for of a and million, growth. somewhat profit mitigated divestiture approximately supply million. $XX approximately during improvement additional which sales gross Systems related Brake organic to which growth

year-over-year $X more improvement of the of than $X million SG&A the costs the addition, during offset restructuring In quarter. million

cash EBITDA improvement flow of where million than $XXX operating offset more our net change was by was Lastly, capital. in lower year-over-year quarter the for last the than $XXX working the negative year million

which LVP, or the sequentially primarily fourth the $XX sequential our to our decline quarter as decreased now sales Looking year, performance XX% next net to slide. XX%. by due million the compared in to underlying the Sequentially, last on declined

in the negative working the currency X%, effects. Our to flow And organic million of million some of lower $XX net by operating and tax extra the $XX to the and capital RD&E RCS $XX was loss $XX Safety to sales mainly sequential Active including million costs organic gross in decline increase offset impact Sequentially, sales decline was million. due profit, or partially $XX on the $X operating approximately currency to cash million, disruptions, lastly, supply due of EBITDA gain payment due chain net million. related of approximately mostly which impact seasonality our was increase, primarily decreased and by capital sequentially effects

slide. on outlook our to now next Looking the

from XXXX remains for of year. the the outlook Our unchanged beginning

increase to where than a approximately sales to by XX%, net XXXX for to with expect X%. along is translation indication XX% exceed more organic we XXXX full-year compared our tailwind sales of growth Our as currency

XXXX mid-teens terms. We percentage the sales also will LVP in expect underlying growth organic for outperform our in the

XXXX expenditures performance per balance of sales be during operating cash XXXX, And $XXX $XXX to organic expect range improve result organic growth, net will XXXX. the a expected our the and sales during improve year XXXX Initiatives compared remain estimate million and million our XXXX. around we program be million as operating operating be and our to $XXX $XXX on expected to during to lastly, our as is the than more cash our XXXX, to in loss to sequentially to growth we leverage of quarter million improve we year-end XXXX half expect certain RD&E Capital headwinds. second of we As flow Market despite our loss Adjustment in for and at expect in strong

and mixed in very momentum uncertain in So, overall, macro continued a especially outlook, our environment. this positive

Now, to the call back over Jan. I'll turn

Jan Carlson

Thank you, Ray.

Turning up Q&A, health today's before I sincere a to sharp a the to formal safety, this continued Veoneer for like with entire and focus on the to quality team you comments their execution, extend earnings dedication call. thank would we over But new focused strong page, I to and concludes our and customer for please open technologies for quarter in turn the continuing conditions team go the difficult session. of our would Mark, and creation. very By operator, remained value like ahead. Q&A Mark, on to during The it that, first year. launching programs this moderate

Operator

Engellau the Instructions]. [Operator And Hampus question first from line our of Handelsbanken. comes of

Hampus Engellau

though and year. releases in to they Two the underlying seen you OEMs Arriver bit in your relating have to you you terms process, of questions are in they OEMs picked taking the seen they sub-suppliers, to for suppliers shortages fear product the test a production Arriver. having Second call-offs is of some guys could stock of related about customers that customers me. you question to Snapdragon now to being and the the is new delivery is in delivery that stock that as on prior talk where And demand the from the of up chip? back to to despite taken haven't suppliers this. still from Thanks. from a software OEMs that, some have customers maybe been quarter. production weeks press components little to are My light you because semi even on being some see My Veoneer question Very that have And that? are this having interesting shortages? from other you have remainder actually vehicle started on question first changed. have from and I changed, chosen take We've Qualcomm

Jan Carlson

seen have that are seen rare finished. products the First cars we parking some taking completely and question, occasions we have customers of not customers being

I that the happening on has that seen happened. quarter. process – have the running as I software quantify mentioned, have So, anything to we When it in chip. it, the this comes cannot of we Snapdragon during are Arriver, but we

text this of during activities expecting expect put formal half that to into Qualcomm that evolve that to Xs. and I are but having, the And a this Qualcomm we quarter this eight during able to Veoneer is approximately, vehicles customer being demonstrations in not second is the there here here and the around year. mentioned be XX OEMs with have We and quarter customers demonstrate thereafter ballpark only discussion also in having discussion. an to we as tier to throughout interaction involved customer to and do the is engagement further

we So among are it. that are OEMs those don't directly there XX have today as that OEMs, yes, involved customers in

And course that that is as much eager strong have for as demonstrate it. visually reality. we to on say a only customers. so, is in But based can see it they And interest there to I in been rather than practically about are of cars customer this more able

Operator

Bank. Rosner next of line our question And of Emmanuel Deutsche comes from the

Emmanuel Rosner

in versus rest the improve first quarter expect second still the you be semi sense or the quarter large you've headwind? a Could you give in second the a do and shortages, Should you will us year? seen the supply what how issues things chain over much the third have of impact of the

Ray Pekar

I we issue continue look quarter the somewhat. think to into when the expect second we here, semi

numbers first I here. worse expect think and at quickly the during day, we we Generally the end frequently think a optimistic second quite second I the changing speaking, second the now the changing this be the tend we I saw expect as quarter to we get seen as into that know bit how OEMs to quarter, to think year. it volatile the quite recover releases the dramatically during wouldn't it to the little quite continue are to and but say during continue quarter, I half on it here. the but be of more be recovery, remains the could of

uncertain during recover So, how continue still into it half. much the second will second the it's quarter and

Emmanuel Rosner

a Second quarter. guess also question, intake the first order took months your of as it end tell step some you in confidence the step of the of down, essentially full But year. last took down so this intake are then XX orders. the you indicated I gives And being solid of timing order you you the over Can guess seeing grow able to that what these us confidence? I a

Jan Carlson

intake XXXX. commented order here half have into our we and targeting and release we major that substance. an on quarter the of the that will think earnings in that are it that back-end are leads targeting and fourth I after RFQs award such the The be second progress we any already fall prospects loaded the pattern will

this said, You quarter. for were this seeing in last lower second XX order month we somewhat intake now first come back. And expect it's as half, to I

in to lower chip is beginning to in shortages. have it of the Some of first quarter but here might the the the due that we than anticipated been quarter, slightly

we expected maybe see that will about losses And Some the don't we accounted year, out. we first quarter. of haven't during the boards we here for don't have than that to beginning yet. in the have to Ray's pushed but here question been point, the had your how long that remain, slightly we of somewhat But lower any know even

less this beginning loaded in we So, year expected of this. the what fully be or more with and line structurally like is back-end the to in

Operator

next of Our comes from Smith of question Adrian Bank the at America. line

Adrian Smith

or first growth in quarter the double-digit we in terms point outperformance the in back And to of launches, factors global more vehicle function the control that just of and function trying get as question, year, would X% to not? acceleration mix versus full is is what's across if in what an revenue regions the of production, so First estimate normalization from that of driving contribution was specifically market out in half it figure a going it mid-teens versus you would for your you we're product to above in the something to that provided a light target to the range year? in what

Ray Pekar

I Yeah, a would the I particular, during of would it's say. year, of more half normalization in of the say second mix the

all lower that CPV the second here quarter, as first and the came clearly in being XX% growth change sales, in all particular, the Veoneer. during the here China our or of being in the China. less And a organic to with well. outlook, China negative from our indicated well, has we sales As LVP and of to of the expect somewhat we the the perhaps during of the half even on as mix shift on Based second in year, for that impact and quarter than

Adrian Smith

Arriver. second A question, longer around term

on kind rudimentary As any Arriver way Snapdragon? And that more for anything you your is other there a a think direct the apologies of sell than in software is about is trying it to agnostic into is to specific OEMs question, SoCs designed software development software or you precludes from Snapdragon? if agreement Qualcomm's this to on selling SoCs but level, in

Jan Carlson

focus We are work with in Qualcomm developing with here. collaboration the we will a Qualcomm, and this to

little it's for bit a the So, question of moot a time being.

our and efforts off collaboration running. starting up very and are and our this to all that to We hard software get on the platform working focusing Snapdragon run make

are that very, performance-wise, very compelling and in value customers that's is We cost-wise, to industry, It's competitive offer financially, why focusing we scale-wise because Qualcomm. this very that and doing gives think on a this we're a offer. superior

Operator

of Erik next Our comes SEB. from Golrang the of question line

Erik Golrang

presenting questions. it's incremental XXXX those second And Xs, the said we for feel attractive? leverage. you eight back XX% that If reason. on the we'll to going be meaning Arriver, the to one, the thinking? were they see should the step Is full I what through Yes, for that half. around you year, this where of at level QX. that say? QX, and see the with tier and last discussions unique which first that that do to above you, big be they margins because the put a quarter last go they then, the in was are OEMs assume is there What have so R&D that what's two coming in reflect on feedback back question right of with incrementals well and far? And the you XX What year, ambitions way out I period, we would second development that

Ray Pekar

Arriver on Maybe take can leverage, and question question. Jan take first latter the the I'll the

of, XX%. Regarding earnings the to the said call coming we February, to think on talked that. it, back leverage I margin around year-end the in operating at what about hold call back line there we leverage, We still gross

you in the quarter, happens related You've had we million right? when here the supply two look the what Now disruptions. headwinds, to first at got $X chain

In first addition also the you're we have of about quarter, to when year-over-year, step-up that, comparing $XX in production million. during a overhead

what sequentially holds things So, year. throughout But improve in expect the really is here that leverage those back to first quarter. two the we the

little I end bit to above would if year then number, the indicate we year XX%. of the So, the be think second the closer a the could XX% half that maybe

Jan Carlson

continue customers cost-wise, very covering level. high architecture is performance power also, consumption, the a think the allows interesting coming system If system. with type selling is I entry of is architecture scalable in level low It into additional compelling. is an the the it compelling up is I that performing, from that Arriver And to the offer here open and points this side, functionality on for high is OEMs what high that customers. a unique is is competitive to a It is rates which

connectivity worked into is also areas, being in combination. work is on and that think et Qualcomm now this thing and cetera, other expanded being Qualcomm with in see interest and another ADAS, in I giving an functionalities and can the used which car, infotainment to in seen have also with that other customers customers areas

So, several areas interest. of

wanted step. very car many now this by to as see next in in it's OEMs think a of the reality, I

Erik Golrang

the intake. Just one may, follow-up, on I if order

you can be the to year? How to the end up very getting orders full slow super the early that a the you still couple lose and say then to or tender and year number Given risky you a going be important back-end for high on you expectations, developments loaded, that's win in your few it's is for backlog? there very going are big

Jan Carlson

the need all for orders you everyone, of coming us. in they these then but that second schedule year. are orders we like half substantial not are here and are to It's are important and And targeting the they

to we important the as quite history. So, taken I you have have the that in the big as lead RCS we base us, a areas, when orders radar our of is think area an piece radar But area in also always and if look well.

it twofold. when it's comes vision I think also area, the here to really

look And maybe in to Qualcomm. vision probably it's If many an start next fourth and interested coming generation mandatory our are frame. for camera more interest XXXX, braking, And camera with in is that to together regulatory somewhat the XXXX, general the is going generation, when with our the fifth customers of et here you time in there you in a also system, generation by Europe XXXX generation, safety the be where environment, production – of that also predominantly technologies look looking XXXX the is emergency from there regulations cetera, timeframe. autonomous then, to for

So, is of more generation. interest and are an type that there normal there for on we business the looking of existing is

So, side. on that the is vision

all bigger situation the awards for are, and are aspects. targeting the for Qualcomm of several the the for by are generation, bigger us we – looking nature, important ones And, of fifth that this. course, awards So,

Operator

line question at Picariello comes from the KeyBanc James Capital Markets. Our next of

James Picariello

It the $X in or disruption the supply was looks chain fact chip like shortage quarter. million in

IHS' to forecast full recovery situation half? the related out in strong Thanks. the second the quarter the the be we sounds semiconductor remainder plays the you April just a in half. from should company back press that how It back assumes commentary, that to is on the though in thinking Can release elaborate and as baking what for how of about near the Just relative year?

Ray Pekar

that this year-over-year geared that's we'll the for less or production, call-offs. more the forecast. then are And vehicle for we more indicate the we assuming IHS light second toward think and outperform year, both of half our the current sequentially, I where quarter

half looking the think that So, is to the as well. LVP certainly, of outlook have certainly our to that for the second during we extent into recover factored IHS year, the I

what think similar look a have mind quarter to, I when coming I quarter, that step-up what we the year you which second flattish essentially it's we quarter. here. fourth from we quarter, you in had saw should the record during the fourth in in guess, LVP very the last at is Then the where third is keep LVP

from that supply So cost would also additional would related chain perspective, anticipate during in a factored we have we in particular costs here to I say. some the second quarter,

James Picariello

Within $XXX Active Controls? XX can Restraint the company's what trailing share month is intake breakout and just million, you order of the Safety between

Ray Pekar

the I think would the between if would the the which the the mix XX, Active XX% somewhere book. you XX% then at than trailing higher Restraint a to Controls, be Safety bit is look of and little be it's order remainder

look at like you order Safety talk Restraint order versus when Controls. in book book, think the Active the I more we two-thirds the is of

James Picariello

item, housekeeping what income the $X just in the Just a equity million curious. gain could ask was quarter? I If

Ray Pekar

that have investment the autotech. to related was we in That

that was that had we So a gain whereby issue just on market record to value investment, of non-cash. the a bookkeeping

Operator

question at line comes next Brian the from Our Johnson Barclays. of

Brian Johnson

in that the a trim have for NCAP for I on do noticed especially picture? comes vision, concern night question guess what And more Jeep kind night route second, into pedestrian increased Cherokee vision. safety, you acceptance Europe, I pedestrian mandating vision about but night more much Grand levels? with upper-end beyond strategic the of Is the does about say they third, one. know nighttime on mid-term that luxury the tactical detection for I upper And tough of, vision see not that. launch a level the night trim market? that a includes nighttime very enough the the and both just maybe standards making of a then

Jan Carlson

object. thermal of typical I a it we additional radars. putting different sensor night guess, all the to using It is technology, to know. superior or cameras as is as all, very normal here, vision long has when first a call sense to vision, it comes distance information It sensing you the

somewhat towards of it autonomy. see on So, autonomy. sold always for a I years, a future but now were has have has good from from the XX, level, niche think is for increased increased higher industry point product the we that years this you higher XX there a for the we interest level an of there in level but mentioning has been around coming This here interest. is of been number a and And

If look you the Cherokee the so Jeep that here, to to your level, upper is on point. trim

a more directed seeing, several it's having the for also But not interest OEMs for vehicle. cetera, this et also vehicles interest CAP this. showing So, mentioned, equipping in standard we and in an companies I are as the more global with solutions, car

care and So, where interest it's keep of developing it when it's remains keep take to going. also putting area coming. to be seen We we this dedicated product in that organization our

Brian Johnson

looking driver for something as used also monitoring. is Is infrared you're follow-up, at that well? a as Just

Jan Carlson

been inside it be could, vision So but course, It the far, radars, done well. also with vehicle. predominantly thermal sensing has as of

been the of cost now, efficiency the right has think of superior. As I technologies other

Operator

of from line And our next Vilela of question the Agnieszka comes Nordea.

Agnieszka Vilela

the million price costs is $X the of like kind Is detail? it of to get to because increases freight? about you microchips it is or for the it through because chain. supply the you Thanks. of what do Can customers? you higher of back prices to inflation chance I your to more First, explain cost ask And a related see in expensive also, this would

Ray Pekar

related to freight. premium that's Related mostly to million, $X the the

early up end the but commitments base that and will how could make work continue but prediction to can inbound, it's on when both and be would there. on both you And also with as to that, discussions customers But on freight it any make with being resolved, our supply premium outbound predominantly comes the this imagine, that some be to too So, ongoing it suppliers we this. to have we customers. any

Agnieszka Vilela

Can us cost higher on for the ramp expect maybe the need planning level higher any doing some you're continue savings more program also, you more quarters? now color up you you Thanks. in to hold million are give that, with is production what of in we And right to there? put launches? coming when the should this costs, $XX production overhead on or it to connection cost kind new And

Ray Pekar

When we level the up of production production this during talk to support to that a the about XXXX. new here we growth cost overhead step a kind have coming is on overhead,

increase we sequentially wouldn't expect to the throughout year. way material this any So, to continue in

to could The being, the towards but two labor, cost to the of Those step is main personnel time costs XXXX, that some end as contributors two we I indirect drivers, of course, into main equipment. preparing be increase the there well the say, increase. your Of further cost we stick for the would have. depreciation for really the are what that up year, as with related

Operator

question from Credit the our Levy line And next of of Dan Suisse. comes

Dan Levy

in quarter. First, to margin on just follow-up the wanted gross the

got broader what you have or incremental So, XQ? in the of says of the about and year appreciate some the And over maybe anticipate of margin you – course that and the margin the overhead. the course business over commentary on what the could launching gross the premium business contribution margin type on launches some the What did obviously But talk you freight about and have you've outlook? year. launching additional maybe of you

Ray Pekar

the guess, the overhead, even into you're below as take well do I you around But call talking as Well, the or that mentioned, XX% contribution that. leverage $X leverage, on the when or I a about million could it, slightly $XX think well so, consideration of chain, overhead million The maybe leverage above math. backwards you I supply was, the XX%. net

that extra leverage on clear. margin on of through ballpark the for of we there And we're just is time mentioned some in the costs of the incurring business, matter I the these earlier, contribution the that's be expect year. as the It's a being. again, So, XX% to for navigating gross new

to that, So, than that's as of And expect at kind at come we XX% could now. time we for higher things when that future we're be but back to to evolving. stick how the looking we'll a

Dan Levy

but like how over on us does margins a contribution its directionally sense that the give could launch? maybe or vary over okay, lifetime maybe when margin of margin program program? The change It a sounds you you are the your lifetime, of

Ray Pekar

things get into of I don't will we the details evolve. should think how

by think I program program.

of mentioned do growth to – here, various think there you on, we as end the at steps. as I the have day, comes are

support cost overhead your for And fixed growth that the unfortunately. free, costs a or step-up doesn't make come to your growth. You in

is program, some -- we're So, that's, get continue evolves. there to program in. by have going cost to how not into contribution that, But to that think you beyond I layer

Dan Levy

of question My couple weeks we a headline just is, in ago, Volvo. saw second a

more with they compute. their think they're NVIDIA I on are taking expanding and collaboration

provide take could multiple customers automakers on active there more a and you functionality you I but customer, can more Maybe are your color on just informing trying are with collaboration how own suppliers? is also versus functionality? at active So, does maybe role broadly work going to whether you of some relationship you for impact more with talk that about a safety with does taking future their implied relying recognize some Volvo? could So as just this all given ways headline customers broadly how what on their have is the

Jan Carlson

architecture starting has correct. our out And roll an next seen gone architecture us. existing Volvo an with Short/mid-term, out NVIDIA to NVIDIA Volvo and do said we you're remains long and overall. just how term, to it they're Volvo, the on to architecture are is going chip Cars. that be affecting based on their

will to we longer have we with that we So, a come. have relationship will for and long-lasting with Volvo have lasting a had years relationship and Volvo historically,

of So, out have demonstration when to how we we that that how And and course, seen will, there also offer running is up I architecture them show had when can remains vehicles. Volvo. for it's playing we received but we and cars, think our out as and – have well is what and when and more put be have into we that up discussions it Qualcomm by it's discussions, in will

And read more I their you role car car that But makers can is think, that several being work architecture formed. into carmakers own speaking, a do to valid how generally more are engineers makers. lot in-house. for taking software are not hiring active is all the

X. X case will that are more ecosystems I tier on OEMs think to be going and/or on ecosystems carmakers And – relying of Some forward. the still tier

on to Arriver, from I in be alternative, going from our different ongoing is we different the of some Veoneer case, able more As Or will said, that architecture, of and be our Qualcomm do more to OEM XX OEM. be discussions, work. to do then work. an of maybe and on had will we integrator and That the OEMs to the

Operator

line from Asumendi comes question of J.P. of Morgan. the José Next

José Asumendi

items. a Just few

May. a improvement geographical signs mix Are you talk of We're you can the April, or regional seeing already one, about little into nearly first May trends? mix? in The

And signs So, can business specific a we you also, in peaked guess a as little any talk question, you the complete the very these are RFQ of Qualcomm some process or all about sort – I think away all months year the a orders? away, suppliers think French discussions suppliers. has from relations OEMs, the and some as the we rounded with the where quarters away you the up guess, Or then, see Jan, sort as I America consider losses little the of that thinking Like, in growth ADAS coming also about quarters? about system, and the and, Ray, North on about the are more budget be create I good as And first quarters, for seeing Europe can picking the overall I company? timing? a speed? you bring think to the you in maybe in of little And do strategically should RCS? of ADAS change think consider that quarter? over bit drive Arriver seasonality situation a hardware a do perspective? a sensor Arriver the how and coming to you more product? Second new something the region this And are think have ADAS would bit is Is the Do with about much suppliers from not you improvement could you about you this could for can it suite, speak we

Jan Carlson

many should Ray, start? questions. That was you

Ray Pekar

about take RCS the and question I'll other the Maybe the question loss.

Safety the RCS we think we've look will year, I develop the some ideas throughout Active growth-wise. development again, the how on you given when at

the kind do grow back we above into expect can RCS to year. you of throughout market But RCS. So, the the

certainly expect haven't it terms, geographies. And particular to geography, in market. we any all that's from So, percentage above grow It's that coming would continue disclosed to not but one information, I we just from say. coming

loss, year, expect to operating throughout prepared a I in comment flow sequential well the cash the go in to back think Regarding related as the made the performance. – that operating remarks performance both we loss improvement the I I'd as

So, the specifically imply would QX? guess, guess I be you and haven't out that peak that, I at does that – could point. but we said come in would that be in this mean the loss

Jan Carlson

mix, to is were chip that course, different down. the thought shortages compared it China a they and that that into had somewhat pandemic are to look the appears – IHS earlier also there. what situation of compared And to and they we through we January, for in in the look If numbers, quarter, to you projected January of if second compared what situation

expect easy even and of effect from to in We recovering to very second year. be last year, of expect also shortages chip quarter on half have depending due year-over-year to second in but comparables the to into the us availability it's for an we mix then down, though chips, to situation, the abate continue to the

the the also products and are So bringing we we're we believe why paid those we launches seeing that's on the this will correct into that new and itself, market. on

earlier. our it guidance comes opportunities, to for I've tweaking the to when it When that Arrivers Arriver reiterating collaboration year. think and I mentioned are and seeking comes the We other

with Our focus work Qualcomm. to is now

the all Our that the on focus X different discussions XX then good and and to tier OEMs, take orders. that that is the Xs bring demonstrations start with and make running the to up And to into to OEMs vehicles. we have

if – we we it. when to asked get the You would out results are of coming aiming

and will XXXX. awards still see during are positive We optimistic that we

we much play optimistic So, And how holding are that then and on to will year. see But take awards how in will we this to that. out.

Operator

Our question of comes line Jefferies. the David Kelley from at next

David Kelley

provide timing maybe of platform your in role in when hoping was You I we more just then how detail rollout? potential fourth that generation a about referenced opportunity, should the and on that that China. system could bit you think

Jan Carlson

looking the believe we – that should expect we further new is grow follow-on orders first of there see one. is If are order something that to and this a can orders, on that we to

this awarded want us in in at the remarks, I joint said venture As to stage, very don't this has prepared a business. it's early. we it's global OEM – it China that

it, this venture get step want And So, as for more order. don't important we a lot I give to I colors to has, this customer joint to an us believe said, follow-on to on come. of this you is but orders it for

Ray Pekar

Maybe vision award I mentioned this that to night that have. we brings up that our customer

David Kelley

Maybe just a quick follow-up there.

the order includes vision Assuming I radars, far so as well. you as you're the software as what referencing opportunity it mentioned that's believe perception and follow-on when opportunity, systems

it's approach going systems-based more think of You forward? a

Jan Carlson

and supplier this coming be then is that happy with joint we when now, we in than you a to they customer This It we are follow-on what a are this to architecture here, venture to venture for we orders them are may more if that as customer. up joint something that it lead and that's But if are starting would new the then playing well will never on that know happens. can giving else. we to speculation us. with And to come are and have lead back what

Operator

comes And Michaeli our of Citi. the question next Itay line from from

Itay Michaeli

Just two me. quick from ones

you're XXXX booked target or already On remind the year XXXX just will what accelerate there? kind margins Ray, to the profitability you to of what about that second, from of in of And Thank here? then you. need you you XX%. need to XXXX? incremental kind to gross it get could to outlook, revenue you us this fully believe you do first, intake order that get Is mentioned have Does

Jan Carlson

are I $X.X the the indicating around orders for the take get can booked first of that billion to XX% piece. XXXX. you're to It's

Ray Pekar

than the and your overhead in course. factor calculation The contribution clarify, on the effect in once net you margin we I on is when part, leverage latter the to then, of which line, And gross just is your on goods XX%. direct which cost of contribution is the is the talk XX% that what is the profit to material, additional think gross profit, actually the from, addition comes production about higher where sold

So, But range the about the contribution XX% is net leverage, I generally XX% talked XX%, I historically, the a really margin, XX% we're think us we to have talk speaking. I we talking about around now. than contribution level for of think, for the higher when think but

Itay Michaeli

profitability? XXXX And leverage XX% net is the get to to sufficient that

Ray Pekar

Yeah.

any into further XXXX or point. We details haven't on given will evolve leverage at XXXX and XXXX this how the into

Operator

line of Mizuho. And from the Rakesh Vijay of our question next comes

Vijay Rakesh

Qualcomm newer How current the How does ASPs we should Just wondering pushing your that at some components the that you're of there? trends? to on on look Arriver. ASP compare

Ray Pekar

Could you please? repeat the question, Vijay,

Vijay Rakesh

Yeah.

Arriver Just the with on Veoneer Qualcomm? the for platforms content

Jan Carlson

with and it of also ECU ECU part cameras probably surround to radar we an it, a Well, the will ADAS will customer content it then of would of Veoneer, and up, with Veoneer the programs a when Qualcomm type course, for integrator be then will the be natural it's then it. supply then ADAS on and into of as be an components sensors put solution will, set Veoneer and

one So from be inside whole Arriver. pack a is the will of that It's Veoneer, Veoneer. software But part otherwise, thing.

Vijay Rakesh

half. you it at know As should your look nicely back into backlog, order I you mentioned up pick

Just if back get levels? XXXX and XXXX Thanks. wondering we to

Jan Carlson

more aren't giving indications. We

to now, here. But we here I in for second we intake that expecting than as – wins am the we We how second order and quarters to over order we be it higher half, that LTMs XXXX, bigger the is is bit will probably order are quarter, then again a expect stressing XXXX are into the come. saying see that report being intake developing

Operator

back we comments. as are closing to the hand for to our I'll close time, And speakers

Jan Carlson

I And your Mark. much, questions everybody for very like interesting also and thank would your today. to and then you Thank participation thoughtful

earnings a will Market we and firm to we We'll with remind talking you date the Day later quarter. July, third have But for call Capital that next planned our that a quarterly is to stage about. also with about come like Now back back tentatively I to come at would sometime you the date. a looking been ahead, also, during

and So, And healthy today. spring. talk thank healthy good time. then we very for next until a a And much I until wish stay good you pre-summer and you

you thank very all you. much of So,

Arriver Holdco (VNE) 29 Apr 212021 Q1 Earnings call transcript