VNE - Earnings call transcript Q2 2021

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Operator

Hello and welcome to the Veoneer Q2 Report 2021 Call. Throughout the call, all participants will be in a listen-only mode. And afterwards, there'll be a question-and-answer session. Today I’m pleased to present Thomas Jonsson. Please go ahead with your meeting.

Thomas Jönsson

Eunice, conference everyone call much, quarter our very earnings XXXX and you and to welcome second 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,

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

to and have an If that the which slides, the Harbor statement, cover we presentation today both will which here are next this Safe includes page, should of the actually two today. Q&A follow part you integrated look

we presentation, Carlson. that, possible. second and we our to we are disclosed During flip we can next as just a the call figures where is PM GAAP Jan questions two the release We quarterly requests press please to X:XX the filed turn CET, many With at work Harbor so mentioned the our XX-Q Safe call the intend SEC. that CEO, of the page, these conclude as to limit maximum I'll yourself will over and and in the with non-US the actually can will of in page be reconciliations reference of to some that which measures

So, Jan, please take over.

Jan Carlson

to Thomas. to much, everyone call. QX I Thank our welcome you also earnings would like very

page. Turning the

Magna comment a our expected. like Magna, Safety, decided both Active This development since amplified. merger XX% a Magna, Active Board on area, long-term. partners, per Despite $XX.XX recent position years. market for share events coming Safety a our market supplier. this Directors on a change shortages, faster our is smaller short-term risk of like this have through book. large merger quarterly by technology shares. needs managed go Veoneer merger to and of significantly company The will well XXXX. will which to when -- market set no Safety also we through spin as going share. our of an than ecosystem is rapid to more order In the the our the disruptive to these cutting the Active today is it's very experienced a agreement consolidation strong have price. has supported production have developments, development. higher enter focus developments With past over with COVID-XX with if continues share, But edge represents or premium and a offering Yesterday The announcement deteriorated its of not to more This years levels a conditions is I is shareholders the could have ago. offer changed report. Magna. is industry-wide like risk that expect the taught come company since us than chip would webcast even automotive in are constraints challenges and XX these lead the agreement during shareholders months that Veoneer clear Adding to come with hit supply Combined the world unexpected and back this have with XX% the into Veoneer forecasts in and Light shifts technology changes investment OEMs significantly representing vehicle higher through are Market to few driving production significant main

opportunity for offer, find discussions that, home with the this a focused employees. shareholders ADAS as Board when capabilities, a our let's webcast So good With value compelling release. as software to and electronics with to a saw enters and large, technology call for to our participant need deliver the Directors for the our good main industry of a it into as earnings stable well and present Magna like and topic get this immediate significant back to us

well during quarter Turning To global lower leading partly over through and the page. pleased ongoing These the explained with Veoneer's progress of second sales cash sum improvements and the quarter. gross improved I'm very is to were the market continuous vehicle in as growth basis extent up, by outperforming was vehicle profit vehicle XX initiatives, uncertainty The adjustments its disruptions, COVID-XX Veoneer challenging flow. pandemic and loss for production, sales, from quarter. strongly large Despite operating lower -- Organic performance sequential a outperformance supply achieved as shifts its points production. in regional to second production we large the progress the part XXXX. XXX%, a throughout expect overall light

the delivery continue to industry supply The create launch operations. shortages and outgrowth. our Our in heavy drive challenges ongoing semiconductor to also contributed costs period

thereby We and to XXXX, of $X to created continue gradually with by our to million. market adjustment been The year. directly second to shortages from effects program the Costs to the this expect the improving the half pandemic. has but supply disruptions initiative amount these associated year-over-year semiconductor helping instrumental disruptions into performance COVID-XX ease are mitigate and estimated

with reduced our second the cash we a operating $XXX losses As quarter and of ended balance result, million. a

The AD best demonstrations positive and the unit, active Great taking the awards recently Motor Wall feedback. and honored quality first-in-vehicle China the Arriver, on continues celebrated good momentum time. to safety award the the with place by launches with contract for ADAS is track during with first customers quarter. software team being in new And and Our

this wins value finally, year order above was further confidence the $XXX a expectations launches first During million, we important which slightly the markets. and months year, than than during own the half is of had customer securing more the intake And and last XX our in XXXX. in Chinese in order higher gives

page. the Turning

compared last our year quarter quarter growth mix same in to quarter up sent second compared when quarter In production margin. fact, with regional production this COVID-XX levels. low which record to were in favor a North vehicle vehicle light the Xx vehicle down worked with is was China, XX% greatly outpacing The in first broad content strong more to production and than to Europe light our Japan contributed our higher America, than year-over-year in revenues

ahead the 'XX. Looking production vehicle expected increase is quarter in into third approximately X% next quarter, sequentially light by to

from For XXXX of XX expected million million the compared reaching full in approximately XXXX, vehicles to an XX% year vehicles is XXXX. approximately XX increase

situation Let's page. on next have into a our the launch look

wins a well us with momentum of technology, to right least achieve very launched track, and in-house at year now radar, is further midterm years six this system. the for where therefore through in establishing are the year including vision, fourth OEMs EMA other XXXX eight on supplier signed XXXX, new we the short-term one like have somewhat customers launch program challenger timings target that important vehicle where schedule, back vision, on we launch the is the although end our number effects to to And vision vision to the key X system is pleased perception customer algorithms, vehicle. held in us of fluctuations platforms from software in flagship and different OEM our the in Just yet the a content would bringing a highlights ECU It integration have our Geely for our these have China another customer volume we are further $X.X the for to generation as the the developed capabilities. demand. our four. I'm will vision us, launch not positive by in According I million of our among strength illustrating China highlight Veoneer. full based number of like for Executing a sales. This

new to proof I leading would for the It's generation meet global Award Japan star the and Safety that X capabilities. Pick for page. Qualcomm's for software. mitigation stereo the and turn Volvo hardware, with it we outperforming Top to software good who in the The highlighted systems making in rated with on Xth Safety of Ray in over Recharge like Snapdragon create in-vehicle quarter was Insurance demonstrated vehicle equipped May, particularly highlights quarter. a variant for appointed positive XXXX vehicle-to-pedestrian the vision best specification. next now Subaru clients Veoneer's is other avoidance whose on Active time Please, X XX challenger and another vehicles. being point to vehicle-to-vehicle are the re-engineered of by the In system, the as are current for platform United The We in-vehicle one Arriver, generation the progress software, feedbacks. prestigious track to Ray. NCAP first Institute XCXX generation won highlighted financial States, Subaru's Levorg Arriver star Safety EyeSight ran to run Highway crash in a

Ray Pekar

next Jan. We slide. turn our highlights you, Thank the to financial slide,

are continued organic second XX approximately quarter, $XXX points. with approximately which billion We during of growth pleased market the sales of our -- represents growth percentage of over a strong

Our lower quarter. of expectations beginning net during sales of erosion from the to mainly the our call-offs quarter, customer the $XXX our were million than of due the

end our strong Our at And the at quarter, expectation million cash $XXX our to focus. was our the beginning the flow of better the continued of than cash due quarter growth our of position slightly without identify reductions expenditure launches, compromising in year-over-year we R&D control. capital continue illustrated opportunities investments this future cost to quickly as changing by environment, reduce for in to

quarter for the strategic sales good So for financial performance a prepare the we make future. growth overall investments as very and for organic continued

were the increase $XX $XXX slide, growth, XXXX. the XXX%, the new was million and million or the into of details Looking organic Safety launches product or net rather LVP across from our RCS recovery sharp was due the sales further the XX%. most the organic pandemic million second for The while areas in Active next course on quarter organic program $XXX growth the growth sales for was increase to quarter

and year year, the due engineering that to $XX million change $XX $XX the organic related extra Our chain RD&E, $X improvement were $X Brake increased million in engineering other period due net above compared offset million than $XX of currency saw million higher same mostly XXXX. income this the initiatives, were offset normal due operating partially lower mainly as and last a by recoveries, net during benefit SG&A approximately million a restructuring which reimbursements was sales other in adjustment combined million year to to costs $XX costs by gross Systems of during disruptions. market in profit which growth, we the supply gross The year-over-year the last to partially $XXX year and recovery of XXXX XXXX. quarter the last the million million $X higher million to driven profit were income, by quarter. the loss mostly was

cash for negative our year million of a caused $XX last year, working better the by last here pandemic. capital million Lastly, impact flow negative driven quarter operating versus than net $XX mainly in was by the the stable XXXX

sequential the to performance out on slide. the Looking next

Our for net to since LVP. the linked decreased from the sequential business $XX million more or the is was X% RCS sales sales of first to the second quarter sequentially as evident sequential LVP closely decline of compared The the decline of underlying X% quarter X%. $XXX million in more

While reimbursements primarily the this initiatives, which declined the due the X%, quarter net sequentially profit RD&E, market to the development. growth decreased our the in our lower to million sequentially Active from were Gross engineering $X over recoveries, area. million strong offset partially organic adjustment by second product Safety quarter. benefits primarily higher from previous increased including sales during due customer market $X reflects

operating operating and capital improvement net our cash during loss quarter. due Lastly, the flow primarily million $XX to working improved the

first on slide. our next results top to now the Looking

versus The sales net a XX%. Restraint of million contributors organic driven point half increase primary sales Safety Controls outperformance was growth percentage $XXX million million XX%, LVP. $XXX first XX which growth organic Our to sales were mostly Active or $XXX and of by XX% represents the

which first were operating effects lower change most and driven While the the half recoveries or mostly, by for year-over-year The divestiture. mostly System gross profit. the offset other net loss higher by -- engineering was Brake currency income, entirely offset

And of is consideration profit to close our gross mention $XXX XXXX. our margin a as gross first due year, should mainly LTM in resulting XX%. improvements gross compared to I These XX.X% the to on half in basis strong the are million to a margin offset now that the million divestiture organic of tailwinds with During of increased XX.X% year-over-year effects. $XX by disruptions. adjustment into market along take extra related estimate chain growth to for currency half and year approximately market costs the we when were sales We partially initiative the engineering above supply which by costs underlying improved first certain

to working million cash due first negative operating of the our $XX in of half million Lastly, flow year. swing during -- the $XX capital net the decreased during

now Looking outlook to the page. on XXXX next for our

unchanged the growth from organic LVP to beginning Our full XXXX as for in exceed essentially sales is a the current implies of the the underlying teens which indication mid versus XX%, outlook remains year. year an The percentage. outperformance

outlook now at currency approximately beginning the X% quarter. tailwind indicates the translation versus Our second the net X% a of of

during to of as growth, program we strong in result adjustment despite compared $XXX be range initiatives $XXX loss sales headwinds. the and to our market a net in operating expected XXXX, million As expect and RD&E million the organic XXXX per quarter certain to of is to XXXX improve

operating of than be to And $XXX end million in expenditures million we cash approximately improve XXXX. to for operating organic the sales flow lastly be our performance XXXX, on as sequentially more We we and of the our second to we growth our and to XXXX XXXX. improve expect expect at expect XXXX estimate balance leverage loss half cash $XXX during capital during

overall, will turn targets, in especially in this momentum and very over With to results continued I So our outlook uncertain carrying and it our positive environment. Yan. into that, over midterm mixed a

Jan Carlson

Thank you, Ray.

to the formal Turning we presentation. the come of page, end this

back today's like As formal host merger X. on health a programs And still Day to But a And team conditions. sure turn to this that, focused call. event have for seen, I Q&A, may and you challenging move team dedication, new customer safety. entire a comments this Veoneer as the Market said what quality, have up are and the for cancel execution Thank technologies we you. concludes the remained I'm Capital sincere during would into sharp thank to strong before The you earnings Eunice September that, on due planning the to to agreement Having we for call and their with focus launching I to we Magna understand. with with open decided Q&A. continued extend are you we on

Operator

Thank DNB Please comes Gunell from line you. go ahead. question of [Operator Instructions] first Markets. the from Joachim Our

Joachim Gunell

Good afternoon. Thank you.

So seems mean more X market I standalone from we agree to this in logic consolidation a gain with strategy ADAS with reversal be industrial it a I sense made as thought Tier 'XX. supplier the to Veoneer like although, in scale, for

change bit what And so, about can you just perception? talk a this is driving in

Jan Carlson

production. environment us, Well, a are back mentioned, we are light significant deterioration seeing that seeing very And in XXXX currently we different for a as vehicle today. seen we have in

We technology OEMs general. have in of seen market, the change in and the and speed in

significant better strategy core that software We strategy. are make happen into a seeing is a on environment account. ADAS, have in to the company will area in control we and difference that where that is in focused, clear our focus into have it and in come focused technology things, focus a Combining And things in an are electronics and asset focus these the that we that over. can think something Veoneer we also is for cannot taking

If difference on strategy the to compare out, and when and you on mechanical of part. occupants. kinetic occupant another absorption the of Magna the with mainly company look is the started we a is pirate energy ADAS Autoliv protection Autoliv beginning the from focusing focusing Whereas here articulating technical

very fits strategy, we well what it the that in very and well fits with home with think here Veoneer Magna we for So their present.

Joachim Gunell

sense be advanced timing And going to with the agreements can far side, how and give you, discussions regards are the on some for signed? some more Thank of to Jan. the you Arriver more here

Jan Carlson

customer in-vehicle on are demonstrations we to that we customers road are And are more in get discussions within and expectation having customers. conclusion now that ongoing, awards really the have year. some first we demonstration read that Not to an good than and with the

that. than concrete more nothing So

Joachim Gunell

you. Thank

Jan Carlson

Thank you.

Operator

And ahead. line of Please the go from next comes question Joseph RBC. the from Spak

Joseph Spak

Magna deal talking indicated Thank of XXXX, you accretive year guess, a first you materials I getting in that. a being very I them know and previously much. of going the some ahead through sustainable towards as profit more just about to had this question,

that? to from here and the for term of could if you Veoneer, know sort anything into I talk maybe path there -- read see that of changed, of your environment the comes the proxy sort keep is we'll saying forecasts but you But out. of helpful. sort has some that'd be about longer So

Jan Carlson

view profitable a We have in nothing to they reiterating, sometime And to that how here the accretion on cash we I add beyond comment the am what not positive we XXXX. in are on. and earnings in writing flow XXXX, situation etcetera, release are becoming during

we here outlook year way, It's the manage to good think the change We to situation the since release. Maybe able term. earnings on not team outlook despite our times. strength longer either the strength is have that for no our the our in And the previous changed to execution. essentially being have here challenging I to the a

Joseph Spak

just your now Maybe they've to deal having good good can challenges? programs you're there -- legacy of can company got your interest days, Autoliv some the progress legacy there that -- go like as sort from seems But maybe Magna seem with history of suppliers right, Arriver then those on of managing again, of some one. -- challenges, progress one but back would the it could path ADAS Autoliv harken on suppliers you sort continues the may and your Jan, And make the some line sort the potentially side like multiple on of and having some opportunities, like Okay. to and based on on is be maybe experience, for in and obviously just if of final how face about there. what so. well vision also based

Jan Carlson

side the will I let on comment stand Magna Magna. the for Yes,

off development we Mobileye and remember out well. our started you own cooperation that side, then and had a Autoliv worked the we with On

I say the only in Veoneer that to the out we and acted leading situation So very with today. worked with fine to done partner good did development we in that from separated now customer a we up program. have we experience that leading up can and way and And that that we our the own are for

of So this Magna, I people. ask have had a to for and that you the out good Magna will turn how experience

Operator

Okay. Thank much. you very

Operator

Bank. question the from Emmanuel next Deutsche go ahead. the Rosner comes And line of from Please

Emmanuel Rosner

question very you thank Arriver. the on outlook One much. follow-up I Yes, for guess

that being Arriver you the Tier multiple supplier multiple I as Xs. I forward, software to updated larger you had well by a really? owned X a think other Tier guess had Those X with discussion going X, So last was Tier in OEMs Tier as the quarter sell Arriver ability as more reposition change to to

Jan Carlson

Yes, the will with that. have not believe operating we not Qualcomm to current arrangement and we reason are under Qualcomm no support

we operating same continuing forward. to in way So this are the going

is there to So change strategy our no here.

Emmanuel Rosner

had been thinking? OEMs Okay, terms of that discussions some with of and does feedback anything terms their but in having in from around Tier you these acquired by being change and Xs partner the Magna, of multiple it

Jan Carlson

all, to world. with discussions that any OEMs as this customers any first was the company yesterday, change had Magna these a of as any of all this our have of very of such we the well-known in announced hours around I haven't no customers. -- Well, anticipate morning is from and can't I

think should So there I change. any be don't

Emmanuel Rosner

faster, in you you it more a a little playing Okay. I better or just like said for of hadn't just you -- Was second give that the to that quarter And more in new XXXX than anticipated. new the of it? full the And guess than you out second contracts be XXXX. And the questions I expected view the obviously volume? bit detail out reiterated then, bit you Can just new better guess can had I order, order played business. what on things order, year part sort

I XX think XXXX last months actually $XXX the was basis. million on

tell So the expected us half you Can just that? better to is expect second this drive you year. what

Jan Carlson

things. it's combination in order good of several a quarter, the in Well, intake second

second been half parts have into have forward, some quarter. that We from but -- pulled second

on that So that we Radar. We new was what the we also is had haven't better-than-expected. said seen coming some orders

perform still think what second expecting were came is in some in of is first really have we order it half that we than very pointing year we quarter. combination And half stronger much a of in XXXX But second that intake. opinion, stronger, the So of a I will we second are quarter out have strong both. half a to

to no this. on are of hold We we So then it's there this numbers able staying or week on change is outlook. quantification easy are We pushed may it's color year volatile in a not then out or not for three world or to you because over give that and in of to be a the to more it's We're the our this a orders it, numbers. and we different but and later, two situation. so coming lose affecting the

out year. of and than on we're staying caught holding better to So last it

Emmanuel Rosner

All right. you. Thank

Operator

line And Hampus the the of Engellau from Handelsbanken. next question comes from ahead. Please go

Hampus Engellau

Thank I much. have you questions. very two

even The new of Magna the and is running carries out. identification merger mobilization going software Arriver's and decision business it remains the is that given Qualcomm where the your question. process like they back will this to first the play How that going also difficulty] That's how to terms on [technical have software getting in risk you first into current manage is collaboration of and question customers. mitigate the

growth we've order years. issue Second about years like for And timing the coming there now since in question is struggling you're backlog I here. been some with on the IPO stellar capitalizing XXXX. more mean, the really

we in the the [technical decision? why you. back more my bid so have major two change decision of Those which on And the not need R&D to on test the capital Thank makes Board's this you take are And later. timing to the there terms and is is difficulty] question accepting on questions. license best the spending now a

Jan Carlson

on one change a Qualcomm no belief to intention have the it is. situation, Qualcomm that first has the on strong we starting the how corporation Yes, in

have the have intention And Magna know to to in know other other. sure will from each to continue it then believe suppliers, get This this, I'm will offer tried I valued but offer. been to they it. very a superior from When agreed of Qualcomm Magna creative as operate of talk corporation allude each a is to that that will they timing as it we to with that believe this here, a way comes believe to is later, Veoneer. Board to operation reason and how we we situation details year as going the recommending to So know forward. shareholders. and looks why this the three And road. already now in not don't down or or the is, continue you the two about the But like the the being a Qualcomm side has is

you You opportunities risks only an as and know to you going have your offer and own that your decide that right And you own upon plans ago into on we a and have are you now. have we two have plan, of see look that we have quarters forward. that. quarter since we we or holding guidance that strong we And believe a our outlook, to believe changed a can strong haven't

in that. fact, things side. it's the And going creates have strong to that Board in more is on or value for industrial the an for a decided their So to home to us, offer get we you But that to change. there can take and then that something from tend customers, around on, accept more into a I environment has to safeguard is employees, for changing that the think are satisfy shareholders you find risky if a When that the side, see these commitments our then uncertain player, anything account. is we no assets

year simply is in going years You know that a don't in that offer month, now, is a or you how from don't happen. to now the if two in on from know table

We And with Board are and to this conclusion. at decision and the making forward carefully we analyzed the have information best looking this has plan the information looking have come into and hand. and the the outlook

Hampus Engellau

[Indiscernible]. Thank you.

Jan Carlson

Thank you.

Operator

the line comes Suisse. of And the ahead. from Please question next Dan go from Credit Levy

Dan Levy

you. morning. Thank good Hi,

cited what acquiring a sense was could to may competitive you there -- you just you? us First, a extent maybe in others have process? give that this Were were interest

Jan Carlson

said, been want as go the And Board right of I analyzed into discussions has with now. looked of I carefully partners and this to has Well, alternative discussions has way. along And into more carefully the been that there don't has the this transaction as situation.

will We that the have the describe will out and all process. proxy coming

Dan Levy

more can of to a look in business has And strategy? just give And we out the environment that roof the has to pursuits? And to a today, business resources Brake it business wonder quarters, even years past the progression the was your lower at XXXX. extent limited how constraints if vigilant your larger maybe LVP limited the But certainly go so order come couple narrowed intake. sense more the some a what pursuits? Great. on then order Systems want of your of is higher years, if down Or Obviously, to or I over over XXXX, the change second, adjust focus maybe a focus some us role. has maybe what you does pursuit plays intake that extent more you resource

Jan Carlson

point intake. and lower see can for order constraints we to think don't I resource

and that on production focusing alternative light It's think where areas environment focus vehicle where company industry under a affecting is an I it's where OEMs entire a like pandemic heavy you are in Veoneer. company is pressure, the going affecting affecting have like on electrification, Veoneer. COVID-XX

as that we a is a strong, limited negative can cash are we got very of that very coming good neglect and a to you environment, is but constraints as and are have in flow are skill of have product portfolio, a good long think place tough a in position can ecosystem not we think situation I have with cash better that very its we negative we I Magna's can providing simply the product that good a resources sets without structure, offer flow. balance a we and but in. And a have very the sheet that company financial into

we deny indications customer to if see situation in difficult may negative that. of on a today, are areas that And can't submitted. are forward the and you according us. effect we flow, a have constrained way and then have a have you We a sees good other cash the and facing that where But as guidance they negative

have have seen seen our to our They this much They this forward from the think to get our situation the for and agreement portfolio and are. that come products that very signing company of much execute on type that by is assets leading the is Magna. to I looking people we is I have abilities with a programs. I'm constraints. Veoneer. that good have into capabilities skills it And away of and very product that as And we financial our And what have them this very appreciated that hope. and

Dan Levy

Thank great. much. very you Okay,

Operator

next the ahead. of comes from Adrian Smith from go Please Bank And of line America. the question

Adrian Smith

your Good a in free fulfilled morning, perhaps If flow the obviously Magna guys. different cash will significant To ask a acquisition a generator. question is needs of capital way. closes, any around then Magna, be which by

the year, of for doesn't staring still a acquisition cash burn $XXX down like something million and balance close cash barrel whatever reason the future, you're the then put end the you if this in However, the in require capital at position extrapolate plus. you at million which additional in where we of if year point could could $XXX a some the of year, next in

acquisition keeping products, funded technology in the potentially the how we So apart? the investing you contingency plans should think about fall business think and as internally should and about

Jan Carlson

shareholders support signing agreement. First from XX% of the of the when all, we have already

a hope we convinced very that successful we the a and closing are have good and make will votes. get We

in are We looking direction. that definitely

XXXX. become cash We also in flow plan have a we where positive

performance. seeing are in executions in continuous improvements We our

in has So you screen. not been here are radar talking our that for us, the about speculation

We and we and are according able focused company to to running do at that doing comes later the that will to plan, what are be our take when in executing we a think it we stage. question

have we backup not that had talking internally about. you're the So as discussion plan

Adrian Smith

another to around business can help their per XXXX of of of which Okay, annum, disclose that's kind revenue of kind targets. revenue. on A suppliers question new helpful. current bridge lot the backlogs future business or new then revenue financial net And roll

a and revenue target $X.X lot not timing a that how scale and to mention you a magnitude visibility of for that on terms versus and the been of can assumptions macro how programs of billion And or volumes, few based based is you’ve today in of have and target signed of As environment the landscape. the you technology much in we has changed that some various plus, couple think maybe about much referenced times provide the with negotiation? on awarded on color is midterm lot lower on the years have past

guys? that on to based of So just you more out been one programs big are is target is that yet announced assumptions much that from some on based how how trying be have to figure internal much versus

Jan Carlson

when we based primarily target billion at of $XX look Yes, that is at beginning XXXX the the the on I we've order book that think that the out, laid have year. we

XXXX, So business, look the that already at target vast specifically majority of we when bought. is that or

XXXX primarily bidding right are we and now, for when it's look at what So beyond. we

positively booked. some will Although have But could impact vast is business the this year won we majority that the do -- of XXXX we XXXX number. positively or

about uncertainty course, XXXX pretty you I take you LVP, of the we you’ve around but rates, uncertainty as target stands currency the as it today. have think the feel and good So, around mentioned,

Adrian Smith

comment, question. for Okay, great. That's guys. taking Thanks helpful the

Jan Carlson

Thank you.

Operator

from go you on is line comes hear The of ahead. your unmute Please Brian. please line Brian, from can't next Seaport. question We mute, if the yourself? Brian can Lombardi

Brian So Barclays. Johnson let's Please go try the next one. ahead. from

Brian Johnson

technical the home fees for everyone. the long-term out that couple as congratulations afternoon, or part deal? this proxy, negotiated anything any questions. are there good A of else but And breakup the come been have will Yes, know a team. great on I on Veoneer

Jan Carlson

on we said, and not commenting of referring, out I it on the are process. saying are it's deal in here. We're this, the the the details as document how described process we be will structured and will Yes, we all

Brian Johnson

know on kind Okay. And A to it. will this questioners issue, maybe thoughts of then other but secondly, become Magna's and of it. I your alluded couple

of reseller around product some adding the a line, Mobileye traditionally Intel been has value it. particularly Magna So

Arriver You, substantial of progress. and of chosen course, have with vision we're your course, own approach making

plays Tiers you based do forward? vision that choice technology? actually the solutions? Xs Will give how to going and think Magna they coexist Arriver different So to out Can transition large

Jan Carlson

conference heard this Magna you seen call sure here may this have I'm morning. the call -- or or earnings call Well,

competencies and they ask represents. Autoliv of I Magna in I again to question and there. to think they Magna about how how we had a the the in Magna development the -- what out speculations the to fine in that you Magna, will -- when resources had team. are in software you inside out the excited about ask Arriver, reiterate out Arriver call it. for it we that I had this work got those got we are here started experience addition or that it question only can forward around several have we will how How earlier years looking us for play all we before have say But worked I'd that Autoliv. And of ago we that sense

Brian Johnson

you. thank Okay,

Operator

go Danske the next line the ahead. Bank. of from question And Bjorn comes from Please Enarson

Bjorn Enarson

more a the And Hi. Yes. numbers outcome course. the that is this you'll a good best get Arriver standalone a a this the for that sees think first offer as addressing shareholders? so question bit you to today. risk the Or you QX lower offer have the software? if the on little as being the on you good valuation us in of can of obviously much you. that -- is fair accepting that it believe offering increased I has has offer, The and a you congratulations you're of Board Thank a company understand as help all, are

Jan Carlson

so have different and an value parts as company are an offer to the of grow. this on of on I'm is out that but for commenting always offer the of of we staying we I'm of accepting staying course, And course and the you on or that shareholders -- shareholders this And for dive side. can totality parts that. And alternative is here and the the different developments with one out then totality. Veoneer entire for other of looked value the and reflected conclusion how or into No, the other for getting on not with, do what can offer we Veoneer on based the parts part one different it, I But can one, here. in or parts commentary the this different the has an Board the

Bjorn Enarson

assume been of also Thank that I would again that they such Board discussion? by as they part And part important the on least Qualcomm of are -- Arriver, as assume you. And before -- as for would is Magna at well, an that addressed of have is the the calculation. I is part

Jan Carlson

this of and and the quite in Bjorn, of But, Veoneer very the if interesting suppliers Arriver take you a very, well. up is course, you one few really different leading I in that can pieces know the look mean, fight into area. market, bits this the with challenger

part. So that an of it's course, interesting

can end You Restraint worldwide the mature ballpark XX% space. the business share in take of leader on other representing that Control very to a it, market a

Active our is player. a You which also Safety, in represents the which our sales activities, can take Radar bulk leading of

value the a of And sees. one our a what every and here position each So is it. significant and for Board think significant areas that I represents product bigger

trading are other. say that can't one You one against the we

the are itself. We on totality offer the on looking

Bjorn Enarson

Thank you. much. very Thank you

Jan Carlson

you. Thank

Operator

from go comes ahead. the question David next of from Please line the And Jefferies. Kelley

David Kelley

and morning, afternoon Good good Hi. everyone.

five maybe landscape top starting the to just Can about think the you four, Veoneer you scale. combined players historical put as about we ADAS. opportunity the in as that for assume I Active your share market company, believe Just and share in particularly in share and and the X% I see it to competitive relates with would maybe the you XX% market Safety? combined Magna talk

Jan Carlson

the No, combination $X.X pro portrayed talking in the and Active and their to how is view And I and I the the to forma And call they Magna market buyer the growth think was of want there that. should combination ballpark and growth two represents here I here. it. conference about billion to how stay the rate out It to slides the of position refer growing in XXXX Safety. a in the that

question that So Magna. to have I to defer

viewed very we good we basis and for can being have in for the Veoneer growth good very with a think this speak and with how I as and viewed have opportunities. asset ourselves we a Veoneer position

have XXXX I We probably that in boosting to their And how billion giving are and much the is But Magna. going are sales. indicated Magna think do, you addition for growth. they looking they that $X.X ask in should by what

David Kelley

on term disruption Maybe to shorter shortages. had Okay, got ask. it. I more Thank you. question supply and

impact some half quarter. the on the to the normalization continuing that channel? visibility about color versus sequential year. second out thinking pace maybe provide of was into I supply of And second you're you just could there in referenced hoping this some just what how seeing the the You you're even

Ray Pekar

first when think sequential half subside the the we Yes, to improve. certainly at the into half expect I look of second we the year, impact the or from to cost

there chain there's And supply expect no out as into I we hiding there's this could well. that. think still However, and XXXX behind continue constraints

more year and more there's more as suppliers is and next this and to go going customers think I into more well. acknowledge starting to that

end day, we that continue end sure with customers at transparent our our to be in cost the to customers, we avoid try work to the of of with like do can the all and think see I the constraint, can at But is the second expect improvement impact P&L. being make but the some into So do closely we still some the half, day. be

Jan Carlson

the to quarter. point shortages still performance having $X wanted I out effect negative for of chip the a of our million actually second

think still worse. managing $X It's a For much a it it's I quite could it's by be -- be team ours to able a money, like our this to million. company good think been And lot we of have I achievement here, well. but very

David Kelley

helpful. Thank you, both. That's great. Okay,

Jan Carlson

you. Thank

Operator

The go next from line Wolfe Research. question Please ahead. comes from Rod the Lash of

Shreyas Patil

like something traditional not Veoneer, Rod. see in on working if is Veoneer you radars, that I'm And for on. Patil you've the sure I've of radar and has systems, from in Shreyas of also leader in working Number is as development as one, not regarded you This how radar radar gigahertz and do it's kind -- imaging Hi. questions from Veoneer currently XX mentioned, been expanding particularly systems. in terms Two that's potentially business you're work. on imaging something well impacting been Magna heard you something me. have? a future

Jan Carlson

I going to is and upon. product would And the in we activities and think they that we I having Well, discussion, here, interesting own into ongoing that use that imaging how also radars having Magna an use are looking to their are they a Veoneer. again looking and activities think are be on are going what are how we

listening Magna to to the listening complimentary each and very think to other. our I product discussions, find they portfolio

So lacking, what here they that we have into their thoughts what etcetera. may are think fits that I be

again, of should many times on compared how they it's they talk but thing I've buying said they to course the So, natural to it what you have. call, this what about here, Magna are now view,

understand, are their activities not me it's can of hard We to comment indeed as you on. aware for

Shreyas Patil

in expected size that What year? were just size -- engineering Okay. what of then of And you us And this what the program? from you do And the the see QX? of that market on be how business, then, can what adjustment initiatives big kind that? remind the savings reimbursements is to

Jan Carlson

reimbursements specific typically the during give quarter. don't we Yes, engineering

related I the think $XX it -- above normal was it we such a engineering, as had because last such such to work. had a prior called of an and million -- year, period out impact, lot

the the of in the all impacts. improvement cost But think the give combination $XX all of divestiture that's what about details an has here it's of at engineering that we script again, in we generating. for that market the on is year. that the the the we and first look estimate And been half that don't a cost I net -- initiatives, when look at when gross we I I impact the adjustment side say mentioned on must million

in got So down. the you R&D, related has the and also to then then cost but And gross from the underlying cost P&L. not don't engineering have Brake Systems additional come the we costs benefit have equity anymore core you've Zenuity, method having

think some should there area that one, the talk So the been -- but mentioned then engineering. did in receive or the we the as have earlier, has big And of course, I profit gross the during I we big not about some recoveries contributor here. think quarter, on I customer

Shreyas Patil

Okay, thanks.

Operator

And from question Please we one have ahead. from Filatov go Berenberg. Michael more

Michael Filatov

Thanks my question. for taking

I bit than expected. think looking at mean, incremental gross little I the have would you just higher So a margins,

initially, XX% in incremental then think, that the this of cadence? it think gross can was about I to XX%. maintain should half? we after follow-up Do as another you margin back well. elevated expectations that you sort of How got think I've And

Jan Carlson

look you the the the year, around indicated XX% had leverage at I Yes, much above earlier the think gross that's quarter. even slightly And pretty maybe we year think, when XX% line that margin in the I profit, in as leverage level, the on the gross with maybe level. in underlying what talked improves throughout we the XX% about

on meet deliverables. we’re think that we're those -- I to we believe So track

Michael Filatov

the portfolio acquisition, got Is sort and some of facility of portfolio? it. any sort rationalization your of your there terms of in product footprint in manufacturing then portfolio guys overlap? just have footprint you the maybe some And of Okay, your or expectation product overlap or

Jan Carlson

had it. Magna comments press $XXX it. in well, on besides that I’m not release a cannot million that, in they're synergies on for No, position comment I to to comment I And looking their no have that. in XXXX. in

Michael Filatov

just And one one. great. quick Okay,

and a is with plan market Magna roadmap sort what recently Just [indiscernible], LiDAR kind because game LIDAR bringing to is Innoviz, relationship of with given this with automotive LiDAR, their historically? you your partnership, announced any got there of to experience sort of grade has

Jan Carlson

good they achievement that going good this think to with and partnership a we their strategy I forward between to Innoviz how and very is it is a be do going [indiscernible], to leave going that what's Boras, Magna. are so very think We and

Michael Filatov

you. Thank Understood.

Jan Carlson

Thank you much. very

Operator

to back further I'll as the And no questions, are there hand it speakers.

Jan Carlson

for questions. good All in much. everyone call. Thanks your would right. your I much insightful and to like Very this participation earnings for very Thank you very very good. thank

summer safe XX, et to release And there calls, to you earnings we and good all And and I Now next looking you very is look and meantime. you. wish XXXX. care later. and forward quarterly various our meetings October speaking you Thank in a for tentatively out take talk drive the planned to looking ahead, forward cetera, please in

Operator

call. all conference Thank for our concludes This you attending.

You your may now disconnect lines.

Arriver Holdco (VNE) 23 Jul 212021 Q2 Earnings call transcript