# Autoliv Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [Autoliv Inc](/companies/alv.md) (CIK 1034670)
- Form: 10-Q
- Filed: 2024-04-26
- Accepted by EDGAR: Apr 26, 2024, 09:54 ET
- Period: 2024-03-31
- Accession: 0000950170-24-048710
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1034670/000095017024048710/alv-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1034670/000095017024048710/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.62bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.17bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $443.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $113.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $132.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $194.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $26.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $47.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $126.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.52 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 83,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $122.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $140.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $56.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-03-31 | $569.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $4.01bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $8.32bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $3.66bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-03-31 | $1.83bn | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2024-03-31 | $310.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-03-31 | $2.43bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,899 characters.

*The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the United States Securities and Exchange Commission (the “SEC”) on February 20, 2024. Unless otherwise noted, all dollar amounts are in millions.*

Autoliv, Inc. (“Autoliv” or the “Company”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal operating subsidiaries, Autoliv AB and Autoliv ASP, Inc.

Through its operating subsidiaries, Autoliv is a supplier of automotive safety systems with a broad range of product offerings, including modules and components for passenger and driver airbags, side airbags, curtain airbags, seatbelts, steering wheels and pedestrian protection systems.

Autoliv’s filings with the SEC, including this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements and all of our other reports and statements, and amendments thereto, are available free of charge on our corporate website at www.autoliv.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC (generally the same day as the filing).

The primary exchange market for Autoliv’s securities is the New York Stock Exchange ("NYSE") where Autoliv’s common stock trades under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts ("SDRs") are traded on Nasdaq Stockholm’s list for large market cap companies under the symbol “ALIV SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv shares are traded on Nasdaq OMX PHLX and on NYSE Amex Options under the symbol “ALV”.

Autoliv’s fiscal year ends on December 31.

### Non-U.S. GAAP financial measures

Some of the following discussions refer to non-U.S. GAAP financial measures: see reconciliations for “Organic sales”, “Trade working capital”, “Free cash flow”, “Net debt”, “Leverage ratio”, “Adjusted operating income”, “Adjusted operating margin” and “Adjusted earnings per share, diluted” provided below. Management believes that these non-U.S. GAAP financial measures provide supplemental information to investors regarding the performance of the Company’s business and assist investors in analyzing trends in the Company's business. Additional descriptions regarding management’s use of these financial measures are included below. Investors should consider these non-U.S. GAAP financial measures in addition to, rather than as substitutes for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial measures have been identified as applicable in each section of this report with a tabular presentation reconciling them to the most directly comparable U.S. GAAP financial measures. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

### EXECUTIVE OVERVIEW

We delivered record first quarter sales, outperforming global light vehicle production (LVP) growth by 6pp. We outperformed in all regions, including China despite a negative LVP mix development with domestic Chinese OEMs growing by 17% and global OEMs declining by 5%. It is encouraging that our sales in India grew organically by 27%. Sales in India are now larger than in South Korea, accounting for more than 4% of our global sales.

We delivered results in line with what we previously communicated, despite LVP being 1pp below what was expected three months ago, and we are on track to deliver on our full year outlook. We expect a record number of product launches in 2024, despite some OEMs changing certain vehicle model launch plans, mainly for EV platforms.

Profitability continued to improve significantly, driven mainly by volume growth and cost reductions. Restructuring activities are yielding results with indirect headcount declining by around 1,000, or by more than 5%, in the past 12 months.

Our continued focus on balance sheet efficiency is supporting our strong performance for cash flow, cash conversion, and return on capital employed.

We are particularly pleased with our leverage ratio of 1.3x, which declined significantly compared to a year ago, despite returning $0.7 billion to shareholders and investing in footprint optimization and growth.

To support future growth, we are currently investing in increased capacity in Vietnam, China and India.

We are facing inflationary pressure again this year and we continue to expect compensation for what is in excess of what we can offset through normal productivity measures. The discussions with our customers are progressing according to plan.

As we have previously communicated, we expect the seasonality of past years to likely continue in 2024, with a gradual improvement throughout the year, leading to a full year adjusted operating margin (Non-U.S. GAAP measure) of around 10.5%. Key drivers for the full year margin progression are organic growth, our structural and strategic cost reduction initiatives, and a lower call-off volatility.

The 2024 development we expect should set up a solid base towards a continued high level of shareholder returns and our target of around 12% adjusted operating margin (Non-U.S. GAAP measure).

### Financial highlights in the three months period ended March 31, 2024

*Change figures below compare to the same period of the previous year, except when stated otherwise.*

**$2,615 million** net sales

**5%** net sales increase

**5%** organic sales growth (Non-U.S. GAAP measure, see reconciliation table below)

**7.4%** operating margin

**7.6%** adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below)

**$1.52** earnings per share, 77% increase

**$1.58** adjusted earnings per share (Non-U.S. GAAP measure, see reconciliation table below), 76% increase

### Key business developments in the three months period ended March 31, 2024

*Change figures below compare to the same period of the previous year, except when stated otherwise.*

- **Record first quarter sales, increased organically by 5%** (Non-U.S. GAAP measure, see reconciliation table below), which was 6pp better than global LVP decline of 1% (S&P Global April 2024). We outperformed in all regions, mainly due to new product launches and higher prices carried over from last year.
- **Profitability improved substantially**, driven mainly by organic growth and cost reduction activities. Operating income was $194 million and operating margin was 7.4%. Adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) improved from $131 million to $199 million and adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below) increased from 5.3% to 7.6%. Return on capital employed was 19.7%.
- **Strong cash flow improvement**. Operating cash flow improved by $168 million and free cash flow (Non-U.S. GAAP measure, see reconciliation table below) improved by $171 million. The leverage ratio (Non-U.S. GAAP measure, see reconciliation table below) of 1.3x was close to unchanged compared to three months earlier and 0.3x lower than a year earlier despite returning $0.7 billion to shareholders as dividends and share repurchases in the last 12 months. In the quarter, a dividend of $0.68 per share was paid, and 1.37 million shares were repurchased and retired.

### Business and market condition update for the first quarter 2024

### Supply Chain

In the first quarter, global light vehicle production declined year-over-year by around 1% (according to S&P Global April 2024). Call-off volatility was lower compared to a year earlier, as supply chains are less strained compared to a year ago. However, volatility did not improve compared to the fourth quarter 2023, and is still higher than pre-pandemic levels, and low customer demand visibility and changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability in the quarter. We expect call-off volatility in 2024 on average to be lower than it was in 2023 but remain higher than the pre-pandemic level.

### Inflation

In the first quarter 2024, cost pressure from labor and other items had a negative impact on our profitability. Most of the inflationary cost pressure was offset by price increases and other customer compensations in the quarter. Raw material price changes had a negligible impact on our profitability in the first quarter 2024. We expect the effects of raw material price changes in 2024 to be negligible for the full year. We expect continued cost pressure from inflation relating mainly to labor, especially in Europe and the Americas. We continue to execute on productivity and cost reduction activities to offset these cost pressures and will continue to seek inflation compensation from our customers.

### RESULTS OF OPERATIONS

### Overview

The following table shows some of the key ratios management uses internally to analyze the Company's current and future financial performance and core operations as well as to identify trends in the Company’s financial conditions and results of operations. The Company has provided this information to investors to assist in meaningful comparisons of past and present operating results and to assist in highlighting the results of ongoing core operations. These ratios are more fully explained below and should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The Company's management uses the Return on capital employed (ROCE) and Return on total equity (ROE) measures for purposes of comparing its financial performance with the financial performance of other companies in the industry and providing useful information regarding the factors and trends affecting the Company’s business. As used by the Company, ROCE is annualized operating income and income from equity method investments relative to average capital employed. The Company believes ROCE is a useful indicator of long-term performance both absolute and relative to the Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its peers.

ROE is the ratio of annualized income (loss) relative to average total equity for the periods presented. The Company’s management believes that ROE is a useful indicator of how well management creates value for its shareholders through its operating activities and its capital management.

### KEY RATIOS

### (Dollars in millions, except per share data)

|  | Three Months Ended or As of March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Trade working capital1) | 1,336 | 1,409 |
| Trade working capital relative to sales, %2) | 12.8% | 14.1% |
| Receivables outstanding relative to sales, %3) | 21.0% | 21.1% |
| Inventory outstanding relative to sales, %4) | 9.5% | 9.9% |
| Payables outstanding relative to sales, %5) | 17.7% | 16.9% |
| Gross margin, %6) | 16.9% | 15.2% |
| Operating margin, %7) | 7.4% | 5.1% |
| Capital employed8) | 4,003 | 4,118 |
| Net debt9) | 1,562 | 1,477 |
| Return on total equity, %10) | 20.2% | 11.3% |
| Return on capital employed, %11) | 19.7% | 13.0% |
| Headcount at period-end12) | 70,100 | 71,300 |

1\) Outstanding receivables and outstanding inventory less outstanding payables. See calculation of this non-U.S. GAAP measure in the table below.

2\) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales.

3\) Outstanding receivables relative to annualized quarterly sales.

4\) Outstanding inventory relative to annualized quarterly sales.

5\) Outstanding payables relative to annualized quarterly sales.

6\) Gross profit relative to sales.

7\) Operating income relative to sales.

8\) Total equity and net debt.

9\) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below.

10\) Net income relative to average total equity.

11\) Operating income and income from equity method investments, relative to average capital employed.

12\) Employees plus temporary, hourly personnel.

### three months period ended March 31, 2024 COMPARED WITH three months period ended March 31, 2023

### Consolidated Sales Development

#### (dollars in millions)

|  | Three Months Ended March 31, 2024 | 2023 | Reported change | Components of change in net sales Currency effects 1) | Organic 3) |
| --- | ---: | ---: | ---: | ---: | ---: |
| Airbags, Steering Wheels and Other2) | $1,781 | $1,673 | 6.5% | (0.5)% | 7.0% |
| Seatbelt products and Other2) | 834 | 820 | 1.7% | (0.5)% | 2.2% |
| **Total** | **$2,615** | **$2,493** | **4.9%** | **(0.5)%** | **5.4%** |
| Americas | $893 | $831 | 7.5% | 2.9% | 4.6% |
| Europe | 770 | 725 | 6.1% | 2.4% | 3.7% |
| China | 460 | 453 | 1.7% | (4.8)% | 6.5% |
| Asia excl. China | 491 | 483 | 1.7% | (6.6)% | 8.2% |
| **Total** | **$2,615** | **$2,493** | **4.9%** | **(0.5)%** | **5.4%** |

1\) Effects from currency translations.

2\) Including Corporate sales.

3\) Non-U.S. GAAP measure.

### Sales by product - Airbags, Steering Wheels and Other

Sales for all major product categories increased organically (Non-U.S. GAAP measure, see reconciliation table above) in the quarter. The largest contributor to the increase was steering wheels, followed by inflatable curtains, side airbags, and driver airbags.

### Sales by product - Seatbelts and Other

Sales for Seatbelt Products and Other increased organically (Non-U.S. GAAP measure, see reconciliation table above) in the Americas, Asia excluding China and Europe, while it declined in China.

### Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 5.4% compared to the global LVP decrease of 0.9% (according to S&P Global, April 2024). The 6.3pp outperformance was mainly driven by new product launches and higher prices carried over from last year.

Our organic sales growth outperformed LVP growth by 15pp in Asia excluding China, by 6.1pp in Europe, by 4.9pp in the Americas, and by 1.4pp in China. LVP growth in China was heavily tilted to domestic OEMs with typically lower safety content. Domestic OEM LVP in China grew by 17% while LVP declined by 5% for global OEMs.

**First quarter of 2024 organic growth**1)

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | --- | --- | --- | --- | --- |
| Autoliv | 4.6% | 3.7% | 6.5% | 8.2% | 5.4% |
| Main growth drivers | Toyota, Mercedes, Ford | Mercedes, BMW, Toyota | Volvo, Chery, BMW | Hyundai, Tata, Honda | Mercedes, Toyota, Hyundai |
| Main decline drivers | Stellantis, GM | Ford, Renault, Volvo | Honda | Nissan, Renault, Mazda | Stellantis, Nissan |

1\) Non-U.S. GAAP measure.

### Light Vehicle Production Development

#### Change first quarter of 2024 versus first quarter of 2023

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | ---: | ---: | ---: | ---: | ---: |
| LVP1) | (0.3)% | (2.4)% | 5.1 % | (6.9)% | (0.9)% |

1\) Source: S&P Global, April 2024.

### Earnings

*(Dollars in millions, except per share data)*

|  | Three Months Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net Sales | $2,615 | $2,493 | 4.9% |
| Gross profit | 443 | 379 | 17% |
| % of sales | 16.9% | 15.2% | 1.7 pp |
| S, G&A | (132) | (132) | (0.0)% |
| % of sales | (5.0)% | (5.3)% | 0.2 pp |
| R, D&E, net | (113) | (116) | (3.1)% |
| % of sales | (4.3)% | (4.7)% | 0.4 pp |
| Other income (expense), net | (4) | (4) | 11% |
| Operating income | 194 | 127 | 52% |
| % of sales | 7.4% | 5.1% | 2.3 pp |
| Adjusted operating income1) | 199 | 131 | 51% |
| % of sales | 7.6% | 5.3% | 2.3 pp |
| Financial and non-operating items, net | (20) | (18) | 10% |
| Income before taxes | 174 | 109 | 60% |
| Income taxes | (47) | (34) | 36% |
| Tax rate | 27.0% | 31.6% | (4.6 )pp |
| Net income | 127 | 74 | 70% |
| Earnings per share, diluted2) | 1.52 | 0.86 | 77% |
| Adjusted earnings per share, diluted1,2) | 1.58 | 0.90 | 76% |

1\) Non-U.S. GAAP measure, excluding effects from capacity alignments and antitrust related matters.

2\) Assuming dilution, when applicable, and net of treasury shares.

### First quarter of 2024 financial development

**Gross profit** increased by $63 million, and the gross margin increased by 1.7pp compared to the same quarter 2023. The gross profit increase was primarily driven by volume growth, price increases and lower costs for production overhead and premium freight. This was partly offset by wage inflation and adverse foreign currency exchange effects.

**S,G&A** costs were unchanged compared to the prior year, positively impacted by lower costs for professional service which was offset by higher costs for personnel, as wage inflation outpaced the headcount reductions. S,G&A costs in relation to sales decreased from 5.3% to 5.0%.

**R,D&E, net** costs decreased by $4 million compared to the prior year, mainly due to higher engineering income. R,D&E, net in relation to sales decreased from 4.7% to 4.3%.

**Other income (expense), net** was unchanged at $4 million compared to the same period last year.

**Operating income** increased by $67 million compared to the same period in 2023, mainly due to the increase in gross profit.

**Adjusted operating income** (Non-U.S. GAAP measure, see reconciliation table below) increased by $68 million compared to the prior year, mainly due to higher gross profit.

**Financial and non-operating items, net** was negative $20 million compared to negative $18 million a year earlier. The difference was mainly due to increased interest expense as the result of higher debt and higher interest rates.

**Income before taxes** increased by $65 million compared to the prior year, mainly due to the increase in operating income.

**Tax rate** was 27.0% compared to 31.6% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 2.5pp. Discrete tax items, net, increased the tax rate by 0.8pp in the same period last year.

**Earnings per share, diluted** increased by $0.66 compared to a year earlier. The main drivers were $0.52 from higher operating income and $0.10 from lower income taxes.

### LIQUIDITY AND CAPITAL RESOURCES

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial position, results of operations or cash flows. The Company’s future contractual obligations have not changed materially from the amounts reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024.

### First quarter of 2024 development

**Changes in operating working capital** was $114 million negative in the first quarter, compared to $202 million negative in the same period the prior year. The $88 million improvement was mainly driven by smaller negative effects on cash flow from receivables and other assets, partly offset by increased negative effects from payables and accrued expenses.

**Other, net** was $14 million positive in the first quarter, mainly related to deferred income taxes and other. The $10 million negative in Other, net in the same period the prior year mainly related to deferred income taxes.

**Operating cash flow** increased by $168 million to $122 million compared to the same period last year, mainly due to lower increase in working capital and higher net income.

**Capital expenditure, net** decreased by $3 million compared to the same period the previous year. Capital expenditure, net in relation to sales was 5.4% versus 5.7% a year earlier.

**Free cash flow** (Non-U.S. GAAP measure, see reconciliation table below) improved by $171 million compared to the same period the prior year, mainly due to the improved operating cash flow.

**Trade working capital** (Non-U.S. GAAP measure, see reconciliation table below) decreased by $73 million compared to the same period last year, where the main drivers were $172 million in higher accounts payable partly offset by $88 million in higher accounts receivables and $12 million in higher inventories. In relation to sales, trade working capital decreased from 14.1% to 12.8%.

**Leverage ratio** (Non-U.S. GAAP measure, see reconciliation table below) As of March 31, 2024, the Company had a leverage ratio of 1.3x compared to 1.6x as of March 31, 2023, as the 12 months trailing adjusted EBITDA (Non-U.S. GAAP measure, see reconciliation table below) increased more than the net debt (Non-U.S. GAAP measure, see reconciliation table below) increased.

**Liquidity position** As of March 31, 2024, our cash balance was around $0.6 billion, and including committed, unused loan facilities, our liquidity position was around $1.7 billion.

**Total equity** as of March 31, 2024, decreased by $199 million compared to March 31, 2023. This was mainly due to $225 million in dividend payments and stock repurchases including taxes of $476 million, as well as $63 million in negative currency translation effects, partly offset by $541 million from net income.

### NON-U.S. GAAP MEASURES

The Company believes that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items.

Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.

### Reconciliation of U.S. GAAP financial measures to “Adjusted operating income”, “Adjusted operating margin” and “Adjusted Earnings per share, diluted”

### (Dollars in millions, except per share data)

|  | Three Months Ended March 31, 2024 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP | Three Months Ended March 31, 2023 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $194 | $5 | $199 | $127 | $4 | $131 |
| Operating margin, % | 7.4% | 0.2% | 7.6% | 5.1% | 0.2% | 5.3% |
| Earnings per share, diluted | $1.52 | $0.05 | $1.58 | $0.86 | $0.03 | $0.90 |

1\) Effects from capacity alignments and antitrust related matters.

### Items included in Non-U.S. GAAP adjustments

### (Dollars in millions, except per share data)

|  | Three Months Ended March 31, 2024 Millions | Per share | Three Months Ended March 31, 2023 Millions | Per share |
| --- | ---: | ---: | ---: | ---: |
| Capacity alignments | $2 | $0.03 | $3 | $0.04 |
| Antitrust related matters | 3 | 0.03 | 1 | 0.01 |
| **Total adjustments to operating income** | **5** | **0.06** | **4** | **0.05** |
| Tax on non-U.S. GAAP adjustments1) | (1) | (0.01) | (1) | (0.01) |
| **Total adjustments to net income** | **$4** | **$0.05** | **$3** | **$0.03** |

1\) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).

The Company uses the non-U.S. GAAP measure “Trade working capital,” as defined in the table below, in its communications with investors and for management’s review of the development of the trade working capital cash generation from operations. The reconciling items used to derive this measure are, by contrast, managed as part of the Company’s overall cash and debt management, but they are not part of the responsibilities of day-to-day operations’ management.

### Calculation of “Trade working capital”

### (Dollars in millions)

|  | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| --- | ---: | ---: | ---: |
| Receivables, net | $2,194 | $2,198 | $2,106 |
| Inventories, net | 997 | 1,012 | 986 |
| Accounts payable | (1,855) | (1,978) | (1,683) |
| **Trade working capital** | **$1,336** | **$1,232** | **$1,409** |

26

Management uses the non-U.S GAAP measure "Net debt" to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore the Company provides this non-U.S. GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

### Reconciliation of U.S. GAAP financial measure to “Net debt”

### (Dollars in millions)

|  | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| --- | ---: | ---: | ---: |
| Short-term debt | $310 | $538 | $577 |
| Long-term debt | 1,830 | 1,324 | 1,601 |
| **Total debt** | **2,140** | **1,862** | **2,179** |
| Cash and cash equivalents | (569) | (498) | (713) |
| Debt issuance cost/Debt-related derivatives, net | (9) | 3 | 12 |
| **Net debt** | **$1,562** | **$1,367** | **$1,477** |

The non-U.S. GAAP measure “Net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses the non-U.S. GAAP measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company's long-term target for the leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) is 1.0x with the aim to operate within the range of 0.5x to 1.5x. For details and calculation of leverage ratio, refer to the table below.

### Calculation of “Leverage ratio”

### (Dollars in millions)

|  | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| --- | ---: | ---: | ---: |
| Net debt1) | $1,562 | $1,367 | $1,477 |
| Pension liabilities | 149 | 159 | 159 |
| **Debt per the Policy** | **1,711** | **1,527** | **1,636** |
| Net income2) | 541 | 489 | 416 |
| Income taxes 2) | 136 | 123 | 176 |
| Interest expense, net2,3) | 83 | 80 | 60 |
| Other non-operating items, net2) | 1 | 3 | 4 |
| Income from equity method investments2) | (5) | (5) | (4) |
| Depreciation and amortization of intangibles2) | 381 | 378 | 359 |
| Capacity alignments, antitrust related matters and the Andrews litigation settlement2) | 231 | 230 | 10 |
| **EBITDA per the Policy (Adjusted EBITDA)** | **$1,369** | **$1,297** | **$1,021** |
| **Leverage ratio** | **1.3** | **1.2** | **1.6** |

1\) Net debt (non-U.S. GAAP measure) is short- and long-term debt and debt-related derivatives, less cash and cash equivalents.

2\) Latest 12-months.

3\) Interest expense, net including cost for extinguishment of debt, if any, less interest income.

Management uses the non-U.S. GAAP measure “free cash flow” to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on the calculation of free cash flow, see the table below. Management uses the non-U.S. GAAP measure “cash conversion” to analyze the proportion of net income that is converted into free cash flow. The measure is a tool to evaluate how efficiently the Company utilizes its resources. For details on cash conversion, see the table below.

### Calculation of “Free Cash Flow”

### (Dollars in millions)

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Net income** | **$127** | **$74** |
| Changes in operating working capital | (114) | (202) |
| Depreciation and amortization | 96 | 92 |
| Other, net | 14 | (10) |
| **Operating cash flow** | **122** | **(46)** |
| Capital expenditure, net | (140) | (143) |
| Free cash flow1) | **$(18)** | **$(189)** |
| Cash conversion2) | **n/a** | **n/a** |
| 1) Operating cash flow less Capital expenditures, net. |  |  |
| 2) Free cash flow relative to Net income. |  |  |

### Headcount

|  | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| --- | ---: | ---: | ---: |
| Total headcount | 70,100 | 70,300 | 71,300 |
| Whereof: |  |  |  |
| Direct personnel in manufacturing | 52,500 | 52,400 | 52,700 |
| Indirect personnel | 17,600 | 17,800 | 18,600 |
| Temporary personnel | 10% | 11% | 11% |

As of March 31, 2024, total headcount (Full Time Equivalent) decreased by 1,200 compared to a year earlier. The indirect workforce decreased by 1,000, or by 5.4%, mainly reflecting our structural reduction initiatives. The direct workforce decreased by 0.4%, despite sales growing organically by 5% compared to a year earlier.

Compared to December 31, 2023, total headcount (FTE) decreased by 0.2%. Indirect headcount decreased by 200, or by 1.1% while direct headcount increased by 0.1%.

### Full year 2024 guidance

Our 2024 guidance is mainly based on our customer call-offs, a full year 2024 global LVP decline of around 1%, the achievement of our targeted cost compensation effects, and a sustained reduction in customer call-off volatility.

| Financial measure | Full year indication |
| --- | --- |
| Organic sales growth | Around 5% |
| Foreign currency impact on net sales | Around 0% |
| Adjusted operating margin 1) | Around 10.5% |
| Tax rate 2) | Around 28% |
| Operating cash flow 3) | Around $1.2 billion |
| Capital expenditures, net % of sales | Around 5.5% |
| 1) Excluding effects from capacity alignments, antitrust related matters and other discrete items. |  |
| 2) Excluding unusual tax items. |  |
| 3) Excluding unusual items. |  |

This report includes content supplied by S&P Global; Copyright © Light Vehicle Production Forecast, April 2024. All rights reserved.

The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. The Company has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs and gains related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and the Company is unable to determine the probable significance of the unavailable information.

### Other recent events

### Key launches in the three months period ended March 31, 2024

- **BMW 5-Series/i5 Touring**: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Seatbelts.
- **Subaru Forester**: Driver/Passenger Airbags, Side Airbags, Seatbelts, Pedestrian Airbag.
- **Dacia Duster**: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Seatbelts.
- **Hyundai Santa Fe**: Side Airbags, Head/Inflatable Curtain Airbags.
- **VW ID.7 Tourer**: Driver/Passenger Airbags, Side Airbags, Steering Wheel, Front Center Airbag, Seatbelts, Hood Lifter.
- **Tata Punch.ev**: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel, Seatbelts.
- **Renault Scenic e-Tech**: Driver/Passenger Airbags, Side Airbags, Steering Wheel, Front Center Airbag, Seatbelts.
- **Tank 700**: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Knee Airbag, Steering Wheel, Front Center Airbag, Seatbelts, Hood Lifter.
- **Li Auto Mega**: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags.

### Other Items

- On February 1, 2024, Autoliv announced it had priced a 5.5-year bond offering of €500 million in the Eurobond market. The notes were issued as green bonds on February 7, 2024 at a coupon of 3.625%.
- On March 6, 2024, Autoliv announced the renewal for one year of its €3 billion guaranteed euro medium term note program, originally established on April 11, 2019.
- In first quarter of 2024, Autoliv repurchased and retired 1.37 million shares of common stock at an average price of $116.78 per share under the Autoliv 2022-2024 stock purchase program.
- Following Autoliv's first partnership in 2021 with SSAB on fossil-free steel, we now introduce two additional collaborations for carbon-reduced steel with Arvedi and ThyssenKrupp. The aim is to reduce greenhouse gas emissions in our products by utilizing low-emission steel and increase recycled content in the material.

## Market risk

As filed, 288 characters.

As of March 31, 2024, there have been no material changes to the information related to quantitative and qualitative disclosures about market risk that were provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024.

## Controls and procedures

As filed, 1,140 characters.

(a) Evaluation of Disclosure Controls and Procedures

An evaluation has been carried out, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 225 characters.

As of March 31, 2024, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024.

Filed Apr 26, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-048710. Last ingested by Listed: Nov 2, 2026, 09:42 ET. No prices; not investment advice.