Autoliv (ALV) Q2 Earnings Beat on Airbags Unit Strength

Autoliv Inc. ALV reported second-quarter 2023 adjusted earnings of $1.93 per share, beating the Zacks Consensus Estimate of $1.45 and rocketing 115% year over year. Higher-than-expected revenues from the Airbags and Associated Products segment led to the outperformance. The company reported net sales of $2,635 million in the quarter, which topped the Zacks Consensus Estimate of $2,508 million and soared 27% year over year.

Organic sales rose 27% year over year and breezed past our estimate of a 17% rise, thanks to new product launches and pricing strength. Autoliv reported an adjusted operating income of $212 million, which surged 71% year over year. Adjusted operating margin was 8%, higher than 6% in the year-ago period on the back of improved organic growth, price increases and cost control efforts.

Autoliv, Inc. Price, Consensus and EPS Surprise

Autoliv, Inc. price-consensus-eps-surprise-chart | Autoliv, Inc. Quote

Segmental Performance

Sales in the Airbags and Associated Products segment totaled $1,757 million, beating our projection of $1,565 million. Revenues rose 32% on a year-over-year basis. All major categories within the segment witnessed organic sales growth. The primary reason for the upside was a rise in sales of inflatable curtains and steering wheels, followed by side airbags and passenger airbags.

Sales in the Seatbelts and Associated Products segment totaled $878 million, up 18% from the prior-year quarter and marginally missing our projection of $888 million. Organic growth in Europe, followed by China and the Americas, was the contributing factor.

Region-wise, overall sales in the Americas during the quarter under review totaled $916 million, which surpassed our estimate of $707.5 million and increased 24% year over year. Sales in Europe totaled $751 million, topping our forecast of $678 million and surging 23% year over year. Sales in China came in at $497 million, missing our projection of $589.8 million but up 37% year over year. Sales in the Rest of Asia totaled $471 million, up 28% year over year and slightly below our projection of $477 million.

Financial Position

Autoliv had cash and cash equivalents of $475 million as of Jun 30, 2023. Long-term debt totaled $1,290 million. Net capital expenditure jumped to $124 million, compared with $139 million during the corresponding period of 2022. At quarter-end, free cash flow (FCF) was $255 million against a negative FCF of $190 million in the year-ago period. During the quarter under review, Autoliv paid dividends of 66 cents per share and repurchased 0.48 million shares at an average price of $85.20 per share.

2023 Guidance Reaffirmed

The company forecasts full-year 2023 organic sales growth of around 15%. Adjusted operating margin is anticipated within the 8.5-9% range. Operating cash flow is expected to be $900 million for 2023.

Zacks Rank & Key Picks

Autoliv currently carries a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space include Ford F, General Motors GM and PACCAR PCAR. While Ford sports a Zacks Rank #1 (Strong Buy), GM and PCAR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 6.6%. The 2023 EPS estimate has been revised upward by 4 cents in the past 30 days. The EPS estimate for 2024 has moved north by 3 cents in the past 30 days.

The Zacks Consensus Estimate for GM’s 2023 sales implies year-over-year growth of 6.8%. The EPS estimate for 2023 has moved north by 28 cents in the past 30 days. The EPS estimate for 2024 has moved north by 26 cents in the past 30 days.

The Zacks Consensus Estimate for PCAR’s 2023 sales and earnings implies year-over-year growth of 17.4% and 36.7%, respectively. The 2023 EPS estimate has been revised upward by 2 cents in the past seven days.

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