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Autoliv Refinances Its Revolving Credit Facility

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Price movement 

Autoliv (ALV) rose by 2.4% to close at $109.83 per share during the second week of July 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.4%, -7.9%, and -11.1%, respectively, as of July 15.

ALV is trading 2.2% below its 20-day moving average, 7.4% below its 50-day moving average, and 5.0% below its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap Value ETF (JKI) invests 0.81% of its holdings in Autoliv. The ETF selects from the 70-90% range of US market capitalization, sorting value stocks based on ten factors. The YTD price movement of JKI was 10.0% on July 15.

The market caps of Autoliv’s competitors are as follows:

  • Delphi Automotive (DLPH): $18.3 billion
  • Magna International (MGA): $14.9 billion
  • Gentex Corporation (GNTX) — $4.6 billion

Latest news on Autoliv

In a press release on July 15, 2016, Autoliv stated the following, “Autoliv Inc. (ALV), the worldwide leader in automotive safety systems has refinanced its existing $1.1 billion multi-currency revolving credit facility agreement with a group of 14 banks. The facility has a five-year maturity, with extension options for up to two more years. The facility agreement is for general corporate purposes and replaces our existing $1.1 billion syndicated facility, which matures in April 2018.”

HSBC, Mizuho, and SEB have worked as active book runners, coordinators, and mandated lead arrangers. Bank of China, Citi, DnB, Nordea, Morgan Stanley, Société Générale, and Wells Fargo Bank have worked as lead arrangers.

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Performance in fiscal 1Q16

Autoliv (ALV) reported fiscal 1Q16 net sales of $2.4 billion, a rise of 11.8% over $2.2 billion in fiscal 1Q15. Sales of airbag products, seatbelt products, passive safety electronic products, and active safety products rose by 12.2%, 1.6%, 17.5%, and 50.7%, respectively, between fiscal 1Q15 and fiscal 1Q16. The company’s cost of sales as a percentage of net sales fell by 2.5%, and its operating income rose by 156.5%.

In fiscal 1Q16, ALV’s net income and EPS (earnings per share) rose to $133.2 million and $1.51, respectively, compared with $35.7 million and $0.40 in fiscal 1Q15.

Autoliv’s cash and cash equivalents fell by 12.9%. Its inventories rose by 7.8% between fiscal 4Q15 and fiscal 1Q16. In fiscal 1Q16, its current ratio and debt-to-equity ratio fell to 1.7x and 1.1x compared with 1.8x and 1.2x, respectively, in fiscal 4Q15.

Quarterly dividend

Autoliv declared a quarterly dividend of $0.58 per share on its common stock. The dividend will be paid on September 1, 2016, to shareholders of record at the close of business on August 18, 2016.

Projections

Autoliv (ALV) made the following projections for fiscal 2Q16:

  • The company expects net sales growth of ~10%.
  • It expects sales growth of ~6% from merger and acquisition activities (Autoliv-Nissin Brake Systems and MACOM).
  • It expects an adjusted operating margin of 8.5%. This excludes costs for capacity alignments and antitrust matters. This projection includes ~$10 million in integration and purchase accounting costs for the joint venture with Nissin Kogyo.

Autoliv (ALV) made the following projections for fiscal 2016:

  • The company expects net sales growth of more than 7%.
  • It expects sales growth from merger and acquisition activities (Autoliv-Nissin Brake Systems and MACOM) of ~5%.
  • It expects an adjusted operating margin of 9.0%. This excludes costs for capacity alignments and antitrust matters. This projection includes $20 million–$30 million in integration and purchase accounting costs for the joint venture with Nissin Kogyo.
  • The tax rate of ~29% excludes any discrete items.
  • The company expects an operating cash flow of ~$0.8 billion.

In the next part of this series, we’ll look at Johnson Controls.

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