2nd Quarter 2021 Financial Results - veoneer.com

© 2021 Copyright Veoneer Inc. All Rights Reserved PUBLICJuly 23, 2021 Veoneer - Magna Merger Agreement1

2nd Quarter 2021Financial Results

Earnings Conference Call and Webcast23-July-2021

© 2021 Copyright Veoneer Inc. All Rights Reserved PUBLIC

Additional Information and Where to Find it

This communication may be deemed to be solicitation material in connection with the proposed acquisition of Veoneer by Magna pursuant to a definitive Agreement and Plan of Merger (the “merger agreement”) between Veoneer, Magna and 2486345 Delaware Corporation. In connection with the proposed merger, Veoneer intends to file relevant materials with the United States Securities and Exchange Commission (SEC), including a proxy statement which will be mailed or otherwise disseminated to Veoneer‘s stockholders. STOCKHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS OR SUPPLEMENTS THERETO, AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VEONEER AND THE PROPOSED MERGER. Stockholders may obtain free copies of the definitive proxy statement, any amendments or supplements thereto and other documents containing important information about Veoneer or the proposed merger, once such documents are filed with the SEC, free ofcharge at the SEC's website at www.sec.gov, or from Veoneer at https://www.veoneer.com/en/investors or by directing a request to Veoneer’sInvestorRe lations Department at [email protected].

Participants in the Solicitation

Veoneer and certain of its respective directors and executive officers may be deemed to be "participants" in the solicitation of proxies from Veoneer’s stockholders in connection with the merger. Information about Veoneer’s directors and executive officers and their direct or indirect interests, by security holdings or otherwise, is set forth in Veoneer’s proxy statement on Schedule 14A for its 2021 annual meeting of stockholders filed with the SEC on March 29, 2021. To the extent holdings of Veoneer’ssecurities by such participants (or the identity of such participants) have changed, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 subsequently filed with the SEC. Additional information regarding the participants in the proxy solicitation and a description of their direct or indirect interests, by security holdings or otherwise, will be included in the definitive proxy statement filed with the SEC regarding the proposed merger, if and when it becomes available. This document does not constitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

July 23, 2021 Veoneer - Magna Merger Agreement2

Safe Harbor Statement


Veoneer Forward-Looking Statements

This document may include “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements relating to the completion of the merger. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. The reader is cautioned not to rely on these forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed merger and the anticipated benefits thereof. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements, including the failure to consummate the proposed merger or to make any filing or take other action required to consummate such merger in a timely matter or at all. The inclusion of such statements should not be regarded as a representation that any plans, estimates or expectations will be achieved. You should not place undue reliance on such statements. Risks and uncertainties include, but are not limited to: (i) the merger may involve unexpected costs, liabilities or delays; (ii) the failure to satisfy the conditions to the consummation of the transaction, including approval of the merger by Veoneer’sstockholders and the receipt of certain governmental and regulatory approvals on the terms or at the timing expected; (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; (iv) operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected; (v) risks related to diverting management attention from ongoing business operations; (vi) the business of Veoneer may suffer as a result of uncertainty surrounding the merger or the potential adverse changes to business relationships resulting from the proposed merger; and (vii) the outcome of any legal proceedings that may be instituted against Veoneer or Magna related to the merger agreement or the transaction contemplated thereby. The foregoing list of factors is not exhaustive. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Veoneer’s financial condition, results of operations, credit rating or liquidity.

You should carefully consider the foregoing factors and the other risks and uncertainties relating to Veoneer described in Veoneer’s Annual Report on Form 10-K for the most recently completed fiscal year, and other reports and documents filed by Veoneer from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Copies of these filings are available online at www.sec.gov. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Veoneer assumes no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Veoneer does not give any assurance that it will achieve its expectations.


Safe Harbor Statement

http://www.sec.gov/


• Veoneer Board of Directors has entered into a merger agreement, through whichVeoneer is acquired by Magna, subject to approval by Veoneer’s shareholders

• The agreement will deliver significant and immediate value to Veoneerstockholders through an attractive premium to our trading price

• In the agreement, Veoneer is valued at $3.8B or $31.25 per share

• The transaction is supported by shareholders representing approx. 40% of shares

• A merger will provide new opportunities for our employees to join one of the most capable suppliers in the mobility space

• The combined business will elevate its status as a full-systems ADAS supplier to the benefit of customers, supplier partners and ultimately consumers


Merger agreement with Magna


• Organic sales2 growth of 108% in Q2'21, ~58pp out-performance vs. the global LVP1, expect out-performance of mid-teens for full year 2021

• Semiconductor supply shortages continue to create industry delivery and cost challenges

• Significant regional mix swing in Light Vehicle Production from Q1 during the quarter, strong in North America, Europe and Japan

• Arriver on track with first in-vehicle demonstrations to customers with positive feedback

• China Active Safety momentum continues with new contract awards and launches during the quarter

• Order intake LTM3 was slightly more than $530 million of average annual sales at the end of Q2’21


Sequential improvement in operating loss and cash flow despite lower than expected LVP and continued supply chain challenges

Business Highlights – 2nd Quarter 2021

1 Light Vehicle Production,, 2 Non-U.S. GAAP measure., Last Twelve Months


Significant changes during Q2 2021

• LVP up 50% since Q2’20 to 18.1m

• Significant shift in geographic mix from Q1, with strong y-o-y growth in North America, Europe and Japan

• Veoneer content per vehicle is morethan 4X higher in NAM+EUR+JP compared to China (in relation to LVP)

• Global Q2 forecast lowered 10pp, with full year down 2 pp to +10% in IHS July vs April forecast.

LVP DevelopmentPotential stabilization of ~79M vehicles

Global

Units in millions

Light Vehicle Production

22,1

17,2

12,0

19,7

22,7

19,818,1

19,2

21,8

10

15

20

Q4'19 Q1'20Q2'20Q3'20Q4'20 Q1'21 Q2'21 Q3'21 Q4'21

1Light Vehicle Production according to IHS Markit as of July 16, 2021.

Units in millions

Light Vehicle Production Q2

1,3 2,25,7

1,2

12,0

2,9 4,2 5,51,8

18,1

0

3

6

9

12

15

18

NORTHAM

EUROPE CHINA Japan GLVPQ2'20 Q2'21


Geely KX11/EX11•AVV ~240K•MV4, SV4, 77Ghz, ADAS ecu, Z1S,

Volvo XC60 •AVV ~160K•MV4, 77Ghz, ADAS ecu, Z1S

Volvo S90/V90 •AVV ~70K•MV4, 77Ghz, ADAS ecu, Z1S

Honda Civic•AVV ~4900+¨´K•24Ghz

Jeep Grand Wagoneer•AVV ~80K•NiVi4, RCS

Mercedes EQ•AVV ~60K•77Ghz, SV4, ADASSW

Jeep Compass•AVV ~150K•77Ghz

2021 is another important Customer launch year


Top 15 in 2021 >$300M average annual sales, average CPV ~$160

7

AVV - Average Vehicle Volume are primarily based on the IHS vehicle volume planning assumptions over vehiclelife-cycle, CPV - Content per Vehicle Volume, Products – MVS (Mono Vision System), SVS (Stereo Vision System),MV4 (Gen4 Mono Vision), SV4 (Gen4 Stereo Vision), 77Ghz & 24Ghz Radar, NiVi4 (Gen4 Thermal Sensing NightVision), ADAS ecu (Advanced Driver Assist System electronic control unit), ADAS SW (ADAS Software), DMS (DriverMonitoring System), Z1S (Zenuity Software), HDLM (High Definition Mapping), RCS (Restraint Control System).

Q1’21 Q2’21 Q3’21 Q4’21

Grand Cherokee•AVV ~630K•NiVi4, RCS, DMS,

Pos. system

Mercedes C class•AVV ~280K•SV4, 77Ghz, ADASSW

Jeep Cherokee •AVV ~130K•24Ghz

Japan based OEM•AVV ~220K•SV4

Japan based OEM [Delayed to Q4]•AVV ~50K•77Ghz, SV4

Japan based OEM•AVV ~120K•77Ghz, RCS

China based OEM [Pushed forward to Q3]•AVV ~70K•MV4, 77Ghz, RCS

China based OEM•AVV ~60K•MV4, 77Ghz


Arriver software on Qualcomm’s Snapdragon Ride

being shown to customers

Volvo XC40 Recharge Top Safety Pick+ by IIHS

with Veoneer Vision, ADAS ECU, radars and SW

Subaru Levorg awarded top results in the Japan NCAPwith Veoneer Vision tech

Customer & Technology Progress


Financial Highlights – 2nd Quarter 2021


Strong Organic Sales1 growth, cost and cash control continues

Operating Results• Net Sales $398 million, driven by strong

performance in all products and geographies

• Organic Sales1 increase 108%, out-performed global LVP2 by ~58pp

• Operating loss of $92M, improved $12M sequentially, despite lower sales, mainly due to benefits from the MAI program

• Temporary gross profit headwind from supply chain disruptions and build up for growth, expected to sequentially improve during 2021

Cash Flow / Liquidity

• Cash flow progressing in-line with our expectations

• Operating cash flow of $(69)M

• Cash flow before financing activities1 of $(88) million

• Cash balance of $556M as of the end of Q2’21

Investments for Growth

• CapEx investments of $18M to support important upcoming launches during 2022

• CapEx ~4% of sales and D&A3 ~7% of sales

• CapEx decreased by $6 million as compared to 2020 mainly due to lower investments in facility expansions

• Continue to closely monitor and explore initiatives to minimize or delay cash requirements in the near and mid-term

1 Non-U.S. GAAP measure, 2 Light Vehicle Production, 3 Depreciation and Amortization (D&A) .


Financial Summary and change vs. prior yearVeoneer Group – 2nd Quarter 2021

Dollars in Millions (except where specified)

Q2’21 Q2’20 Chg. vs. Prior Year Comments

Net Sales $398 $184 $214 • Organic sales1 growth $199M mostly due to new program launches and Covid-19 recovery from 2020 where RCS2 $68M, AS2 $110M, and Other2 $21M, currency $15M.

Gross Profit%

$6215.6%

$31.9%

$59(13.7) pp

• Positive organic sales drove solid operating leverage, net currency $6M and benefits from the MAI program were partially offset by extra costs related to supply chain disruptions ~$4M.

RD&E, net%

$(108)(27.1)%

$(44)(24.1)%

$(64)(3.1) pp

• Lower above normal engineering reimbursements ~$80M in 2020, while underlying engineering costs improved.

Operating Loss%

$(92)(23.1)%

$(64)(34.8)%

$(28)11.7 pp

• The benefit from organic sales, net currency effects $5M and the Brake System divestitures were more than offset by higher RDE, net, slightly higher SG&A and $20M lower other income related to Brake systems recovery in 2020.

Operating Cash flow $(69) $(107) $38 • The main driver is the improved change in net working capital1 in Q2’21 as compared

to Q2’20,

CapEx%

$184.5%

$2413.0%

$(6)(8.5) pp

• Lower capital investments in the Brake Systems business and facility expansions.

1 Non-U.S. GAAP measure,2 Restraint Control Systems (RCS), Active Safety (AS), Other (Brake Systems and Brake ECUs).


Financial Summary and sequential change vs. prior quarter in 2021Veoneer Group – 2nd Quarter 2021

Dollars in Millions(except where specified)

Q2’21 Q1’21 Chg. vs. Prior Quarter

Comments

Net Sales $398 $419 $(21) • Organic sales1 growth $(21)M including RCS2 $(14)M, AS2 $(9)M, Other (Brake Systems and Brake ECUs) $2M.

Gross Profit%

$6215.6%

$5613.4%

$62.2 pp

• The increase was primarily driven by continued effects from Market Adjustment Initiatives (MAI) program which was partly offset by lower organic sales.

RD&E, net%

$(108)(27.1)%

$(117)(27.9)%

$90.8 pp

• Primarily due to higher engineering reimbursements.

Operating Loss%

$(92)(23.1)%

$(104)(24.9)%

$121.8 pp

• In addition to the gross profit and RD&E impacts, net currency was $(3)M, along with restructuring costs of $3M.

Operating Cash flow $(69) $(110) $41 • Primarily due to the improved change in net working capital1.

CapEx%

$184.5%

$122.9%

$61.6 pp

• Higher capital investments in Q2’21 due to timing effects from previous quarters.

1 Non-U.S. GAAP measure,2 Restraint Control Systems (RCS), Active Safety (AS), Light Vehicle Production (LVP).


Financial Summary and current year vs. prior yearVeoneer Group – 1st Half 2021

Dollars in Millions(except where specified)

H1’21 H1’20 Chg. vs. Prior Year Comments

Net Sales$816 $546 $270 • Organic sales1 growth $258M including RCS2 $86M, AS2 $141M, Other (Brake Systems

and ECUs) $31M, VNBS-Asia divestiture $(24)M and net currency effects $36M.

Gross Profit%

$11814.4%

$5610.3%

$624.1 pp

• New program launches along with the COVID-19 recovery from 2020, currency impact $10 million largely offset by extra costs related to supply chain disruptions ~$(9)M.

RD&E, net%

$(224)(27.5)%

$(175)(32.0)%

$(49)(4.5) pp

• Primarily due to ~$80M lower above normal engineering reimbursements in H1’21, partially offset by lower RD&E gross project costs and Brake Systems divestures benefit.

Operating Loss%

$(196)(24.0)%

$(186)(34.1)%

$(10)10.1 pp

• The gross profit improvement is more than offset by RD&E impact, net currency impact of $(2)M and lower other income ~$20M.

Operating Cash flow

$(179) $(116) $(63) • The negative change in net working capital1 in H1’21 as compared to the positive change in H1’20.

CapEx%

$303.7%

$519.3%

$(21)(5.6) pp

• Lower capital investments in the Brake Systems business and facility expansions.

1 Non-U.S. GAAP measure,2 Restraint Control Systems (RCS), Active Safety (AS), Veoneer Nissin Brake Systems (VNBS), Light Vehicle Production (LVP).


Outlook 2021Remains unchanged from the beginning of 2021


1 Non-U.S. GAAP measure, 2 Full Year 2021 Outlook is based on the change from 2020, 3 Light Vehicle Production according to IHS Markit (LVP).

2021 – Net Sales• We continue to see OEM interruptions due to global supply chain

disruptions, particularly during the first half of 2021, which are expected to continue into H2’21

• FY’21 VNE Organic sales1 growth is expected to exceed 25% YoY, expect to outperform underlying LVP in the mid-teens %

• FY’21 Active Safety Organic sales1 growth is expected to be in the range of 40-45% YoY

• FY’21 VNE currency translation, net effects are expected to be ~4% of sales

• FY’21 underlying LVP3 growth YoY ~10%

2021 – Key Indicators

• RD&E, net is expected to be in the range of $110 to $120 million per quarter

• Operating loss is expected to improve in FY’21 from FY’20

• Capital expenditures are expected to be ~$100 million

• Depreciation and amortization are expected to be ~$115million

• Cash balance is expected to be more than $400 million at year-end 2021

• FY’21 order intake is expected to improve YoY


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2nd Quarter 2021 Financial Results - veoneer.com