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Veoneer, Inc. (NYSE:VNE)
Q4 2019 Earnings Call
Feb 5, 2020, 7:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 Earnings Release Conference Call. [Operator Instructions]

I'd now like to hand over to your speaker today, Thomas Jonsson. Please go ahead, sir.

Thomas Jonsson -- Executive Vice President of Communications and Investor Relations

Thank you very much Summer, and welcome, everybody, to our fourth quarter 2019 earnings conference call and webcast presentation. And sorry about the slight delay here in the beginning. Here in Stockholm, we have our Chairman, President and CEO, Jan Carlson; Chief Operating -- Chief Financial Officer, Mats Backman and myself, Thomas Jonsson, EVP, Corporate Communications and IR.

During today's call, Jan will comment on our current business highlights, our customer progress and in particular about the very important unprecedented upcoming launch period for new technologies and customer programs we have ahead of us. Then, Mats will walk you through our financial results, our efficiency programs and provide some commentary on our outlook for the remainder of 2020. After this, we'll remain on the line for the Q&A session and of course, the slides and earnings release are available through a link on the home page of our corporate website page.

So if we turn to page here, we have the Safe Harbor Statement, which is an integrated part of this presentation, including the Q&A that follow here today. During the presentation, we will reference some non-US GAAP measures where reconciliations of the figures are disclosed in our quarterly press release and the 10-K that will be filed with the SEC. This call is intended to conclude at 2:00 p.m. CET. So please limit yourselves to a maximum of two questions, that way we can work everybody's questions in.

I will now turn it over to our CEO, Jan Carlson. So Jan, please take over.

Jan Carlson -- Chairman, President and Chief Executive Officer

Thank you very much, Thomas. I would also like to say welcome everyone to today's earnings call. And by turning the page, I would like to start out our presentation today to reinforce the strategic direction of our company as we demonstrated at CES recently.

Our focus is on collaborative driving or as many like to reference L2 Plus solutions. Our unique offering of state-of-the-art sensors and software suite along with our sensor compute capabilities provide both the system and subsystem solutions, the market and our customers need. We believe, that our total addressable market is not only the largest, but also the fastest growing market segments where we intend to evolve as a profitable market leader with our scalable architecture of sensors, software and sensor compute.

As we demonstrated at CES, our first L2 Plus system will be available in the market already during the first half of 2020, with more to come in the quarter thereafter. This is an important milestone and prove point for not only Veoneer, but also for this Zenuity software suite. Before moving on to our business highlights, I would like to pause and extend my sincere thank you to the entire Veoneer team for their great support, dedication in 2019, with a relentless focus on quality and at the same time driving strong operational improvements.

Now moving to the next page. Looking first to the underlying market conditions, we ended 2019 at a much lower light vehicle production levels than we expected at the beginning of last year. This was weighing on our 2019 results. Looking ahead into 2020, we expect the rate of light vehicle production deterioration to slow down. However, we foresee a continued weakness in the production environment mostly in Europe and China particularly in the first half of 2020.

Looking at our market adjustment initiatives, we've made very good progress during 2019 in RD&E and balance sheet efficiency and we intended to carry this momentum into 2020. We have now completed the divestiture of our VNBS joint venture, which generated approximately $170 million of net cash and we continue to make progress with the strategic reviews of our remaining Brake Systems business and Zenuity joint venture.

Our order book at the end of 2019 remained at around $19 billion of which 80% is related to our Electronics segment. This is despite the downward adjustment in the light vehicle production assumptions of approximately 9% for the period 2020 through 2025 and our lower-than-expected order intake in 2019.

And lastly, as we enter 2020, our company faces an unprecedented period of upcoming new customer program and product launches with several important new technologies. It is expected that these launches are the long-awaited catalyst for Veoneer to return to organic sales growth during the second half of 2020 and ramp up and even accelerate into 2021 and 2022.

Now looking on the next page. As alluded to earlier, we remain in the middle of an industry downturn where it appears that the global light vehicle production has still not reached a floor. We see approximately 50 million fewer vehicles or close to 13% for the time period of 2019 through 2022, since the spin off of Veoneer. This is another 4 million fewer vehicles than we reported last quarter. The entire auto industry is affected by the limited light vehicle production growth through 2022 and continues to have an impact on our business and targets.

For Veoneer, once our expected organic growth kicks in later this year, we foresee a sales growth for our company of close to 19% CAGR in 2022 from 2019. This expected organic sales growth is approximately 17 percentage points of growth above the light vehicle production market. And therefore, the focus for our company is about successful launches rather than the level of light vehicle production decline, while having effective cost control and cash flow management.

Now looking on to our customer development in Active Safety on the next slide. We made solid progress in expanding our Active Safety product portfolio across our customer base. During 2019, we are pleased to have added our 7th Vision customer, a Mono Vision program with a major OEM including Sensor Fusion features from the Zenuity software suite. In addition, during the year, we became technically qualified with three new Vision customers. Looking to Radar, we have added new business awards with two new customers and are now on the bid list with 20 customers.

In all other Active Safety technologies, we expanded our presence as illustrated here on this chart. We estimate in 2019 that approximately 40% of our Active Safety order intake was for L2 Plus systems and around 45% of the Active Safety order intake included features from the Zenuity software suite. And lastly, as you have likely heard, earlier today we announced a new business award with our 8th Vision customer. This system award includes our Mono Vision Camera and Radars, along with a fusion software from Zenuity, which includes Driver Assist features like highway assist, lane centering control, stop and go adaptive cruise control, automatic emergency braking, traffic sign and light recognition and automated high beam control. These are the important building blocks for higher level of automated driving.

Looking now to our order intake on the next page. On this chart we have recast our order intake trend to include only the Electronics segment, which excludes the Brake Systems business. Our strong order intake in Restraint Control Systems and Active Safety has resulted in approximately 15 billion order book. The vast majority of the order book is expected to be delivered during the period 2020 through 2026. Keep in mind, the market lead time of order to launch is generally in the range of two to four years however, in our current situation due to certain customer delays we see closer to four years.

As we mentioned before, our best estimate based on current market opportunities is for an order intake of approximately 1 billion of average annual sales for the Electronics segment in 2020. This is 25% higher than our last three years average as illustrated on this chart.

Looking now onto our 2020 technology in customer launches. On the next page, we have summarized our key new technology launches during 2020. Already during the first quarter 2020, we will be launching our Generation 4 Mono Vision camera system, our Generation 2 Smart ADAS ECU and lastly, our much awaited first launch of the Zenuity software suite for autonomous driving. These three technologies represent an important foundation for our expected future customer sourcing with both existing and new customers.

During the second and third quarter, we will launch four additional camera technologies, including our Thermal Night Vision Generation 4 technology; our first generation driver monitoring system; our Generation 4 Stereo vision camera, as well as a customer stereo vision solution for an Asian-based OEM. In addition, we will launch our first stand-alone software feature with premium base -- premium brand based in Europe during the third quarter.

During the fourth quarter, we will launch our first Safe Stop ECU module for a US-based Robo-taxi application and our 77 gigahertz 1.3 radar which is a cost and performance improvement over the Generation 1.2, which we launched last fall. And lastly, we will launch our first RoadScape high definition mapping and precision positioning module with a US premium brand during the fourth quarter.

Looking now to our specific customer launches on the next page. We have summarized here our top 15 new program launches, as well as the products and annual vehicle volumes, which are expected to each have more than $10 million of average annual sales. In aggregate, these vehicle modules and platforms represent more than $500 million of average annual sales with the content per vehicle of $270 including Brake System launches. The content of the top 15 is in the range of approximately $30 to more than $800 per vehicle. We expect these launches as we have mentioned earlier are more loaded to the second half of the year and should significantly contribute to our expected return to organic sales growth in 2020. Throughout the year, we will have elaborate further on the specific customers and vehicle models as appropriate.

This concludes now my formal remarks for today. I will turn the presentation over to our CFO, Mats. Please go ahead.

Mats Backman -- Chief Financial Officer

Thank you, Jan. 2019 was a very challenging and complex year for Veoneer, as we work to implement capacity for the new program launches as Jan just mentioned, but we also work hard to improve our underlying cost structure.

Looking now to the next slide, as we mentioned on our last earnings call, the macro environment and LVP situation continues to adversely affect our operating results in the near-term. Our net sales for the fourth quarter of $456 million was slightly better than our expectations, while our operating loss was much better-than-expected, primarily due to our market adjustment initiatives around engineering reimbursements. Our operating cash flow was in line with our expectation, however, negatively affected by $30 million of timing effects -- effect, which we expect to normalize during the first quarter of 2020.

Despite these timing effects, our net working capital improved by $39 million during 2019, and we remain very close to zero net working capital. We continue to see a positive development on our underlying cost structure, where the sequential improvement in the fourth quarter was $45 million, when looking at the RD&E net and SG&A combined. When looking at the year-over-year development for the quarter, the improvement was $32 million for RD&E net and SG&A combined. Our company continues to be in the middle of a tremendous investment period to support the ramp-up of our future sales growth supported by a strong order book. These investments for capacity increases in all major regions resulted in a capital expenditure for the quarter of $45 million or 10% in relation to sales.

Looking at the further details for the quarter on the next slide. Our sales decline of $79 million, as compared to the same quarter last year was due to a negative currency translation effect of 1% or $5 million and then organic sales decline of 14% or $74 million. The organic sales decline was mainly driven by Active Safety of $39 million and Restraint Control Systems of $27 million, while Brake Systems declined by $8 million.

Within Active Safety, we continued negative Radar product mix shift from 24 gigahertz to 77 gigahertz technology and the gradual phase-out of the Mono Vision systems at BMW were the main drivers. The Restraint Control decline was mainly due to the phase out of certain vehicle models, primarily in North America, while the decline in Brake Systems was mainly driven by lower volumes on certain Honda models in China.

The gross profit decline of $33 million for the quarter versus prior year was due to the volume of product mix impact caused by the organic sales decline and the net currency effect was minimal. RD&E net of $103 million decreased by $21 million -- $29 million during the quarter, compared to 2018, mainly due to the improved engineering reimbursement mentioned earlier. In addition, SG&A improved $3 million year-over-year, due to lower consultancy and IT costs.

We are pleased that during 2019, our market adjustment initiatives are driving underlying cost structure improvements in our company. RD&E net for the full-year '19 was $562 million, which is $70 million below the first half of 2019 annual run rate. While the SG&A annual run rate improved by $30 million, when comparing the second half '19 with the first half run rate. Lastly, our operating cash flow for the fourth quarter was below prior year mainly due to the timing effects in the working capital mentioned earlier and other net which is mostly related to some favorable adjustment to deferred tax and assets and long-term liabilities in 2018.

Looking now for sequential performance on the next slide. Our sales decline of $6 million, as compared to the third quarter was due to a decline in organic sales as the currency translation effect was minimal. Restraint Control Systems and Brake Systems improved sequentially by $12 million and $7 million respectively, while Active Safety declined $25 million due to the radar and vision mix, issues mentioned earlier. The gross profit improvement of $3 million was mainly due to a product and a customer mix impact. RD&E net and SG&A decreased by $41 million and $4 million respectively, as compared to the third quarter and that is due to our market adjustment initiative. As a consequence, the lower operating loss improved our operating cash flow, which was offset by the net working capital change. As mentioned on our last earnings call, we believe the capital expenditure of $59 million last quarter was at the peak level where we had a decline of $14 million sequentially in the fourth quarter.

Looking now for 2019 launches on the next slide. We have summarized the 2019 key new program launches and model face-lifts. Although, some of these launches even materially contribute our organic sales development in 2019, they provide a strong base for our 2020 growth in addition to the 2020 launches as Jan highlighted earlier.

Looking now for 2020 outlook on the next slide. We have based our 2020 outlook excluding the VNBS joint venture in Asia operations, since we completed divestiture on February 3rd, 2020. Our current customer call-offs and deliveries point a weak first quarter mostly in China and Europe, both sequentially from the previous quarter and year-over-year. This leads us to an expected Global LVP decline for the first half of '20, as compared to 2019. As a consequence, we estimate the LVP decline in the low single-digits for the full-year '20 as compared to 2019.

For full-year '20, Veoneer expect to return to organic sales growth in the mid single-digit. This expected sales growth is driven by new program launches mostly in Active Safety and Brake Systems during the second half of the year. During the first half of 2020, our net sales are expected to remain relatively flat sequentially from the second half of 2019 and the ramp-up sequentially during the second half of 2020. We expect the currency translation impact to be minimal in 2020 versus last year.

During 2020, our market adjustment initiatives are expected to generate further cost structure and balance sheet improvement. During 2020, we expect RD&E net along with our operating loss and cash flow before financing activities to improve from 2019 levels on a comparable basis, although most of the improvement is expected during the second half of 2020.

I will now turn the call back over to Jan.

Jan Carlson -- Chairman, President and Chief Executive Officer

Thank you, Mats. Turning to page again and this concludes our formal comments for today's earnings call. But before we open up for Q&A, I would like to make a few comments regarding the unfortunate Coronavirus. We are currently monitoring this and taking appropriate actions on a daily basis related to the effects from the Coronavirus outbreak in China. And as always, the health and safety of our employees is our primary focus. To-date, we are not aware of any cases of the virus with our employees, however, it's too early to assess the effect on to our China business as this is an ongoing and evolving situation.

And by saying that, I would like to turn the call back to our operator Summer, please take over the call.

Questions and Answers:

Operator

Thank you, Jan. Ladies and gentlemen, we'll now begin the question-and-answer session. [Operator Instructions] We will take our first question and this comes from Hampus Engellau from Handelsbanken. Please go ahead.

Hampus Engellau -- Handelsbanken Capital Markets -- Analyst

Thank you very much, two questions from me. Firstly, if you could maybe discuss a little bit on where you are in the modernization of your product offering and where we should start to see effect from that on the cost side?

Secondly, I had a question on the orders. You are guiding for orders for $1 billion. I was wondering how much of that is orders that was pushed out from 2019 into 2020 and should we -- how should we think about launch cost in the second half of 2020? Thank you.

Jan Carlson -- Chairman, President and Chief Executive Officer

So let's start with the second part here. We said that a majority of the gap between what we earlier communicated and the 550 was a delay on that. If we look to the situation as of right now, you can say that half or approximately a little more than half of that push out is still up for grab, so it's still out there for being awarded of the delay that we referred to. We have captured as of today around $100 million in order intake and more than half of that is actually coming from new business. So we're half -- around half or more slightly more than half is coming from new business, that was planned this year.

So, that is the information we can give you now. It is a good start to be able to got -- to get around $100 million little more than a month into the year. If you then take the modular situation, this is something that we have been talking about, and it has taken a big step already when it comes to marketing this to our customers, we expect to of course look into potential order wins on this design or this concept and maybe already this year. The financial effect out of it will kick in, of course, later. So that is nothing that we will see as of today or as of 2020.

Hampus Engellau -- Handelsbanken Capital Markets -- Analyst

Thank you.

Operator

Thank you. We'll now take our next question from the line of Brian Johnson from Barclays.

Brian Johnson -- Barclays -- Analyst

Hi, thank you for taking the question. Wanted to start just, kind of, understand both the RD&E, but the performance in 4Q, as well as the guide for year-over-year. And would be helpful is to maybe -- just to at least size up the buckets left real numbers. So, yes how much of the reduction, both in 4Q and how has it changed in '20? Was due to commercial reimbursements? How much was due to perhaps rationalizing the RD&E efforts and working on greater IP sharing across project teams. How much was just a piece of -- is going to be piece of launch activity and how much was maybe just to cutting deeper than maybe you'd like to?

Mats Backman -- Chief Financial Officer

Maybe we can start -- this is Mats. Maybe we can start with the guidance when we are looking into 2020, while we are talking about lower RD&E and RD&E net in absolute numbers, comparing to 2019, which is the starting point. Looking into the fourth quarter, in terms of savings and what we have seen sequentially in 2019, we have as we showed in the second quarter and third quarter and into the fourth quarter, we have reduced RD&E and we have reduced the run rate when it comes to our growth RD&E. So the reduction in terms of the run rate cost on the growth side is contributing to those savings.

However, looking in the fourth quarter and from a seasonality point of view, we always had a bigger impact in the fourth quarter when it comes to Engineering income. In this quarter, we had more impact than normal as we had additional reimbursement done for engineering costs, that have been signed during 2019. So if you see -- when you see that, that net number for the fourth quarter, that is not reflecting a kind of a normal run rate due to the Engineering income and in this quarter, it's more than normal. But saying that we have had a sequential reduction in the growth RD&E cost every quarter since the -- since the second quarter, so you have both side contributing.

Looking into 2020, we are -- what we can foresee is that what we are kind of working with is to reduce the cost base and reduce the gross cost in 2020. But on top of that, we are also expecting some additional contribution coming from reimbursement of the higher engineering samples and working capital. So it's a combination. But due to the intense launch period in 2020, we also need to kind of be prepared to have the engineering resources needed to handle launches. But saying that, we are still targeting a reduction of the RD&E in 2020.

Jan Carlson -- Chairman, President and Chief Executive Officer

I think it's also worth to add here that, if you look to the higher than normal engineering compensation or engineering income Mats is referring to, we have also spent more money growth on engineering to prepare for all these launches that we are talking about. So, it's somewhat communicating, somewhat higher engineering income, but also significantly higher engineering spend during the year 2019.

Brian Johnson -- Barclays -- Analyst

Okay. And just a follow-on, could you frame up the transition headwinds from the radar bandwidth shift of 24, 77. How much was the headwind in '19, what's expected for '20 and even beyond that, kind of, when does that sort of become a tailwind?

Mats Backman -- Chief Financial Officer

Yes, I mean, we will continue to have a headwind when it comes to this -- the shift in technology in the first half of 2020. But then as you saw at Jan's slide, when it comes to launches, you could see that the new technology in quite a lot of those launches so it will gradually improve then in the second quarter -- in the second half of the year.

Jan Carlson -- Chairman, President and Chief Executive Officer

We will believe that it should be over by -- after 2020. So it will abate during the year and be over by year-end to the highest extent.

Brian Johnson -- Barclays -- Analyst

Okay, thank you.

Operator

Thank you. We will now take our next question from the line of Erik Golrang from SEB.

Erik Golrang -- SEB -- Analyst

Thank you. I have two questions. The first one, coming back to the previous one there on the order trends, I didn't fully get everything you said. Did I read right that around -- you lost around $600 million of orders in '19, compared to what you originally targeted and that 50% of that -- or $600 was pushed into 2020 and 50% has been lost of that, and 50% still up for grabs. Is that correct?

Mats Backman -- Chief Financial Officer

Some of it has been awarded and some of it has been lost, but we say that the ballpark, half way, still remains for grabs.

Erik Golrang -- SEB -- Analyst

Okay, thank you. And then the second question also coming back to previous topic on RD&E spend, would you sort of make a stab at saying what's the underlying annualized RD&E spending is in Q4, for the core business i.e., excluding Brake Systems? Q4 on an annualized basis for the core business?

Mats Backman -- Chief Financial Officer

Yes, I mean, as we are guiding now with -- for 2020 the core business together with US operation when it comes to Brake Control. So the comparable net number looking at the net RD&E, that's $537 million.

Erik Golrang -- SEB -- Analyst

Okay.

Mats Backman -- Chief Financial Officer

To give you the right base line and then what, we are saying that we are targeting an improvement from that level in 2020.

Erik Golrang -- SEB -- Analyst

Okay, thank you. And then the final question on, I mean, the order delays you experienced in 2019. Do you see that although the factors behind that as a stabilizing now, meaning that there's less of a risk that we get further delays in ordering activity?

Jan Carlson -- Chairman, President and Chief Executive Officer

I cannot say that, I think this is a very fluid situation and it's -- a lot of discussions and it will be probably more discussions throughout the year. We of course, have seen this happening in 2019. We are trying to make our best estimate what we can win here in 2020. But, that is stabilizing and getting more easier to forecast, I don't think I can say that. It's still volatile.

Erik Golrang -- SEB -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of James Picariello from KeyBanc Capital Markets. Please go ahead.

James Picariello -- KeyBanc Capital Markets -- Analyst

Hey guys. Just digging into the guide specifically for the first quarter, are you expecting both sales and EBIT to be down year-over-year and sequentially? Or is the commentary in the press release just tied to sales?

Mats Backman -- Chief Financial Officer

Yes, I mean -- I mean that if you are looking at the outlook as we're describing, I mean we will -- year-over-year, I mean it's definitely a negative organic growth in the third quarter. And then...

James Picariello -- KeyBanc Capital Markets -- Analyst

What about for EBIT?

Mats Backman -- Chief Financial Officer

Yes. And those was in second EBIT [Phonetic]

James Picariello -- KeyBanc Capital Markets -- Analyst

Just regarding operating profit for the first quarter, is that also expected to trend down?

Jan Carlson -- Chairman, President and Chief Executive Officer

Yes, I mean look, if you're comparing to the fourth quarter and again from a seasonality point of view, the fourth quarter is always the strongest quarter from a seasonality point of view, very much due to the engineering income effect that we see every year in the fourth quarter. So sequentially, it's a negative development into the first quarter, yes.

James Picariello -- KeyBanc Capital Markets -- Analyst

Okay. And then maybe just to ask the RD&E question another way. In the fourth quarter you cut 180 employees, do you expect additional cuts through 2020 in terms of your targeted headcount reductions or are you got done?

Jan Carlson -- Chairman, President and Chief Executive Officer

Well, we are looking into different type of activities to improve our efficiency in RD&E and to the extent that is going to affect also the headcount. It's primarily a cost focused and efficiency focused where we are looking to work with partners and so what extent that is also going to affect their headcount number. I'm not going to speculate at this point in time, because it's also -- how the cost base for the resources that we have will be applied when we are coming further down the road in the year.

James Picariello -- KeyBanc Capital Markets -- Analyst

Got it. And just one clarification regarding the 2022 framework. So you're targeting $2.5 billion in sales, you specifically call out Active Safety revenue to double, which would imply $1.4 billion roughly. So, I mean the implication here is that Restraint Controls then surpasses the $1 billion mark has the growth trajectory for RCS improved when looking at 2022?

Jan Carlson -- Chairman, President and Chief Executive Officer

If you look to overall the growth trajectory, we will see growth in our RCS business as well. But as we -- as you know the RCS business is a business generally that is developing with the market, in line with the light vehicle production market. So the growth coming from -- for us coming in RCS is coming from better order wins over the last three, four years than we have seen in the past or before that.

James Picariello -- KeyBanc Capital Markets -- Analyst

Okay, thanks guys.

Operator

Thank you. Our next question comes from the line of Joachim Gunell from DNB Markets. Please go ahead.

Joachim Gunell -- DNB Markets -- Analyst

Yes. Thank you. So just to start off with customers apparently postponing some of their investment decisions, what are your view in say in the next two years in terms of OEM adoption of ADAS technologies on a more say broader scale versus being more of a comfort features for premium OEMs?

Jan Carlson -- Chairman, President and Chief Executive Officer

We see a good adoption rate and as we alluded to in our formal remarks here earlier, we believe that our part of this industry is continuing to see growth, it's driven by legislation, it's driven by EU NCAP requirements and the sharpening of the EU NCAP requirements step by step in many parts of the world. And this is driving the features and the content of the vehicle, so we believe that in the world of stress, in the automotive industry we look to see a further improvement of our markets.

Joachim Gunell -- DNB Markets -- Analyst

Lovely, and finally regarding the growth profile in the US Operations of Brake Systems, I mean there is a larger contract ramping up there I assume. But are there anything you want mention in terms of the growth profile in the US operations as opposed to the Asian one?

Jan Carlson -- Chairman, President and Chief Executive Officer

No, not really, we have commented a couple of contracts there to a global OEM in the US, we have a strong focus in launching this. It will launch later on this year, the first part of that contract. As you know, we have the Brake Systems on the strategic review for the time being, we are guiding as this is a part of our company and a strong focus to launch the commitments that we have. We are guiding including these Brake Systems, but I have no other comments to give besides this for the future, we'll come back to that later, throughout the year.

Joachim Gunell -- DNB Markets -- Analyst

All right, thank you.

Operator

And our next question comes from the line of David Leiker from Baird. Please go ahead.

Erin Welcenbach -- Robert W. Baird -- Analyst

Good morning. This is Erin Welcenbach on for David. My first question is about the market share of your new contract awards. I guess I'm wondering where are you winning the most new business from a market share standpoint, and maybe where is market share trending a little bit weaker, and how does this compare to kind of the prior year periods?

Jan Carlson -- Chairman, President and Chief Executive Officer

Well, if you look through our market share wins even in 2019, with lower-than-expected order intake number we won more than our market share for 2019. So, pointing to that it's a better win than our market share. We definitely see wins in all product areas, I would say, we see wins in vision as we announced here we see wins in radar. So we are gaining business I cannot point in all of our product areas. I cannot say that we are -- any product areas that is lagging behind, particularly, we are seeing new technologies being launched as I mentioned also in my remarks here that should improve also our prospects for the future down the road.

Erin Welcenbach -- Robert W. Baird -- Analyst

Okay, and then my second question is just with respect to your confidence in the revenue ramping conversion to profits for others this has been challenging converting the book of new business profitably. So any comments on that?

Jan Carlson -- Chairman, President and Chief Executive Officer

Well, this will correct itself in the overhead numbers and the overheads in relation to sales then return into profit, we'll gradually improve down the road when we are ramping up the sales number. This is the challenging market and it requires a lot of upfront investments. So over time, we expect the numbers of course, to normalize. And we have not given any outlook on 2022. We gave the sales outlook, but not any profit numbers or any other indications of normalizing RD&E in relation to sales or becoming profitable or so. We'll have to return to you with that at the later stage, but we expect a growth in 2020. We expect that to accelerate in 2021 and in 2022 and gradually then this will normalize.

Erin Welcenbach -- Robert W. Baird -- Analyst

Great, thanks for taking my questions.

Jan Carlson -- Chairman, President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Bjorn Enarsson from Danske Bank. Please go ahead.

Bjorn Enarsson -- Danske Bank -- Analyst

Bjorn Enarson, Danske. Yes, I have a question on the US Brake Business and also the financial implications from the divestment of the Asian part, if you can help us out with some further clarification. And how we should look upon the Brake Business in the P&L in the first half? If that's possible.

Mats Backman -- Chief Financial Officer

Yes, I mean first of all you need to separate US part and Asian part. Because I mean, there is a part that was divested now, that was the joint venture for Asia where we've the net proceeds of $470 million. But there the US part of it is still in and it's also included in the guidance we are giving them. So I mean, that's -- so the baseline is really our core operations meaning Active Safety together with RCS and plus the US Brake operations and so that's the baseline.

Thomas Jonsson -- Executive Vice President of Communications and Investor Relations

And then maybe -- Thomas here. Maybe just for the historic comparisons you can also look at the full-year segment report in the press release, on Page 5 where we provide a little bit of commentary on the historic sales and the RD&E on the Asia part, which I think helps get you some reference numbers.

Bjorn Enarsson -- Danske Bank -- Analyst

And the cash impact has happened now?

Jan Carlson -- Chairman, President and Chief Executive Officer

Yes.

Bjorn Enarsson -- Danske Bank -- Analyst

A couple of days ago, yes. OK.

Thomas Jonsson -- Executive Vice President of Communications and Investor Relations

Yes.

Bjorn Enarsson -- Danske Bank -- Analyst

Perfect, thank you.

Operator

Thank you. And our next question comes from the line of Joseph Spak from RBC Capital Markets.

Joseph Spak -- RBC Capital Markets -- Analyst

Thank you. I wanted to head back to the comment about the orders and what sort of up for grabs. I guess just to be clear, are you seeing some more competitors on a portion of that business, bidding for that business than you should have previously assumed or it's a little bit unclear to me sort of what change on the part that sort of hasn't been awarded yet?

Jan Carlson -- Chairman, President and Chief Executive Officer

Yes, we have seen some competitors coming in here, this is evolving technology and we have seen actually new companies bidding for business, depending on what type of business it is. We can see new competitors we have not seen to the high extent at least in the past coming in, and that is related to the Active Safety piece. On the RCS business, we don't see any new competitors, but on the Active Safety piece we can see some of the new competitors.

Joseph Spak -- RBC Capital Markets -- Analyst

Okay.

Jan Carlson -- Chairman, President and Chief Executive Officer

I also wanted to make a clarification here to the question, I think came from Erik Golrang, you mentioned the number of the $600 million being pushed out and then you said half of that being or something, we have not quantified how much of the total delay that is pushed out. We said that the majority of the gap between the number we indicated of between $1.1 billion, $1.2 billion and the 550, majority of that gap was delayed, not to have any mix about quantification around how much of -- is up for grab or so. We still see what we defined being delayed, we still see half of that being up for grab, just to be quite clear to not confuse everyone on the specific numbers.

Joseph Spak -- RBC Capital Markets -- Analyst

Okay. And then, I guess the second question is just back to the RD&E, I mean, I know -- the fourth quarter sort of not the right run rate, but I guess just more broadly and as you think out here over the next couple of years. How do you think about the R&D spend? Either growing that or maintaining that, relative to sort of the ambitions to sort of grow the top line, right? Because there is an element of the RD&E right that sort of going to have to go higher as some of that business sort of comes to launch. But then, there's also an element that I guess more on the R side and D side than the E side, which is sort of key pace with the industry and I think if that's starved somewhat then it seems like there is a corresponding impact to the top line growth?

Mats Backman -- Chief Financial Officer

No, I think, I mean when you're looking at RD&E, I mean the majority is on application engineering very much driven by the order intake, the pre-launch and launch meaning that, if you're looking at more on the R side, I mean, that's not where we are cutting down. I mean, it's more on the application engineering side. And what we have done now in 2019 is -- I mean we recruited quite a lot of engineers back in 2018 and into the beginning of 2019, so what we have been talking about is more efficiencies and consolidating the base that we have and I wouldn't say that we are kind of risking any business from doing that.

So, when we see the run rate right now, that's more of the kind of a consolidation and efficiency gains we see. And then as Jan said, now we can look into the kind of the next step, so what we can do together with partners and so forth going forward, but that is still without jeopardizing the growth, I would say.

Joseph Spak -- RBC Capital Markets -- Analyst

But then just to be...

Jan Carlson -- Chairman, President and Chief Executive Officer

We have a skilled set of people here and a lot of good engineers, what is important is that we use them efficiently for what is unique for us and our algorithm development, our architecture development. Repetitive work of standard type should be preferably used with partners. Things that can be reused and redone in application engineering that Mats is talking about here could preferably be done outside.

Joseph Spak -- RBC Capital Markets -- Analyst

But so -- if the best sort of indicator -- if the RD&E sort of more tied to sort of order intake and then as that comes online and converts to revenue, it seems like the RD&E should also increase. I guess I'm just wondering like -- and maybe it's difficult to sort of put a fine point on it, but like when do you actually start seeing some of the greater leverage on that spend, because it would seem like you actually had a couple of years of that higher revenue to sort of really overtake the RD&E to sort of support the order intake. Is that fair?

Mats Backman -- Chief Financial Officer

Yes. But I mean in terms of leverage, I mean if you're looking at the indication for 2020, when we are saying that we will -- what we are targeting is to reduce the RD&E in absolute numbers and we are talking about an organic growth and in the relative RD&E we'll start coming down and you will see some leverage coming through there. But it's also -- I mean, what we have done and we have reduced the run rate and where we are right now, we also need to remember when we are looking into 2020, and again referring to Jan's slide, I mean we have five huge launches now coming up in 12 months to 18 months. So we also need to be prepared for the launches and we need to have that kind of the resources in place. But I think, even though you see growth in the order intake, I can't imagine that we will have another 12 months to 18 months period with those, kind of, new technology launches with this size. So it is a little bit of a perfect storm looking on where we are today.

Joseph Spak -- RBC Capital Markets -- Analyst

Okay, thank you very much.

Operator

Thank you. And our next question comes from the line of Agnieszka from Nordea. Please go ahead.

Agnieszka Vilela -- Nordea Equity Research -- Analyst

It's Agnieszka Vilela, Nordea. I have a couple of questions and follow-ups, if I may please. Starting maybe with the R&D and your guidance when you guide on the comparable basis, can you just be specific and tell us what's the comparable basis for R&D was in 2019, so excluding the Brakes Asia? Thanks.

Mats Backman -- Chief Financial Officer

537 is the baseline, net RD&E full-year 2019 excluding the joint venture.

Agnieszka Vilela -- Nordea Equity Research -- Analyst

Okay, thank you. And then also, if I calculate it correctly then the US Brakes Business in 2019 contributed to $60 million in sales and my question here is what's your expectation for the kind of cadence for the revenue growth for Brakes US in 2020 as you included in your organic growth guidance? Thank you.

Mats Backman -- Chief Financial Officer

I mean we have -- and coming back to again what Jan said, I mean, we have one of the big launches all related to the Brake Control. But that is in the later part of the year 2020. And so it's not a significant impact on the organic growth guidance for full-year 2020. The bulk and the majority of the growth are coming from Active Safety looking at the growth.

Agnieszka Vilela -- Nordea Equity Research -- Analyst

All right. And then just coming back to Active Safety sales decline of 20% in Q4, I would appreciate if you could be a bit more specific about headwinds coming from the shift in radars and also the BMW ramp down. Could you quantify it and also could you specify when exactly these headwinds will disappear?

Mats Backman -- Chief Financial Officer

I mean the majority if you're looking at Active Safety overall, the majority of the decline, that's radar business, related to radar and the technology sector. And if you are looking at -- if you are looking forward then on the change in trends, so to speak, that we will continue to see negative impact in the first half of 2020, but then it will gradually improve and you can say in to 2021, we thought to get through the technology shifts, so to speak with launches and so forth. So, it's very much related to radar.

Agnieszka Vilela -- Nordea Equity Research -- Analyst

Yes, OK. But do you expect the negative impact in H1 will be kind of double-digits on sales?

Mats Backman -- Chief Financial Officer

You mean from radar alone or?

Agnieszka Vilela -- Nordea Equity Research -- Analyst

Yes, if it was the majority of the sales decline that was connected to the radar shift in Q4? And if you expect it to continue in Q1 and Q2, will it be as kind of severe impact year-on-year?

Mats Backman -- Chief Financial Officer

I would have, kind of -- I wouldn't be that kind of granular looking on certain products and technologies. But first of all, the comps are getting easier looking into 2020 versus 2019 as we saw the same issue in 2019. But otherwise, I will just kind of stick with the overall guidance that we have, talking about top third quarter and then gradual improvement and going into growth in the second half of 2020, overall.

Agnieszka Vilela -- Nordea Equity Research -- Analyst

Okay, thank you. Yes. Thank you.

Thomas Jonsson -- Executive Vice President of Communications and Investor Relations

Okay. So just to mention that we have five minutes left and of course, we intend to end on the hour, but we'll be available of course on Investor Relations after the call is over.

Operator

Thank you. We will now take one more question and this comes from David Kelley from Jefferies.

David Kelley -- Jefferies -- Analyst

Hi, good morning. Just looking at Slide 9, the average dollar content per vehicle of new launches you referenced $270, I'm assuming that's comparable to the $175 in 2019 that you referenced on Slide 13. Could you talk about the drivers of that increase, how much is product mix or is this more tied to the expanding addressable market as your level two launches start to ramp?

Jan Carlson -- Chairman, President and Chief Executive Officer

It's affecting the level 2, it's affecting the number of feature increase, it's including and driven by increased NCAP requirements and many different factors driving this forward. But as you can see from this -- it's also including as we have mentioned the Brake Systems, that is a part of it, so many different factors that are driving behind this technology improvements and increases.

David Kelley -- Jefferies -- Analyst

Okay, perfect. Thank you. And then a question on Active Safety win rates, you referenced the increased competition in the space. I guess could you provide some color on kind of how you're converting the bid list and are you seeing any considerable differences in win rates across product lines or changes and historical win rates as well?

Jan Carlson -- Chairman, President and Chief Executive Officer

I cannot quantify that, as we say that when you look to our key components of our sensor suites and our airbag controllers and also our ADAS controller and our software suite, we are in a very good position. We are seeing a strong customer interest and we expect this year of launches to prove that and to make it even more visible to customers of our development and of our product performance here, looking little bit for the down the road.

We experienced that same step change in 2016, when we launched a previous generation of our sensor suite. Now we are coming out with a renewed product portfolio and we expect that to happen. But in -- as I said and in this space, you see new entrants trying to come in and you see people bidding on at least some of the product portfolio here, if not all of it, but some of it coming in and that is expected. We have expected that to happen, so I don't think there is any change from our previous opinion.

David Kelley -- Jefferies -- Analyst

Okay, great. I appreciate the color.

Operator

Thank you. And we will no longer be taking questions, I'd like to hand the call back to Jan.

Jan Carlson -- Chairman, President and Chief Executive Officer

Thank you very much, Summer. I would like to thank everyone for your participation for interesting questions as of today. And we of course, look forward to seeing you on conferences and roadshows etc, during the quarter here. Our next quarterly earnings release is planned for end of April, and we will revert back to you with the exact date. And we are also intending to hold a business update more generally between our earnings releases in the end of late spring or beginning summer, and we'll be back to you with more color on that one as well. So until then, I wish you all the best and hope you're having a good start of 2020. Thank you very much for attending today's call.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Thomas Jonsson -- Executive Vice President of Communications and Investor Relations

Jan Carlson -- Chairman, President and Chief Executive Officer

Mats Backman -- Chief Financial Officer

Hampus Engellau -- Handelsbanken Capital Markets -- Analyst

Brian Johnson -- Barclays -- Analyst

Erik Golrang -- SEB -- Analyst

James Picariello -- KeyBanc Capital Markets -- Analyst

Joachim Gunell -- DNB Markets -- Analyst

Erin Welcenbach -- Robert W. Baird -- Analyst

Bjorn Enarsson -- Danske Bank -- Analyst

Joseph Spak -- RBC Capital Markets -- Analyst

Agnieszka Vilela -- Nordea Equity Research -- Analyst

David Kelley -- Jefferies -- Analyst

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