VAN BUREN TOWNSHIP, Mich., April 28, 2016 — Visteon Corporation (NYSE: VC) today announced first-quarter 2016 results, reporting sales of $802 million and net income attributable to Visteon of $19 million, or $0.49 per diluted share. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $89 million for the first quarter, compared with $78 million in the same period last year. Adjusted net income, a non-GAAP financial measure as defined below, was $47 million for the first quarter, or $1.22 per diluted share.
Cash used by operating activities in the first quarter, including discontinued operations, totaled $58 million. Adjusted free cash flow, a non-GAAP financial measure as defined below, was a use of $28 million for the first quarter.
First Quarter in Review
Visteon reported first-quarter sales of $802 million, a decrease of $14 million compared with the same quarter last year. The decrease is primarily related to the sale of the Germany interiors facility during the fourth quarter of 2015 and unfavorable currency, partially offset by higher production volumes and new business.
Electronics Product Group sales totaled $793 million, an increase of $12 million from the first quarter of 2015. On a regional basis, Asia accounted for 38 percent of sales, Europe 32 percent, North America 29 percent, and South America 1 percent.
Visteon gross margin for the first quarter of 2016 was $121 million, compared with $112 million a year earlier. Selling, general and administrative expenses were $56 million for the first quarter, compared with $58 million for the first quarter of 2015. The $9 million increase in gross margin reflected higher sales volume and new business impacts, partially offset by the impact of unfavorable currency.
Adjusted EBITDA for the Electronics Product Group was $94 million for the first quarter of 2016, compared with $84 million for the same quarter last year. The improvement was primarily driven by increased production volumes and new business, partially offset by unfavorable currency. Beginning in 2016, costs associated with the company’s corporate headquarters and other administrative support functions have been included with the Electronics Product Group for all comparative periods. Adjusted EBITDA for the Other operations was a loss of $5 million, compared with a loss of $6 million for the first quarter last year.
For the first quarter of 2016, the company reported net income attributable to Visteon of $19 million, or earnings per share of $0.49 per diluted share. First-quarter net income included a loss of $13 million from discontinued operations, net of tax and $15 million of restructuring, transformation, integration and related costs. Adjusted net income, which excludes these costs, was $47 million, or $1.22 per diluted share.
Through the first quarter of 2016, customers awarded Visteon new business wins amounting to $1.2 billion of lifetime revenue. Visteon’s ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $15.6 billion as of March 31, 2016, an increase of $0.4 billion since Dec. 31, 2015.
Pending Acquisition of AllGo Systems
On Jan. 12, 2016, Visteon announced it had signed an agreement to acquire AllGo Systems – a leading developer of embedded multimedia system solutions to global vehicle manufacturers – to add greater scale depth to Visteon’s infotainment software capabilities. The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to be completed during the second quarter of 2016.
Cash and Debt Balances
As of March 31, 2016, Visteon had global cash and equivalents totaling $808 million. During the first quarter of 2016, Visteon paid a special distribution to its shareholder of approximately $1.74 billion. This outflow was partially offset by a recovery of $356 million of withholding taxes related to the 2015 climate divestiture. Total debt as of March 31 was $382 million.
For the first quarter of 2016, cash from operations was a use of $58 million, capital expenditures were $25 million and adjusted free cash flow was a use of $28 million in the quarter. Cash flows included results related to discontinued operations.
Visteon had a use of $13 million of cash from operations related to Electronics Product Group costs. Electronics Product Group capital expenditures totaled $24 million, and adjusted free cash flow for the Electronics Product Group was a use of $22 million in the quarter.
Special Distribution to Shareholders and Share Repurchases
On Jan. 22, 2016, Visteon paid a special distribution of $43.40 per share of its common stock outstanding as of Jan. 15, 2016, or approximately $1.74 billion in the aggregate.
During the first quarter of 2016, Visteon purchased $105 million, or 1,607,849 shares, under the stock repurchase agreement entered in December 2015, complying with the provisions of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934 (“10b5-1 Share Repurchase Program”). Additionally, during the first quarter of 2016, Visteon entered into an Accelerated Stock Buyback (ASB) with a third party to purchase shares of its common stock for a payment of $395 million and received 4,370,678 shares. This ASB is expected to be completed by Dec. 15, 2016. Visteon’s board of directors has authorized $500 million of share repurchase of its shares of common stock through Dec. 31, 2016, including the 10b5-1 Share Repurchase Program entered in 2015 and the ASB entered in 2016.
Since the June 9, 2015, Climate transaction, Visteon has substantially completed the return of approximately $2.75 billion to shareholders through 2015 and 2016 share repurchases and the January 2016 special distribution.
Full-Year 2016 Outlook
Visteon affirmed its full-year 2016 guidance for its key financial metrics. The company projects 2016 sales for the Electronics Product Group of $3.2 billion. Adjusted EBITDA for the Electronics Product Group is projected in the range of $305 million to $335 million. Adjusted free cash flow, as defined below, for the Electronics Product Group is projected in the range of $110 million to $150 million.
About Visteon
Visteon is a global company that designs, engineers and manufactures innovative cockpit electronics products and connected car solutions for most of the world’s major vehicle manufacturers. Visteon is a leading provider of instrument clusters, head-up displays, information displays, infotainment, audio systems, and telematics solutions; its brands include Lightscape®, OpenAir® and SmartCore™. Headquartered in Van Buren Township, Michigan, Visteon has nearly 11,000 employees at more than 40 facilities in 18 countries. Visteon had sales of $3.25 billion in 2015. Learn more at www.visteon.com.
Conference Call and Presentation
Today, Thursday, April 28, at 9 a.m. ET, the company will host a conference call for the investment community to discuss the quarter’s results and other related items. The conference call is available to the general public via a live audio webcast.
The dial-in numbers to participate in the call are:
U.S./Canada: 855-855-4109 Outside U.S./Canada: 706-643-3752
(Call approximately 10 minutes before the start of the conference.)
The conference call and live audio webcast, the financial results news release, related presentation materials and other supplemental information will be accessible through Visteon’s website at www.visteon.com.
A replay of the conference call will be available through the company’s website or by dialing 855-859-2056 (toll-free from the U.S. and Canada) or 404-537-3406 (international). The conference ID for the phone replay is 86737426. The phone replay will be available for one week following the conference call.
View the first-quarter 2016 results
Forward-looking Information
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements, including, but not limited to: (1) conditions within the automotive industry, including (i) the automotive vehicle production volumes and schedules of our customers, (ii) the financial condition of our customers and the effects of any restructuring or reorganization plans that may be undertaken by our customers or suppliers, including work stoppages, and (iii) possible disruptions in the supply of commodities to us or our customers due to financial distress, work stoppages, natural disasters or civil unrest; (2) our ability to satisfy future capital and liquidity requirements; including our ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to us; our ability to comply with financial and other covenants in our credit agreements; and the continuation of acceptable supplier payment terms; (3) our ability to satisfy pension and other post-employment benefit obligations; (4) our ability to access funds generated by foreign subsidiaries and joint ventures on a timely and cost-effective basis; (5) our ability to execute on our transformational plans and cost-reduction initiatives in the amounts and on the timing contemplated; (6) general economic conditions, including changes in interest rates, currency exchange rates and fuel prices; (7) the timing and expenses related to internal restructurings, employee reductions, acquisitions or dispositions and the effect of pension and other post-employment benefit obligations; (8) increases in raw material and energy costs and our ability to offset or recover these costs, increases in our warranty, product liability and recall costs or the outcome of legal or regulatory proceedings to which we are or may become a party; and (9) those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015).
Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date of this release, and which we assume no obligation to update. The financial results presented herein are preliminary and unaudited; final financial results will be included in the company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016. New business wins and rewins do not represent firm orders or firm commitments from customers, but are based on various assumptions, including the timing and duration of product launches, vehicle production levels, customer price reductions and currency exchange rates.
Use of Non-GAAP Financial Information
This press release contains information about Visteon's financial results which is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. The provision of these comparable GAAP financial measures for 2016 is not intended to indicate that Visteon is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the company at the date of this press release and the adjustments that management can reasonably predict.