VAN BUREN TOWNSHIP, Mich., Oct. 27, 2016 — Visteon Corporation (NYSE: VC) today announced third-quarter 2016 results, reporting sales of $770 million and net income attributable to Visteon of $28 million, or $0.81 per diluted share. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $75 million for the third quarter, compared with $65 million in the same period last year. Adjusted net income, a non-GAAP financial measure as defined below, was $38 million for the third quarter, or $1.10 per diluted share. Average diluted shares outstanding during the third quarter totaled 34.4 million.
In the first three quarters of 2016, global vehicle manufacturers awarded Visteon new business wins amounting to $4.1 billion of lifetime revenue. Third-quarter wins totaled $1.3 billion. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $16.2 billion as of Sept. 30, 2016.
Third Quarter in Review
Visteon reported third-quarter sales of $770 million, a decrease of $38 million compared with the same quarter last year. Electronics Product Group sales totaled $749 million in the third quarter of 2016, a decrease of $22 million from the third quarter last year. The decrease is primarily related to lower production volumes and customer pricing partially offset by new business. Other operations sales totaled $21 million in the third quarter of 2016, a decrease of $16 million from the third quarter last year, primarily related to the sale of an Interiors European facility in 2015. For the Electronics Product Group, on a regional basis, Asia accounted for 41 percent of sales, Europe 29 percent, North America 28 percent, and South America 2 percent.
Visteon gross margin for the third quarter of 2016 was $105 million or 13.6 percent of sales, 0.6 points higher than the prior year. Selling, general and administrative expenses were $53 million, or 6.9 percent of sales, for the third quarter, compared with $59 million, or 7.3 percent of sales, a year earlier.
For the third quarter of 2016, the company reported net income attributable to Visteon of $28 million, or earnings per share of $0.81 per diluted share, compared with $5 million and $0.12 for the same period in 2015. The third quarter improved by $23 million compared with the same period last year, primarily reflecting increased net income related to the Electronics Product Group and discontinued operations.
Third-quarter Visteon net income includes $13 million of impairment-related charges, and $5 million of restructuring expense, partially offset by income from discontinued operations of $7 million and $1 million in net gain on the sale of non-consolidated affiliates. Adjusted net income, which excludes these costs, was $38 million, or $1.10 per share.
Adjusted EBITDA for the Electronics Product Group was $75 million for the third quarter, compared with $67 million for the same quarter last year. The improvement primarily reflected cost efficiencies. Adjusted EBITDA for Other Operations was break-even, $2 million higher than adjusted EBITDA for the third quarter of 2015.
Cash and Debt Balances
As of Sept. 30, 2016, Visteon had global cash balances totaling $854 million. Total debt as of Sept. 30 was $371 million.
For the third quarter of 2016, Visteon generated $24 million of cash from operations, compared with $70 million in the same period a year earlier. Capital expenditures for the third quarter of 2016 were $19 million, compared with $29 million during the third quarter of 2015. Adjusted free cash flow was $25 million in the quarter, compared with $77 million in the third quarter of 2015. Adjusted free cash flow decreased year over year, reflecting timing of trade working capital and higher cash taxes.
Visteon generated $33 million of cash from operations related to the Electronics Product Group in the third quarter. Capital expenditures for the Electronics Product Group totaled $18 million and adjusted free cash flow was $23 million.
Share Repurchase
During the first quarter of 2016, Visteon entered into an accelerated stock buyback program with a third-party financial institution to purchase shares of common stock for an aggregate purchase price of $395 million. Under the program, Visteon paid the financial institution $395 million and received an initial delivery of 4,370,678 shares of common stock using a reference price of $72.30. The program was concluded in October 2016 and the company received an additional 1,211,979 shares. In total, Visteon purchased 5,582,657 shares at an average price of $70.75 under this program.
Full-Year 2016 Outlook
Visteon increased the low-point for full-year 2016 guidance for adjusted EBITDA and adjusted free cash flow. Visteon’s Electronics Product Group sales guidance is $3.1 billion. Adjusted EBITDA for the Electronics Product Group is projected in the range of $325 million to $335 million. Adjusted free cash flow, as defined below, for the Electronics Product Group is projected in the range of $125 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™. Visteon also supplies embedded multimedia and smartphone connectivity software solutions to the global automotive industry. Headquartered in Van Buren Township, Michigan, Visteon has approximately 10,000 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, Oct. 27, at 9 a.m. EDT, 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: 866-411-5196 Outside U.S./Canada: 970-297-2404
(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 89207584. The phone replay will be available for one week following the conference call.
View the third-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 Sept. 30, 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.