26
July
2018
|
02:00
America/New_York

Visteon announces second-quarter 2018 results

Summary
  • Sales of $758 million
  • Net income of $35 million
  • Adjusted EBITDA of $81 million
  • Awarded $2.2 billion in new business – up 38 percent year-over-year
    • Largest infotainment award in Visteon's history – $640 million
    • Largest instrument cluster award in Visteon's history – $585 million
  • Increased order backlog to record $21.1 billion

VAN BUREN TOWNSHIP, Mich., July 26, 2018 — Visteon Corporation (NASDAQ: VC) today announced second-quarter 2018 results, reporting sales of $758 million, compared with $774 million in the second quarter of 2017. Second-quarter net income attributable to Visteon was $35 million or $1.17 per diluted share for 2018, compared with $45 million or $1.41 per diluted share in 2017.

Adjusted EBITDA, a non-GAAP financial measure as defined below, was $81 million for the second quarter, compared with $84 million in the same period last year. Adjusted net income, a non-GAAP financial measure as defined below, was $41 million for the second quarter or $1.37 per diluted share, compared with $44 million or $1.38 per diluted share in the second quarter of 2017.

During the second quarter, global vehicle manufacturers awarded Visteon new business of $2.2 billion in lifetime revenue. This new business included the largest infotainment win and the largest instrument cluster win in the company's history. The infotainment win is for a cross-platform, global system with a large European automaker, with anticipated lifetime revenue of $640 million and launching in early 2020. The digital instrument cluster win is for high-volume, compact vehicles for a global European automaker, with expected lifetime revenue of $585 million and launching in late 2020. Visteon's ongoing backlog, defined as cumulative remaining awarded life-of-program expected booked sales, was $21.1 billion as of June 30, 2018, up from $19.4 billion at the end of 2017.

Sachin Lawande, President and CEO, Visteon
Our second-quarter results were impacted by lower vehicle production volumes, particularly in North America, and new emissions regulations in Europe, offset by continued strong performance in China. Our products and technology continue to enable us to win record levels of new business in the evolving cockpit and safety electronics segments. Visteon's core business remains strong and our order backlog keeps us on track to achieve our long-term targets despite near-term industry headwinds.
Sachin Lawande, President and CEO, Visteon

Second Quarter in Review

Sales totaled $758 million and $774 million during the second quarter of 2018 and 2017, respectively, for a decrease of $16 million. Sales decreased in the Americas, primarily reflecting lower vehicle production volumes. Sales increased in Europe, reflecting favorable currency, and in Asia, driven by new product launches. On a regional basis, Asia accounted for 39 percent of sales, Europe 34 percent, and the Americas 27 percent.

Gross margin for the second quarter of 2018 and 2017 was $104 million and $111 million, respectively, for a decrease of $7 million. Adjusted EBITDA was $81 million for the second quarter of 2018, compared with $84 million for the same quarter last year, for a decrease of $3 million. Adjusted EBITDA margin was 10.7 percent for the second quarter of 2018, 20 basis points lower than the prior year.

Gross margin and adjusted EBITDA were impacted by lower production volumes and product mix, partially offset by favorable currency and a positive business equation. Business equation is defined as cost performance net of customer pricing.

For the second quarter of 2018, net income was $35 million or $1.17 per diluted share, compared with net income of $45 million or $1.41 per diluted share for the same period in 2017. Adjusted net income, which excludes restructuring charges and discontinued operations, was $41 million or $1.37 per diluted share for the second quarter of 2018, compared with $44 million or $1.38 per diluted share for the same period in 2017.

Cash and Debt Balances

As of June 30, 2018, Visteon had total cash of $528 million. Total debt as of June 30, 2018, was $378 million.

For the second quarter of 2018, cash from operations was $45 million, and capital expenditures were $25 million. For the first half of 2018, cash from operations was $126 million, and capital expenditures were $69 million. Total Visteon adjusted free cash flow, a non-GAAP financial measure as defined below, for the second quarter and first half of 2018 was $29 million and $77 million, respectively.

During the second quarter of 2018, the company repriced its $350 million term facility to reduce the applicable margin by 25 basis points, from LIBOR plus 2.00 percent to 1.75 percent.

Share Repurchases

During the first half of the year, the company executed agreements to purchase $200 million of shares, including an accelerated share buyback program of $150 million. As of June 30, 2018, the company had 29.9 million of diluted shares of common stock outstanding. Subsequent to the end of the quarter, the company concluded the accelerated share buyback program and received an additional 229,986 shares.

Visteon is authorized to purchase an additional $500 million of shares through Dec. 31, 2020, under the Board of Directors' Jan. 15, 2018, resolution.

Full-Year 2018 Outlook

Visteon updated its full-year 2018 guidance with sales in the range of $3.10 billion to $3.15 billion, adjusted EBITDA in the range of $350 million to $360 million, and adjusted free cash flow in the range of $160 million to $170 million.

Conference Call and Presentation

Today, Thursday, July 26, 2018, 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: 866-411-5196Outside U.S./Canada: 970-297-2404

(Call approximately 10 minutes before the start of the conference.)

The conference call and live audio webcast, related presentation materials and other supplemental information will be accessible in the investors section of Visteon’s website. A news release on Visteon’s second-quarter results will be available in the news section of the website.

A replay of the conference call will be available through the company’s website or by dialing855-859-2056 (toll-free from the U.S. and Canada) or 404-537-3406 (international). The conference ID for the phone replay is 3594194. The phone replay will be available for one week following the conference call.

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, 2017). 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 June 30, 2018. 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 2018 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.

About Visteon

Visteon is a global technology 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, SmartCore™ cockpit domain controllers, vehicle connectivity, and the DriveCore™ autonomous driving platform. 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 $3.15 billion in 2017. Learn more at www.visteon.com.