Visteon announces second-quarter 2020 results
- Net sales of $371 million; 48% reduction Y/Y excluding currency
- Industry production down 45% Y/Y; Visteon customers down 53% Y/Y
- Visteon sales outperformed customer production by five percentage points
- $1.7 billion in new business and 21 new product launches YTD
- Cash of $759 million; no significant near-term debt maturities
VAN BUREN TOWNSHIP, Mich., July 30, 2020 — Visteon Corporation (NASDAQ: VC) today announced that despite a drastic market downturn in the second quarter, the company's sales outperformed production volumes at Visteon's top customers by five percentage points. The company’s sales outperformed industry production volumes in Europe and China, driven by new product launches and improved take rates.
Second-quarter 2020 sales were $371 million, gross margin during the same period was $4 million, and net loss attributable to Visteon was $45 million. Adjusted EBITDA, a non-GAAP measure as defined below, was a loss of $3 million for the second quarter of 2020. Adjusted EBITDA was impacted by lower sales volume, primarily due to COVID-19 and partially offset by strong cost-reduction actions, resulting in adjusted EBITDA decremental margin1 of 15%.
The company actively managed cash and liquidity, reduced operational costs, strengthened commercial discipline and aligned supply chain and manufacturing to lower demand. These actions are positioning the company to not only weather the storm but emerge stronger as industry volumes recover.
Visteon took decisive actions in the second quarter to reduce its cost base in response to decreased automotive industry activity. Despite the challenging environment, we launched 21 new products during the first half of the year, including all-digital clusters, a new Android-based infotainment system and large displays. We also won $1.7 billion in new business in the first half, which will position us for continued market outperformance in the future.
The company continued to execute on its growth strategy in the second quarter by launching 8 new products, including its infotainment solution in the VW Nivus, a new coupe-style SUV for the Brazil market. The new model debuts VW Play – a pioneering infotainment system for enhanced in-car connectivity, streaming and other services supported by Visteon. Other key launches include a 12-inch digital cluster with Toyota, the company's first with this OEM, and a 12-inch digital cluster for the Nissan Rogue compact SUV.
The company won more than $900 million of new business during the quarter. Key wins include a multi-display module with a 12-inch and 27-inch display for a Chinese OEM, a SmartCore™-based cockpit domain controller for a different Chinese OEM, and a 10-inch touch screen center display for a Japanese OEM.
As of June 30, 2020, Visteon had cash of $759 million and debt of $770 million with no significant near-term debt maturities.
For the first half of 2020, cash used by operations was $13 million and capital expenditures were $65 million. Adjusted free cash flow, a non-GAAP financial measure, for the first half of 2020 was a use of cash of $66 million, compared to a use of cash of $2 million for the same period in the prior year.
The company had 27.8 million diluted shares of common stock outstanding as of June 30, 2020.
Visteon is a global technology company that designs, engineers and manufactures innovative cockpit electronics and connected car solutions for the world’s major vehicle manufacturers. Visteon is driving the smart, learning, digital cockpit of the future, to improve safety and the user experience. Visteon is a global leader in cockpit electronic products including digital instrument clusters, information displays, infotainment, head-up displays, telematics, SmartCore™ cockpit domain controllers, and the DriveCore™ autonomous driving platform. Visteon also delivers artificial intelligence-based technologies, connected car, cybersecurity, interior sensing, and embedded multimedia and smartphone connectivity software solutions. Headquartered in Van Buren Township, Michigan, Visteon has approximately 10,000 employees at more than 40 facilities in 18 countries. Visteon had sales of approximately $3 billion in 2019. Learn more
Conference Call and Presentation
Today, Thursday, July 30, 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:
Outside U.S./Canada: 970-297-2404
Conference ID: 2369176
(Call approximately 15 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 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 2369176. The phone replay will be available for one week following the conference call.
1 Adjusted EBITDA decremental margin, a non-GAAP measure, is defined as the year-over-year change in adjusted EBITDA divided by the year-over-year change in net sales, and excludes $5 million of operational challenges that impacted second-quarter 2019 adjusted EBITDA.
Use of Non-GAAP Financial Information
Because not all companies use identical calculations, adjusted gross margin, adjusted SG&A, adjusted EBITDA, adjusted EBTIDA decremental margin, adjusted net income, adjusted EPS, free cash flow and adjusted free cash flow used throughout this press release may not be comparable to other similarly titled measures of other companies.
The company has withdrawn its financial guidance and, due to the continued uncertainty of market conditions, will not be providing revised guidance until there is better clarity regarding the COVID-19 impact.
In order to provide the forward-looking non-GAAP financial measures for full-year 2020, the company is providing reconciliations to the most directly comparable GAAP financial measures on the subsequent slides. The provision of these comparable GAAP financial measures is not intended to indicate that the company 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.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "will," "may," "designed to," "outlook," "believes," "should," "anticipates," "plans," "expects," "intends," "estimates," "forecasts" and similar expressions identify certain of these forward-looking statements. 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:
continued and future impacts of the coronavirus (COVID-19) pandemic on our financial condition and business operations including global supply chain disruptions, market downturns, reduced consumer demand and new government actions or restrictions;
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, including work stoppages at our customers, 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;
our ability to execute on our transformational plans and cost-reduction initiatives in the amounts and on the timing contemplated;
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;
our ability to satisfy pension and other post-employment benefit obligations;
our ability to access funds generated by foreign subsidiaries and joint ventures on a timely and cost-effective basis;
general economic conditions, including changes in interest rates and fuel prices; the timing and expenses related to internal restructurings, employee reductions, acquisitions or dispositions and the effect of pension and other post-employment benefit obligations;
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
those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by our subsequent filings with the Securities and Exchange Commission).