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Visteon Announces Second-Quarter 2017 Results

  • Delivered strong financial performance
    • Sales of $774 million
    • Net income of $45 million
    • Adjusted EBITDA of $84 million
  • Increased China domestic sales 38 percent year-over-year, excluding impact of currency
  • Awarded $3.1 billion in new business year-to-date
    • Two additional SmartCore™ awards year-to-date
    • Record $17.3 billion order backlog
  • Executed $160 million of share repurchases year-to-date

VAN BUREN TOWNSHIP, Mich., July 27, 2017 — Visteon Corporation (NYSE: VC) today announced second-quarter 2017 results, reporting sales of $774 million compared with $773 million in the second quarter of 2016. Second-quarter net income attributable to Visteon was $45 million or $1.41 per diluted share for 2017, compared with $26 million or $0.76 per diluted share for 2016.

Second-quarter Electronics sales were $774 million compared with $762 million for the same period in 2016. Electronics second-quarter net income was $45 million or $1.41 per diluted share for 2017, compared with $43 million or $1.25 per diluted share for 2016.

Electronics adjusted EBITDA, a non-GAAP financial measure as defined below, was $84 million for the second quarter, compared with $79 million in the same period last year. Electronics adjusted net income, a non-GAAP financial measure as defined below, was $44 million for the second quarter or $1.38 per diluted share, compared with $44 million or $1.28 per diluted share in the second quarter of 2016.

During the first half, global vehicle manufacturers awarded Visteon new business of $3.1 billion in lifetime revenue. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $17.3 billion as of June 30, 2017, up from $16.5 billion at the end of 2016.

“Our second-quarter performance was very solid, with improved year-over-year sales and adjusted EBITDA,” said Visteon President and CEO Sachin Lawande. “Sales grew 3 percent, excluding currency, despite flat global vehicle production volumes. This growth was driven by a high number of new product launches over the past several quarters, particularly in China. Adjusted EBITDA improved due to higher sales and our ongoing focus on cost reduction.”

Lawande added: “New business wins remained strong, with about 50 percent in the fast-growing segments of all-digital instrument clusters and display audio. With $3.1 billion in new business wins in the first half, we are on track to achieve our target for the full year.”

Second Quarter in Review

Visteon Corporation

Second-quarter sales were $774 million, compared with $773 million for the same period in 2016. The $1 million increase is primarily related to higher electronics production volumes and new product launches, partially offset by unfavorable currency and the exit of other operations.

Gross margin was $112 million, compared with $109 million a year earlier. The $3 million increase in gross margin reflected higher sales and the exit of other climate operations, partially offset by unfavorable currency. Selling, general and administrative expenses were $53 million for the second quarter of 2017, compared with $54 million for the second quarter of 2016.

For the second quarter of 2017, the company reported net income attributable to Visteon of $45 million or $1.41 per diluted share, compared with $26 million or $0.76 per diluted share for the same period in 2016. The $19 million increase in net income included a gain on sale of a non-consolidated affiliate of $3 million, lower restructuring expense of $4 million and the non-recurrence of 2016 loss from discontinued operations of $9 million, net of tax.

Electronics Product Group

Sales totaled $774 million and $762 million during the second quarter of 2017 and 2016, respectively, for an increase of $12 million, resulting from new product launches, particularly in China. Unfavorable currency movements and contractual customer pricing reductions partially offset the increase. On a regional basis, Asia accounted for 38 percent of sales, Europe 31 percent, North America 29 percent, and South America 2 percent.

Gross margin for the second quarter of 2017 was $112 million, compared with $109 million a year earlier. The $3 million increase reflected the impact of higher sales volume, material cost efficiencies and a decline in engineering expenses, partially offset by customer pricing and unfavorable currency.  

Adjusted EBITDA for the Electronics Product Group was $84 million for the second quarter of 2017, compared with $79 million for the same quarter last year. The improvement was primarily driven by increased sales and cost efficiencies, partially offset by unfavorable currency. Selling, general and administrative expenses were $53 million for the second quarter, compared with $54 million for the same quarter in 2016. Adjusted EBITDA margins were 10.9 percent for the second quarter of 2017, a 50-basis point improvement from prior-year levels.

For the second quarter of 2017, net income was $45 million or $1.41 per diluted share, compared with net income of $43 million or $1.25 per diluted share for the same period in 2016. Second-quarter 2017 net income benefited from the sale of a non-consolidated affiliate, which more than offset restructuring transformation and related costs. Adjusted net income, which excludes these items, was $44 million or $1.38 per diluted share for the second quarter of 2017, compared with $44 million or $1.28 per diluted share for the same period in 2016.


Other Operations

By the end of 2016, Visteon exited its other operations, consisting of climate operations in South America and South Africa. The second quarter of 2016 included sales of $11 million, negative adjusted EBITDA of $2 million and a net loss of $8 million.

Cash and Debt Balances

As of June 30, 2017, Visteon had global cash and equivalents totaling $734 million. Total debt as of June 30 was $389 million.

For the second quarter of 2017, cash from operations was $96 million and capital expenditures were $15 million. Total Visteon adjusted free cash flow for the second quarter of 2017 was $87 million, compared with $79 million during the second quarter of 2016. Year-to-date, adjusted free cash flow was $57 million.

Share Repurchases

During the first half of the year, the company repurchased 1,659,466 shares at an average price of $96.41. A total of $240 million remains under the company’s share repurchase authorization. As of June 30, 2017, the company had 31.7 million diluted shares of common stock outstanding.

Full-Year 2017 Outlook

Visteon affirmed its full-year 2017 guidance for its key financial metrics. The company projects 2017 sales in the range of $3.1 billion to $3.2 billion. Adjusted EBITDA is projected in the range of $355 million to $370 million. Adjusted free cash flow, as defined below, for the Electronics Product Group is projected in the range of $165 million to $180 million.

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, telematics and SmartCore™ cockpit domain controllers. 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 19 countries. Visteon had sales of $3.16 billion in 2016. Learn more at www.visteon.com.


Conference Call and Presentation

Today, Thursday, July 27, 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: 866-411-5196 
Outside U.S./Canada: 970-297-2404

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

The conference call and live audio webcast, related presentation materials and other supplemental information will be accessible in the investors section of Visteon’s website. A news release on Visteon’s first-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 43585810. The phone replay will be available for one week following the conference call.

View the second-quarter 2017 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, 2016).   
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, 2017. 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.

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Contact:

Media:

Jim Fisher
734-710-5557
734-417-6184 – mobile
jfishe89@visteon.com

Investors:

Bill Robertson
734-710-8349
william.robertson@visteon.com