Visteon Corporation (NASDAQ: VC) today announced first-quarter 2020
results, reporting net loss attributable to Visteon of $35 million
or $1.25 loss per diluted share, compared with net income of $14
million or $0.49 earnings per diluted share in the first-quarter of
2019. First-quarter 2020 net loss includes a $33 million charge the
company took in respect to its recently announced restructuring
programs as it continues to streamline its operations.
First-quarter 2020 net sales were $643 million,
compared with $737 million in the first-quarter of 2019. The
decrease of $94 million is primarily due to the impacts of
COVID-19. Gross margin for the first-quarter of 2020 was $53
million, compared with $66 million in the same quarter in 2019.
Adjusted EBITDA, a non-GAAP measure as defined
below, was $33 million for the first-quarter of 2020, compared with
$41 million for the same quarter last year. Adjusted EBITDA was
impacted by lower sales, which were partially offset by lower net
engineering expense, the non-recurrence of 2019 operational
challenges and favorable cost performance.
During the first-quarter of 2020, global vehicle
manufacturers awarded Visteon new business of $800 million in
lifetime sales, with nearly all coming from next-generation
technology including digital instrument clusters, infotainment and
displays.
"Despite the challenging market environment due
to COVID-19, Visteon sales outperformed the market, driven by
launches of our core products," said President and CEO Sachin
Lawande. "The proactive cost-reduction actions we implemented,
combined with our strong balance sheet and a significant cash
position, will enable us to weather the crisis and emerge as a
strong, more competitive company."
First-Quarter in Review
Sales totaled $643 million and $737 million
during the first-quarter of 2020 and 2019, respectively. On a
regional basis, in the first-quarter of 2020, Europe accounted for
37% of sales, the Americas 28%, China Domestic 8%, China Export 10%
and Other Asia-Pacific 17%.
Gross margin for the first-quarter of 2020 and
2019 was $53 million and $66 million, respectively. Adjusted
EBITDA, a non-GAAP measure as defined below, was $33 million for
the first quarter of 2020, compared with $41 million for the same
quarter last year.
For the first-quarter of 2020, net loss
attributable to Visteon was $35 million or $1.25 loss per diluted
share, compared with net income attributable to Visteon of $14
million or $0.49 earnings per diluted share for the same period in
2019. Adjusted net loss, which excludes restructuring charges and
discontinued operations, was $2 million or $0.07 loss per diluted
share for the first-quarter of 2020, compared with adjusted net
income of $15 million or $0.53 earnings per diluted share for the
same period in 2019.
The company had 27.8 million diluted shares of
common stock outstanding as of March 31, 2020.
COVID-19 Actions
In response to the COVID-19 pandemic, the company took decisive
actions during the quarter to preserve liquidity, manage costs and
enhance employee safety. These actions include:
- Enhanced liquidity and cash
position by drawing down the full $400 million available under its
revolving credit facility. Visteon has no significant near-term
debt maturities.
- Temporarily suspended, or
significantly reduced, production at manufacturing facilities
outside of China. During the three months ending March 31, 2020,
the company announced restructuring programs to rationalize the
company's global footprint, lower its cost base, and improve
financial performance and cash flow generation.
- Ramped up production in China
during March and expecting to reach pre-COVID-19 levels during the
second quarter.
- Implemented temporary global
compensation reductions of 40% for the CEO, 30% for the company's
executive committee and 30% of the cash compensation for the
company's non-employee directors. Subject to local laws and
regulations, all other employee salaries will be reduced by
20%.
- Implemented comprehensive safety
protocols to protect the health and safety of employees as
operations resume.
- Providing up to 50,000 protective
face shield donations by using production lines at its
state-of-the-art Palmela manufacturing facility in Portugal,
typically dedicated to automotive cockpit electronics.
Cash, Debt Balances and
Guidance
As of March 31, 2020, Visteon remained in a
positive net cash position with cash of $825 million and debt of
$784 million.
For the first-quarter of 2020, cash provided
from operations was $25 million and capital expenditures were $44
million. Adjusted free cash flow, a non-GAAP financial measure, was
a use of cash of $14 million, compared with a use of cash of $30
million for the same period in the prior year.
The company withdrew its financial guidance on
April 9, 2020, and, given the uncertainty of the market conditions,
will not be providing revised guidance until there is better
clarity regarding the COVID-19 impact.
About Visteon
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, embedded multimedia
and smartphone connectivity software solutions. Headquartered in
Van Buren Township, Michigan, Visteon has approximately 11,000
employees at more than 40 facilities in 18 countries. Visteon had
sales of approximately $3 billion in 2019. Learn more
at www.visteon.com.
Conference Call and
Presentation
Today, Thursday, April 30, at 9:15 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 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 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 7037948. The phone replay will be available for one week
following the conference call.
Use of Non-GAAP Financial Information
Because not all companies use identical
calculations, adjusted gross margin, adjusted SG&A, adjusted
EBITDA, 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.
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.
Forward-looking Information
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).
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 press 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, 2020. New business wins, re-wins and
backlog 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 cancellations, installation rates, customer price
reductions and currency exchange rates.
Follow Visteon:
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Contacts:
Media:
Dave Barthmuss805-660-1914dave.barthmuss@visteon.com
Investors:
Kris Doyle201-247-3050kdoyle@visteon.com
VISTEON CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)(In millions, except per share
data)(Unaudited)
|
Three Months Ended |
|
March 31 |
|
2020 |
|
2019 |
|
|
|
|
Net sales |
$ |
643 |
|
|
$ |
737 |
|
Cost of sales |
(590 |
) |
|
(671 |
) |
Gross margin |
53 |
|
|
66 |
|
Selling, general and
administrative expenses |
(54 |
) |
|
(57 |
) |
Restructuring expense,
net |
(33 |
) |
|
(1 |
) |
Interest expense, net |
(2 |
) |
|
(2 |
) |
Equity in net income of
non-consolidated affiliates |
1 |
|
|
3 |
|
Other income, net |
4 |
|
|
2 |
|
Income (loss) before income
taxes |
(31 |
) |
|
11 |
|
Benefit (provision) for income
taxes |
(5 |
) |
|
5 |
|
Net income (loss) |
(36 |
) |
|
16 |
|
Net (income) loss attributable
to non-controlling interests |
1 |
|
|
(2 |
) |
Net income (loss) attributable
to Visteon Corporation |
$ |
(35 |
) |
|
$ |
14 |
|
|
|
|
|
Comprehensive income
(loss) |
$ |
(73 |
) |
|
$ |
21 |
|
Comprehensive income (loss)
attributable to Visteon Corporation |
$ |
(72 |
) |
|
$ |
18 |
|
|
|
|
|
Basic earnings (loss) per
share attributable to Visteon Corporation |
$ |
(1.25 |
) |
|
$ |
0.50 |
|
|
|
|
|
Diluted earnings (loss) per
share attributable to Visteon Corporation |
$ |
(1.25 |
) |
|
$ |
0.49 |
|
|
|
|
|
Average shares outstanding (in
millions) |
|
|
|
Basic |
27.9 |
|
|
28.2 |
|
Diluted |
27.9 |
|
|
28.4 |
|
|
|
|
|
|
|
VISTEON CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In millions)
|
(Unaudited) |
|
|
|
March 31 |
|
December 31 |
|
2020 |
|
2019 |
ASSETS |
|
|
|
Cash and equivalents |
$ |
822 |
|
|
$ |
466 |
|
Restricted cash |
3 |
|
|
3 |
|
Accounts receivable, net |
401 |
|
|
514 |
|
Inventories, net |
180 |
|
|
169 |
|
Other current assets |
177 |
|
|
193 |
|
Total current assets |
1,583 |
|
|
1,345 |
|
|
|
|
|
Property and equipment,
net |
420 |
|
|
436 |
|
Intangible assets, net |
126 |
|
|
127 |
|
Right-of-use assets |
161 |
|
|
165 |
|
Investments in
non-consolidated affiliates |
48 |
|
|
48 |
|
Other non-current assets |
150 |
|
|
150 |
|
Total assets |
$ |
2,488 |
|
|
$ |
2,271 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Short-term debt |
$ |
36 |
|
|
$ |
37 |
|
Accounts payable |
442 |
|
|
511 |
|
Accrued employee
liabilities |
59 |
|
|
73 |
|
Current lease liability |
30 |
|
|
30 |
|
Other current liabilities |
162 |
|
|
147 |
|
Total current liabilities |
729 |
|
|
798 |
|
|
|
|
|
Long-term debt, net |
748 |
|
|
348 |
|
Employee benefits |
284 |
|
|
292 |
|
Non-current lease
liability |
140 |
|
|
139 |
|
Deferred tax liabilities |
27 |
|
|
27 |
|
Other non-current
liabilities |
59 |
|
|
72 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock |
1 |
|
|
1 |
|
Additional paid-in capital |
1,337 |
|
|
1,342 |
|
Retained earnings |
1,644 |
|
|
1,679 |
|
Accumulated other comprehensive loss |
(304 |
) |
|
(267 |
) |
Treasury stock |
(2,284 |
) |
|
(2,275 |
) |
Total Visteon Corporation
stockholders’ equity |
394 |
|
|
480 |
|
Non-controlling interests |
107 |
|
|
115 |
|
Total equity |
501 |
|
|
595 |
|
Total liabilities and
equity |
$ |
2,488 |
|
|
$ |
2,271 |
|
|
|
|
|
|
|
|
|
VISTEON CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS (In millions)(Unaudited)
|
Three Months Ended |
|
March 31 |
|
2020 |
|
2019 |
OPERATING |
|
|
|
Net income (loss) |
$ |
(36 |
) |
|
$ |
16 |
|
Adjustments to reconcile net
income to net cash provided from operating activities: |
|
|
|
Depreciation and amortization |
25 |
|
|
25 |
|
Non-cash stock-based compensation |
5 |
|
|
5 |
|
Equity in net income of non-consolidated affiliates, net of
dividends remitted |
(1 |
) |
|
(3 |
) |
Other non-cash items |
6 |
|
|
3 |
|
Changes in assets and
liabilities: |
|
|
|
Accounts receivable |
102 |
|
|
3 |
|
Inventories |
(16 |
) |
|
(11 |
) |
Accounts payable |
(42 |
) |
|
9 |
|
Other assets and other liabilities |
(18 |
) |
|
(43 |
) |
Net cash provided from
operating activities |
25 |
|
|
4 |
|
INVESTING |
|
|
|
Capital expenditures,
including intangibles |
(44 |
) |
|
(37 |
) |
Loan repayments from
non-consolidated affiliates |
2 |
|
|
2 |
|
Other |
1 |
|
|
1 |
|
Net cash used by investing
activities |
(41 |
) |
|
(34 |
) |
FINANCING |
|
|
|
Borrowings on revolving credit
facility |
400 |
|
|
— |
|
Repurchase of common
stock |
(16 |
) |
|
— |
|
Dividends paid to
non-controlling interests |
(7 |
) |
|
— |
|
Short-term debt repayments,
net |
— |
|
|
(2 |
) |
Net cash provided from (used
by) financing activities |
377 |
|
|
(2 |
) |
Effect of exchange rate
changes on cash |
(5 |
) |
|
— |
|
Net increase (decrease) in
cash |
356 |
|
|
(32 |
) |
Cash and restricted cash at
beginning of the period |
469 |
|
|
467 |
|
Cash and restricted cash at
end of the period |
$ |
825 |
|
|
$ |
435 |
|
|
|
|
|
|
|
|
|
VISTEON CORPORATION AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(Unaudited, in millions)
Adjusted EBITDA: Adjusted
EBITDA is presented as a supplemental measure of the Company's
performance that management believes is useful to investors because
the excluded items may vary significantly in timing or amounts
and/or may obscure trends useful in evaluating and comparing the
Company's operating activities across reporting periods. The
Company defines Adjusted EBITDA as net income attributable to the
Company adjusted to eliminate the impact of depreciation and
amortization, restructuring expense, net interest expense,
loss on divestiture, equity in net income of non-consolidated
affiliates, gain on non-consolidated affiliate transactions,
provision for income taxes, discontinued operations, net
income attributable to non-controlling interests, non-cash
stock-based compensation expense, and other gains and losses not
reflective of the Company's ongoing operations. Because not all
companies use identical calculations, this presentation of Adjusted
EBITDA may not be comparable to similarly titled measures of other
companies.
|
Three Months Ended |
|
March 31 |
Visteon: |
2020 |
|
2019 |
Net income (loss) attributable to Visteon Corporation |
$ |
(35 |
) |
|
$ |
14 |
|
Depreciation and amortization |
25 |
|
|
25 |
|
Provision (benefit) for income taxes |
5 |
|
|
(5 |
) |
Non-cash, stock-based compensation expense |
5 |
|
|
5 |
|
Interest expense, net |
2 |
|
|
2 |
|
Net income (loss) attributable to non-controlling interests |
(1 |
) |
|
2 |
|
Restructuring expense, net |
33 |
|
|
1 |
|
Equity in net income of non-consolidated affiliates |
(1 |
) |
|
(3 |
) |
Adjusted EBITDA |
$ |
33 |
|
|
$ |
41 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is not a recognized term under
U.S. GAAP and does not purport to be a substitute for net income as
an indicator of operating performance or cash flows from operating
activities as a measure of liquidity. Adjusted EBITDA has
limitations as an analytical tool and is not intended to be a
measure of cash flow available for management's discretionary use,
as it does not consider certain cash requirements such as interest
payments, tax payments and debt service requirements. In addition,
the Company uses Adjusted EBITDA (i) as a factor in incentive
compensation decisions, (ii) to evaluate the effectiveness of the
Company's business strategies, and (iii) because the Company's
credit agreements use similar measures for compliance with certain
covenants.
Free Cash Flow and Adjusted Free Cash
Flow: Free cash flow and Adjusted free cash flow are
presented as supplemental measures of the Company's liquidity that
management believes are useful to investors in analyzing the
Company's ability to service and repay its debt. The Company
defines Free cash flow as cash flow provided from operating
activities less capital expenditures, including intangibles. The
Company defines Adjusted free cash flow as cash flow provided from
operating activities less capital expenditures, including
intangibles as further adjusted for restructuring related payments.
Free cash flow and Adjusted free cash flow include amounts
associated with discontinued operations. Because not all companies
use identical calculations, this presentation of Free cash flow and
Adjusted free cash flow may not be comparable to other similarly
titled measures of other companies.
|
Three Months Ended |
|
March 31 |
Total
Visteon: |
2020 |
|
2019 |
Cash provided from operating activities |
$ |
25 |
|
|
$ |
4 |
|
Capital expenditures,
including intangibles |
(44 |
) |
|
(37 |
) |
Free cash flow |
$ |
(19 |
) |
|
$ |
(33 |
) |
Restructuring related
payments |
5 |
|
|
3 |
|
Adjusted free cash flow |
$ |
(14 |
) |
|
$ |
(30 |
) |
|
|
|
|
|
|
|
|
Free cash flow and Adjusted free cash flow are
not recognized terms under U.S. GAAP and do not purport to be a
substitute for cash flows from operating activities as a measure of
liquidity. Free cash flow and Adjusted free cash flow have
limitations as analytical tools as they do not reflect cash used to
service debt and do not reflect funds available for investment or
other discretionary uses. In addition, the Company uses Free cash
flow and Adjusted free cash flow (i) as factors in incentive
compensation decisions and (ii) for planning and forecasting future
periods.
Adjusted Net Income and Adjusted
Earnings Per Share: Adjusted net income and Adjusted
earnings per share are presented as supplemental measures that
management believes are useful to investors in analyzing the
Company's profitability, providing comparability between periods by
excluding certain items that may not be indicative of recurring
business operating results. The Company believes management and
investors benefit from referring to these supplemental measures in
assessing company performance and when planning, forecasting and
analyzing future periods. The Company defines Adjusted net income
as net income attributable to Visteon adjusted to eliminate the
impact of restructuring expense, loss on divestiture, gain on
non-consolidated affiliate transactions, discontinued operations,
other gains and losses not reflective of the Company's ongoing
operations and related tax effects. The Company defines Adjusted
earnings per share as Adjusted net income divided by diluted
shares. Because not all companies use identical calculations, this
presentation of Adjusted net income and Adjusted earnings per share
may not be comparable to other similarly titled measures of other
companies.
|
Three Months Ended |
|
March 31 |
|
2020 |
|
2019 |
Net income (loss) attributable to Visteon |
$ |
(35 |
) |
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31 |
|
2020 |
|
2019 |
Diluted earnings per
share: |
|
|
|
Net income (loss) attributable to Visteon |
$ |
(35 |
) |
|
$ |
14 |
|
Average shares outstanding,
diluted (in millions) |
27.9 |
|
|
28.4 |
|
Diluted earnings (loss) per
share |
$ |
(1.25 |
) |
|
$ |
0.49 |
|
|
|
|
|
Adjusted earnings per
share: |
|
|
|
Net income (loss) attributable
to Visteon |
$ |
(35 |
) |
|
$ |
14 |
|
Restructuring, net |
33 |
|
|
1 |
|
Adjusted net income
(loss) |
$ |
(2 |
) |
|
$ |
15 |
|
Average shares outstanding,
diluted (in millions) |
27.9 |
|
|
28.4 |
|
Adjusted earnings (loss) per
share |
$ |
(0.07 |
) |
|
$ |
0.53 |
|
|
|
Adjusted net income and Adjusted earnings per
share are not recognized terms under U.S. GAAP and do not purport
to be a substitute for profitability. Adjusted net income and
Adjusted earnings per share have limitations as analytical tools as
they do not consider certain restructuring and transaction-related
payments and/or expenses. In addition, the Company uses Adjusted
net income and Adjusted earnings per share for internal planning
and forecasting purposes.
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