- Delivered strong financial performance
- Record electronics sales of $810 million
- Record electronics adjusted EBITDA of $101 million
- Net income of $63 million
- Awarded $1.5 billion in new business
- Infotainment represents largest share
- Third SmartCore™ award – first in China
- Record $16.7 billion order backlog
- Executed $125 million share repurchase
VAN BUREN TOWNSHIP, Mich — Visteon Corporation (NYSE: VC) today announced first-quarter 2017 results, reporting sales of $810 million compared with $802 million in 2016. First-quarter net income attributable to Visteon was $63 million or $1.91 per diluted share for 2017, compared with $19 million or $0.49 per diluted share for 2016.
First-quarter Electronics sales were $810 million compared with $793 million for the same period in 2016. Electronics first-quarter net income was $55 million or $1.67 per diluted share for 2017, compared with $38 million or $0.99 per diluted share for 2016.
Electronics adjusted EBITDA, a non-GAAP financial measure as defined below, was $101 million for the first quarter, compared with $94 million in the same period last year. Electronics adjusted net income, a non-GAAP financial measure as defined below, was $57 million for the first quarter or $1.73 per diluted share, compared with $52 million or $1.35 per diluted share in the first quarter of 2016.
During the first quarter, global vehicle manufacturers awarded Visteon new business of $1.5 billion in lifetime revenue. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $16.7 billion as of March 31, 2017, up from $16.5 billion at the end of 2016.
“We had a strong first quarter, highlighted by record Electronics sales and adjusted EBITDA,” said Visteon President and CEO Sachin Lawande. “We won significant new business that raised our order backlog to an all-time high, with noteworthy wins in infotainment and in Asia – including our third SmartCore™ cockpit domain controller win and our first in China. We also benefited from key product launches at the end of 2016 and in early 2017. Our continued focus on operational improvements helped drive adjusted EBITDA as a percent of sales to 12.5 percent.”
First Quarter in Review
First-quarter sales were $810 million, compared with $802 million for the same period in 2016. The $8 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 $131 million, compared with $121 million a year earlier. The $10 million increase in gross margin reflected higher sales and the exit of other climate operations. Selling, general and administrative expenses were $51 million for the first quarter of 2017, compared with $56 million for the first quarter of 2016.
For the first quarter of 2017, the company reported net income attributable to Visteon of $63 million or $1.91 per diluted share, compared with $19 million or $0.49 per diluted share for the same period in 2016. First-quarter 2017 net income included income of $8 million from discontinued operations, net of tax; and $2 million of restructuring, transformation and related costs.
Electronics Product Group
Sales totaled $810 million and $793 million during the first quarter of 2017 and 2016, respectively, for an increase of $17 million, resulting from higher volume and product mix, particularly in Europe and China. Unfavorable currency movements and contractual customer pricing reductions partially offset the increase. On a regional basis, Asia accounted for 37 percent of sales, Europe 33 percent, North America 28 percent, and South America 2 percent.
Gross margin for the first quarter of 2017 was $131 million, compared with $126 million a year earlier. The $5 million increase in gross margin reflected the impact of higher sales volume, material cost efficiencies and a decline in engineering expenses, partially offset by customer pricing.
Adjusted EBITDA for the Electronics Product Group was $101 million for the first quarter of 2017, compared with $94 million for the same quarter last year. The improvement was primarily driven by increased vehicle production volumes and new business, and favorable currency. Manufacturing, engineering, and sales, general and administrative cost efficiencies were offset by customer pricing and higher warranty costs. Selling, general and administrative expenses were $51 million for the first quarter, compared with $56 million for the first quarter of 2016. Adjusted EBITDA margins were 12.5 percent for the first quarter of 2017, a 60-basis point improvement from prior-year levels.
For the first quarter of 2017, net income was $55 million or $1.67 per diluted share, compared with net income of $38 million or $0.99 per diluted share for the same period in 2016. First-quarter 2017 net income included $2 million of restructuring, transformation and related costs. Adjusted net income, which excludes these items, was $57 million or $1.73 per diluted share in 2017, compared with $52 million or $1.35 per diluted share in 2016.
By the end of 2016, Visteon exited its other operations, consisting of climate operations in South America and South Africa. The first quarter of 2016 included sales of $9 million, negative adjusted EBITDA of $5 million and a net loss of $5 million.
Cash and Debt Balances
As of March 31, 2017, Visteon had global cash and equivalents totaling $692 million. During the first quarter of 2017, Visteon paid $125 million to purchase shares of its common stock and $47 million to repurchase the India electronics business in connection with the 2015 climate transaction.Total debt as of March 31 was $396 million.
For the first quarter of 2017, cash from operations was a use of $10 million, capital expenditures were $32 million and adjusted free cash flow was a use of $30 million. The first quarter typically reflects an outflow of cash due to timing of working capital movements.
In March 2017, Visteon amended its revolving and term loan credit facilities. The amendment extended the maturity dates of each facility by three years, reduced the applicable interest rate margin on each facility by 50 basis points and upsized the revolving facility by $100 million to $300 million.
During the first quarter of 2017, Visteon entered into an Accelerated Stock Repurchase (ASR) with a third party to purchase shares of its common stock for a payment of $125 million and received 1,062,022 shares, representing 80 percent of the expected shares. This ASR is expected to be completed by May 8, 2017. The company has $275 million remaining under its current share repurchase authorization.
Full-Year 2017 Outlook
Visteon affirmed its full-year 2017 guidance for its key financial metrics. The company projects 2017 sales 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.
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.
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 March 31, 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.