Visteon Reports Second-Quarter 2012 Results

                 Visteon Reports Second-Quarter 2012 Results

PR Newswire

VAN BUREN TOWNSHIP, Mich., Aug. 2, 2012

VAN BUREN TOWNSHIP, Mich., Aug. 2, 2012 /PRNewswire/ -- 

  o Second quarter in line with company's expectations
  o Board of directors authorized $100 million share repurchase program
  o Continued cost cutting resulted in 13 percent reduction in SG&A
  o Completed sale of lighting operations
  o Announced sale of ownership stake in R-TEK Ltd., a UK interiors joint
    venture
  o Value creation through further portfolio optimization is a priority

Visteon Corporation (NYSE: VC) today announced second-quarter 2012 sales of
$1.69 billion, compared with $2.05 billion during the same period in 2011.
Lower sales resulted from the deconsolidation of Duckyang Industry Co. Ltd.
and unfavorable currency translation.

(Logo:  http://photos.prnewswire.com/prnh/20001201/DEF008LOGO )

Visteon reported net income of $75 million, or $1.40 per diluted share, in the
second quarter of this year, compared with net income of $26 million, or $0.50
per diluted share, in the second quarter of 2011. Net income for the second
quarter of 2012 included a net positive impact of $32 million related to an
equity investment gain and the related tax impact, restructuring and other
expenses, and other non-recurring costs.

"The quarter was in line with our expectations," said Don Stebbins, chairman,
chief executive officer and president. "While we saw some impact from lower
vehicle production volumes in Europe and South America related to economic
weakness in those regions, as well as from currency fluctuation, our
performance was solid. We continue to win new business through our innovative
products and technologies and take actions to achieve a full market
valuation."

Adjusted EBITDA (a non-GAAP financial measure, as defined below) for the
second quarter of 2012 was $151 million, compared with $203 million in the
second quarter of 2011. Cash from operating activities for the second quarter
of 2012 was a use of $12 million, compared with a positive $70 million in the
second quarter of 2011, while free cash flow (a non-GAAP financial measure, as
defined below) was a use of $61 million, compared with a use of $1 million in
the same period last year. The company ended the second quarter of 2012 with
total cash balances of $702 million and total debt of $597 million, compared
with $861 million and $596 million, respectively, the year before.

Sale of Lighting and R-TEK

On Aug. 1, Visteon completed the previously announced sale of its lighting
business to Varroc Group for $72 million, subject to price adjustments.
Visteon also agreed to sell its 50 percent equity stake in the R-TEK Ltd.
interiors joint venture in the UK for about $30 million, with the transaction
expected to be completed by the end of August.

"Following recent successful transactions to strengthen our business
portfolio, we will continue to direct capital investments to our climate and
electronics businesses, while focusing on driving the performance of the
business and pursuing options for the interiors segment," Stebbins said. "The
sharp focus of the executive team and Visteon's board of directors is on
creating accelerated near-term and consistent long-term value for our
customers and shareholders." 

Share Repurchase Program

Visteon announced that its board of directors has authorized the repurchase of
up to $100 million worth of its common shares over the next two years. Shares
would be repurchased from time to time in open market transactions or in
privately negotiated transactions depending on market and economic conditions,
share price, trading volume, alternative uses of capital and other factors.
Such purchases will be made in accordance with applicable U.S. securities laws
and regulations.

Second Quarter in Review

Net sales of $1.69 billion for the second quarter of 2012 decreased $353
million from $2.05 billion in the same quarter a year earlier. Hyundai-Kia
accounted for approximately 33 percent of Visteon's second-quarter product
sales, with Ford Motor Company representing 27 percent, Renault-Nissan 8
percent and PSA Peugeot-Citroen 5 percent. On a regional basis, Asia accounted
for 43 percent of total product sales – unchanged from a year earlier – while
Europe represented 34 percent – down from 35 percent a year earlier. North
America represented 17 percent of total product sales for the second quarter
of 2012, compared with 15 percent during the same quarter last year, and South
America accounted for 6 percent, compared with 7 percent in the second quarter
of 2011.

Gross margin for the second quarter of 2012 was $128 million, compared with
$192 million a year earlier. Gross margin decreased $64 million
year-over-year, reflecting the non-recurrence of certain customer agreements,
unfavorable currency and volume, and the impact of Duckyang. Selling, general
and administrative (SG&A) expense of $87 million for the second quarter of
2012 decreased $13 million.

During the second quarter of 2012, Visteon recognized $103 million of equity
in the net income of non-consolidated affiliates, compared with $43 million in
the second quarter of 2011. Visteon's 50 percent-owned affiliate, Yanfeng
Visteon Automotive Trim Systems Co., Ltd. (YFV), and related affiliated
interests contributed $97 million in equity income, including a non-cash gain
of $63 million at YFV. The gain resulted from the step-up in carrying value of
an equity investment to fair value that was consolidated effective June 1,
2012.

For the second quarter of 2012, the company reported net income of $75
million, or $1.40 per diluted share. This compares with net income of $26
million for the same period of 2011. Adjusted EBITDA for the second quarter of
2012 was $151 million, compared with $203 million for the same period a year
earlier. On a year-over-year basis, decreases in adjusted EBITDA from the
non-recurrence of customer agreements, unfavorable currency and volume, and
equity in the net income of non-consolidated affiliates were partially offset
by positive net cost performance.

Sales by Segment

Climate sales increased during the second quarter of 2012 by $7 million,
compared with the same quarter last year. Higher production volumes and net
new business increased sales by $86 million, primarily attributable to Asia,
Europe and North America. Unfavorable currency related to the euro, Indian
rupee and Korean won resulted in a decrease of $55 million.

Electronics sales decreased during the second quarter of 2012 by $52 million,
compared with the second quarter of 2011. Production volume declines,
including the impact of weakened economic conditions in Europe, resulted in a
$30 million decline in sales. Unfavorable currency, driven by the weakening of
the euro, further decreased sales by $17 million.

Interiors sales decreased during the quarter by $320 million, compared with
the second quarter of 2011. Sales decreased $199 million due to the
deconsolidation of Duckyang. Sales were further decreased by lower production
volumes in Europe and South America of $41 million and $17 million,
respectively. Unfavorable currency related to the euro and Brazilian real
decreased sales $36 million.

First Six Months of 2012

For the first six months of 2012, the company reported net income of $46
million, or $0.86 per diluted share. This compares with net income of $65
million for the same period of 2011, or $1.25 per diluted share. Adjusted
EBITDA for the first half of 2012 was $301 million, compared with $363 million
for the same period a year earlier.

Cash and Debt Balances

As of June 30, 2012, Visteon had global cash balances of $702 million,
including $21 million of restricted cash. Total debt was $597 million as of
June 30, 2012. Year-to-date through June 30, 2012, free cash flow was a use of
$95 million, an improvement of $11 million compared with the first six months
of 2011.

Updated Sales and Earnings Guidance for 2012

Visteon adjusted its sales and earnings guidance for full-year 2012 to reflect
the impact of lower vehicle production volumes in Europe, South America and
China, and the impact of unfavorable currency. Based on these adjustments, the
company currently expects full-year 2012 product sales in the range of $6.6
billion to $6.8 billion and adjusted EBITDA in the range of $580 million to
$620 million. Free cash flow is expected to range from a use of $20 million to
positive $20 million.

About Visteon

Visteon is a leading global automotive supplier that designs, engineers and
manufactures innovative climate, interior and electronic products for vehicle
manufacturers. With corporate offices in Van Buren Township, Mich. (U.S.);
Shanghai, China; and Chelmsford, UK; the company has facilities in 28
countries and employs approximately 22,000 people. Learn more at
www.visteon.com.

Conference Call and Presentation

Today, Thursday, Aug. 2, at 8 a.m. EDT, 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: 888-452-7086
Outside U.S./Canada: 706-643-3752

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

The conference call and live audio webcast, along with the financial results
release, presentation material and other supplemental information, will be
accessible through Visteon's website at www.visteon.com.

Those interested in hearing a replay of the conference call can do so through
the company's website or by calling 855-859-2056 (toll-free if dialing from
the U.S. and Canada) or 404-537-3406 (international). To access the replay by
phone, enter conference ID 87656749. The replay will be available by phone 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) 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; (2) our ability to satisfy pension and other
post-employment benefit obligations; (3) our ability to access funds generated
by foreign subsidiaries and joint ventures on a timely and cost-effective
basis; (4) conditions within the automotive industry, including (i) the
automotive vehicle production volumes and schedules of our customers, and in
particular Ford's and Hyundai-Kia's vehicle production volumes, (ii) the
financial condition of our customers or suppliers and the effects of any
restructuring or reorganization plans that may be undertaken by our customers
or suppliers or work stoppages at our customers or suppliers, 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; (5)
new business wins and re-wins 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; (6) general economic conditions,
including changes in interest rates, currency exchange 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; (7) 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 (8) those
factors identified in our filings with the SEC (including our Annual Report on
Form 10-K for the fiscal year ended Dec. 31, 2011).

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 interim financial results will be
included in the company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2012.

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
full-year 2012 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.

VISTEON CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Millions, Except Per Share Data)
(Unaudited)
                                          Three Months Ended  Six Months Ended
                                          June 30             June 30
                                          2012       2011     2012     2011
Sales                                     $  1,693   $ 2,046  $ 3,410  $ 3,896
Cost of sales                             1,565      1,854    3,148    3,561
Gross margin                              128        192      262      335
Selling, general and administrative       87         100      178      196
expenses
Restructuring and other expenses          11         26       74       28
Operating income                          30         66       10       111
Interest expense                          10         12       22       27
Interest income                           4          5        7        11
Loss on debt extinguishment               —          24       —        24
Equity in net income of non-consolidated  103        43       145      87
affiliates
Income before income taxes                127        78       140      158
Provision for income taxes                42         34       69       62
Income from continuing operations         85         44       71       96
(Loss) income from discontinued           (1)        —        2        4
operations, net of tax
Net income                                84         44       73       100
Net income attributable to                9          18       27       35
non-controlling interests
Net income attributable to Visteon        $  75      $ 26     $ 46     $ 65
Per share data:
Basic earnings (loss) per share:
Continuing operations                     $  1.43    $ 0.51   $ 0.83   $ 1.20
Discontinued operations                   (0.02)     —        0.04     0.08
Basic earnings per share attributable to  $  1.41    $ 0.51   $ 0.87   $ 1.28
Visteon
Diluted earnings (loss) per share:
Continuing operations                     $  1.42    $ 0.50   $ 0.82   $ 1.17
Discontinued operations                   (0.02)     —        0.04     0.08
Diluted earnings per share attributable   $  1.40    $ 0.50   $ 0.86   $ 1.25
to Visteon
Average shares outstanding (in millions)
Basic                                     53.3       51.0     53.1        50.9
Diluted                                   53.7       51.9     53.5        52.1
Comprehensive income:
Comprehensive income                      $  31      $ 93     $ 67     $ 212
Comprehensive income attributable to      $  29      $ 66     $ 40     $ 158
Visteon Corporation

 

VISTEON CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)

(Unaudited)
                                                         June 30   December 31
                                                         2012      2011
ASSETS
Cash and equivalents                                     $ 681     $  723
Restricted cash                                          21        23
Accounts receivable, net                                 1,166     1,071
Inventories, net                                         380       381
Other current assets                                     430       296
Total current assets                                     2,678     2,494
Property and equipment, net                              1,264     1,412
Equity in net assets of non-consolidated affiliates      714       644
Intangible assets, net                                   328       353
Other non-current assets                                 60        66
Total assets                                             $ 5,044   $  4,969
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt, including current portion of long-term  $ 94      $  87
debt
Accounts payable                                         1,067     1,010
Accrued employee liabilities                             171       189
Other current liabilities                                227       267
Total current liabilities                                1,559     1,553
Long-term debt                                           503       512
Employee benefits                                        408       495
Deferred tax liabilities                                 199       187
Other non-current liabilities                            247       225
Shareholders' equity
Preferred stock                                          —         —
Common stock                                             1         1
Stock warrants                                           13        13
Additional paid-in capital                               1,250     1,165
Retained earnings                                        212       166
Accumulated other comprehensive loss                     (31)      (25)
Treasury stock                                           (12)      (13)
Total Visteon Corporation shareholders' equity           1,433     1,307
Non-controlling interests                                695       690
Total shareholders' equity                               2,128     1,997
Total liabilities and shareholders' equity               $ 5,044   $  4,969

VISTEON CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

(Unaudited)
                                          Three Months Ended  Six Months Ended
                                          June 30             June 30
                                          2012        2011    2012      2011
Operating Activities
Net income                                $  84       $ 44    $  73     $ 100
Adjustments to reconcile net income to
net cash (used by)

provided from operating activities:
Depreciation and amortization             67          85      132       162
Equity in net income of non-consolidated
affiliates, net                           (92)        (39)    (134)     (83)

of dividends remitted
Loss on debt extinguishment               —           24      —         24
Other non-cash items                      17          6       42        16
Changes in assets and liabilities:
Accounts receivable                       9           (73)    (91)      (195)
Inventories                               (11)        1       (32)      (40)
Accounts payable                          (62)        4       64        79
Other assets and liabilities              (24)        18      (47)      (43)
Net cash (used by) provided from          (12)        70      7         20
operating activities
Investing Activities
Capital expenditures                      (49)        (71)    (102)     (126)
Proceeds from asset sales                 79          9       80        10
Other                                     (1)         (5)     (2)       (5)
Net cash provided from (used by)          29          (67)    (24)      (121)
investing activities
Financing Activities
Short-term debt, net                      4           6       4         9
Proceeds from issuance of debt, net of    —           502     2         502
issuance costs
Principal payments on debt                —           (503)   (4)       (506)
Cash restriction, net                     —           48      —         52
Rights offering fees                      —           (33)    —         (33)
Dividends to non-controlling interests    (22)        (24)    (22)      (24)
Other                                     —           (5)     —         —
Net cash (used by) financing activities   (18)        (9)     (20)      —
Effect of exchange rate changes on cash   (14)        14      (5)       35
and equivalents
Net (decrease) increase in cash and       (15)        8       (42)      (66)
equivalents
Cash and equivalents at beginning of      696         831     723       905
period
Cash and equivalents at end of period     $  681      $ 839   $  681    $ 839

 

VISTEON CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in Millions)
(Unaudited)

In this press release the Company has provided information regarding certain
non-GAAP financial measures including "Adjusted EBITDA" and "free cash flow." 
Such non-GAAP financial measures are reconciled to their closest GAAP
financial measure in the schedules below.

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 Visteon, plus net interest expense, provision for
income taxes and depreciation and amortization, as further adjusted to
eliminate the impact of asset impairments, gains or losses on divestitures,
net restructuring expenses and other reimbursable costs, certain non-recurring
employee charges and benefits, reorganization items, and other non-operating
gains and losses. Additionally, amounts below are inclusive of the Company's
discontinued operations. Because not all companies use identical calculations
this presentation of Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies.

 

                             Three Months Ended  Six Months Ended  Estimated
                             June 30             June 30           Full Year
                             2012        2011    2012      2011    2012
Net income attributable to   $  75       $ 26    $  46     $ 65    $60 - $100
Visteon
Interest expense, net        6           7       15        16      50
Loss on debt extinguishment  —           24      —         24      —
Provision for income taxes   42          34      69        62      140
Depreciation and             67          79      131       151     265
amortization
Restructuring and other      11          26      74        28      110
expenses
Equity investment gain       (63)        —       (63)      —       (63)
Gain on sale of R-Tek Ltd.   —           —       —         —       (14)
Other non-recurring costs,   2           —       7         5       10
net
Discontinued operations      11          7       22        12      22
Total Adjusted EBITDA        $  151      $ 203   $  301    $ 363   $580 - $620

 

Adjusted EBITDA is not a recognized term under 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) the Company's credit
agreements use measures similar to Adjusted EBITDA to measure compliance with
certain covenants.

Free Cash Flow: Free cash flow is presented as a supplemental measure of the
Company's liquidity that management believes is 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 (used by) operating
activities less capital expenditures. Because not all companies use identical
calculations, this presentation of free cash flow may not be comparable to
other similarly titled measures of other companies.

 

                            Three Months Ended  Six Months Ended   Estimated
                            June 30             June 30            Full Year
                            2012        2011    2012     2011      2012
Cash (used by) provided     $  (12)     $ 70    $ 7      $ 20      $220 - $260
from operating activities
Capital expenditures        (49)        (71)    (102)    (126)     (240)
Free cash flow              $  (61)     $ (1)   $ (95)   $ (106)   ($20) - $20

 

Free cash flow is not a recognized term under GAAP and does not purport to be
a substitute for cash flows from operating activities as a measure of
liquidity. Free cash flow has limitations as an analytical tool and does not
reflect cash used to service debt and does not reflect funds available for
investment or other discretionary uses.  In addition, the Company uses free
cash flow (i) as a factor in incentive compensation decisions, and (ii) for
planning and forecasting future periods.

SOURCE Visteon Corporation

Website: http://www.visteon.com
Contact: Media: Jim Fisher, +1-734-710-5557, jfishe89@visteon.com, or
Investors: Scott Deitz, +1-734-710-2603, sdeitz@visteon.com