Visteon Reports Third-Quarter 2012 Results PR Newswire VAN BUREN TOWNSHIP, Mich., Nov. 1, 2012 VAN BUREN TOWNSHIP, Mich., Nov. 1, 2012 /PRNewswire/ - oResults in line with company expectations oSales of $1.62 billion oNet income of $15 million; adjusted EBITDA of $131 million oStrong cash performance oThird-quarter cash from operations $156 million; up $121 million from 2011 oFree cash flow $112 million; up $136 million from 2011 oTotal cash of $920 million and total debt of $595 million oShareholder value creation plan announced Sept. 19 oCost-reduction program initiated oSale of Visteon Climate to Halla Climate Control Corporation on target oUpdated 2012 guidance – sales projected at upper end of previously announced range; adjusted EBITDA mid-point reaffirmed; and free cash flow increased Visteon Corporation (NYSE: VC) today announced third-quarter 2012 results, which were in line with company expectations, reporting sales of $1.62 billion. Sales were lower compared with the same period in 2011 due to the October 2011 deconsolidation of Duckyang Industry Co. Ltd. and unfavorable currency. (Logo: http://photos.prnewswire.com/prnh/20001201/DEF008LOGO ) Visteon reported net income of $15 million, or $0.28 per diluted share, in the third quarter of this year, compared with net income of $41 million, or $0.79 per diluted share, in the third quarter of 2011. Third-quarter 2012 adjusted EBITDA, a non-GAAP financial measure as defined below, was $131 million, compared with $168 million for the same period last year. Strong cash performance of $156 million from operating activities resulted in an increase of $121 million in the third quarter of 2012 compared with the same period in 2011. Free cash flow, a non-GAAP financial measure as defined below, of $112 million for the third quarter of 2012 improved by $136 million compared with the same period in 2011. On a year-to-date basis, Visteon reported cash from operating activities of $163 million and free cash flow of $17 million. "The quarter met our expectations considering the challenging macroeconomic conditions in Europe, but we are not satisfied with these results," said Tim Leuliette, who on Sept. 30 was named president and chief executive officer of Visteon. "We are taking aggressive rightsizing actions to ensure we have an efficient overhead and operational structure as part of a broad value-creation strategy for all Visteon stakeholders." Today Visteon announced its intention to restructure the company, including a plan to address and rationalize certain underperforming facilities and to significantly reduce global selling, general and administrative (SG&A) and other costs. "Year-to-date, we have reduced targeted costs by 7 percent compared with 2011 levels, but there is more we can and must do," Leuliette said. The company expects to incur restructuring and other costs of approximately $100 million with charges beginning in the fourth quarter of 2012. Savings are expected to result in year-over-year improvements in both 2013 and 2014. On Sept. 19, the company also announced its intention to combine its wholly owned climate businesses into a single world-class climate organization under its 70 percent-owned affiliate Halla Climate Control Corporation ("Halla"), with substantial benefits to both Visteon and Halla. Since the announcement, significant steps have been taken, including the definition of the transaction perimeter, commencement of independent valuations and due diligence. "The sharply focused value-creating actions for customers, partners and shareholders that were announced in mid-September remain on track, and I'm pleased with our progress," Leuliette reported. "Specifically, the combination of Visteon's global climate business with that of our Korean affiliate, Halla Climate Control, is tracking toward first quarter 2013 completion." During the third quarter, Visteon announced a lump sum payment option to certain former U.S. employees who are vested defined benefit plan participants not currently receiving monthly payments. At current interest rate levels, the lump sum settlements provide an opportunity for Visteon to significantly reduce liabilities and administrative costs. The payment option, to be funded with pension plan assets, is being offered from Oct. 1 to Nov. 9 to nearly 10,000 of the company's 20,000 total U.S. plan participants. Eligible participants will be given an option to select a lump sum payment, begin an immediate annuity, or to maintain their existing benefit. A non-cash settlement charge is expected in the fourth quarter of 2012, resulting from the lump sum payment. The total charge will depend on the participation rate, value of assets and discount rate at year-end. Third Quarter in Review Sales of $1.62 billion for the third quarter of 2012 decreased $285 million from $1.90 billion in the same quarter a year earlier. Hyundai-Kia accounted for approximately 32 percent of Visteon's third-quarter sales, with Ford Motor Company representing 28 percent, Renault-Nissan 8 percent and PSA Peugeot-Citroen 4 percent. On a regional basis, Asia accounted for 45 percent of total product sales, down slightly from 47 percent for the same period last year, while Europe represented 30 percent – also down slightly from 31 percent a year earlier. North America represented 19 percent of total product sales for the third 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 third quarter of 2011. Gross margin for the third quarter of 2012 was $129 million, compared with $139 million a year earlier. Gross margin decreased $10 million year-over-year, reflecting unfavorable currency and volume, partially offset by cost efficiencies. SG&A expense of $89 million for the third quarter of 2012 decreased $6 million from a year earlier. During the third quarter of 2012, Visteon recognized $38 million of equity in the net income of non-consolidated affiliates, compared with $43 million in the third quarter of 2011. Visteon's 50 percent-owned affiliate, Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), and related affiliated interests contributed $38 million in equity income. On Aug. 31, Visteon completed the previously announced sale of its 50 percent equity stake in the R-TEK Ltd. interiors joint venture in the UK for about $30 million. The company also completed the sale of its lighting product line for approximately $70 million on Aug. 1. For the third quarter of 2012, the company reported net income of $15 million, or $0.28 per diluted share. This compares with net income of $41 million for the same period of 2011. Adjusted EBITDA for the third quarter of 2012 was $131 million, compared with $168 million for the same period a year earlier. On a year-over-year basis, decreases in adjusted EBITDA from unfavorable currency and volume, and equity in the net income of non-consolidated affiliates, were partially offset by positive net cost performance. Segment Results Climate sales increased by $21 million during the third quarter of 2012 compared with the same quarter last year. Higher production volumes and net new business increased sales by $92 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 $69 million. Electronics sales decreased $40 million during the third quarter of 2012, compared with the third quarter of 2011. Production volume declines, including the impact of weakened economic conditions in Europe, resulted in a $15 million sales decline. Unfavorable currency, driven by the weakening of the euro, further decreased sales by $21 million. Interiors sales decreased during the quarter by $293 million, compared with the third quarter of 2011. Sales decreased $190 million due to the deconsolidation of Duckyang. Sales were further decreased by lower production volumes in Europe, Asia and South America of $28 million, $18 million and $13 million, respectively. Unfavorable currency primarily related to the euro and Brazilian real decreased sales by $41 million. First Nine Months of 2012 For the first nine months of 2012, the company reported net income of $61 million, or $1.14 per diluted share. This compares with net income of $106 million, or $2.04 per diluted share, for the same period in 2011. Adjusted EBITDA for the first nine months of 2012 was $432 million, compared with $531 million for the same period a year earlier. Cash and Debt Balances As of Sept. 30, 2012, Visteon had global cash balances of $920 million, including $19 million of restricted cash. Total debt was $595 million as of Sept. 30, 2012. Year-to-date through Sept. 30, 2012, free cash flow was $17 million, an improvement of $147 million compared with the first nine months of 2011. 2012 Sales and Earnings Guidance Visteon has moved its sales guidance for full-year 2012 to the upper end of the previously announced range and has narrowed the range of previously announced earnings guidance for 2012. The company expects full-year 2012 product sales to be approximately $6.8 billion and adjusted EBITDA to be in the range of $590 million to $610 million. The company has increased its free cash flow guidance and expects to generate positive free cash flow for 2012 in excess of $25 million. Share Repurchase Program On Aug. 2, 2012, Visteon announced a plan to repurchase up to $100 million of its common shares during the next two years. Visteon did not repurchase any shares during the third quarter of 2012 due to trading restrictions in August and September. Future repurchases will be made from time to time in open market transactions or in privately negotiated transactions. Any future purchase will take into consideration global macroeconomic conditions, Visteon's trading value and the assessment of current and future cash needs of the business. 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, Nov. 1, at 8 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: 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 35395639. 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 Sept. 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 Nine Months Ended September 30 September 30 2012 2011 2012 2011 Sales $ 1,624 $ 1,909 $ 5,034 $ 5,805 Cost of sales 1,495 1,770 4,643 5,331 Gross margin 129 139 391 474 Selling, general and administrative 89 95 267 291 expenses Interest expense 17 10 39 37 Interest income 4 5 11 16 Loss on debt extinguishment 4 — 4 24 Equity in net income of 38 43 183 130 non-consolidated affiliates Restructuring and other (income) (11) 1 63 29 expenses Income from continuing operations 72 81 212 239 before income taxes Provision for income taxes 33 25 102 87 Income from continuing operations 39 56 110 152 (Loss) income from discontinued (5) 4 (3) 8 operations, net of tax Net income 34 60 107 160 Net income attributable to 19 19 46 54 non-controlling interests Net income attributable to Visteon $ 15 $ 41 $ 61 $ 106 Corporation Per share data: Basic earnings (loss) per share: Continuing operations $ 0.37 $ 0.72 $ 1.21 $ 1.92 Discontinued operations (0.09) 0.08 (0.06) 0.15 Basic earnings attributable to Visteon $ 0.28 $ 0.80 $ 1.15 $ 2.07 Corporation Diluted earnings (loss) per share: Continuing operations $ 0.37 $ 0.71 $ 1.20 $ 1.89 Discontinued operations (0.09) 0.08 (0.06) 0.15 Diluted earnings attributable to $ 0.28 $ 0.79 $ 1.14 $ 2.04 Visteon Corporation Average shares outstanding (in millions) Basic 53.3 51.5 53.1 51.1 Diluted 53.8 52.0 53.5 52.0 Comprehensive income: Comprehensive income (loss) $ 96 $ (102) $ 163 $ 110 Comprehensive income (loss) $ 63 $ (84) $ 103 $ 74 attributable to Visteon Corporation VISTEON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited) September 30 December 31 2012 2011 ASSETS Cash and equivalents $ 901 $ 723 Restricted cash 19 23 Accounts receivable, net 1,168 1,071 Inventories 408 381 Other current assets 265 296 Total current assets 2,761 2,494 Property and equipment, net 1,278 1,412 Equity in net assets of non-consolidated affiliates 734 644 Intangible assets, net 324 353 Other non-current assets 73 66 Total assets $ 5,170 $ 4,969 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term debt, including current portion of $ 89 $ 87 long-term debt Accounts payable 1,077 1,010 Accrued employee liabilities 162 189 Other current liabilities 248 267 Total current liabilities 1,576 1,553 Long-term debt 506 512 Employee benefits 413 495 Deferred tax liabilities 202 187 Other non-current liabilities 251 225 Shareholders' equity Preferred stock — — Common stock 1 1 Stock warrants 13 13 Additional paid-in capital 1,258 1,165 Retained earnings 227 166 Accumulated other comprehensive income (loss) 17 (25) Treasury stock (17) (13) Total Visteon Corporation shareholders' equity 1,499 1,307 Non-controlling interests 723 690 Total shareholders' equity 2,222 1,997 Total liabilities and shareholders' equity $ 5,170 $ 4,969 VISTEON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 2012 2011 2012 2011 Operating Activities Net income $ 34 $ 60 $ 107 $ 160 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 64 86 196 248 Equity in net income of non-consolidated affiliates, net of 27 (5) (107) (88) dividends remitted Loss on debt extinguishment 4 — 4 24 Other non-cash items (9) 10 33 26 Changes in assets and liabilities: Accounts receivable 33 64 (58) (131) Inventories (22) (10) (54) (50) Accounts payable (23) (98) 41 (19) Other assets and other liabilities 48 (72) 1 (115) Net cash provided from operating 156 35 163 55 activities Investing Activities Capital expenditures (44) (59) (146) (185) Proceeds from business divestitures 100 — 100 — Proceeds from asset sales 8 1 88 11 Other — (8) (2) (13) Net cash provided from (used by) 64 (66) 40 (187) investing activities Financing Activities Short-term debt, net (2) 2 2 11 Proceeds from issuance of debt, net of 810 1 812 503 issuance costs Principal payments on debt (820) (7) (824) (513) Cash restriction, net — — — 52 Rights offering fees — — — (33) Dividends to non-controlling interests (1) (5) (23) (29) Other — 3 — 3 Net cash used by financing activities (13) (6) (33) (6) Effect of exchange rate changes on cash 13 (44) 8 (9) and equivalents Net increase (decrease) in cash and 220 (81) 178 (147) equivalents Cash and equivalents at beginning of 681 839 723 905 period Cash and equivalents at end of period $ 901 $ 758 $ 901 $ 758 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 Nine Months Ended Estimated September 30 September 30 Full Year 2012 2011 2012 2011 2012 Total Adjusted EBITDA $ 131 $ 168 $ 432 $ 531 $590 - $610 Interest expense, net 13 5 28 21 41 Loss on debt 4 — 4 24 4 extinguishment Provision for income 33 25 102 87 140 taxes Depreciation and 64 81 195 232 260 amortization Restructuring and other (11) 1 63 29 80 (income) expenses Equity investment gain — — (63) — (63) Other non-operating 5 8 12 13 13 costs, net Discontinued operations 8 7 30 19 30 Net income attributable to $ 15 $ 41 $ 61 $ 106 $85 - $105 Visteon Corporation 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 Nine Months Ended Estimated September 30 September 30 Full Year 2012 2011 2012 2011 2012 Cash provided from $ 156 $ 35 $ 163 $ 55 $ 255 + operating activities Capital expenditures (44) (59) (146) (185) (230) Free cash flow $ 112 $ (24) $ 17 $ (130) $ 25 + 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, email@example.com or Investors, Scott Deitz, +1-734-710-2603, firstname.lastname@example.org
Visteon Reports Third-Quarter 2012 Results
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