Fourth-quarter performance contributes to solid year-over-year gains
2013 sales, adjusted EBITDA, net income higher than 2012
Full-year sales of $7.44 billion ($1.96 billion in fourth quarter)
Record adjusted EBITDA of $704 million ($187 million in fourth quarter)
2013 net income attributable to Visteon of $690 million ($513 million in fourth quarter)
Positive full-year cash from operations of $312 million
Total cash of $1.7 billion and total debt of $730 million
Company completed key strategic actions in 2013
Integrated global climate business
Sold ownership interest in Chinese interiors joint venture
Acquired controlling interest in Yanfeng electronics business
Completed $250 million in share repurchases
Won $1.8 billion in new business in core climate and electronics businesses
VAN BUREN TOWNSHIP, Mich., Feb. 25, 2014 — Visteon Corporation (NYSE: VC) today announced full-year 2013 results, reporting net income attributable to Visteon of $690 million, or $13.50 per diluted share, an increase of $590 million compared with 2012. Visteon’s 2013 fourth-quarter and full-year results included gains totaling $465 million related to the sale of Visteon’s 50 percent ownership interest in Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), partially offset by $51 million of related taxes.
Driven by double-digit sales increases in its core climate and electronics businesses, Visteon reported full-year sales of $7.44 billion, an increase of $582 million or 8 percent compared with 2012. Full-year adjusted EBITDA, a non-GAAP financial measure as defined below, was $704 million, an increase of $78 million or 12 percent compared with 2012. Adjusted free cash flow, a non-GAAP financial measure as defined below, was $232 million for the full year 2013 – up $130 million from 2012.
In 2013, customers awarded Visteon climate and electronics new business wins totaling $1.8 billion in annual revenue, including $685 million of incremental new wins and $1,155 million of rewin business. Visteon has an expected backlog for climate and electronics of approximately $900 million in net annual new business for the period 2014-16.
“We delivered a strong finish to a very good year highlighted by several achievements, including integrating our global climate business and selling our Yanfeng Visteon interiors joint venture, while consolidating Yanfeng’s electronics operations into our global electronics business,” said Timothy D. Leuliette, president and CEO. “We achieved double-digit sales increases in North America and Asia, fueled by our customers’ desire for innovative climate and electronics technology. With a low-cost global footprint and solid balance sheet, Visteon is well-positioned for future success as we work to complete the acquisition of Johnson Controls’ electronics business and divest our interiors business. Our 24,000 employees around the world remain focused on creating value for customers and shareholders.”
Fourth Quarter in Review
Sales of $1.96 billion for the fourth quarter of 2013 increased $135 million from $1.82 billion for the same quarter a year earlier. Hyundai-Kia accounted for approximately 35 percent of Visteon’s fourth-quarter sales, with Ford Motor Company representing 25 percent, and Renault-Nissan and PSA Peugeot-Citroën each accounting for 4 percent. On a regional basis, Asia accounted for 50 percent of total product sales, up from 46 percent for the same period last year, while Europe represented 29 percent, down slightly from 30 percent a year earlier. North America and South America represented 17 percent and 4 percent, respectively, of total product sales for the fourth quarter of 2013.
Climate sales were $1.26 billion for the fourth quarter of 2013, $91 million higher than the same quarter last year. Higher production volumes and net new business increased sales by $85 million, primarily attributable to volume increases in Asia and North America.
Electronics sales were $396 million for the fourth quarter, $59 million higher than the fourth quarter of 2012. The increase is explained by the consolidation of YFVE, which increased sales by $66 million
Interiors sales were $317 million for the fourth quarter of 2013, $19 million lower than the fourth quarter of 2012. Lower vehicle production volumes, primarily in Europe, decreased sales by $12 million.
Adjusted EBITDA for the fourth quarter of 2013 was $187 million, compared with $202 million in the same period a year earlier, with the decrease largely reflecting lower year-over-year commercial agreements, unfavorable currency and increased engineering investment.
For the fourth quarter of 2013, Visteon reported net income attributable to Visteon of $513 million, or $10.32 per diluted share, on sales of $1.96 billion – the highest sales of any quarter in 2013. Adjusted net income, which excludes the gain from the YFV sale and related taxes, restructuring and other transaction costs, was $96 million for the quarter or $1.93 per diluted share.
Cash and Debt Balances
As of Dec. 31, 2013, Visteon had global cash balances totaling $1.7 billion, including restricted cash of $25 million and total debt of $730 million.
For full year 2013, Visteon generated $312 million of cash from operations. Capital expenditures of $269 million in 2013 were $40 million higher than in 2012, primarily related to growth in the climate segment. For 2013, free cash flow, as defined by operating income less capital expenditures, was $43 million compared with $10 million for 2012.
For the fourth quarter of 2013, Visteon generated $133 million of cash from operations, compared with $76 million in the same period a year earlier. Capital expenditures in the fourth quarter of 2013 were $105 million, up from $83 million in the fourth quarter of 2012. Free cash flow was $28 million in the fourth quarter of 2013, compared with a use of $7 million in the fourth quarter of 2012.
During the fourth quarter, Visteon sold its 50 percent ownership interest in its Chinese joint venture YFV to Huayu Automotive Systems Co., Ltd. (HASCO) for cash proceeds of $928 million before applicable taxes. Visteon also received approximately $180 million in dividend distributions from YFV and related entities based on previously undistributed earnings for 2012 and 2013. Visteon expects to receive more than $1 billion in total after-tax proceeds as a result of the series of transactions.
The sale of the YFV stake is the largest part of a series of transactions that also includes the sale of certain other interiors joint ventures and the acquisition by Visteon of a controlling interest in Yanfeng Visteon Automotive Electronics Co., Ltd. (YFVE), which was completed in November 2013.
On Jan. 13, Visteon announced an agreement to purchase the automotive electronics business of Johnson Controls (NYSE: JCI) in a cash transaction valued at $265 million, subject to adjustment. The acquisition is subject to certain regulatory and other consents and approvals and is expected to be completed in the second quarter of 2014. Upon completion, the acquisition will strengthen Visteon’s global scale in electronics, diversify its customer base and bring new technologies to help grow the business.
Since the beginning of the fourth quarter of 2012, Visteon completed stock buyback programs totaling $300 million, including $250 million in 2013. The 2013 repurchase programs reduced the outstanding share count by 3.9 million shares.
Full-Year 2014 Outlook
Visteon projects 2014 sales with a mid-point of $7.8 billion, adjusted EBITDA with a mid-point of $680 million, and adjusted free cash flow, as defined below, with a mid-point of $125 million. The company has redefined adjusted EBITDA for 2014 to exclude equity income and non-controlling interest. Under this revised definition, Visteon’s adjusted EBITDA in 2013 would have been $600 million. Also, as previously announced, Visteon is targeting $875 million of additional share repurchases through 2015.
Visteon is a leading global automotive supplier delivering value for vehicle manufacturers and shareholders through businesses including:
Halla Visteon Climate Control, majority-owned by Visteon and the world’s second largest global supplier of automotive climate components and systems.
Visteon Electronics, a leading supplier of audio and infotainment, driver information, center stack electronics and feature control modules.
Visteon Interiors, a global provider of vehicle cockpit modules, instrument panels, consoles and door trim modules.
Visteon designs, engineers and manufactures innovative components and systems for virtually every vehicle manufacturer worldwide. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Chelmsford, UK; Visteon has facilities in 29 countries and employs about 24,000 employees in its consolidated operations. Learn more at www.visteon.com.
Conference Call and Presentation
Today, Tuesday, Feb. 25, at 9 a.m. ET, the company will host a conference call for the investment community to discuss the quarterly and full-year 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:
Outside U.S./Canada: 706-643-3752 (Call approximately 10 minutes before the start of the conference.)
The conference call and live audio webcast, the financial results news release, related presentation materials and other supplemental information will be accessible through Visteon’s website at www.visteon.com.
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 30583935. The phone replay will be available for one week following the conference call.
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, 2013).
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 Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2013. 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 2014 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.