Visteon Corporation (NYSE:VC) today announced second-quarter 2016 results, reporting sales of $773 million and net income attributable to Visteon of $26 million, or $0.76 per diluted share. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $77 million for the second quarter, compared with $60 million in the same period last year. Adjusted net income, a non-GAAP financial measure as defined below, was $42 million for the second quarter, or $1.22 per diluted share.
In the first half of 2016, global vehicle manufacturers awarded Visteon new business wins amounting to $2.8 billion of lifetime revenue. Second-quarter wins totaled $1.6 billion, an all-time quarterly record for Visteon’s Electronics business. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $15.9 billion as of June 30, 2016.
“We delivered another solid quarter and are on pace for a strong year as automakers around the world experience the benefits of our cockpit electronics technology,” said Visteon President and CEO Sachin Lawande. “As a result of our first-half performance, we are reaffirming our guidance for adjusted EBITDA and adjusted free cash flow for the year. The record pace at which customers are awarding us new business, coupled with our focus on new technology and cost efficiency, solidifies our position as a leader in the fast-growing cockpit electronics segment.”
Second Quarter in Review
Visteon reported second-quarter sales of $773 million, a decrease of $39 million compared with the same quarter last year. The decrease is primarily related to the sale of a Germany interiors facility during the fourth quarter of 2015 and customer pricing, partially offset by higher production volumes and new business.
Electronics sales totaled $762 million, a decrease of $18 million from the second quarter last year. For the Electronics Product Group, on a regional basis, Asia accounted for 34 percent of sales, Europe 34 percent, North America 30 percent, and South America 2 percent.
Gross margin for the second quarter of 2016 was $109 million, compared with $99 million a year earlier. Selling, general and administrative (SG&A) expenses were $54 million, or 7.0 percent of sales, for the second quarter, compared with $65 million, or 8.0 percent of sales, a year earlier.
For the second quarter of 2016, Visteon reported net income attributable to Visteon of $26 million, or earnings per share of $0.76 per diluted share, compared with net income attributable to Visteon of $2,208 million and earnings per share of $49.73 for the same period in 2015. Net income attributable to Visteon in the second quarter of 2015 included the climate transaction gain and related taxes within discontinued operations net income of $2,159 million and a gain on the sale of non-consolidated affiliates of $62 million.
Second-quarter 2016 net income included a loss of $9 million related to discontinued operations and $7 million of restructuring, transformation integration and related costs. Adjusted net income, which excludes these costs, was $42 million, or $1.22 per diluted share.
Adjusted EBITDA for the Electronics Product Group was $79 million for the second quarter of 2016, compared with $60 million for the same quarter last year. The improvement primarily reflected cost efficiencies impacting both gross margin and SG&A. Adjusted EBITDA for Other Operations was a loss of $2 million, $2 million lower than adjusted EBITDA for the second quarter last year.
Cash and Debt Balances
As of June 30, 2016, Visteon had global cash balances totaling $852 million. Total debt as of June 30 was $372 million.
For the second quarter of 2016, Visteon generated $72 million of cash from operations, compared with $31 million in the same period a year earlier. Capital expenditures for the second quarter of 2016 were $12 million, compared with $67 million during the second quarter of 2015, reflecting the impacts of the climate business divestiture. Adjusted free cash flow was $79 million in the quarter, compared with $33 million in the second quarter of 2015.
Visteon generated $92 million of cash from operations related to the Electronics Product Group in the second quarter. Electronics capital expenditures totaled $12 million, and adjusted free cash flow for Electronics totaled $87 million.
Completion of AllGo Acquisition
On July 11, 2016, Visteon announced completion of its acquisition of AllGo Embedded Systems Pvt. Ltd., an India-based leading supplier of embedded multimedia and smartphone connectivity software solutions to the global automotive industry. The acquisition makes Visteon the only automotive supplier with vertically integrated multimedia playback and smartphone connectivity technologies for infotainment and display audio systems. The transaction includes AllGo’s technology assets and automotive business and approximately 140 employees – primarily software engineers based in India – supported by sales offices in the U.S., Europe and Asia.
Full-Year 2016 Outlook
Visteon reaffirmed its full-year 2016 guidance for adjusted EBITDA and adjusted free cash flow. Visteon established a range for Electronics Product Group sales guidance of $3.1 billion to $3.2 billion. Adjusted EBITDA for the Electronics Product Group is projected in the range of $305 million to $335 million. Adjusted free cash flow, as defined below, for the Electronics Product Group is projected in the range of $110 million to $150 million.
