- Improved year-over-year financial performance
- Sales of $1.73 billion, up $109 million
- Net income attributable to Visteon of $43 million, up $28 million
- Adjusted EBITDA of $160 million, up $26 million, driven by strong performance in climate and electronics
- Cash from operations up $16 million year-to-date; cash balances of $862 million
- Launched $125 million accelerated stock buyback program as part of $1 billion stock buyback announced in August
- Represents second accelerated stock buyback program this year
- First $125 million accelerated stock buyback program completed in April
- Year-to-date share repurchase programs have reduced outstanding shares by 3.6 million or 6.9 percent of outstanding shares
- Announced sale of Yanfeng Visteon joint ventures to partner HASCO and acquisition of majority control of Yanfeng Visteon’s automotive electronics business – total transaction value of $1.5 billion
- Transaction closing on track for late Q4 2013 or early Q1 2014
- Increased full-year guidance for adjusted EBITDA, adjusted free cash flow and adjusted earnings per share
Visteon Corporation (NYSE: VC) today announced third-quarter 2013 results, reporting year-over-year increases in sales and net income.
Visteon reported third-quarter sales of $1.73 billion, an increase of $109 million compared with the same quarter a year earlier. Net income attributable to Visteon of $43 million ($0.85 per diluted share) increased $28 million ($0.57 per diluted share) compared with $15 million ($0.28 per diluted share) in the third quarter of 2012. Third-quarter adjusted EBITDA, a non-GAAP financial measure as defined below, was $160 million, increasing from $134 million in the same period last year.
“We sustained strong performance in the third quarter and continue to benefit from the momentum of our value-creating strategic plan,” said Tim Leuliette, president and CEO. “Fueled by strong technology, we achieved year-over-year improvement in our core climate and electronics businesses. We continue to effectively manage fixed costs, including focusing engineering expenses on technology areas that will drive growth in those businesses. I am pleased that our share repurchase program continues to return value to shareholders.”
Year-to-date cash from operating activities was $179 million, an increase of $16 million compared with 2012. Cash from operating activities in the third quarter totaled $21 million, decreasing $135 million compared with the same period in 2012, driven by the timing of dividends and working capital. Adjusted free cash flow, a non-GAAP financial measure as defined below, was $96 million year-to-date and a use of $1 million for the third quarter of 2013.
Other Developments
As part of Visteon’s authorized share repurchase program, the company in August 2013 entered into a $125 million accelerated stock buyback program, which is expected to be completed by the end of 2013. A total of $875 million remains authorized and available for repurchase through Dec. 31, 2015.
On Aug. 12, 2013, Visteon entered into an agreement with Huaya Automotive Systems Company Limited (HASCO), Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), and Yanfeng Visteon Automotive Electronics Co., Ltd. (YFVE) to sell its 50 percent ownership interest in YFV for cash proceeds of $928 million, and to sell its ownership interests in other interiors joint ventures to Yanfeng for additional cash proceeds aggregating $96 million. In addition, Visteon agreed to an additional investment of $58 million into YFVE in exchange for additional equity resulting in a 51 percent controlling equity interest in YFVE. Visteon is also entitled to distributions of approximately $200 million associated with Yanfeng and affiliate earnings. In total, Visteon expects to receive approximately $1.2 billion in cash payments related to these transactions. The transactions are subject to customary government and regulatory approvals; they are expected to be completed in multiple stages, with the initial closing in late 2013 or early 2014 representing approximately 90 percent of the economic interests, and with remaining elements to be substantially completed by June 2015.
Third Quarter in Review
Hyundai-Kia accounted for approximately 34 percent of Visteon’s third-quarter sales, with Ford Motor Company accounting for 28 percent, Renault-Nissan 7 percent and PSA Peugeot-Citroën 4 percent. On a regional basis, Asia accounted for 45 percent of sales, Europe represented 30 percent, North America 20 percent and South America 5 percent.
Gross margin for the third quarter of 2013 was $143 million, compared with $129 million a year earlier. Gross margin increased $14 million year-over-year, reflecting higher sales volume and new business impacts. Selling, general and administrative (SG&A) expenses were $87 million, or 5.0 percent of sales, for the third quarter of 2013 compared to $89 million, or 5.5 percent of sales, a year earlier.
During the third quarter of 2013, Visteon recognized $48 million of equity in the net income of non-consolidated affiliates, including $45 million from Visteon’s 50 percent-owned affiliate, YFV, and related affiliated interests. Visteon recognized $38 million of equity in the net income of non-consolidated affiliates in the third quarter of 2012.
For the third quarter of 2013, the company reported net income attributable to Visteon of $43 million, or $0.85 per diluted share. Adjusted EBITDA for the third quarter of 2013 was $160 million, compared with $134 million for the same period a year earlier, primarily reflecting favorable volume, new business and higher equity income.
Third Quarter Results by Segment
Climate sales totaled $1.131 billion during the third quarter of 2013, an increase of $107 million compared with the same quarter last year. Higher production volumes and new business increased sales year-over-year, with the largest increases in Asia Pacific and Europe.
Electronics sales were $340 million during the third quarter of 2013, an increase of $36 million compared with the same period in 2012. Higher production volumes increased sales year-over-year in all regions, with the largest increases in North America and Europe.
Interiors sales were $293 million during the third quarter of 2013, a decrease of $14 million, compared with the third quarter of 2012. The sales decrease was primarily in Europe and South America in connection with weakened economic conditions.
Cash and Debt Balances
As of Sept. 30, 2013, Visteon had global cash balances totaling $862 million, including restricted cash of $25 million. Total debt as of Sept. 30, 2013, was $807 million.
For the third quarter of 2013, Visteon generated $21 million of cash from operations, compared with $156 million in the same period a year earlier. The $135 million decrease was primarily driven by the timing of dividends and working capital. Capital expenditures in the quarter were $50 million, up from $44 million in the third quarter of 2012. Adjusted free cash flow was a use of $1 million in the quarter, compared with $120 million provided in the third quarter of 2012.
Full-Year 2013 Outlook
Visteon increased its full-year 2013 guidance for adjusted EBITDA, adjusted free cash flow and adjusted earnings per share. The company projects 2013 sales of $7.4 billion, adjusted EBITDA in the range of $680 million to $700 million, adjusted free cash flow in the range of $145 million to $185 million, and adjusted earnings per share in the range of $5.00 to $6.26.
