- Fourth-quarter performance contributes to solid year-over-year gains
- Full-year sales up 18 percent to $7.51 billion ($2.04 billion in fourth quarter)
- Adjusted EBITDA up 16 percent to $678 million ($200 million in fourth quarter) led by record electronics performance
- 2014 net loss attributable to Visteon of $295 million (includes a $343 million loss on discontinued operations associated with sale of former interiors business)
- Strong cash performance
- Positive full-year cash from operations of $284 million
- Total cash of $836 million and total debt of $981 million
- Record electronics new business wins of $1.3 billion
- Company completed key strategic actions in 2014
- Signed agreement to sell 70 percent interest in Halla Visteon Climate Control
- Acquired Johnson Controls electronics business
- Sold majority of non-core interiors business
- Acquired thermal and emissions product line of Cooper Standard
- Transferred one-third of U.S. pension liability through annuity contract
- Announced $500 million accelerated share repurchase program
Visteon Corporation (NYSE: VC) today announced full-year 2014 results, reporting a net loss attributable to Visteon of $295 million, or $6.25 per diluted share, including a $343 million loss on discontinued operations. Full-year sales were $7.51 billion, an increase of $1.138 billion or 18 percent compared with 2013. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $678 million for the year, an increase of $96 million or 16 percent compared with 2013. Adjusted free cash flow, a non-GAAP financial measure as defined below, was a positive $111 million for the full year 2014.
In 2014, customers awarded Visteon a record $1.3 billion in electronics new business wins. Combined electronics and climate new business wins totaled $1.8 billion in annual revenue, including 1.1 billion of incremental new wins and $700 million of rewin business. Visteon projects the electronics order book and restructuring savings associated with the consolidation of the Johnson Controls electronics operations will generate a projected 40 percent growth in EBITDA by 2018, with new major platform awards supporting more robust growth through the end of the decade.
“We delivered a strong finish to an excellent year highlighted by several key achievements, including announcing the sale of our Halla Visteon Climate Control business, acquiring the electronics business of Johnson Controls, and completing the majority of our divestiture of the non-core interiors business,” said Timothy D. Leuliette, president and CEO. “With our singular focus on the vehicle cockpit electronics ecosystem; outstanding technology; and a balanced footprint across Asia, Europe and the Americas; Visteon is winning significant new business and is well-positioned to continue delivering value for our customers and shareholders.”
Fourth Quarter in Review
Sales of $2.04 billion for the fourth quarter of 2014 increased $348 million from $1.69 billion for the same quarter a year earlier. Hyundai-Kia accounted for approximately 34 percent of Visteon’s fourth-quarter sales, with Ford Motor Company representing 23 percent, and Renault-Nissan accounting for 6 percent. On a regional basis, Asia accounted for 49 percent of total product sales for the fourth quarter of 2014, while Europe represented 28 percent. North America and South America represented 21 percent and 2 percent, respectively.
Climate sales were $1.28 billion for the fourth quarter of 2014, $16 million higher than the same quarter last year. Higher vehicle production volumes, primarily in Asia and Europe, and net new business increased climate sales by $64 million.
Electronics sales were $744 million for the fourth quarter, $348 million higher than the fourth quarter of 2013. The increase is primarily attributable to the acquisition of the global automotive electronics business of Johnson Controls Inc., effective July 1, 2014, and the acquisition of a controlling interest in Yanfeng Visteon Automotive Electronics Co., Ltd. (YFVE) effective Nov. 7, 2013.
Gross margin for the fourth quarter was $233 million, compared with $190 million a year earlier. Selling, general and administrative (SG&A) expenses were $105 million for the fourth quarter of 2014, compared with $89 million a year earlier. Year-over-year results for gross margin and SG&A were both impacted by the Johnson Controls electronics business acquisition and the YFVE consolidation.
Adjusted EBITDA for the fourth quarter of 2013 was $200 million, compared with $164 million in the same period a year earlier. Electronics adjusted EBITDA and corporate expenses were better than internal projections used to set guidance, partially offsetting performance and currency issues within the climate product group.
For the fourth quarter of 2014, Visteon reported a net loss attributable to Visteon of $138 million, or $3.12 per diluted share. Adjusted net income, which excludes the loss on the interiors transaction, restructuring and other transaction costs, was $74 million for the quarter, or $1.67 per diluted share.
Cash and Debt Balances
As of Dec. 31, 2014, Visteon had global cash balances totaling $836 million, including restricted cash of $9 million and cash held for sale of $5 million. Total debt was $981 million.
For full year 2014, Visteon generated $284 million of cash from operations, including discontinued operations. Capital expenditures of $340 million in 2014 were $71 million higher than in 2013, primarily related to growth in the climate segment and the Johnson Controls electronics business acquisition. For 2014, adjusted free cash flow, including discontinued operations, was a positive $111 million.
For the fourth quarter of 2014, Visteon generated $104 million of cash from operations, including discontinued operations, compared with $133 million in the same period a year earlier. Capital expenditures in the fourth quarter of 2014 were $131 million, up from $105 million in the fourth quarter of 2013. Adjusted free cash flow, including discontinued operations, was $47 million in the fourth quarter of 2014, compared with $136 million in the fourth quarter of 2013. (Note: 2013 free cash flow included dividends of $162 million and $182 million for the quarter and year, respectively, related to the former Yanfeng Visteon Automotive Trim Systems Co. Ltd. (YFV) venture.)
HVCC Transaction
During the fourth quarter, Visteon announced it reached an agreement to sell its approximately 70 percent ownership interest in Halla Visteon Climate Control Corp. (HVCC) to an affiliate of Hahn & Company and Hankook Tire Co. Ltd. for approximately $3.6 billion. The transaction represents an enterprise value for HVCC of approximately 10.1 times EBITDA for the 12 months ended Sept. 30, 2014. The sale is subject to regulatory reviews, shareholder approval and other conditions, and is expected to be completed in the first half of 2015.
Full-Year 2015 Outlook
Visteon projects Electronics and Other Product Group 2015 sales in the range of $3.2 to $3.4 billion. Adjusted EBITDA for the Electronics Product Group and Corporate Segment is projected in the range of $225 million to $255 million. Adjusted free cash flow, as defined below, for the Electronics and Corporate Segment is projected in the range of $20 million to $60 million.
