- Fourth-quarter results cap year of solid performance
- Full-year sales up 25 percent to $3.25 billion ($809 million in fourth quarter)
- Adjusted EBITDA up 59 percent to $282 million ($79 million in fourth quarter), led by record electronics performance
- 2015 net income attributable to Visteon of $2,284 million (includes net income from discontinued operations of $2,286 million associated with climate and interiors businesses)
- Total cash and short-term investments of $2,783 million; total debt of $384 million
- Declared special distribution of $43.40 per share, or approximately $1.75 billion in aggregate
- Completed $500 million accelerated share repurchase program; authorized incremental $500 million share repurchase program
- Record 2015 performance for Electronics Product Group/Corporate
- Adjusted EBITDA of $294 million ($83 million in fourth quarter)
- Electronics/Corporate achieved cash from operations of $251 million, free cash flow of $149 million, and adjusted free cash flow of $212 million
- Record electronics new business wins; electronics backlog of $15.2 billion
- Transformed to focused cockpit electronics company in 2015
- Concluded sale of 70 percent interest in climate control business
- Sold interiors facility in Germany
- Integrated Johnson Controls electronics business, achieving high end of synergy range
- Early 2016 milestones
- Received approximately $325 million, net of taxes, in early 2016 related to refunded Korean withholding tax on HVCC transaction. Previous estimate was $250 million.
- Repurchased approximately $84 million or 1.3 million shares in early 2016
- Board approved execution of Accelerated Share Repurchase Program for balance of $500 million authorization
Visteon Corporation (NYSE: VC) today announced strong full-year 2015 results, reporting a net income attributable to Visteon of $2,284 million, or $52.63 per diluted share, including $2,286 million of net income associated with discontinued operations.
Full-year sales were $3,245 billion, an increase of $659 million or 25 percent compared with 2014. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $282 million for the year, an increase of $105 million or 59 percent compared with 2014. Adjusted free cash flow, a non-GAAP financial measure as defined below, was a positive $311 million for the full year 2015.
In 2015, customers awarded Visteon a record $1.35 billion in electronics new business wins, amounting to $4.3 billion of lifetime revenue. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $15.2 billion as of Dec. 31, 2015, or 4.9 times 2015 sales. Adjusting for currency and changes in market demand forecasts, Visteon’s backlog increased 8 percent in 2015.
“We delivered a strong finish to a year of many accomplishments, achieving significant year-over-year profit improvement despite currency challenges,” said Sachin Lawande, Visteon president and CEO. “In 2015 Visteon solidified its focus on vehicle cockpit electronics and software by completing the sale of our 70 percent interest in Halla Visteon Climate Control (HVCC). We also achieved the upper range of targeted synergies related to the Johnson Controls electronics acquisition, returned $500 million in capital to shareholders, and announced a $1.75 billion special cash distribution to shareholders and an additional $500 million repurchase authorization. We retain a substantial net cash position compared with our peer group.”
Lawande added: “I am excited about the opportunities ahead for Visteon as the only company focused on vehicle cockpit electronics that offers products across all segments of this fast-growing market. We are winning significant new business and have a robust strategy in place to drive further growth through our cockpit electronics and software focus, as well as customer and geographic expansion.”
Fourth Quarter in Review
Sales of $809 million for the fourth quarter of 2015 increased $21 million from $788 million for the same quarter a year earlier. An additional $15 million of sales were classified as discontinued operations.
Electronics sales totaled $775 million, an increase of $31 million from the fourth quarter of 2014. The year-over-year improvement was primarily related to increased production volumes and new business, partially offset by unfavorable currency. For the Electronics Product Group on a regional basis, Asia accounted for 39 percent of sales, Europe 31 percent, North America 29 percent and South America 1 percent.
Gross margin for the fourth quarter of 2015 was $114 million, compared with $117 million a year earlier. Selling, general and administrative (SG&A) expenses were $63 million for the fourth quarter of 2015, compared with $64 million a year earlier.
Adjusted EBITDA for the Electronics Product Group, including Corporate costs, was $83 million compared with $58 million for the fourth quarter of 2014. The improvement was driven by increased production volumes, new business and cost efficiencies. Adjusted EBITDA for the Other Product Group was a loss of $4 million, compared with $17 million for the fourth quarter of 2014. The decrease was primarily due to the sale of the Germany interiors facility and the non-recurrence of a one-time tax benefit in 2014.
For the fourth quarter of 2015, Visteon reported net income attributable to Visteon of $21 million, or $0.52 per diluted share. This included a $105 million charge related to the sale of the Berlin, Germany, interiors operation; $28 million of restructuring and other transaction costs; and a $92 million gain from discontinued operations for the quarter.
Cash and Debt Balances
As of Dec. 31, 2015, Visteon had global cash and short-term investment balances totaling $2,783 million. This balance does not include approximately $325 million, net of taxes received in early 2016, related to refunded withholding taxes from the HVCC transaction completed in 2015. Total debt as of Dec. 31, 2015, was $384 million.
For the fourth quarter of 2015, Visteon generated $64 million of cash from operations, compared with $104 million in the same period a year earlier. Capital expenditures in the quarter were $36 million. Adjusted free cash flow was $62 million in the quarter, compared with $47 million in the fourth quarter of 2014. Cash flows for both periods included results related to discontinued operations.
Visteon generated $89 million of cash from operations related to the Electronics Product Group and Corporate costs in the fourth quarter. Electronics and Corporate capital expenditures totaled $39 million, and adjusted free cash flow for Electronics and Corporate totaled $66 million in the quarter.
Sale of Germany Interiors Operations
On Dec. 1, 2015, Visteon completed the sale of its non-core automotive interiors plant in Berlin, Germany, to APCH Automotive Plastic Components Holding GmbH. Visteon contributed cash of approximately $141 million and other assets and liabilities including pension-related liabilities of $182 million. Visteon also will make a 30 million Euro payment by Nov. 30, 2016, as part of this transaction. This completed the sale of Visteon’s only remaining interiors operation not covered by the 2014 agreement to divest the majority of the interiors business to Reydel Automotive Holdings B.V., as Visteon focuses on its automotive cockpit electronics business.
Share Repurchase
On Dec. 16, 2015, Visteon entered into a stock repurchase agreement with a third-party financial institution to purchase shares of its common stock complying with the provisions of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934 (“10b5-1 Share Repurchase Program”). The new 10b5-1 Share Repurchase Program is open until March 1, 2016, with the maximum purchase amount of $150 million. In addition to the 10b5-1 Share Repurchase Program, the board has approved execution of an accelerated share repurchase program to complete the balance of the current $500 million share repurchase authorization. Visteon will complete the accelerated share repurchase program by year end. Visteon’s board of directors, on Dec. 9, 2015, had authorized $500 million of share repurchase of its shares of common stock through Dec. 31, 2016.
Special Distribution to Shareholders
On Jan. 22, 2016, Visteon paid a special distribution of $43.40 per share of its common stock outstanding as of Jan. 15, 2016, or approximately $1.75 billion in the aggregate. The special distribution is part of the previously announced plan to return $2.5 billion-$2.75 billion of cash to shareholders by June 2016.
Full-Year 2016 Outlook
Visteon projects Electronics Product Group 2016 sales of $3.2 billion. Adjusted EBITDA for the Electronics Product Group and Corporate Segment is projected in the range of $305 million to $335 million. Adjusted free cash flow, as defined below, for the Electronics and Corporate Segment is projected in the range of $110 million to $150 million.
