VISTEON CORP
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
VC$75.68-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0001111335-24-000096
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0001111335-24-000121
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 122 current paragraphs.
68 unchanged; 23 reworded; 19 added; 5 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 4 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Six Months Ended June 30, 2024
Current report
Restructuring
Current report
Interest, Net
Current report
Other Income (Expense), Net
Current report
Other expense, net was $10 million for the three-month period ending June 30, 2023 was primarily related to the 2023 Van Buren litigation settlement partially offset by net pension financing benefits.
Current report
Results of Operations - Six Months Ended June 30, 2024 and 2023
Current report
Cost of sales decreased by $55 million for the six months ended June 30, 2024 compared with the same period in 2023. Volume, mix, and net new business increased cost of sales by $88 million. Net engineering costs, excluding currency, decreased cost of sales by $8 million. Foreign currency decreased cost of sales by $12 million primarily attributable to the Chinese renminbi and Japanese yen, partially offset by the Brazilian real. Favorable cost performance, design changes and other decreased cost of sales by $123 million primarily due to improving supply chain dynamics, manufacturing efficiencies, and a non-recurrence of a prior year product recall charge of $15 million.
Current report
Selling, General and Administrative Expenses
Current report
Selling, general, and administrative expenses were $101 million and $104 million for the six months ended June 30, 2024 and 2023, respectively. The decrease is primarily due to reduced bad debt expense.
Current report
Restructuring
Current report
Interest, Net
Current report
Equity in net income of non-consolidated affiliates was a loss of $4 million and a loss of $7 million for the six months ended June 30, 2024 and 2023, respectively. The decreased loss is primarily due to the non-recurrence of certain operational and non-operational charges in 2023 combined with operational improvements at an affiliate during 2024.
Current report
Other Income (Expense), Net
Current report
Other income, net was $5 million for the six-month period ending June 30, 2024 is primarily due to net pension financing benefits.
Current report
Other expense, net was $7 million for the six-month period ending June 30, 2023 due to the 2023 Van Buren litigation settlement partially offset by net pension financing benefits.
Current report
Income Taxes
Current report
Adjusted EBITDA
Current report
Adjusted EBITDA was $238 million for the six months ended June 30, 2024, representing an increase of $49 million when compared to $189 million for the same period of 2023. Volume and new business increased Adjusted EBITDA by $24 million due to market outperformance as a result of recent product launches partially offset by lower customer vehicle production volumes. Foreign currency decreased Adjusted EBITDA by $7 million primarily attributable to the Chinese renminbi and Japanese yen, partially offset by the euro. Net engineering costs, excluding currency, increased Adjusted EBITDA by $8 million. Warranty increased Adjusted EBITDA by $15 million, related to the non-recurrence of a prior year charge of $15 million related to a product recall. Favorable cost performance, design changes and other actions, partially offset by customer pricing and certain commercial items increased Adjusted EBITDA by $9 million.
Current report
The Company benefited from $126 million of cash inflows from operating activities during the six months ended June 30, 2024, representing an improvement of $84 million as compared to prior year. The increase in cash from operations during 2024 is primarily attributable to higher Adjusted EBITDA of $49 million and improved working capital usage of $15 million.
Removed paragraphs (5)
Previous report
Restructuring, Net
Previous report
Interest Expense, Net
Previous report
Other Income, Net
Previous report
The Company provided $69 million of cash from operating activities during the three months ended March 31, 2024 as compared to usage of $19 million during 2023 representing a $88 million increase.
Previous report
The increase in cash from operations during the three months ended March 31, 2024 when compared to the prior period is primarily attributable to higher Adjusted EBITDA of $3 million and improved working capital usage of $66 million, primarily related to increased payables due to increased inventory purchases to support new product launches.
Reworded paragraphs (23)
Previous wording
•Enhance Shareholder Returns While Maintaining a Strong Balance Sheet- The Company has continued to maintain a strong balance sheet to withstand near-term industry volatility while providing a foundation for future growth and shareholder returns. In March 2023, the Company announced a $300 million share repurchase program maturing at the end of 2026. The Company has repurchased $126 million of Company common stock under this program.
Current wording
•Balanced Capital Allocation with a Strong Balance Sheet - The Company continues to maintain a strong balance sheet to withstand near-term industry volatility and support a balanced capital allocation framework. The Company is primarily focused on allocating capital to high-returning organic initiatives that increase internal capabilities, pursuing attractive inorganic opportunities, and returning capital to shareholders. In March 2023, the Company announced a $300 million share repurchase program maturing at the end of 2026. The Company has repurchased $126 million of Company common stock under this program.
Previous wording
The pie charts below highlight the net sales breakdown for Visteon for the three months ended March 31, 2024.
Current wording
The pie charts below highlight the net sales breakdown for Visteon for the three and six months ended June 30, 2024.
Previous wording
Automotive industry production has been turbulent in recent years with impacts from the COVID-19 pandemic, worldwide semiconductor and other supply related shortages, a UAW strike, increased geopolitical challenges, and the industry transition to electric vehicles. Industry vehicle volumes increased in 2022 and again in 2023 as the worldwide semiconductor and other supply related shortages have eased. However, industry production volumes are expected to remain at approximately 90 million units in 2024, which is below recent industry production levels that peaked in 2017 and risks related to vehicle affordability, economic uncertainty, potential geopolitical challenges, and customer market share changes create ongoing uncertainties. The magnitude of the impact on the financial statements, results of operations, and cash flows will be dependent on plant production schedules, supply chain impacts, global economic impacts, and electric vehicle adoption.
Current wording
Automotive industry production has been turbulent in recent years with impacts from the COVID-19 pandemic, worldwide semiconductor and other supply related shortages, a UAW strike, increased geopolitical challenges, and the industry transition to electric vehicles. Industry vehicle volumes increased in 2022 and again in 2023 as the worldwide semiconductor and other supply related shortages have eased. However, industry production volumes are expected to decline approximately 1 million units which equates to approximately 90 million units produced in 2024, which is below recent industry production levels that peaked in 2017. Risks related to vehicle affordability, economic uncertainty, potential geopolitical challenges, and customer market share changes create ongoing uncertainties. The magnitude of the impact on the financial statements, results of operations, and cash flows will be dependent on plant production schedules, supply chain impacts, global economic impacts, and electric vehicle adoption.
Previous wording
Net sales for the three months ended March 31, 2024 totaled $933 million, representing a decrease of $34 million compared with the same period of 2023. Volumes and net new business increased net sales by $10 million due to market outperformance as a result of recent product launches partially offset by lower customer vehicle production volumes. Customer pricing decreased net sales by $39 million as a result of lower customer recoveries due to improving supply chain dynamics and annual price reductions. Unfavorable currency decreased net sales by $5 million, primarily attributable to the Chinese renminbi and Japanese yen, partially offset by the euro.
Current wording
Net sales for the three months ended June 30, 2024 totaled $1,014 million, representing an increase of $31 million compared with the same period of 2023. Volumes and net new business increased net sales by $102 million due to market outperformance as a result of recent product launches partially offset by lower customer vehicle production volumes. Customer pricing decreased net sales by $33 million as a result of lower customer recoveries due to improving supply chain dynamics and annual price reductions. Currency decreased net sales by $14 million, primarily attributable to the Chinese renminbi and Japanese yen. Cost performance, design changes and other decreased net sales by $24 million, primarily as a result of the non-recurrence of certain prior year commercial one-time items.
Previous wording
Cost of sales decreased by $43 million for the three months ended March 31, 2024 compared with the same period in 2023. Volume, mix and net new business increased cost of sales by $7 million. Net engineering costs, excluding currency, increased cost of sales by $4 million. Favorable currency decreased cost of sales by $2 million, primarily attributable to the Japanese yen, partially offset by the Brazilian real and Mexican peso. Favorable cost performance, design changes and other decreased cost of sales by $52 million primarily due to improved supply chain dynamics as well as manufacturing efficiencies.
Current wording
Cost of sales decreased by $12 million for the three months ended June 30, 2024 compared with the same period in 2023. Volume, mix and net new business increased cost of sales by $81 million. Net engineering costs, excluding currency, decreased cost of sales by $12 million. Foreign currency decreased cost of sales by $10 million, primarily attributable to the Mexican peso and Chinese renminbi, partially offset by the Brazilian real. Favorable cost performance, design changes, and other decreased cost of sales by $71 million primarily due to improving supply chain dynamics, manufacturing efficiencies, and the non-recurrence of a prior year product recall charge of $15 million.
Previous wording
Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs. Net engineering costs of $60 million for the three months ended March 31, 2024, including the impacts of currency, were $4 million higher than the same period of 2023. This increase is primarily related to the timing of recoveries.
Current wording
Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs. Net engineering costs of $50 million for the three months ended June 30, 2024, including the impacts of currency, were $12 million lower than the same period of 2023. This decrease is primarily related to increased 2023 costs incurred related to the timing engineering project expenses.
Previous wording
Selling, general, and administrative expenses were $52 million during the three months ended March 31, 2024 and 2023.
Current wording
Selling, general, and administrative expenses were $49 million and $52 million, during the three months ended June 30, 2024 and 2023, respectively. The decrease is primarily due to reduced bad debt expense.
Previous wording
Interest expense, net, for the three months ended March 31, 2024 and 2023 was less than $1 million and $3 million, respectively. The decrease in interest expense is primarily due to higher interest income on cash balances.
Current wording
Interest, net, for each of the three months ended June 30, 2024 and 2023 was zero and expense of $3 million, respectively. The decrease in interest expense is primarily due to higher interest income on cash balances.
Previous wording
Equity in net income of non-consolidated affiliates was a loss of $4 million and $5 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Equity in net income of non-consolidated affiliates was zero and a loss of $2 million for the three months ended June 30, 2024 and 2023, respectively. The decreased loss is primarily due to operational improvements at an affiliate.
Previous wording
Other income, net of $2 million and $3 million for the three-month periods ending March 31, 2024 and 2023, respectively, is primarily due to net pension financing benefits.
Current wording
Other income, net was $3 million for the three-month period ending June 30, 2024 was primarily due to net pension financing benefits.
Previous wording
The Company's provision for income taxes of $19 million for the three months ended March 31, 2024 represents an increase of $5 million compared with $14 million in the same period of 2023. The increase in tax expense is primarily attributable to the overall increase in net income, including changes in the mix of earnings and differing tax rates between jurisdictions.
Current wording
The Company's provision for income taxes of $25 million for the three months ended June 30, 2024 represents an increase of $12 million compared with $13 million in the same period of 2023. The increase in tax expense is primarily attributable to the overall increase in net income, including changes in the mix of earnings and differing tax rates between jurisdictions, partially offset by $3 million year-over-year decrease related to uncertain tax positions.
Previous wording
The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, non-cash stock-based compensation expense, provision for income taxes, net interest expense, net income attributable to non-controlling interests, restructuring and impairment expense, equity in net income of non-consolidated affiliates, and other gains and losses not reflective of the Company's ongoing operations.
Current wording
The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, non-cash stock-based compensation expense, provision for income taxes, net interest expense, net income attributable to non-controlling interests, restructuring expense, equity in net income of non-consolidated affiliates, and other gains and losses not reflective of the Company's ongoing operations.
Previous wording
Adjusted EBITDA was $102 million for the three months ended March 31, 2024, representing an increase of $3 million when compared to $99 million for the same period of 2023. Foreign currency decreased Adjusted EBITDA by $3 million, primarily attributable to the Chinese renminbi and Mexican peso, partially offset by the Euro. Net engineering costs, excluding currency, decreased Adjusted EBITDA by $4 million as a result of lower recoveries. Favorable cost performance, design changes and other actions, partially offset by customer pricing increased Adjusted EBITDA by $8 million primarily due to improved supply chain dynamics as well as manufacturing efficiencies.
Current wording
Adjusted EBITDA was $136 million for the three months ended June 30, 2024, representing an increase of $46 million when compared to $90 million for the same period of 2023. Volume and new business increased Adjusted EBITDA by $21 million due to market outperformance as a result of recent product launches partially offset by lower customer vehicle production volumes. Foreign currency decreased Adjusted EBITDA by $4 million primarily attributable to the Brazilian real and Japanese yen, partially offset by the Mexican peso. Net engineering costs, excluding currency, increased Adjusted EBITDA by $12 million. Warranty increased Adjusted EBITDA by $16 million, primarily related to the non-recurrence of a prior year charge of $15 million related to a product recall. Favorable cost performance, design changes and other actions, partially offset by customer pricing and certain commercial items increased Adjusted EBITDA by $1 million.
Previous wording
During the three months ended March 31, 2024 and 2023, the Company recorded $2 million and $1 million of restructuring expense primarily related to employee severance, respectively.
Current wording
During the six months ended June 30, 2024 and 2023, the Company recorded$3 million and $2 million, respectively, of restructuring expense, primarily related to employee severance.
Previous wording
Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of March 31, 2024, the Company’s corporate credit rating is BB by Standard & Poor’s. See Note 8, "Debt" for a comprehensive discussion of the Company's debt facilities. Incremental funding requirements of the Company's consolidated foreign entities are primarily accommodated by intercompany cash pooling structures. Affiliate working capital lines, which may be utilized by the Company's local subsidiaries and consolidated joint ventures, had availability of $148 million and the Company had $400 million of available credit under the revolving credit facility, as of March 31, 2024.
Current wording
Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of June 30, 2024, the Company’s corporate credit rating is BB by Standard & Poor’s. See Note 8, "Debt" for a comprehensive discussion of the Company's debt facilities. Incremental funding requirements of the Company's consolidated foreign entities are primarily accommodated by intercompany cash pooling structures. Affiliate working capital lines, which may be utilized by the Company's local subsidiaries and consolidated joint ventures, had availability of $147 million and the Company had $400 million of available credit under the revolving credit facility, as of June 30, 2024.
Previous wording
As of March 31, 2024, the Company had total cash and cash equivalents of $507 million, including $3 million of restricted cash. Cash balances totaling $442 million were located in jurisdictions outside of the United States, of which approximately $120 million is considered permanently reinvested for funding ongoing operations outside of the U.S. If such permanently reinvested funds were repatriated to the U.S., no U.S. federal taxes would be imposed on the distribution of such foreign earnings due to U.S. tax reform enacted in December 2017. However, the Company would be required to accrue additional tax expense, primarily related to foreign withholding taxes.
Current wording
As of June 30, 2024, the Company had total cash and cash equivalents of $508 million, including $3 million of restricted cash. Cash balances totaling $430 million were located in jurisdictions outside of the United States, of which approximately $65 million is considered permanently reinvested for funding ongoing operations outside of the U.S. If such permanently reinvested funds were repatriated to the U.S., no U.S. federal taxes would be imposed on the distribution of such foreign earnings due to U.S. tax reform enacted in December 2017. However, the Company would be required to accrue additional tax expense primarily related to foreign withholding taxes.
Previous wording
During the three months ended March 31, 2024, cash contributions to the Company's defined benefit plans were $1 million related to its non-U.S. plans. Additionally, the Company expects to make contributions to its U.S. and non-U.S. defined benefit pension plans of $9 million and $7 million, respectively, during 2024.
Current wording
During the six months ended June 30, 2024, cash contributions to the Company's defined benefit plans was $3 million related to its U.S. plans and $3 million related to its non-U.S. plans. The Company estimates that total cash contributions related to its U.S. and non-U.S. defined benefit pension plans during 2024 will be $9 million and $7 million, respectively.
Previous wording
During the three months ended March 31, 2024, the Company paid $2 million related to restructuring activities. Additional discussion regarding the Company's restructuring activities is included in Note 3, "Restructuring and Impairments." The Company estimates that total cash restructuring payments during the next twelve months will be approximately $5 million.
Current wording
During the six months ended June 30, 2024, the Company paid $4 million related to restructuring activities. Additional discussion regarding the Company's restructuring activities is included in Note 3, "Restructuring." The Company estimates that total cash restructuring payments during the next twelve months will be approximately $4 million.
Previous wording
The Company may be required to make significant cash outlays related to its unrecognized tax benefits, including interest and penalties. As of March 31, 2024, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $17 million. Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the period of cash settlement, if any, with the respective taxing authorities.
Current wording
The Company may be required to make significant cash outlays related to its unrecognized tax benefits, including interest and penalties. As of June 30, 2024, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $14 million. Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the period of cash settlement, if any, with the respective taxing authorities.
Previous wording
On March 2, 2023 the Company's board of directors authorized a share repurchase program of $300 million of common stock through December 31, 2026. Under this program, the Company will repurchase shares at the prevailing market prices pursuant to specified share price and daily volume limits. During the three months ended March 31, 2024, the Company has purchased 170,550 shares at an average price of $117.27 under this program.
Current wording
On March 2, 2023 the Company's board of directors authorized a share repurchase program of $300 million of common stock through December 31, 2026. As of June 30, 2024, the Company has purchased 953,840 shares at an average price of $132.01.
Previous wording
Net cash used by investing activities during the three months ended March 31, 2024 totaled $37 million, representing a $17 million increase as compared to $20 million use of cash used by investing activities during the same period in 2023. This increase in cash used by investing activities is primarily due to increased capital expenditures of $16 million.
Current wording
Net cash used by investing activities during the six months ended June 30, 2024 totaled $72 million, representing $23 million of increased usage as compared to the same period in 2023. This increase in cash used by investing activities is primarily due increased capital expenditures of $17 million.
Previous wording
Cash used by financing activities during the three months ended March 31, 2024 was $31 million, representing a $26 million increase as compared to $5 million use of cash used by financing activities during the same period in 2023. This increase is primarily attributable to repurchases of common stock of $20 million and principal repayments on the term debt facility of $4 million. During the three months ended March 31, 2023, subsidiary borrowings increased $3 million due to affiliate borrowings and dividends of $8 million were paid to non-controlling interests.
Current wording
Cash used by financing activities during the six months ended June 30, 2024 was $36 million, representing a $21 million decrease as compared to the same period in 2023. This decrease is primarily attributable to dividends paid to non-controlling interest of $15 million during the six months ended June 30, 2023. There was also a decrease in repurchases of common stock of $10 million during the six months ended June 30, 2024 as compared to the same period in 2023.
Previous wording
•Continued and future impacts of the geopolitical conflicts and related supply chain disruptions, including but not limited to the conflicts in the middle east, Russia and East Asia and the possible the imposition of sanctions.
Current wording
•Continued and future impacts of the geopolitical conflicts and related supply chain disruptions, including but not limited to the conflicts in the middle east, Russia and East Asia and the possible imposition of sanctions.
Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
During the three months ended June 30, 2024 and 2023, the Company recorded $1 million of restructuring expense primarily related to employee severance.
Current report — wording carried from elsewhere
The Company's consolidated results of operations for the six months ended June 30, 2024 and 2023 were as follows:
Current report — wording carried from elsewhere
Net Sales, Cost of Sales and Gross Margin
Current report — wording carried from elsewhere
Net sales for the six months ended June 30, 2024 totaled $1,947 million, representing a decrease of $3 million compared with the same period of 2023. Volumes and net new business increased net sales by $112 million due to market outperformance as a result of recent product launches partially offset by lower customer vehicle production volumes. Customer pricing decreased net sales by $72 million as a result of lower customer recoveries due to improving supply chain dynamics and annual price reductions. Currency decreased net sales by $19 million primarily attributable to the Chinese renminbi and Japanese yen. Cost performance, design changes and other decreased net sales by $24 million, primarily as a result of the non-recurrence of certain prior year commercial one-time items.
Current report — wording carried from elsewhere
A summary of net engineering costs is shown below:
Current report — wording carried from elsewhere
Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs. Net engineering costs of $110 million for the six months ended June 30, 2024, including the impacts of currency, were $8 million lower than the same period of 2023. This decrease is primarily related to increased 2023 costs incurred related to the timing engineering project expenses.
Current report — wording carried from elsewhere
Interest, net, for the six months ended June 30, 2024 and 2023 was zero and expense of $6 million, respectively. The decrease in interest expense is primarily due to higher interest income on cash balances.
Current report — wording carried from elsewhere
Equity in Net Income of Non-Consolidated Affiliates
Current report — wording carried from elsewhere
The Company's provision for income taxes of $44 million for the six months ended June 30, 2024 represents an increase of $17 million compared with $27 million in the same period of 2023. The increase in tax expense is primarily attributable to the overall increase in net income, including changes in the mix of earnings and differing tax rates between jurisdictions, partially offset by $3 million year-over-year decrease related to uncertain tax positions.
Current report — wording carried from elsewhere
The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, non-cash stock-based compensation expense, provision for income taxes, net interest expense, net income attributable to non-controlling interests, restructuring expense, equity in net income of non-consolidated affiliates, and other gains and losses not reflective of the Company's ongoing operations.
Current report — wording carried from elsewhere
Adjusted EBITDA is presented as a supplemental measure of the Company's financial performance that management believes is useful to investors because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company's operating activities across reporting periods. Not all companies use identical calculations and, accordingly, the Company's presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be a substitute for net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and is not intended to be a measure of cash flow available for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. The Company uses Adjusted EBITDA as a factor in incentive compensation decisions and to evaluate the effectiveness of the Company's business strategies. In addition, the Company's credit agreements use measures similar to Adjusted EBITDA to measure compliance with certain covenants.
Current report — wording carried from elsewhere
The reconciliation of net income (loss) attributable to Visteon to Adjusted EBITDA for the six months ended June 30, 2024 and 2023, is as follows: