VISTEON CORP

Previous 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.

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. On August 29, 2024, Visteon acquired all equity shares of a German advanced design and R&D services firm for a net cash outlay of $48 million as a growth initiative.

Previous wording

The pie charts below highlight the net sales breakdown for Visteon for the three and six months ended June 30, 2024.

Current wording

The pie charts below highlight the net sales breakdown for Visteon for the three and nine months ended September 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 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.

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, inflation, 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 2 million units which equates to approximately 88 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 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.

Current wording

Net sales for the three months ended September 30, 2024 totaled $980 million, representing a decrease of $34 million compared with the same period of 2023. Volumes and net new business increased net sales by $20 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 $31 million as a result of lower customer recoveries due to improving supply chain dynamics and annual price reductions. Currency decreased net sales by $11 million, primarily attributable to the Brazilian real. Cost performance, design changes and other decreased net sales by $12 million, which includes a decrease to net sales due to the non-recurrence of certain prior period one time commercial items.

Previous 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.

Current wording

Cost of sales decreased by $22 million for the three months ended September 30, 2024 compared with the same period in 2023. Volume, mix and net new business increased cost of sales by $16 million. Net engineering costs, excluding currency, decreased cost of sales by $5 million. Foreign currency decreased cost of sales by $1 million, primarily attributable to the Mexican peso and Brazilian real, partially offset by the euro. Cost performance, design changes, and other decreased cost of sales by $32 million primarily due to improving supply chain dynamics and manufacturing efficiencies.

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 $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.

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 $47 million for the three months ended September 30, 2024, including the impacts of currency, were $7 million lower than the same period of 2023. This decrease is primarily related to higher recoveries during 2024 compared to the prior period.

Previous 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.

Current wording

Selling, general, and administrative expenses were $51 million and $52 million, during the three months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to lower amortization expense compared to the same period in 2023.

Previous wording

During the three months ended June 30, 2024 and 2023, the Company recorded $1 million of restructuring expense primarily related to employee severance.

Current wording

During the three months ended September 30, 2024, the Company recorded $28 million of net restructuring expense primarily related to employee severance.

Previous 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.

Current wording

Interest, net, for each of the three months ended September 30, 2024 and 2023 was zero and expense of $1 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 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.

Current wording

Equity in net income of non-consolidated affiliates was a loss of $3 million and $1 million for the three months ended September 30, 2024 and 2023, respectively. The loss for both periods is primarily due to operating losses at an affiliate.

Previous wording

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 wording

Other income, net was $2 million for the three month period ending September 30, 2024 and was primarily due to net pension financing benefits partially offset by costs related to the German Acquisition.

Previous wording

Other income, net was $3 million for the three-month period ending June 30, 2024 was primarily due to net pension financing benefits.

Current wording

Other income, net was $3 million for the three month period ending September 30, 2023 and was primarily due to net pension financing benefits.

Previous wording

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 wording

The Company's provision for income taxes of $11 million for the three months ended September 30, 2024 represents a decrease of $10 million compared with $21 million in the same period of 2023. The decrease in tax expense is attributable to the reassessment of the German valuation allowance resulting in a $7 million valuation allowance release during the third quarter of 2024, primarily in connection with the German Acquisition, and the overall decrease in net income, including changes in the mix of earnings and differing tax rates between jurisdictions.

Previous 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.

Current wording

Adjusted EBITDA was $119 million for the three months ended September 30, 2024, representing a decrease of $9 million when compared to $128 million for the same period of 2023. Volume and new business increased Adjusted EBITDA by $4 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 $10 million primarily attributable to the Brazilian real and euro, partially offset by the Mexican peso. Net engineering costs, excluding currency, increased Adjusted EBITDA by $5 million. Cost performance, design changes and other decreased Adjusted EBITDA by $8 million, primarily related to pricing and the non-recurrence of certain prior period one time commercial items, partially offset by operational efficiencies.

Previous wording

The Company's consolidated results of operations for the six months ended June 30, 2024 and 2023 were as follows:

Current wording

The Company's consolidated results of operations for the nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

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 wording

Net sales for the nine months ended September 30, 2024 totaled $2,927 million, representing a decrease of $37 million compared with the same period of 2023. Volumes and net new business increased net sales by $132 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 $103 million as a result of lower customer recoveries due to improving supply chain dynamics and annual price reductions. Currency decreased net sales by $30 million primarily attributable to the Chinese renminbi, Japanese yen and Brazilian Real. Other cost performance, design changes and other including the non-recurrence of certain prior period one time commercial items decreased net sales by $36 million.

Previous wording

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 wording

Cost of sales decreased by $77 million for the nine months ended September 30, 2024 compared with the same period in 2023. Volume, mix, and net new business increased cost of sales by $104 million. Net engineering costs, excluding currency, decreased cost of sales by $13 million. Foreign currency decreased cost of sales by $13 million primarily attributable to the Mexican peso, Chinese renminbi and Japanese yen, partially offset by the euro. Cost performance, design changes and other decreased cost of sales by $155 million primarily due to improving supply chain dynamics, manufacturing efficiencies and the non-recurrence of certain prior period one time items.

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 $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 wording

Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs. Net engineering costs of $157 million for the nine months ended September 30, 2024, including the impacts of currency, were $15 million lower than the same period of 2023. This decrease is primarily related to lower project costs and higher recoveries during 2024 compared to the prior period.

Previous wording

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 wording

Selling, general, and administrative expenses were $152 million and $156 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to reduced bad debt expense and lower amortization expense.

Previous 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.

Current wording

During the nine months ended September 30, 2024 and 2023, the Company recorded $31 million and $2 million, respectively, of net restructuring expense, primarily related to employee severance.

Previous wording

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 wording

Interest, net, for the nine months ended September 30, 2024 and 2023 was zero and expense of $7 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 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 wording

Equity in net income of non-consolidated affiliates was a loss of $7 million and $8 million for the nine months ended September 30, 2024 and 2023, respectively. The loss for both periods is primarily due to operating losses at an affiliate.

Previous wording

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 wording

Other expense, net was $4 million for the nine month period ending September 30, 2023 due to the 2023 Van Buren litigation settlement partially offset by net pension financing benefits.

Previous 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.

Current wording

The Company's provision for income taxes of $55 million for the nine months ended September 30, 2024 represents an increase of $7 million compared with $48 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. These increases were partially offset by a decrease in tax expense attributable to a reassessment of the German valuation allowance resulting in a $7 million valuation allowance release during the third quarter of 2024, primarily in connection with the German Acquisition, and a $2 million year-over-year decrease related to uncertain tax positions.

Previous wording

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:

Current wording

The reconciliation of net income (loss) attributable to Visteon to Adjusted EBITDA for the nine months ended September 30, 2024 and 2023, is as follows:

Previous wording

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 wording

Adjusted EBITDA was $357 million for the nine months ended September 30, 2024, representing an increase of $40 million when compared to $317 million for the same period of 2023. Volume and new business increased Adjusted EBITDA by $28 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 $17 million primarily attributable to the Brazilian Real, Chinese renminbi and Japanese yen, partially offset by the Mexican peso. Net engineering costs, excluding currency, increased Adjusted EBITDA by $13 million. Cost performance, design changes and other decreased Adjusted EBITDA by $16 million, primarily related to pricing, partially offset by operational efficiencies.

Previous 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.

Current wording

Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of September 30, 2024, the Company’s corporate credit rating is BB by Standard & Poor’s. See Note 9, "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 $152 million and the Company had $400 million of available credit under the revolving credit facility, as of September 30, 2024.

Previous 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.

Current wording

As of September 30, 2024, the Company had total cash and cash equivalents of $553 million, including $3 million of restricted cash. Cash balances totaling $436 million were located in jurisdictions outside of the United States, of which approximately $25 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 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.

Current wording

During the nine months ended September 30, 2024, cash contributions to the Company's defined benefit plans was $7 million related to its U.S. plans and $5 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 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.

Current wording

During the nine months ended September 30, 2024, the Company paid $7 million related to restructuring activities. Additional discussion regarding the Company's restructuring activities is included in Note 4, "Restructuring." The Company estimates that total cash restructuring payments through 2025 will approximate $20 million.

Previous wording

The Company committed to make a $15 million investment in two funds managed by venture capital firms principally focused on the automotive sector pursuant to limited partnership agreements. As of June 30, 2024, the Company contributed $12 million toward the aggregate investment commitments. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount.

Current wording

The Company committed to make a $20 million investment in two entities managed by venture capital firms principally focused on the automotive sector pursuant to limited partnership agreements. As of September 30, 2024, the Company contributed $13 million toward the aggregate investment commitments. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount.

Previous 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.

Current wording

The Company may be required to make significant cash outlays related to its unrecognized tax benefits, including interest and penalties. As of September 30, 2024, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $15 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

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.

Current wording

The Company generated $224 million of cash inflows from operating activities during the nine months ended September 30, 2024, representing an improvement of $55 million as compared to prior year. The increase in cash from operations during 2024 is primarily attributable to higher Adjusted EBITDA, the timing of certain non-income based tax payments and higher cash interest income, partially offset by an increase in working capital.

Previous 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.

Current wording

Net cash used by investing activities during the nine months ended September 30, 2024 totaled $148 million, representing $68 million of increased usage as compared to the same period in 2023. This increase in cash used by investing activities is primarily due to the German Acquisition, net of cash acquired, of $48 million and increased capital expenditures of $14 million.

Previous 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.

Current wording

Cash used by financing activities during the nine months ended September 30, 2024 was $40 million, representing a $79 million decrease as compared to the same period in 2023. This decrease is primarily attributable to higher cash outflows during 2023 related to dividends paid to non-controlling interest of $27 million and higher share repurchases as compared to 2024 of $56 million.