Visteon Announces First-Quarter 2010 Results
VAN BUREN TOWNSHIP, Mich., April 30, 2010 -- First Quarter Summary
-- Product sales of $1.85 billion, up 43 percent from first quarter 2009
-- Net income of $233 million
-- Adjusted EBITDA of $161 million, up $139 million from first quarter
2009
-- Cash generated by operating activities of $40 million, a $315 million
year-over-year improvement
-- Cash balances of $1.1 billion
Visteon Corporation (OTC:VSTNQ) today announced its first-quarter 2010 results, reporting net income of $233 million, or $1.79 per share, on product sales of $1.85 billion. For the first quarter of 2009, Visteon reported a net income of $2 million, or 2 cents per share, on product sales of $1.3 billion. Adjusted EBITDA, as defined below, for the first quarter of 2010 was $161 million, compared with $22 million in the first quarter of 2009.
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"Increased global vehicle production, combined with our ongoing operational improvements and cost-reduction efforts, drove our year-over-year financial improvement," said Donald J. Stebbins, chairman, chief executive officer and president. "We benefited from aggressive actions taken over the past year to keep our cost structure in line with significantly reduced global volumes. Although in the near term we remain concerned about European production volumes, we're confident that our worldwide engineering and manufacturing footprint positions Visteon to support new global vehicle programs and grow with our customers around the world."
Approximately 27 percent of Visteon's first-quarter product sales were to Ford Motor Co. and 24 percent to Hyundai-Kia, with Renault-Nissan and PSA Peugeot-Citroen each accounting for about 7 percent of product sales. On a regional basis, Europe accounted for 39 percent of total product sales, with Asia representing 35 percent, North America 20 percent and South America 6 percent.
First Quarter 2010 Results
For the first quarter of 2010, total sales were $1.9 billion, including product sales of $1.85 billion and services revenue of $58 million. Product sales increased by $551 million, or 43 percent, year-over-year as higher production and new business wins, net of plant divestitures and closures, increased sales by about $414 million. Foreign currency further increased sales by about $146 million. The company experienced higher sales in each of the major regions in which it operates, reflecting increased production volumes by all customers as vehicle sales rebounded in response to stronger global economic conditions.
Gross margin for the first quarter was $418 million, compared with $45 million a year earlier. Factors contributing to this improvement included a $251 million gain related to the termination of certain company-paid medical, prescription drug and life insurance coverage benefits under certain U.S. other post-retirement employee benefit ("OPEB") plans; and the impact of higher customer production levels and net cost performance; partially offset by foreign currency.
Selling, general and administrative expense for the first quarter totaled $113 million, an increase of $5 million compared with the same period a year ago, as cost reductions were largely offset by an expense of $14 million related to the OPEB termination.
For the first quarter, the company reported net income of $233 million, or $1.79 per share. This compares with net income of $2 million, or 2 cents per share, in the same period a year ago. First quarter 2010 results included a $237 million net gain related to the OPEB termination, while first quarter 2009 results included a deconsolidation gain of $95 million related to Visteon UK Ltd.
Adjusted EBITDA for the first quarter was $161 million, compared with $22 million for the same period a year ago. During the first quarter, Visteon won approximately $141 million of business, with more than half generated in Asia.
Cash Flow and Liquidity
For the first quarter of 2010, Visteon generated $40 million in cash from operations, compared with an outflow of $275 million for the first quarter of 2009. The improvement was largely attributable to higher net income, lower trade working capital outflow and the impact of the automatic stay on interest payments. Capital expenditures in the first quarter were $25 million, equal to the amount a year earlier. Free cash flow, as defined below, was positive $15 million in the first quarter, compared with a use of $300 million in the first quarter of 2009.
As of March 31, 2010, Visteon had global cash balances, including restricted cash, of nearly $1.1 billion.
Visteon is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Chelmsford, UK; the company has facilities in 25 countries and employs approximately 28,500 people.
Forward-looking Information
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements, including, but not limited to,
-- the potential adverse impact of the Chapter 11 proceedings on our
business, financial condition or results of operations, including our
ability to maintain contracts and other customer and vendor
relationships that are critical to our business and the actions and
decisions of our creditors and other third parties with interests in
our Chapter 11 proceedings;
-- our ability to maintain adequate liquidity to fund our operations
during the Chapter 11 proceedings and to fund a plan of reorganization
and thereafter, including obtaining sufficient "exit" financing;
maintaining normal terms with our vendors and service providers during
the Chapter 11 proceedings and complying with the covenants and other
terms of our financing agreements;
-- our ability to obtain court approval with respect to motions in the
Chapter 11 proceedings prosecuted from time to time and to develop,
prosecute, confirm and consummate one or more plans of reorganization
with respect to the Chapter 11 proceedings and to consummate all of
the transactions contemplated by one or more such plans of
reorganization or upon which consummation of such plans may be
conditioned;
-- conditions within the automotive industry, including (i) the
automotive vehicle production volumes and schedules of our customers,
and in particular Ford's and Hyundai-Kia's vehicle production volumes,
(ii) the financial condition of our customers or suppliers and the
effects of any restructuring or reorganization plans that may be
undertaken by our customers or suppliers or work stoppages at our
customers or suppliers, and (iii) possible disruptions in the supply
of commodities to us or our customers due to financial distress or
work stoppages;
-- new business wins and re-wins do not represent firm orders or firm
commitments from customers, but are based on various assumptions,
including the timing and duration of product launches, vehicle
productions levels, customer price reductions and currency exchange
rates;
-- general economic conditions, including changes in interest rates and
fuel prices; the timing and expenses related to internal
restructurings, employee reductions, acquisitions or dispositions and
the effect of pension and other post-employment benefit obligations;
-- increases in raw material and energy costs and our ability to offset
or recover these costs, increases in our warranty, product liability
and recall costs or the outcome of legal or regulatory proceedings to
which we are or may become a party; and
-- those factors identified in our filings with the SEC (including our
Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2009).
The risks and uncertainties and the terms of any reorganization plan ultimately confirmed can affect the value of our various pre-petition liabilities, common stock and/or other securities. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 proceedings to each of these constituencies. A plan of reorganization could result in holders of our liabilities and/or securities receiving no value for their interests. Because of such possibilities, the value of these liabilities and/or securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date of this release, and which we assume no obligation to update. The financial results presented herein are preliminary and unaudited; final financial results will be included in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.
Use of Non-GAAP Financial Information
This press release contains information about Visteon's financial results which is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Data)
(Unaudited)
Three Months Ended
March 31
--------
2010 2009
---- ----
Net sales
Products $1,846 $1,295
Services 58 57
--- ---
1,904 1,352
Cost of sales
Products 1,429 1,251
Services 57 56
--- ---
1,486 1,307
----- -----
Gross margin 418 45
Selling, general and administrative
expenses 113 108
Reorganization items, net 30 -
Restructuring expenses 8 27
Reimbursement from Escrow Account - 62
Deconsolidation gain - 95
Asset impairment and loss on
divestitures 21 -
--- ---
Operating income 246 67
Interest expense, net 3 51
Equity in net income of non-
consolidated affiliates 30 7
--- ---
Income before income taxes 273 23
Provision for income taxes 25 14
--- ---
Net income 248 9
Net income attributable to
noncontrolling interests 15 7
--- ---
Net income attributable to Visteon $233 $2
==== ===
Per share data
--------------
Net earnings per share attributable
to Visteon $1.79 $0.02
Average shares outstanding
(millions)
--------------------------
Basic 130.3 130.5
Diluted 130.3 130.5
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
December
March 31 31
2010 2009
---- ----
ASSETS
Cash and equivalents $964 $962
Restricted cash 135 133
Accounts receivable, net 1,072 1,055
Inventories, net 353 319
Other current assets 318 236
--- ---
Total current assets 2,842 2,705
Property and equipment, net 1,849 1,936
Equity in net assets of non-
consolidated affiliates 320 294
Other non-current assets 87 84
--- ---
Total assets $5,098 $5,019
====== ======
LIABILITIES AND SHAREHOLDERS' DEFICIT
Short-term debt, including current
portion of long-term debt $216 $225
Accounts payable 1,037 977
Accrued employee liabilities 163 161
Other current liabilities 315 302
--- ---
Total current liabilities 1,731 1,665
Long-term debt 10 6
Employee benefits 519 568
Deferred income taxes 171 159
Other non-current liabilities 247 257
Liabilities subject to compromise 2,828 2,819
Shareholders' deficit:
Preferred stock (par value $1.00, 50
million shares authorized, none
outstanding) - -
Common stock (par value $1.00, 500
million shares authorized, 131
million shares issued, 130 million
shares outstanding) 131 131
Stock warrants 127 127
Additional paid-in capital 3,408 3,408
Accumulated deficit (4,343) (4,576)
Accumulated other comprehensive income (51) 142
Other (4) (4)
--- ---
Total Visteon Corporation
shareholders' deficit (732) (772)
Noncontrolling interests 324 317
--- ---
Total shareholders' deficit (408) (455)
---- ----
Total liabilities and shareholders'
deficit $5,098 $5,019
====== ======
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31
--------
2010 2009
---- ----
Operating activities
Net income $248 $9
Adjustments to reconcile net income to
net cash provided from (used by)
operating activities:
Depreciation and amortization 73 78
OPEB and pension amortization and
curtailment (240) (8)
Deconsolidation gain - (95)
Asset impairments and loss on
divestitures 21 -
Equity in net income of non-
consolidated affiliates, net of
dividends remitted (29) (7)
Reorganization items 30 -
Other non-cash items 11 2
Changes in assets and liabilities:
Accounts receivable (95) 15
Inventories (38) 3
Accounts payable 49 (122)
Other 10 (150)
--- ----
Net cash provided from (used by)
operating activities 40 (275)
Investing activities
Capital expenditures (25) (25)
Cash associated with deconsolidation - (11)
Other 1 2
--- ---
Net cash used by investing activities (24) (34)
Financing activities
Short-term debt, net - (15)
Cash restriction (2) (163)
Proceeds from issuance of debt, net of
issuance costs 4 39
Principal payments on debt (12) (45)
Other, including book overdrafts (1) (56)
--- ---
Net cash used by financing activities (11) (240)
Effect of exchange rate changes on
cash (3) (27)
--- ---
Net increase (decrease) in cash and
equivalents 2 (576)
Cash and equivalents at beginning of
year 962 1,180
--- -----
Cash and equivalents at end of period $964 $604
==== ====
VISTEON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in Millions)
(Unaudited)
In this press release the Company has provided information
regarding certain non-GAAP financial measures including
"Adjusted EBITDA" and "free cash flow." Such non-GAAP
financial measures are reconciled to their closest GAAP
financial measure in the schedules below.
Adjusted EBITDA: Adjusted EBITDA is presented as a supplemental
measure of the Company's 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 continuing
operating activities across reporting periods. The Company
defines Adjusted EBITDA as net income (loss) attributable to
the Company, plus net interest expense, provision for income
taxes and depreciation and amortization, as further adjusted to
eliminate the impact of asset impairments, non-operating gains
and losses, net unreimbursed restructuring expenses and other
reimbursable costs, and reorganization items. Because not all
companies use identical calculations this presentation of
Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies.
----------------------------------------------------------------------
Three Months
Ended
March 31
--------
2010 2009
---- ----
Net income attributable to Visteon $233 $2
Interest expense, net 3 51
Provision for income taxes 25 14
Depreciation and amortization 73 78
Asset impairments, loss on divestiture and
deconsolidation gain 21 (95)
Restructuring and other related costs 8 34
Reimbursement from escrow account - (62)
Employee benefit litigation 17 -
OPEB termination and wind-down revenue (249) -
Reorganization items 30 -
--- ---
Adjusted EBITDA $161 $22
==== ===
Adjusted EBITDA is not a recognized term under GAAP and does not
purport to be a substitute for net income (loss) 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. In addition, the Company
uses Adjusted EBITDA (i) as a factor in incentive compensation
decisions, (ii) to evaluate the effectiveness of the Company's
business strategies, and (iii) the Company's credit agreements use
measures similar to Adjusted EBITDA to measure compliance with
certain covenants.
Free Cash Flow: Free cash flow is presented as a supplemental measure
of the Company's liquidity that management believes is useful to
investors in analyzing the Company's ability to service and repay
its debt. The Company defines free cash flow as cash flow from
operating activities less capital expenditures. Because not all
companies use identical calculations, this presentation of free cash
flow may not be comparable to other similarly titled measures of
other companies.
---------------------------------------------------------------------
Three Months
Ended
March 31
--------
2010 2009
---- ----
Net cash provided from (used by) operating activities $40 $(275)
Capital expenditures (25) (25)
--- ---
Free cash flow $15 $(300)
=== =====
Free cash flow is not a recognized term under GAAP and does not
purport to be a substitute for cash flows from operating activities
as a measure of liquidity. Free cash flow has limitations as an
analytical tool and does not reflect cash used to service debt and
does not reflect funds available for investment or other
discretionary uses. In addition, the Company uses free cash flow (i)
as a factor in incentive compensation decisions, and (ii) for
planning and forecasting future periods.
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