Third Quarter Summary
-- Product sales of $1.67 billion
-- Up 13 percent from second quarter 2009
-- Down 17 percent from third quarter 2008
-- Operating performance continues to improve
-- Third straight quarterly improvement
-- Gross margin of $116 million, up 170 percent from third quarter 2008
-- Net loss of $38 million vs. net loss of $188 million in 2008
-- Cash remains strong
-- Quarter-end cash balance of $814 million
-- Operating cash flow of $84 million
Visteon Corporation (OTC: VSTN) today announced its third-quarter 2009 results, reporting a net loss of $38 million, or 29 cents per share, on total sales of $1.73 billion. For the third quarter of 2008, Visteon reported a net loss of $188 million, or $1.45 per share, on total sales of $2.12 billion. Adjusted EBITDA, as defined below, for third quarter 2009 was $125 million, compared with $5 million in third quarter 2008.
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For the third straight quarter, Visteon's product sales, gross margin and adjusted EBITDA improved sequentially, reflecting continued benefits from restructuring and cost-saving actions along with increases in OEM vehicle production.
"Despite the difficult operating environment, our third-quarter results reflect the continued efforts of our employees to build a global framework for business success which is focused on serving our customers with innovative products and technologies," said Donald J. Stebbins, chairman and chief executive officer. "While we believe the global auto industry is recovering from historically low levels of production, there remain challenges as the industry stabilizes."
Third quarter product sales to Ford Motor Co. and Hyundai-Kia each accounted for 27 percent of total product sales. Renault-Nissan and PSA Peugeot Citroen accounted for about 10 percent and 6 percent of sales, respectively. On a regional basis, Asia accounted for about 36 percent of total product sales, with Europe representing 35 percent, North America 22 percent and the balance in South America.
Third Quarter 2009 Results
For third quarter 2009, total sales were $1.73 billion, including product sales of $1.67 billion and services revenue of $61 million. Product sales decreased by about $340 million, or 17 percent, year-over-year as the impact of foreign currency and divestitures and facility closures reduced sales by about $130 million and $90 million, respectively. Lower production, net of new business, further reduced sales by about $90 million. Aside from the Asian region where sales were largely unchanged from the prior year, Visteon experienced lower sales in all the other major regions in which it operates, reflecting decreased customer production volumes in response to weak global economic conditions.
Gross margin for third quarter 2009 was $116 million, or 6.7 percent of sales, an increase of $73 million compared with $43 million, or 2.0 percent of sales, for the same period a year ago. Favorable cost performance, reflecting ongoing operational efficiencies as well as recently implemented restructuring actions, and foreign currency more than offset the impact of lower production levels.
Selling, general and administrative expense for third quarter 2009 totaled $95 million, a decrease of $43 million, or 31 percent, compared with the same period a year ago, reflecting the benefit of significant headcount and other cost-reduction actions.
For third quarter 2009, the company reported a net loss of $38 million, or 29 cents per share. This compares with a net loss of $188 million, or $1.45 per share, in the same quarter a year ago. Restructuring and reorganization costs of $27 million and $23 million, respectively, were incurred during the quarter while reimbursement from customers totaled $4 million. Third-quarter 2008 results included $42 million of restructuring costs and $19 million of asset impairments and loss on divestiture, along with $39 million of escrow reimbursement.
Equity in net income of non-consolidated affiliates increased $21 million to $26 million in third quarter 2009 as compared to the same period in 2008, largely reflecting continued customer production increases in Asia Pacific. Income tax expense for third quarter 2009 was $18 million compared with $31 million in the same period a year ago. Adjusted EBITDA for third quarter 2009 was $125 million, compared with $5 million for third quarter 2008.
First Nine Months 2009
For the first nine months of 2009, total sales of $4.65 billion were lower by $3.2 billion, or 41 percent, compared with the same period a year earlier. For the first nine months of 2009, Visteon reported a net loss of $148 million, or $1.14 per share, compared with a net loss of $335 million, or $2.59 per share during the first nine months of 2008. Adjusted EBITDA for the first nine months of 2009 was $220 million, compared with $359 million in the same period last year.
Cash Flow and Liquidity
As of September 30, 2009, Visteon had cash balances totaling $814 million, $72 million higher than June 30, 2009 levels.
Cash generated by operating activities totaled $84 million for third quarter 2009, a $244 million improvement over the cash use of $160 million during the same period a year ago. The improvement was attributable to lower net losses, as adjusted for non-cash items, and lower trade working capital outflows. Trade working capital in the third quarter 2009 reflected, among other items, the impact of pre-petition payables that have not been settled. Capital expenditures were $29 million for third quarter 2009, compared with $76 million in third quarter 2008, reflecting the company's continued management of program investment. Free cash flow, as defined below, was $55 million for third quarter 2009, or $291 million better than 2008, which was a use of $236 million.
New Business Wins
Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent.
Visteon is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Chelmsford, UK; the company has facilities in 26 countries and employs approximately 30,000 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 debtor-in-possession and
"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;
-- 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, 2008).
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 bankruptcy 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 fiscal quarter ended Sept. 30, 2009.
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 Nine Months Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales
Products $1,672 $2,010 $4,449 $7,530
Services 61 110 205 361
-- --- --- ---
1,733 2,120 4,654 7,891
Cost of sales
Products 1,557 1,968 4,211 7,064
Services 60 109 202 358
-- --- --- ---
1,617 2,077 4,413 7,422
----- ----- ----- -----
Gross margin 116 43 241 469
Selling, general and
administrative expenses 95 138 300 442
Restructuring expenses 27 42 72 117
Reimbursement from escrow
and accommodation
agreements 4 39 66 81
Reorganization items 23 - 30 -
Deconsolidation gain - - 95 -
Asset impairments and loss
on divestitures - 19 - 70
--- -- --- --
Operating loss (25) (117) - (79)
Interest expense, net 6 38 102 122
Equity in net income of
non-consolidated
affiliates 26 5 52 35
-- - -- --
Loss before income taxes (5) (150) (50) (166)
Provision for income taxes 18 31 63 131
-- -- -- ---
Net loss (23) (181) (113) (297)
Net income attributable to
noncontrolling interests 15 7 35 38
-- - -- --
Net loss attributable
to Visteon $(38) $(188) $(148) $(335)
==== ===== ===== =====
Per share data:
---------------
Net loss per share
attributable to
Visteon $(0.29) $(1.45) $(1.14) $(2.59)
Average shares
outstanding (millions)
Basic 129.4 129.4 129.4 129.5
Diluted 129.4 129.4 129.4 129.5
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
September 30 December 31
2009 2008
---- ----
ASSETS
Cash and equivalents $712 $1,180
Restricted cash 102 -
Accounts receivable, net 1,126 989
Inventories, net 360 354
Other current assets 224 249
--- ---
Total current assets 2,524 2,772
Property and equipment, net 2,039 2,162
Equity in net assets of non-consolidated affiliates 266 220
Other non-current assets 78 94
-- --
Total assets $4,907 $5,248
====== ======
LIABILITIES AND SHAREHOLDERS' DEFICIT
Short-term debt, including current portion of
long-term debt and debt in default $136 $2,697
Accounts payable 952 1,058
Accrued employee liabilities 159 228
Other current liabilities 262 288
--- ---
Total current liabilities 1,509 4,271
Long-term debt 66 65
Employee benefits 416 1,031
Deferred income taxes 149 139
Other non-current liabilities 340 365
Liabilities subject to compromise 3,126 -
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 and 131 million shares outstanding,
respectively) 131 131
Stock warrants 127 127
Additional paid-in capital 3,407 3,407
Accumulated deficit (4,852) (4,704)
Accumulated other comprehensive income 201 157
Other (5) (5)
-- --
Total Visteon shareholders' deficit (991) (887)
Noncontrolling interests 292 264
--- ---
Total shareholders' deficit (699) (623)
---- ----
Total liabilities and shareholders' deficit $4,907 $5,248
====== ======
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Operating Activities
Net loss $(23) $(181) $(113) $(297)
Adjustments to reconcile net loss
to net cash provided from
operating activities:
Depreciation and amortization 93 102 255 327
Deconsolidation gain - - (95) -
Asset impairments and loss on
divestitures - 19 - 70
Equity in net income of
non-consolidated affiliates,
net of dividends remitted (26) (4) (46) (30)
Reorganization items 23 - 30 -
Other non-cash items (9) (15) (17) (58)
Changes in assets and liabilities:
Accounts receivable and retained
interests (103) 239 (142) 204
Inventories (18) 1 6 (16)
Accounts payable 114 (302) 50 (259)
Other 33 (19) (79) (94)
-- --- --- ---
Net cash provided from (used by)
operating activities 84 (160) (151) (153)
Investing Activities
Capital expenditures (29) (76) (87) (230)
Cash associated with deconsolidation - - (11) -
Proceeds from divestitures and asset
sales 1 6 5 65
Other - 1 - 5
--- - --- -
Net cash used by investing activities (28) (69) (93) (160)
Financing Activities
Short-term debt, net (5) (10) (24) 24
Cash restriction (7) - (102) -
Proceeds from issuance of debt, net
of issuance costs - - 56 185
Principal payments on debt - (46) (119) (78)
Repurchase of unsecured debt securities - - - (337)
Other, including book overdrafts 2 (30) (56) (62)
--- --- --- ---
Net cash used by financing activities (10) (86) (245) (268)
Effect of exchange rate changes on
cash 19 (58) 21 (44)
-- --- -- ---
Net increase (decrease) in cash and
equivalents 65 (373) (468) (625)
Cash and equivalents at beginning of
period 647 1,506 1,180 1,758
--- ----- ----- -----
Cash and equivalents at end of
period $712 $1,133 $712 $1,133
==== ====== ==== ======
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 US GAAP financial measure in the schedules below.
Adjusted EBITDA: Adjusted EBITDA represents net income (loss)
attributable to Visteon before net interest expense, provision for
income taxes and depreciation and amortization and excludes asset
impairments, non-operating gains and losses, net unreimbursed
restructuring expenses and other reimbursable costs, and reorganization
items. Management believes Adjusted EBITDA 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.
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net loss $(38) $(188) $(148) $(335)
Interest expense, net 6 38 102 122
Provision for income
taxes 18 31 63 131
Depreciation and
amortization 93 102 255 327
Asset impairments, loss
on divestitures and
deconsolidation gain - 19 (95) 70
Restructuring and other
related costs 27 42 79 125
Reimbursement from escrow
and accommodation
agreements (4) (39) (66) (81)
Reorganization items 23 - 30 -
-- --- -- ---
Adjusted EBITDA $125 $5 $220 $359
==== == ==== ====
Adjusted EBITDA is not a recognized term under GAAP and does not purport
to be an alternative to net income (loss) as an indicator of operating
performance or to cash flows from operating activities as a measure of
liquidity. Because not all companies use identical calculations this
presentation of Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies. Additionally, Adjusted EBITDA 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.
Free Cash Flow: Free cash flow represents cash flow from operating
activities less capital expenditures. Management believes that free cash
flow is useful in analyzing the Company's ability to service and repay
its debt, for planning and forecasting future periods and as a measure
for compensation purposes.
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Cash provided from
(used by) Operating
activities $84 $(160) $(151) $(153)
Capital expenditures (29) (76) (87) (230)
--- --- --- ----
Free cash flow $55 $(236) $(238) $(383)
=== ===== ===== =====
Free cash flow is not a recognized term under GAAP and does not reflect
cash used to service debt and does not reflect funds available for
investment or other discretionary uses.
Web site: http://www.visteon.com/