VC - Earnings call transcript Q3 2020

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Kris Doyle

Good morning. I'm Kris Doyle, Vice President, Investor Relations and Treasurer. Welcome to our earnings call for the third quarter of 2020. Please note this call is being recorded. [Operator Instructions].

of morning's forward-looking like of statements Securities Reform this this remind the begin Litigation contains presentation within Act we call, to I'd you Private Before XXXX. the meaning

of expressed Forward-looking statements are to Please in to cause these factors, various differ results Investors could to were conditions, and section that additional actual for Visteon's details. but materials posted statements. subject uncertainties Information future risks on our are rather Please and materially Forward-looking guarantees call the you not results have morning. download from entitled refer page this so. not the to already the of if for website Presentation investors.visteon.com done today's visit material those

Senior Vice and Officer. are Financial today President Lawande, us Chief Sachin Rouquet, Executive and Chief Joining Jerome President Officer; and

the joining hour, [Operator Jerome's and open have and after your for call remarks. for We one you we'll us. questions thank for lines the Sachin's Instructions] Again, scheduled

turn the over I'll Sachin. to Now call

Sachin Lawande

third we you, quarter a to Thank everyone. by the the operations industry to the certain our took proactive with impact caused Kris. business reflects performance crisis. align coronavirus Good morning, Visteon's actions

reducing employees to have and simultaneously resilient in to Our our while commitments, be delivering customer resourceful proven costs.

third execution mainly the This a point across represents for business. currency of X% down record quarter. cost and despite basis grew a XX.X% third which sales, EBITDA areas our or of globally. to $XXX due year, a reduction year-over-year sales was our the over on all Adjusted vehicle million in Our is X% to last XXX basis actions being constant quarter improvement production disciplined $XX million

cash third is flow the in million cash the half prior cash and higher the first offset the adjusted adjusted the of first X result, a was $XX $XXX free This negative free for the million flow year. year, flow QX than months. and As quarter for

underscores not in returned our industry. the levels, third the quarter. automakers at our This technology the performance key billion trends portfolio. very $X.X to with This the business impacting product is wins and aligned While exceeded sourcing pre-COVID strength activities has well new of

toward record footprint the We has year-to-date result quarters, the this past initiated processes third in reduced its product move development. that approach of a to products, quarter platform-based our also launched across and and will number XX including the structural efficiency The the operational new the a business a in XX. total of of We company increased over phase the transformation costs critical several and company, been transformation for undergoing business. bringing

of and the $XX pleased terms report environment company of cash in the levels and a to to facility I'm company exciting quarter years. of for board Visteon forward I'm QX million. contract cash the my agreed and From we that net pre-COVID the now at that, I the it leading net With position back look that of phase the business to period in also technology are our in industry, are improvement end X its position, ended the to evolution. perspective, a cash. have a report these and for repaid With revolving in the with times next extend I credit pleased to of accessed

the to to pent-up higher than Vehicle of third with was as partly demand in coming down production year demand X. quarter global of incentives government some QX European out recovering Page to countries. improved prior well Turning Retail as lock the production X% level. expected, in within due

an retail at of dealerships to In industry. addition, inventories depleted the provided vehicle the boost added restocking

to of recently out last promotion and also offset double-digit ongoing new total Visteon's a up such level products our grew SGM digital in launches VW, year-over-year due of product digital launched Mazda. While and X% rates in demand well displays with and basis, Digital year's product than for down the Sales to programs X% third infotainment, the of half as the performance for infotainment cluster the sales, were the new strong and digital the down roll-offs. the displays volume of Renault of In cockpit market summary, audio the quarter, in Mazda at and market at partly represent and overall center the digital on driven were year-over-year with with business strong offset launches cluster phase of module multi SGM, sales. displays now more due which year-over-year. China of systems impact X%, by of and Ford of cockpit as Visteon's better-than-market more China. non-recurrence than currency as was product sales top constant continued customers in Daimler, to In Visteon's BMW also launches decline that with almost year's prior Europe Sales strong more continued instrument high increased customers in the information and PSA. clusters from ramp-up sales we doubled quarter. Sales attach and of third respectively. number were particularly increased however, demand displays

region. Mercedes-Benz on the of very the in to half the F-XXX, XX North of telematics report remaining America, new These a third in in that quarter. distributed the in despite China, outperformance single XX-inch $X.X the with on plus F-XXX regions, such Turning QX, I'm launched X X company quarters. the pleased the restrictions help well XX new launches for number new us cluster record these a quarter lifetime S-Class. vehicles digital. different will parts COVID-XX, were other the is flagship and were audio which America, X including have digital In for achieved of best-selling the which launched all-new X/X of market in in Europe to instrument we as clusters, products in billion, products North were we highest projected and which the combined Asia. launches We coming X. a all the and our is caused products revenue across continue more Page new The by Ford during also Ford of pickup and the launched is launches product the than

a launched we mid-cycle CTX a a cluster This cluster reality XK HUD. over-the-air which an for Europe, with upgrade cluster and graphics, also as updates competitor. replaces with In Mercedes-Benz XX-inch the XX-inch from integration digital a S-Class. We feature-rich analog-digital launched new digital augmented Cadillac the cluster offers software

information to all-new high we an digital a for launched We third-generation total while integration to of keeping as new and for historically used X-inch a new and XX of And the They cluster challenging crossover clusters that support now digital In quarter, in launches. with bring upgrade our how the the launched compact for even XXX systems analog to cost, well. gauges Royal launched company a in introduce environment, phone software Envision a in is vehicle. migrating CX-X compact XX-inch with show all-digital vehicles delay for It's number infotainment VW. ls can on Mazda cluster but for with as solutions new launch Buick a we functionality, hybrid XX-inch execute China, are segment or third In good cluster Enfield also complex and cockpit this XX integration of updates. the an LED cadence especially in launched multiple X-inch center reasons navigation, the market innovative The ADAS of looking mid-cycle Peugeot costs to support system and SUV. products mode mass The has the launched quarter example Motorcycles digital turn-by-turn Japan, digital for we new year-to-date check. and our continue third an X-wheeler

in led coming Turning spread consistent did performance. infotainment X. evenly from not XX% displays Nonetheless, the China, restarted the at recent activity I'm where the third quite which with of audio represented shutdown, across unlike year-to-date at total share, quarter, more quarter to other that the about third the bringing of to improved $X.X quarter, but to new After most outside products to the of is business billion bookings XX% reach bookings sourcing in pre-COVID-XX with the all particular, Cockpit X that, clusters And $X quarters first the Page came China third total. from $X.X our pleased report quarter second rest bookings of electronics XX%, our in billion. were OEMs levels. about regions. the at and Asia, Of billion

a wins mid-cycle sports a a upgrade key the Some a as a pickup American for XXXX, end in OEM's new included XX-inch XXXX. North launch for cluster launches that OEM of Japanese XX-inch towards that car cluster for and will

smaller key other a XX included launch won and North upgrade, a which American also and replace America months. center which new Europe vehicles on for platform. large display mid-cycle a as that's in in Android-based also South an OEM North with our mid-cycle as update a about in in a digital display information OEM America current infotainment Besides the XX-inch clusters, Japan, will will infotainment cluster We based an for XX-inch system wins their

a booked management platform. In vehicle to with for stronger additional discuss business more is wireless amount our the management the be the the the won initial next added significant We to will detail electronics, first early in will also models the system battery its launch OEM had we on and the mix last a with of of wireless quarter, cockpit addition quarter pipeline infotainment EV as but to displays. system battery The third I year, similar for with mid-XXXX. GM our page. and business GM and partner fourth

continues level. also product have portfolio our sourcing stronger with solutions. normal As to to and and in has now infotainment industry And and BMS in recover, we to progress activity the expect been return never made the more we increase technology

devices collectively the system of A vehicles need that referred within Systems power to different used cells from are of for as Today's be ranges. enormous This wired Management allowed system monitoring of operate BMS. or Electric the X. cells and electronics components and of them thousands Battery battery several health the is of operating power. the a hundreds batteries need and state Page is These EVs to connections cells or to to software monitored limitations. System made Battery even BMS. deliver for the amount of electronic required done Management maintain between battery and wired constantly Turning to the by has management to

and weight work additional the itself space harness manufacturing pack. cost, providing extra battery adds battery in requires and of to the First,

its models. design And these reliable mechanical with limitations secure The that are the highly battery wires a to and to expensive from BMS wireless pack vehicle technology and of BMS Second, failures eliminates are prone harness the technology across fix. connections connectors limit of wired the wireless that the with flexibility to solutions. limits wired third, reuse Visteon replaces that communication

cell wireless the the units, wiring electronics are developing three software the units of as system solution. The solution: We part with vehicle to in the act unit need the the components for control wireless provided the monitoring monitoring the typically information developed the integrate BMS control in interface collaboration these algorithms the low on OEM unit enable without by this manufacturer network and We algorithms in voltage that packs of by and cell our the cell assembly supplier. harness. of of design the battery battery battery are

the with we across working covering by help from Ultium and system solution as And this GM batteries brands all all heavy-duty other trucks technology powered ensure planned lineup, with this discussions future are GM's well. segments performance batteries. EV scalability for The to in Ultium wireless their We on OEMs vehicles. BMS are to vehicle models introduce will of

EVs consumers a And in EVs market is of a X. continue. EVs the pick greater about sold also and total of expected requirements, trend. are in is of before. X/X vehicles have in good Europe, growing, The very XXXX, incentives to of to expected quarter, third than represent in also where this the tightening available to especially up Visteon and Electric are well the giving to sales position share in to government again. number Turning market. The to China, started emissions Page due growth models choice by leverage

cluster, digital traditional as well agnostic infotainment seamlessly EVs Our SmartCore as and are cockpit powertrain work for electronics and as products, such can vehicles.

the display wireless microZone for but price and displays, new Our scalable packs is provides in reusable ideal without paying consumption. a And OEMS. solution for higher for technology battery automotive BMS high-quality a power modular

platform Geely year, from some of are EVs, was from far Nissan. as in will EV already EV launch so new Zoe based the year. new such our Renault, which PMA models multiple products best-selling this best-selling from on the on Europe next the Starting products the platform BEVX Our electric and platforms, from vehicle the the GM, such as on

Turning to Page X.

also shutdowns and While the helped volume pent-up the expected, Government demand incentives, retail is initially expected market. in quarter depleted U.S. Europe, by the second the production in fourth China, demand the remain demand in and was dealer stronger spur by also inventories uncertainty replenishing particularly particularly much quarter, consumer volume. but to Retail helped of in remains the strong production than third in was quarter. vehicle in in

cases, in several are First, stricter control there is with and countries associated the the to the COVID-XX wave, second already recent risk restrictions spread. the increase so-called considering

Second, vehicles of year, in European may vehicle the volume have level government incentives next of which of by quarter. and requirements year. that being Europe several phased of early slowly this countries fourth Also, the impact effect were on the mix towards are out emissions place end next and will an in second in in quarter the put produced expire the end into go

has expectations for production. sequential to growth are The fourth these with We market conditions. reflect a underlying quick may believe forecasts third demand quarter's quarter, optimistic market indicating increase recovery and watchers not in estimates the some some caused double-digit vehicle too

we and production. growth Given based muted risks discussions the above will demand the in believe on of more be terms sequential with our OEMs, and

On levels this launches fourth our the should the important quarter. quarter. to third in hand, results the production be electronics third it continue experienced new while that in reasons forecast our trends based to difficult market in in quarter Cockpit same the outperformance is our and the on to product we similar outperformance drive factors to will our expect other drove vehicle that continue environment,

solid new at growth year-to-date executed Turning company $X.X won to business well robust XX.X% adjusted challenging in we and very Page we the a quarter of a delivering continued another margin. X. summary, the sales of in the for In over build the launched XX foundation and face EBITDA new in environment, billion growth a The programs business market future.

took the ever in together is electric interest portfolio for solution Our digital The cockpit wireless than with product is leverage to stronger BMS have a stronger to while positioned cost growing organization optimized emerge well and technology sheet the performance before, and operations our vehicles. and resulted helping balance very improved we actions that proactive the operational the structure from the strong and streamline maintaining in that's restructure crisis. us

over Now turn to I would call Jerome. to like the

Jerome Rouquet

everyone. you, and Sachin, morning, Thank good

that results base. year-over-year margin million quarter to before $XXX were first some the representing impact $XX an EBITDA financial of flow the from for year. for excluding EBITDA rate cost were adjusted in to million, the X% activity was the levels the COVID-XX this benefited early cash representing a in addition Net X Adjusted very compared Adjusted the aggressively quarter when preserving the In currency. we sales cash growth of increase the free million actively actions months the our These adjusting XX.X%. $XX quarter, was third QX, in focused of actions initiated generating on also proactive the and implemented year, and which on pandemic. were of

evidenced SG&A cost down Both reductions business optimized short-term XX% XX%, will by Our cost support that the to and a Visteon combination from engineering we structure. compared SG&A a benefited longer to term areas an growing initiatives and last is of is the both is and Gross in which year. with quarter allow significant control structural in engineering reporting. down adjusted focus are on adjusted

our supply to reduction levels sales with year-over-year, full quarter a XX% the the customers ensuring $XX XX% basis, on focus to the chain continue QX, inventory, reduction basis. force ended quarter-over-quarter for pandemic, representing cash the for down our cash free $XX of million and QX, year. which continues flow in We from quarters, negotiated in few million created target of on a we Our which quarter chain to will midst temporary task benefited $XXX in was QX optimize free XXXX, flow half adjusted in million that we and million the the CapEx us and at supplier sheet. we that sales a inventory throughout term extensions the QX To of on adjusted a year-to-date increase combined in XXXX. XX% million and With maintain early global service continued the of at supply year $XXX QX. improving significant and a allowing a and this, was today inflow we also challenges of the while cash had cash a $XX strong approximately numerous a address of timely. last balance the repaid strong full crisis despite next versus the coming September In end QX for this the year million cash year. access reverse in aggregate, from in of revolver strong credit balance remainder levels, facility early as sheet in a the QX, generation precaution end entire we $XXX a with in we activity

short-term We also repaid our debt.

result, cash reduced this of a million. stands our our debt cash at $XXX the position position Combined end the of that As which net with the to the XXXX, To context, total had of after at in $XX $XX quarter. million. was net $XXX a million total at was debt put is it cash million, end we essentially position

EBITDA by ongoing million to $XX On a production of manufacturing, Adjusted annual continue measures Sales cost of year has improvement declined provide top X% or the X.X% to approximately that schedule representing in Strong enabled launch In the represented benefited short-term The estimate We industry not historical offset the increased the adjusted carry outperform year and volumes including robust within to summary benefited performance restructuring third the These savings which Visteon market. salary recently X%. for $XX the programs combination and continues Adjusted from of X% impact spending sales engineering to in coming and same period, declined while representing margins production impact restructuring in XX.X%, The sales XX, new Pricing Page the will we pricing. was XXXX. be in the earlier Page of in excluding a million this Visteon's our announced and announced prior year-over-year, into measures QX currency. business volumes EBITDA to to and $XXX year Turning increase wins of of XXXX negative by completion. QX. when million program prior XX. are approximately quarter million comparison, quarter. earlier at the $XX not curtailed versus ranges. customers material from fourth year. will related permanent an than X.X% in impacts QX reductions more implemented most and X%. mix versus SG&A to have temporary and a EBITDA our

to the would decision flow, cash context our moving to of like to for not the remainder provide Before I some provide guidance continued on year.

optimistic rate are coming stabilized. quarter, production we the in of forecast third Although of change not out the has

instance, points percentage the the for IHS last in just percentage For a months X X X last QX month. improvement in point nearly with forecast improved

has addition, the of uncertainty quarter year. added COVID-XX year-end complexity In typical the managements fourth shutdowns OEM the related with inventory to holiday and this

EBITDA have increase increase gradual year. seasonality they reductions benefit short-term mid-to expect and the in the fourth prior digits. we do salary will while that we to we from high recoveries expiration outgrow as spending. benefited from will the the to cost in continue that due discretionary a market Adjusted third in quarter, of expect savings we had the in However, same the the structural not will Engineering continue quarter in single do to

to year year. in that We prior the for will to are mid-teens be we be year. expect mid-XX% the anticipating down In net in decremental total, full margins engineering compared the full now range

for flow. of cash quarters quarter as three an position cash and at adjusted to Page overview the cash Moving of XX end flow our as net our the cash first the provides well year. the of free

quarter, no and be net net a a one was $XX before benefiting industry the XX-month was year-to-date X.X and and plan. year-to-date best of XX% to on payment we balance more track putting with to maturity terms reversal tocontribute inventory from by temporary above source a adjusted negative flow $XX full optimizing QX cash cash extended for these approximately negotiating the the with €XX supplier and Capital million from U.S. our was to cash EBITDA ratio expected million free be spend fourth Our the and term are temporary full adjusted million will times debt $XXX by flow flow decreased continues payment capital a anticipating last cash basis, levels. on million. million in near-term reduce expenditures the XX% In year. on plan Working the Visteon levels expansions to cash than million to free of slightly debt Despite outflows pension quarter, of Adjusted fourth of us $XX XXXX. free position anticipate sheet CapEx cash, year for a in suppliers. approximately our we the breakeven $XXX with focus

Turning XX.Visteon be opportunity. long-term to to compelling continues Page investment a

company for I cash flow like to the balance line questions. growth, free maximum time your for our We margin and strong provides while call flexibility. sheet generation, your for open today. you Thank expansion increased now the would have positioned top

Operator

first line with question [Operator is of Barclays. the Brian Johnson Your Instructions] from

Brian Johnson

questions. of couple A

Page might and the measures have How increase. on come is of, in temporary the and I but terms EBITDA permanent back in missed so First, million reduction XX, can forth? just much how it, operational much year-over-year of improvement $XX SG&A,

Jerome Rouquet

We, script, in here. it mentioned I've Yes. Jerome Brian, it's indeed. the

will We measures EBITDA are QX percentage that be is took that points again in related to repeating X.X, austerity we QX that not in close estimating X of QX. to and

that, in which X.X%, to could results QX by give EBITDA XX.X% range X.X% So simplified the very would to XX% for removing EBITDA you a quarter. a normalize you our in way, just

well a in important the side. QX. point QX, in that the getting reduced as think of regain engineering levels see on to as activity are into will is we as X level, well especially benefited mention we I probably from that we is And XXXX. as do And into I activity think continue like well did going QX which we

Brian Johnson

of about sort happy on this those growth, with think, we emphasized moving piece the on Second X there. you the in Could and software big the, and a just Page not are and digital that question than they follow-on maybe talk drivers the growth business? simply and are displays, indeed, a of is another of that talk your much more you marginable clusters growing clusters, digital infotainment faster Could margins. When and the audio clusters? margins a about hence than at of from margin digital And display competitor the away X, somehow implications about the maybe displays. rapid hence displays, a, software-driven opportunity

Sachin Lawande

software Digital absolutely. of clusters cluster. from so may cockpit to the the content, have features we software continues amount be, a in have grow. it and those ADAS earlier And growth the the infotainment of Brian, comes developing have into of of we And which third in-house the as noted, been from rest licensing integration you Yes. where the compared the in-sourcing that would as parties. lot components like content a to by fair industry, software

digital for good coming expect with makes all business And margin very to innovation in. that of that clusters we continue the So us.

strategy. and clear be you to classes I the displays, about when very to of are industry. I Now our about made the in have point it X some displays noted also comes competitors. that There want

to that anti-glare that some these many including be pillar, And more the displays look in are are pillar the challenges, as well. are more it is user optical anti-reflectants, there. be for and as cockpit, integration of curved business grow where of going that's those integration forward a are is of experience. different with in believe gives features, environment. drive have to taken to manufacturing-related as the You displays We the essentially have display-driven electronics And glass the because for such going be in cockpit flat, but that size, the the you and getting being the we what And we the larger, capabilities good displays margin essential us are small and software. to then displays, is shapes a to display, steps rectangular, to eventually and content becoming evolution commodities. of bonding -- higher us part These much get those see on to things displays that

Brian Johnson

And then which the aware, way CPV final frankly, in and of margin there in we're BMS, any platform. us about snuck on dimensionally role dimly Is to but Ultium terms your question wireless on think around opportunity up big BMS?

Sachin Lawande

Yes.

limitations. was evolving, wired way, is, at technology, the Let me battery became step back that EV some first been itself to have we how been a talk which wired to waiting it and are of number as years on haven't we providing looked by the about really from we a And chemistry, been of take about for talk we pouches because GM and it. BMS well with to their BMS But which about hence older are, apparent vehicles. But major solutions have vocal are technology opportunity the cylindrical as and our evolving forms reasons the those very BMS win, is for prismatic solutions. have rapidly to as And newer the GM. solutions

been with have the and away which wiring on wireless low-voltage we the pack a this fundamentally more working at does So BMS modular harness scalable. lot approach battery and makes the

we GM. are be to so happy And working very with

products are the of platform. across already We future their and in BEV platform, on their that electric whole battery will new the announced are portfolio be

and build forward. that expect get able more so to us but be that one, a gives position we'll to, bring scale, to we also And experience, great other we go solution it OEMs as

content, depends to about the how think the terms battery. the size it on in Now of of

it say, all price the of about $XXX is the good way $XXX to, say, over think to vehicle just BMS be to just the for between XXX, way So XX a kilowatt battery depending let's the range hour up solution. let's that would per upon,

it's pretty us and high-value component a for So a segment. solution in that

Operator

Your the Markets. of is from with Berenberg Michael Capital question Filatov next line

Michael Filatov

Good question. taking the morning for guys. Thanks

pressure pricing Are have the more that of talked one your having their about aggressive you're make on not one, pressure pricing first more of whether concessions And on those to side I systems. business? competitors So seeing wondering was additional on of sort or analog systems. or maybe you

Sachin Lawande

No, be yes. very, we even normal seeing pretty is times, And what than pressure, pricing intense to in not that you are as normal. on clear know. pressure I in this want would more I the Michael, in any be saying industry, very is

So to we through been various offset means. have able that

We forward. that able and well going be as have quarter to done expect in continue QX, to this we

Michael Filatov

then the And are clusters. behind one displays in-house sort software that guys more of and around doing you the the

you differentiates wondering more new give and win that just and around you could you helps Just that software a bit if guys me of sort business? how detail

Sachin Lawande

Yes. No, absolutely.

third an clusters digital XX parties. There's And think AUTOSAR licensed if two operating that large third later. for recently the software. industry needed for the system software and In I'll and has that clusters, So is really you built clusters, components Visteon In from from about as of until parties. AUTOSAR. license that been in, specifically traditionally would to well, are we last there have months, displays come

are it longer We have our we've last XX customers. months, to than of over able developing introduce been clusters a the period that. time new the building that into we it But been for in

one that's So component.

is XD second graphics The that our component software. XD,

rendering larger, be that parties. the the of And capable, licensed the are also this was part proposition a very from As getting device. something more is used to displays graphics high-quality third of big value

our introduced own solution. have We

on both sense, AUTOSAR that XD, on in XD unique the are the and graphics. We

larger are X party, third in-house. of components we it doing that were now the So

evolving which technology One, pay how But is innovation is that's us it Our cockpit. me, pace the is us, we very for the does gives important even parties. that And royalty competitors importantly Now help ourselves, within more to gives fact us, at have in than cockpit. a competitively? that to benefit. control the the are simply, they This have cost, cost the on doing that, third happening the the more that even us just right? to

Michael Filatov

three any next know margins follow-up. in one better-than-expected, visibility I probably years? of austerity for Is clearly that just your there or target the sorry, those And adjusting And XX% were margin is measures. even sort update around two quick limited.

Sachin Lawande

Yes.

that's minds, let to me me try I'm talk that. on so about address Let it. a question many sure people's

growth to back Now we have X of market where go points. percentage if you a QX, over

had the nonrecurrence special of the includes sales by that, promotion year. we Now some way, last also

X% So to like you it's really more look outperformance. if performance, really X% at market our

coming So sales growth clearly, new driven product by is through respect the launches. side to with the

current think about in need that's I'll based the if Now ability we And you the is on beyond this our experiencing the out. factors: margin And that take to talk a minute. for expansion, cost to in growth sales about one, level. two margins second that expand our

this short-term front, those to cost say actions. time, the you have that progressing this in the be of we By well the are savings, as, on substantially structural seen drive importantly, quarter, both in going as done sustainable that those made have we year, Now time the the next well. changes results as more are with should all

to into drive environment. year, help that's then next We one And good more base, on production feel is the so XX%. to clearly, underlying sales expect respect towards terms in depends which also growth, our XXXX. going to going production piece. our We into do And That grow lowered it with and the the that. cost of about has

IHS, we growth more have combined be we conservative may than we target. XXXX over be our a expectations achieve a XX% by market, stated position, growth. little we as with think to time before, frame, Our expect this should And but that in

of Our beginning the it year. takeout confidence now is even account was higher cost actually on the of than the at

Operator

line question of Advisors. is the Your Stephen from Fox with next Fox

Stephen Fox

a was wins now. any there's of I takeaway updates. mentioned You mid-cycle curious to couple And related if

for talking quick business coming front And had maybe learnings suggests then along wins next that year? potential that more been I recent that, any is about You've if a follow-up there's that. from and for the the there

Sachin Lawande

Yes, upgrades. sure. And we have are in interest as stated we mid-cycle before, seeing, more

at the the wins. production, XX to look $X.X those our you are you XX total forth wins related performance If BMS, and update just that if cockpit of going into XX%, wins And focus of go months. electronics that one also benefits almost excluding account to mid-cycle is launch, for a billion, of the our on of full within year-to-date wins roughly

faster vehicle revenue the models. is on generated also than new So

what been much XX% historically. higher this case than has the Now is

is say continue. early the to term, going a couple to X it's is things. forward. But in environment, some least And trying the quarters, the expect so development of are One, of the that XX% environment, especially extend the next the to that benefiting think OEMs whether far. I to level not with we overall vehicles, helping in fact expect, too market sustainable us. very given sure. that welcomed the life from we do I'm this It's near at of

Stephen Fox

just helpful. on then And That's Europe.

it's of mind lot issues top weeks. of yet? last evidence to the definitely tell? playing You seeing in out you mentioned of of Or of Are concerns, any to couple too early seem a which be some the

Sachin Lawande

to to Yes, wanted given respect with make thoughtful Europe. it are future, that We mentioned about the we for the we sure of expectations too things early is to all tell. that

renew, those incentives unless been of towards So going as this put emissions, on the requirements the quarter. the in slowly you effect are there's end the quarter. in there especially impact out. have the beginning that of will end finish. also year. decide go fourth aware, of into year, have And that mix, place And the to this they incentives the an might are stricter several And at were to second phased And production now being

themselves. ahead call some were we of to wanted in opinion, little we which, So especially saw, light out, in a running of that forecasts the that of our

watching say sure So the and of. are early, at making development, we that are very our customers we this carefully discussing point, I on but would too with top

Operator

Wolfe line Rod of is Your next with Research. Lache question the from

Rod Lache

follow-ups. targeting million the a is middle to you're other contract decade, X and than One Ultium like on sounds I more year BMS vehicles grow Hey expected a everybody. had of it is to by the the few alone OEMs.

that So of low here does a million to thinking time? that are could $XXX volumes be Or kind you the business Visteon and indicating declines over million the that reflect you're of that, alone $XXX pricing business? part for

Sachin Lawande

No, Rod.

not I pricing does range reflect the the this the in there's and to more clearly system that to So hold, that that's pricing make the continue low stay and within of this what point the at business. in have this yes, really time, the talked aware been reflecting And we're only But planned of also models implications coming BMS about. volume. awarded that will has will believe content continue We we launch. for high-volume been that are

to opportunities you models well. will know, As other for the are more add that's but they it, there And with as future. as this OEM, volumes increase,

mentioned, optimistic, that the $XXX for opportunity or Visteon. of so I'm be business can and I million annual it level like So you feel

Rod Lache

us do the to Great. few opportunity. And you be BMS here? bring wireless just Sensata proprietary that one what's A maybe give would that is have And just on that mentioned table sense of landscape what as competitive the well. or a you an others? mind. companies as Can to the differentiated comes versus

Sachin Lawande

Correct.

available attention evolution agnostic solutions. wireless lot choices be a these the the to not the we the of the the time, on So itself and that be is wireless to going the is to on be for And from might the is want what of side. parties. technology Clearly, third Visteon provider wireless same us at silicon do

of battery software their necessarily the It's to come custom very software, well. the value that the the There's think what from the providers. is don't very in platform whole system and the to that we themselves a you consists algorithms see solution, a a if The very provide that that hardware, different so hardware each of of because in OEM. But lot from doing, basis becomes integrated So the wired. we wireless we building OEM solution. learning about something that a involved do, the what we works offer as want

the so time. advantage a time, unique at more than what And in have of point we really this IP, is

be of of this challenges and The physical here, will characteristics, scalable, about the I to up able continue and in to manufacture terms more models. ultimate And solution. source the investment different once wireless able evolve expect in on be to objective. that the various achieve BMS of this are is anybody part of solution. goal system, developing lead over to overall we a for them goal the with different make address what that that of enable scalable And right? a learn have have technology, packs as is trying couple our very OEM rapidly We flexible will battery coming batteries set them this else continue, we years to to chemistry, of the different to That's

Rod Lache

being revenue. Volkswagen accelerates, contracts high-level And declines timing gross expected down be won have maybe it's the you've about see infotainment. unusual few clarify, referenced level? far now. maybe lastly, to spending to longer but just engineering you thinking $XX Right. the launch Two spend other the right times comments number is in one of X% five on things. One million, a that we years, What's your so that of being on how Any engineering should next about the growth the those of for net as some engineering then term you've over thoughts as Obviously, is, organic kinds Android-based of I of any believe growth? others?

Jerome Rouquet

Jerome, it's Rod. Yes,

at on year. net million a taken engineering side. cost the of lot $XXX last engineering were we've So We

A of for are of 'XX. year full as essentially come million guiding that on cost is definitely back well in The as year. the actions We on this close will actions to early we've embarked lot this that save $XXX activity restructuring year. levels

So we number be this next to expect year. higher

were be However, back last engineering our we X%. if step look you at and close we'll XX% to year, percentage, at

have a dollars. chip at in terms absolute that continue not but going terms year definitely of year, we've of level been we'll this point this X and So into year, we're to away next taken expecting in at percentage point to

Sachin Lawande

And the side, then Rod. on infotainment

would add result hopeful of in the have have the will for in VW. expanding are And will we we one on are is other And all we related of American the is And in we within VW, the XXXX. like like rest, Obviously, more others provide that also are I there's production a is to which quarters. OEM, further coming interest lot to OEMs the launch, I of working system wins all the from we're business seeing, since them expect last with besides to other rest in that had launch. activities our some, would we of with are with that go the that the along Asia. of into So but color you North others, a the launch than that, point launches to we

So activity opportunities the to respect on we of are terms it there's infotainment. in acceptance seeing. that expectations of and with has a my going market Frankly, lot the exceeded this Android-based

sort the a you launch now. have in to biggest know. Now in as factor seeing that are we to, have the that's this we sure performance, success that's And as continuing usual, that going critical good make infotainment in of area, we very be

Operator

question Delaney next with is from the Mark of line Goldman Your Sachs.

Mark Delaney

month. on the Thanks for all company the announced from actions program. benefits the But to in temporary side. very helpful. at the same of few some X.X third go on comment restructuring the on X earlier there's BMS details, about financial more away. the points had especially a starting would margins, Maybe It's the time, this cost and quarter, that the program I

between talk and terms Where about what magnitude? we SG&A? of savings, see could program timing, COGS will in maybe that mean this So restructuring

Jerome Rouquet

Jerome. it's Mark, Sure.

with to program $XX million just be terms announced. X.X October close announced of years. the $XX estimating restructuring the I'll million So to We've we're cost. that will And at in this start that we've stage payback

to have So annual from of run much, close to in we're anticipating don't $XX of have terms standpoint, And overall, a timing anticipate we we'll savings. anything, that million savings, rate if in QX.

this we'll than year. XX% next at a expecting more stage, that are, little have the We of saving bit

say, let's XXXX. close saving going into So of $XX to million

Mark Delaney

on ask I understood guidance range. to the engineering down want the full for just I mid-XX% recoveries. then And the If year,

current $XX are the the fourth $XX compared million this in quarter more quarter. like implies or think recoveries to I it million in so engineering

there's maybe make headwind want to quarter. a just So I next that understood properly. margin I sure

Jerome Rouquet

Yes.

year. million to the $XXX we're we've, be for engineering So full net guiding to close

fact, what net you of into million recoveries. means So it $XX for QX, back to close if engineering in it's

In million. few maybe And levels fact, quarters. over our per million and around quarter. been have very even way last expecting $XX we the we've been and very and we're recoveries, the are similar QX, in We've between things averaging very happy flat in in $XX developed million see $XX to

because we're $XX impact like quite the obviously million close that significantly. something to had at time expecting year So to of year-over-year last the And QX. million. $XX important same recovery million $XX it's We decrementals for will

So it a we earlier recoveries will had more year-over-year impact, given year. that have in the obviously,

Mark Delaney

It's really helpful.

Just one could. I last one for if me,

any conversion, you free free Just share on on for cash puts and can your flow takes flow XXXX? cash

Jerome Rouquet

side. 'XX. on to of the year. the But flow cash the especially guidance, bit give are It's little free obviously beginning we'll, flow cash a early on very we since focused

the big going X As be drivers you know, are to CapEx. EBITDA and

well, and expecting sales, this as year EBITDA And to a are CapEx So year. This up on this our even well, of done the down to percentage. lot despite EBITDA, we'll CapEx what to be X.X% seeing drive year, sales. good dollar on slightly of versus we're close as year to with though We last value growing we've work keep we're be the side. percentage that X.X%, the continue we will expecting in decline started

adjusted EBITDA, flow on a free come this of to focus the cash area. more So lot versus on but

Operator

RBC Spak Joseph next of question line with from Capital Your Markets. is the

Joseph Spak

with does maybe target? sort you're just and actions it to needed target? XX% tightening a greater? volume way, your break is now Or the actually your And Because up cost would margin back, hit say longer-term you is into like structure. like margin still of then that actually comes play to that that so, if things opportunity if the Is how fair? more of of last the part like some want is measures sort than follow-up that lower mean, that similar I seems but of get I you're volume, question. guess also taken the and of again, to the offset I some on, austerity it you've seems the that doing taking to dealing

Sachin Lawande

Yes.

Jerome to and So I additional let color. Joe, start, first will on pass me then for it

that's we me you share with why Let are and important. doing what first

of cost technical trained heavy, new system sites places. over that years moving in and Romania to and especially steadily, opened couple now past as liked, more Mexico. know, had gradually was past, country our have And as structure in few we more the a to now in of So we in or I X our would and also in been as Japan. Bangalore, footprint than had India; centers I well you take they've so, have a development, cost the are participate say, would lower may ready We to get whole more years high cost development. product they in Europe, in And on

in be cost Now a structure forward will that manner. sustainable will mean for us. also going advantage more that better a fundamentally And competitive that's our much

and our Now this as we whether to is second how question your does impact go about needed target. answer it XX% forward,

XX% better it beginning think of being in a even of with to compared at the much what than terms XXXX. than all, ever level as a first of lower able position us, achieve sales we the year, I to indicated puts in for

available returns the up, sales will hold if beyond us. clearly, Anything Now add, Jerome? our and volumes you like to would to opportunity certainly to expand XX% be

Jerome Rouquet

Sachin. it -- the are restructuring that costs. well, the in driving summarized The very Just definitely and efforts you improvement

lot in the in that a the We paying of we've I we well results. discipline put the beginning on see And that off. place of the have as And since cost. year think QX is focus

as careful, this back. think, around from a QX just means trying well have what that as that, still in get arms I see on coming we're it think activity and And what we've is we'll other 'XX, touch the be, side, dollar got I a our we'll standpoint. in to to

we'll So tailwinds more earnings taken, a will call. all guiding into a call I'll actions that coming it, headwind, activity little that bit we've we've go some but February be as got be, we our from the definitely and on

Kris Doyle

our XXXX. call call interest participating for conclude third Thank the This in for your today's and earnings in quarter ongoing Visteon. does you, everyone, of

have please you. questions, any contact me follow-up If directly. Thank you

Operator

Visteon's This concludes Third Earnings Call. Quarter XXXX

disconnect. may You now

Visteon (VC) 31 Oct 202020 Q3 Earnings call transcript