VC - Earnings call transcript Q1 2021

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Kris Doyle

Good morning. I am Kris Doyle, Vice President, Investor Relations and Treasurer. Welcome to our earnings call for the first quarter of 2021. Please note, this call is being recorded and all lines have been placed on listen-only mode to prevent background noise.

Before we begin this morning's call, I would like to remind you this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

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

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

We after have you for thank and call your one hour the lines question and open Again, scheduled the Jerome's for limit we joining for Sachin's Please one follow-up. will your remarks. us. to questions questions one and

Now I the Sachin. will turn call over to

Sachin Lawande

booking points. EBITDA $XX by related to on balance ended $X.X billion. the adjusted chain million the morning results. customers. total at million about $XXX Page sales. quarter of first costs in although quarter remained excluding second when $XXX million Good business X.X% our supply first represents shortages in the first sheet. flow cash in demand muted everyone. Visteon's growth quarter currency. was reduced our performance of of XXX vehicle $X or supply semiconductor summarizes quarter XX% for EBITDA cash our million. XXXX increase half continued year-over-year We strong, Visteon's of Incremental Adjusted was a Adjusted of Visteon's shortages basis quarter first the strong one Thank the sales you Industry strong XXXX. positive Kris. free production margin was quarter with new with

attractive is introduction automakers microZone included and bookings business displays premium MicroZone win an for OLED recent market technology. to their our for a vehicles. offers New display alternative first

of the margins incremental SmartCore spending from my million our for approximately reductions in in I our accounting We XX% presentation. to structural lifetime total later our with cost started in wins business detail were XXXX QX discuss we the microZone end quarter, nearly and benefiting continued $XXX wins of approximately more significant in QX value. the and SmartCore also XX%, won near discipline. implement will

Our balance all the end quarter. over operational performed at detail and of first sheet performance the cash financials. the our in the Jerome company following of million handing the delivered with well it a net more quarter. Overall, discuss strong before pages to areas I remained $XXX across in discuss on the business will to solid

performance to page all chain customer supply Turning regions. occurred impacted the to sales relative shows despite semiconductor Visteon industry increased Most China. production vehicle growth global that constraints production vehicle of QX production and volumes. first in two. other Visteon's Global the and in This page quarter XXXX of in XX%

levels, during the resulting first positive first growth. this was rest China. excluding Americas in the year February strong majority just of down not production last vehicle the in year-over-year under year last recall, during China Vehicle may quarter second Europe been parts reduced, XX% of the and in If to shut have was seen all world, the for modestly for the rest Asia, and production regions, in In growth performance of facilities pre-pandemic supply being of significantly year. production the China half of in due the vehicle up robust volumes in pandemic. and and of shortages, production XXXX production quarter you would As with first the the a was down of for quarter continuing March

about market. toward XX% first China of the which a production global quarter was growth weighted As industry result, represents heavily

lost second first production quarter. grew driven a its Visteon's flat still basis, vehicle only our creating negative itself to the currency. was of quarter On positive The of customers' Visteon's about represents week prior of two-thirds, equaling a year-over-year was of mix. Most sales for year. sales in shortages, some higher this this the it outperformance, in mix anticipate impact of will China In Visteon's to While to market, estimate with vehicles quarter about and customers. domestic business X.X X%. XX% product weighted primarily sales the approximately on XX% We four excluding We Visteon the was the the remainder contribution impacting contrast, quarters. by globally scenario the the first the sales, has growing from in in been by regional launches year-over-year, sales from reverse new China vehicle resulting the our of due this basis, one was a rest for and the parts about over about due negative production regional due million mix

to page start year new strong to Turning We a three. business billion quarter. the had with in the $X.X in

controllers first domain with cockpit two the one new Asia. were North across wins in our to controllers transition and quarter other previously, domain for noted cockpit Android-based industry. digital infotainment half and in accelerating As business is of with the America The integrated OEMS, about SmartCore clusters

electric wins total in accelerating Furthermore, launch updates and in by for half within industry. of electric digitalization years, the position wins, will production is in this Similar vehicle vehicles, the new wins about business pace to as wins our trend. in to the which in platforms the XXXX, our Visteon the technology with mid-cycle these are of wins of XX two OEM of are of globally, or reflecting XX% one-third business deliver customers new With total investment strengthening OEMs. emerging underscores for industry about soon the will SmartCore the new total our leaders prioritization

side first On quarter the the wins. are key of some page right

microZone later for discuss in designed will microZone As premium of in mentioned vehicles. for secured automotive demanding earlier, we meet is the detail corporate win displays a more requirements a large MicroZone that's high-quality for luxury premium first our solution display to new display and displays I technology. page.

a applications. This current SmartCore with This cockpit offers system a XXXX. The into controller software clusters models starting here OEM all Android-based Android-based OEM. system this domain connected in win and and controller digital over-the-air is vehicle North multiple in infotainment. with second extends The business beyond win our integrated cluster updates infotainment American an highlighted launches cockpit with domain on for

The and replacing OEM planned not on win vehicle digital this with supplier. their XX-inch our is mid-XXXX. third a new brands with This global page launch win for where two incumbent models two a are we for in business are currently business today additional extends OEM cluster this in have digital that do cluster vehicle to

displays to consumer and electronics. history. capability quickly similar to Dials, Turning buttons with touch are fading auto page knobs is four. larger into The industry adopting

As effectively. to that fixed displays a a at wider higher work without require with luxury premium mass are ratios or render Visteon larger energy-efficient market advanced to be displays, meeting and gamut so looking also while heat delivers their to brightness Automotive devices, vehicles require display to cockpits stringent premium larger start microZone Unlike developed ambient that displays and than must contrast effect. a also Displays mounted address color managed angle. are solutions. viewing high-quality Displays industry well consumer a position cockpit and display automotive-specific differentiate more banding can requirements. lighting the bright, demand experience be images to a offer XX-inch inches dissipation very for OEMs XX conditions. in

more match state-of-the-art a in life electronics. is OLED have years technology must displays life span of for XX to vehicle consumer spans. or high-end Finally, today's displays

drawbacks However, it two automotive to significant has comes applications. when it

automotive life for is applications. Moreover, First, is the material, not long brighter as emitting enough quicker OLED's it light span based display, the on deteriorates. organic the it

XXXX award performance Consumer is significantly OLED a Visteon's exceptional and cost a optical proprietary deliver automotive for is alternative expensive models. while drawback large at specific automotive The to million, to in win at OEM will very capabilities. performance and XXXX. multiple technology that and an more manufacture, microZone OLED. win. MicroZone challenging our system this good North It its than is with to is to premium especially Show multi-display that at At vehicle manufacturers microZone about cost. and OLED. have a second microZone size technology announce display Visteon since launch is displays. in will uses challenges. innovation, a continued first address to evolve to in-house are entirely we is vehicle featured offers be Today, The $XXX Electronics pleased the We business meeting for patent-pending American less introduced significant developed requirements in very

that will continue solution delivers LCD over display premium high-end solutions offer a LCD price based to As technology. standard Visteon a on microZone that carries displays premium technology. a use experience,

a market of we section competition. ourselves with differentiate broader now However, from microZone, and can the address the

new consumers software are a updates with with Turning shift the to a to OEMs car adopting next-generation uses silicon user cockpits. vehicles. updates, Visteon's of the SmartCore page for enable offer of Offering cockpit. kinds infotainment software critical to to in services, Along quickly advanced connected Android-based over-the-air the for these and over-the-air along become has software manufacturers solution advanced larger choice experiences five. displays, technologies requirement and

XXXX the infotainment, panel over multiple vehicle past with in models. leadership evolution right launch business a of for Visteon's on support services second cluster American industry a This will years. ICE The and OEM the It region SmartCore SmartCore a our offers North in the multiple quarter and first controller win domain will Android-based is electric first with shows applications. and this Our page and cockpit technology. win digital OEM few connected system this in reinforces of this and this

Linux-based connected Europe car these Android has launched for the first-generation two-wheeler to which for grown updates our The system the and manufacturers GAC system, as OEMs equally initially China. commercial led in with services we as categories. We customer second-generation emergence include of XXXX. now development passenger has SmartCore become Daimler launched of system over-the-air portfolio with our and important operating from infotainment vehicle in Our to in

will SmartCore are SmartCore of of acceleration customers, we under of this acceptance systems With continue increasing OEMs all driver launch business which Android and globally, by Visteon's be in key development. growth years in Today, are page. currently regions. of SmartCore to in have adoption as coming XX OEM we the the eight technology a shown an on the we with is seeing the

lower the to demand are in the drivers retail units. close than rest Turning of to dealer year and page to our March inventories being six. regions key normal. all sales several growth. SAAR with I outlook was would and XX U.S. in the like discuss of remained strong our for million strong Retail

historically in quickly strong to has in registrations March. OEMs as vehicle lots cannot particularly This Europe in dealer enough. New also led low inventory restock levels, were U.S., the

As And quarter. orders levels from customers. sequential we are result, a a initial the high OEM first represented last to quarter increase our seeing order compared

product of another for year planning XX are over We new introductions.

in Motors near digital First cluster for anticipate and digital a Hyundai. a quarter a launch continue for to for XX-inch enable launch Jiangling XX-inch multi-display highlights XXXX production future. We volumes outpace to digital our schedule for China include the will Nissan, Visteon cluster industry display

will was in remains further impacted strong, March. especially in at Texas storm quarter, to demand silicon to primarily we the anticipate semiconductor semiconductors. industry and tight The supply a growth continue the supplier's in supply already facility a be second Although chain and winter February in fire Japan shortages due negatively by muted in

a year. As shortages of the second be quarter before recovering the believe first in will second we result, the to in as more semiconductor the quarter compared significant half

We to OEMs about to production second of half. compared second to improve amounting three decrease a production of the quarter, in that to year representing first half the allow weeks reduce to partial lost from production, the situation of production the the loss expect in for the for sufficiently quarter. down recovery the levels first supply will We or anticipate shut two

confident X%. year production we incorporates reasons, full feel increase maintaining guidance, our our that will these view approximately For in industry which volumes

itself that of in end addition, mix the the year. and reverse quarter by In will we negative anticipate customer regional the first the experienced

benefit optimistic throughout cockpit electronics In into of third-party domain from year. slight has industry see ready the a remain to although of not estimate it are factor forecasts mix, infotainment continues the We it. to about broadest position from clusters, large systems, our displays. our the current guidance materialize fact, digital customer tailwind and Android-based we and the this we the and shift to Visteon in fundamentals controllers portfolio cockpit until

cockpit fully to also the also shift accelerated industry's opportunities more EVs. digitalization OEMs expect increased wireless vehicles This the battery to will of will for as system. We shift continue our provide drive commit and management electric

confidence targets. we in drivers content secular XXXX in two-wheeler call, growth categories. of last us and our give on cockpits discussed our we as the Finally, important grow the digitalization trend and achieving being coming outperform expect to continue to opportunity Visteon lead and These market in to commercial years able for those in the vehicle increased to

Turning to results in it chain challenging in market and incremental including the industry for over impact the very costs. remains environment. delivered our The well XX% adjusted seven. and quarter sales the Visteon performed first margin, In of EBITDA strong. growth of page solid a with summary, We X.X% within supply place fundamentals

Our supply such infotainment chain performed digital large challenging very products, the as and well despite core clusters, environment. displays

Our with the digitalization Visteon faster-than-market very technology aligns quarter connectivity, new $X.X and key booked well trends and portfolio the electrification. growth. business strong of is The our enables during industry billion to continue of

we previously maintaining expect as a robust that impacting in dissipate vehicle are term constraints in the chain of indicated. And XXXX the year, supply for long the allowing and stage for to guidance, We the our half production growth beyond. second XXXX recovery sets

to turn will results. the presentation I review Jerome to financial Now over the

Jerome Rouquet

from morning Visteon company of the is generated at in incremental recent a the strong our currency. challenging margin year some resulting of similar Production year excluding in key it for midpoint incremental we started sales currency. implemented adjusted chain Sachin while which XX% favorable posting you financial the quarter. sales of an XX% by The million, positive flow constraints free the margins representing is as as approximately basis and throughout our cost in when Thank to result of cash mix sales points. guidance. last when improved impact supply benefited which These customers. representing line in grew X.X% measures a was year. some going and Visteon structural XX% our or X.X% programs year-over-year of our performance will about good the $XX from the EBITDA XXXX, results This was in flat Adjusted quarter a the forward. basis, of top we year-over-year, with higher lowered XXX Visteon's million EBITDA industry the activities the despite adjusted ramp-up for XX%, million, full with dynamics. everyone. $XX continue customers supply essentially impact Adjusted benefit improved from China to of the launch EBITDA as when On savings XXXX, way excluding the were excluding cost well finished Visteon chain margin, a results $X year-over-year,

generating as XXXX, the was of we in However, lapping these these first positive outflow. second as capital as the continued first free adjusted by initiated cash higher offset most actions million early were are Adjusted CapEx, quarter will partially last in start optimization XXXX. of first the cash half quarter. savings time cost a flow year, in cash from flows of free benefited flow we since adjusted quarter positive the $X to EBITDA, one, working year-over-year Compared

which cash after $XXX ratio best that million, than a drives a We cash is continue of and total the balance with $XXX leverage the less have to position zero. one million net a industry, of debt in of sheets net

to still guidance the ahead, we mid-February. be look that provided we within we range in anticipate As

QX sales two the came the than anticipated, we of second the tighten before our supply further in expect better chain year. to Although in slightly improve to quarter beginning in half

two a result, QX and adjusted free As flow is second OEM the will be an for shutdowns quarter, quarter anticipate to than EBITDA QX cash we due lower be in outflow. while to adjusted sales expected

initial QX lower in indicating compared one the the beginning XXXX levels. quarter of modest dealer increase orders retail prior first an of quarter demand inventory demand OEM $XXX the Turning increase strong to by quarter, in page year. a from fueled Sales and XX. levels, remained at were $XXX XXXX to of million, million with

actions favorable However, the as the and from shortages key in chain programs industry. throughout shortages combination foam, distributors, The mitigate Visteon's cross-functional customers. took by purchase actions progressed, order the were sales ship adjusted our force. our of of prior intensified, organic To OEMs set quarter grew resins in the rubber, ability supply year, Ultimately, global Tier as reduced ramp-up to driven products numerous These team task coming activity, as suppliers, compared quarter the various the such increased logistics, and that to to short the our XX%, launch of a levels inventory levels, which to Visteon drawdown of recent a mix. improve inputs, parts engineering well also some up X semiconductor suppliers supply during semiconductors included and expedited our and as redesign brokers of some their through as able were while deliveries.

Our daily as well. engagement customers suppliers with and increased

margin as these quarter, a EBITDA in However, the categorized reflected did in at is basis come chain the due of lost XXX price, costs. which points actions supply and

year actions quarter of constrained. chain of becomes or as well our volumes harder to X.X%, $XX these basis as be a reset margins XXX increase representing impacts. chain offset EBITDA prior an margin higher EBITDA to as more partially cost the million Adjusted by was second of will million, Adjusted the cost points. implement Some supply XXXX, in compared in $XX supply from benefited from

from We to have costs to discretionary by combined adjusted certain such QX pass we are transitory and XX%. Tier back which increased Overall, as limit as travel. in we although year-over-year increases be want of launch customers. amount engineering Tier gross also to suppliers, to freight which impacted opposed we anticipate higher higher our nature, along X lower our the from see input brokers against, reduced will pressures related approximately our driven approximately Overall, by we pricing with basis and benefited that pushing decreases SG&A we price costs. Costs cost to to points, purchased suppliers, costs by XX% logistics continued and as X the from as we approximately supply spend in higher distributors were in margins normal chain these and XXX primarily by starting are number to constraints, of a semiconductors

approximately to in net and primarily continue logistics will costs higher recoveries, year. This be the incurred forecast a of year-over-year We redesign. first million, shortage impact impact engineering of higher which semiconductor the includes of some prices, purchase $XX half

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

ratio $XX to one net continues the million, prior year cash no year. benefited industry, continued Capital the free versus net and the a balance Adjusted was flow of of an optimized will EBITDA million capital forward. with maturities flow expenditures XX-month implemented Our early higher free last to EBITDA action discipline debt with XXXX. in than the be debt XX% CapEx X.X million and $X last expenditures. of Adjusted drive quarter. to negative were down capital more best from cash until position level of Working going we times, cash the in sheet continue as material first $XXX in outflow our positive quarter a of an improvement for adjusted was

As outflow end inventory this build offsetting in of approximately of beginning we chain million of lower the when were will the supply primarily QX quarter, capital from result this at excluding $XX favorable quarter. industry increase recall, currency XXXX. constraints. the activity related the would a impact the Partially than at you the working which The of negative as benefited Throughout cash the second to impact be of end at working as end levels capital did in XXXX. levels of anticipated the we negatively the may quarter XXXX, unwind was

expansion supply questions. although XX. to to underlying impact leading adjusted page continued on to the in today. and levels, anticipate summary, portfolio tighten QX. will strategy, for for the on Visteon's open time future changes, like execute automotive as in continued flow to to production And for to remain we due as and quarter I well-positioned industry the accelerate company. on continue to well to continue the growth chain the vehicles. strong about while electric second and is now the dynamics your digital, cash focusing that our would growth the free margin we optimistic call we Turning to shift continue your demand side you Thank a these connected product In

Operator

Instructions]. [Operator

is question first with Your Kelley from Jefferies. line the David of

David Kelley

questions. for thanks on Hi. second half guys Good morning headwinds appreciate QX my the taking as the the chain really I supply well. in and commentary

you on X% normalized the XX% ramp in Just throughout how curious of year the thinking growth you to year. your at in market hopefully, as mentioned shift are and target? levels the of light more back Everything about the then to regional the mix least half production over

Sachin Lawande

take to Yes. Jerome then first on it will David, I I and for that will this is Sachin. more pass commentary.

you our had as the product all, a QX in we win driven our by revenues of launches business four continue. cadence quarters. new going First we saw to of And QX, contribution prior had performance, good that's to in have the very high new

but than you at launch driver that's look rest to biggest previous QX in products has and we have total, not the in to also that year, that more If been XX the the continue. new expected of the this our of just performance, And quarters in year. better-than-market scheduled are going

top in over higher on performance we Jerome, on that, also in have partly mix And from as environment the digital it vehicles. us. some higher models, you had to benefit QX market. in content, like of trim why going strong prioritizing our our go OEMs terms would products came reason did the anything And that? that's to as higher add that's to the as growth typically benefit Now of this

Jerome Rouquet

pleased I Yes. am very QX developed. how with

in the from to the think seen way and about an have consistent of year. last think QX is fact I what very QX EBITDA it's standpoint, maybe to we it

Excluding at EBITDA impacts, supply chain are cost X.X%, XX% margin. we

end the on start indeed. very and of it's guidance of line, it's high well good not year, in the a our So if

David Kelley

point, mount on Jerome, bit like pressures could that cost maybe impact color QX. of will sounded before are trajectory sequential follow-up a It if the That's normalizing provide you Great. more about then kind the you the that the of points And helpful. supply basis XXX your Okay. bit of on But in one more year. maybe from chain a last forward? last the headwind QX thinking half how in go commentary, back in

Jerome Rouquet

Yes. Sure.

first. back step maybe me Let

So we an about cost. seeing. about highlighted talked we chain at time we When QX, the numbers. QX. provided we always costs more QX incremental had our are million that's $XX And exactly that it in we full guidance talked would impacting And of supply and year be what

have So of we in very bucket, are large terms in there this what got two items.

first is, smallest item, to logistics costs expedited and one relates costs. The it's the

have we, impacts XX and of impact We to the point COVID semiconductor. including that what the seen some because we in got, talked and numbers. a tensions the QX, supply is at we seen the QX, as basis our that various have And again, This time, that's of you may remember. about continuing chain in have

basis about related freight. the smallest that's bucket expedited points XX to So

buy parts. we high in our the items. The had had this buy to And fact in in quite these call buys. to had find components We that had the that force suppliers, largest lot was successful. extra a and to be and a specific pretty mile go chain again, was we And these semiconductor supply from the were because spot second obviously I The demand think to and buy put beyond QX QX, and distributors. constrained, is to provide category, the we and what of able we task so largely our now which to normal highlighted is we components, back relates brokers guidance we

these spot pretty So buys, that overall between represented points. large. and XXX extra freight was And the basis cost

bulk have in the what of So seen that's QX. we

costs At that as of suppliers. chain and getting in to we material dollars. disappear supply we point, these And bit a increases ease absolute cost QX these think from seeing we lower, the and that we QX, As we in think same then sales about will decrease think to the probably tensions or to a little of bit continue. may I given will see are And most the costs of substantially you be little expecting time resolved. although a terms are quite alluded are level QX

in much getting are accept you We increases of see to from our suppliers. results. pressure cost that And QX don't

And it our to fact, that on on if continues have and will In pushed we quite strongly customers. we if we we pass will so. this continue back able, are But to not side. definitely do

to basis. as try neutral possible an will that as keep We on ongoing

David Kelley

it. Got you. Really helpful. Thank Okay.

Operator

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

Michael Filatov

to my course, and like about ask for pretty that as Thanks new Clearly, slower clusters guys really strong the a looks wins. But business display particularly strong for average a Hi. maybe it SmartCore wins the probably wanted SmartCore, infotainment, just you well. of back in then, looks taking questions. the quarter of I historically. than and little in looks

maintain So I am for think of cadence can just you you kind of new up the you forward in going wins about business you quarter? sort If think curious how picked year? the here the first

Sachin Lawande

of the as the regions, also activity to saw up quite Most activity last of the into I opportunities this which and as that time terms as bookings. new our of But should in very the to from certainly strengthened a well I year compared that people energy taking in supply remainder was chain the thing And lot QX activity North came are bookings a region. is say, this year. good is good despite for would of we And distractions year. the has in first there of the business other, of industry. win going and other Sure. say some America develop bit are

a say, of in I as what clusters, balances I But And see controllers billion, at SmartCore, we the less clear. the or little good would and to in you displays track where the talk quite some it $X rest functionality point cluster is out that was should and look for first mention domain more QX at robust, our We are achieve SmartCore make toward you cockpit quite pipeline SmartCore terms When and BMS $X.X pretty the which we to less As bit. just One SmartCore a on thing weighted of clusters. pipeline. we is, the target a more opportunities noted, the traditional billion of it. integrate of quarter also does the think with at about year. given within for I are year, full

it the yes, cluster And clusters just because cluster standalone the well. the may here as is business. are is only quarters. the that's with on There perhaps SmartCore represent as business more to wins wins that we appear slide So in what lesser the it than prior

we digitalization, controller more, that. to and connected And is their really platform see do software to domain more OEMs forward, our SmartCore with more pushing updates, services over-the-air business and so XXXX, beyond go those infotainment experiences as cockpit And deliver really to customers. I trends a as of more good types Android-based of key expect for even are the

Michael Filatov

Understood. follow-up. Thank you. broader a color open you could more your on market microZone the was wondering general microZone provide little up comments bit I that opportunity if just award And for and guys. you sort in a one of

Sachin Lawande

Right.

vehicles look technologies you are roads the would offering that's term So pretty since in vehicles you which if And larger premium market alternatives. more, pushing available the have of XX-inch used see luxury using But well those that the displays, displays, capability the known. technology. automotive. see now, you for the displays what just to of technology, of be for good OEMs the look vehicles, more as, display on and to today, I mass It's we display past, in a and most level is The at LCD LCD some standard are the display. which of LCD vehicles

quality. for technology been it OLED electronics the comes when higher choice optical display has to Now consumer challenges automotive. of it its But has for

address ability know, that solves the that's cost, really more introduce you at segment. us market And into which the this has, so luxury down as gives going displays to the the to opportunity challenges span, segment And the well. microZone, the many that's as before first premium now these come life segment, with OLED they new segment larger it mass typically of

the in frankly, an And OEMs past. displays, what and display all larger It's with discussions industry. product. microZone is engagements So for unique part a these truly demonstration for which we of really innovative not in us, opening capabilities. Visteon's were, represents the it's of It's

So what represents. very about I excited that am

Michael Filatov

Great. Thank much. very you

Operator

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

Mark Delaney

company my And able guidance the was Yes. much semiconductor in understand some this. its shortages. reconcile guide? helpful. made incremental I more automotive premium company conservatism comments full to more maintain its maintain maybe able year the this help call the original was the this. perhaps full you hoping would And full with us be to But know Or taking is outlook there to some guidance for Visteon incremental vehicles? I being context, year and Thanks the very despite because questions. production any able maintain better mix was of to to The on higher the despite challenges year

Sachin Lawande

Yes.

Let me we had come how with explain up our guidance. try to

a half. as a then XX% guidance recovery followed XXXX, of some as noted, especially our that anticipated had market First XXXX growth, by indicated. assumed in XX% production or half not vehicle of second of we had the supply, all, semiconductor you the the and had for And X% first have lower was analysts for because

that supply limited industry perhaps of not aspect the being Now the by appreciated fully was that time. at rest the of

supply behind we with were quarter we here expected, by But than account stand product. whole largely had impacted the has supply So certainly as we OEM's noted. today first how of does chain, that better like? or so, X% us, as stock demand meet we to able for in the buffer look by QX in about Now on come

am that's Now just the not industry. I talking Visteon whole about alone.

industry, as effectively using, buffer are build we completely stock hands deliver can the customers. that chip to is and to on Now our And every we parts get exhausted. an

had one fire occurred winter Texas a and then what happened the of that the March, for was industry, say facilities to storm I February the took large and of impacting the impact in weeks, the Renesas, anticipated, Now that should to production of which not production supply few and QX in the most. out a chain supplier we the

to when the loss the by Now production. of as will production two suppliers it three have between we impacted mean the will volume account anywhere QX, of additional comes production But that impact. things to to that QX these still been largely compared have that see weeks on recovered

our coming the year. be beginning half did than anticipated. we Now into also seems having from supply we better second of to second And in than are we seeing, at the that, visibility the the suppliers, better half said had

we dynamics, that close we look industry market indicated. X% that still our units outperformance first that, number the have growth we believe the And or And that outlook. of million the at of level. full second and to for So these half, right all top very half XX overall, production and roughly year that's when see how we the come you have the likely on is will between the

in the QX that We that continue have and of rest well as we the to play expect into seen out year.

that all of have we and quite we range expect given come are we that. provided to So our guidance comfortable within that, with

Mark Delaney

you the Thank context. additional there. for details helpful really That's

you. which with earnings second on Could question, on was talk call, you two more the that's you terms the OEM? a able how remember may get then product, my could sort well I a Thank announce customers hoping how you and we And of for when to has so third progressing provide win we were the on going, company. both is of have going be BMS in -- of able kind a I far? that very customer. last of potentially BMS time to line For been an with update any second And

Sachin Lawande

Yes.

business that all, One, happening significant technology. we There very the current So with substantial. there's is launches first a BMS. year, are the happening quite of respect on at that first of launches just which very a activity hand, company have few executing lot this on the to

also so is especially and are in at attention as energy general these had engaging OEMs, for other showcase busy point of EVs that announcement interest that more Europe on in in lot can we opportunities But technology the a OEMs. you this our and of that, in taking imagine previously this of a lot our we to us to creating time. is with top So

some our any to of get take nature it it new space, in does them solution. with case this technology especially is As the amount the of wireless time comfortable, for

of the into course us. those believe so year, that these of And and with be able the some convert of the wins remainder work to will for we we in

well, would terms very of So new of getting say OEMs. especially in in going it's I front

that we I have leaders that very that's else everything say as a travel, we in in et would Given of strong the this cetera, are on, going with position the space. all restrictions and clearly one emerging

Mark Delaney

Thank you.

Sachin Lawande

you. Thank

Operator

is with question the next from of Aileen America. Bank line Your of Smith

Aileen Smith

morning everyone. Good

Sachin Lawande

morning. Good

Aileen Smith

maintained horse going on outlook. dead a drill to am I XXXX a down to probably I wanted bit the but beat

a weaker after of your customers are quarter, little the similarly much of investors pretty night big think major fearful one to a in half back first year. had last a reported I that beat guided the but

has outlook that As implied to is about versus the remainder isolated your February, weaker now the the XQ provided of would year you that Or the than some off lingering the costs pressure of think was outlook third your outlook incrementally impacts expect in beat, like second for as were and now year? you you quarter? earlier that perhaps is are well? or you in the And the beyond anything cautious otherwise fourth a in on shortage there quarter semiconductor commodity more

Sachin Lawande

Yes.

QX had were a quarter. two impact, feel production largely that, that's demand, would we those a plans facilities which significant that We exactly is the to the specific by about In driven I resume the at impacted. say good terms indeed see the Aileen, And suppliers is of that second that incidents challenge. of pretty impacting it semiconductor

already should In they by we before the impact. finish online. were of at production the be back levels time that or fact, they the come the at And have above QX, plants

the the will of by also last start here the QX contribute Now to made end supply in that appear will suppliers investments were year semiconductor go toward back tail that more which QX. and

versus the need feel levels demand is half to that will within half, for to still supply us even the be be make our it there though higher make enough the we at that we look we levels supply, for first guidance. second the when than still So to

do seems is at The much be not environment supply-driven that, customer risk. I very for demand feel of is the exceptionally to the us for year. still the This retail that demand, remainder So a strong.

not can just no see with we And a vehicles, parts, to as OEMs, the be but in produce enough challenges good should we pretty ultimately, our that. So at shape. as respect long we

how that's it. see add? we want So to Jerome,

Jerome Rouquet

Yes. OEMs about were recover. more year little Sachin. the I of the We a ability well. to as the was second half always bit about the add cautious in to Thanks of

that. whereas a think I some we publications recovery, anticipating So were full from far were

did on follows what's it QX. an was standpoint, better us, with little that think bit what I the a the sales really We doing in Sachin EBITDA helps side. on indeed, So going at From moment.

us QX, a about. which challenging then EBITDA. because And of we therefore and have and that at the have been terms will lower definitely of normal run for we to we the We will more rest be talking year, to get more will back sales rate will of range lower the least in resume EBITDA X.X%

our feel and full EBITDA guidance, year sales wise good still we So pretty wise. about

Aileen Smith

market, full very specifically growth XX% for year. to the Great. follow-up commentary. I above X% to And helpful the first versus the around That's question, XX% second wanted in quarter the

within the online we could half And year? of in certainly similar normalizing above back why or quarter and regions, as higher from may to Europe decelerate very in of market into perhaps Or about be for automakers been quarter? in get As continuing there is product would assuming value mix first this persist launches prioritize the favorable what believe levels those regional that growth wouldn't back the and the price something that in as think first conservative regional come and somewhat to at you you leads vehicles it the North we has that you mixed that remain the America half prudent mix year? assume chain doesn't

Sachin Lawande

probably light the a more year. how Yes. And of think there of to that needs will be on detail in which put terms rest might the I question. for great look some XX%, That's discussed that here is like the

comes XX% So from that you made is of look as launches. about at I new that, two-thirds if up, how our mentioned, product

remainder China. launches. actually the The the And within new regional our let's all product so of because cadence growth mix came of between, expect to And to that's the was some that through X% large of we of XX%. remainder QX about strong continue customers. say, a somewhere year for

we our carried relative vehicles world, the in that performance And product. stronger China rest a of the had so had that some customers especially for to

you, for of most And end, vehicles. is China, cockpits mind many of of customers, more represent rest of than digital in does of higher the the product content vehicle opportunity our Now our a the higher world. premium these end the more

will a little that as reverse go Now forward bit. we here,

last year Now China went of the not case did that that they shutdowns on was through special a year. account this occur

then So of second as half, not benefit should of that of of terms some market. the But world. we that we rest a growth be in necessarily tailwind in the see will our the for go forward,

to is would down going normalize it's market, largely new growth launches. to by So say, product our, driven organic I what of our our

Aileen Smith

Okay. Thanks Fantastic. for questions. very, That's very commentaries. taking my helpful

Sachin Lawande

welcome are You

Jerome Rouquet

you Thank

Operator

question is the Rosner next Deutsche Bank. Emmanuel from of with Your line

Emmanuel Rosner

this of Ford's would impact of in focusing most were yesterday Thanks one their industry from morning. this you or idea second have Good additional down Hi. I people obviously hoping second recovery. expected. five the around year-over-year XX%, considerably by half to was taking potential your I because it's than what second specifically production more was put understand to the quarter, communication point zero, worse for which I disruption guess production around is my probably how being questions. on globally conservative IHS on the from the point was final quarter some chip surprising

conservative of of so the the contemplated automakers second being or guidance? restated would in losing there the contemplated would magnitude of almost this already far quarter, risk overall second what you incur that this have quarter? kind production other beside of disruption, Ford in And is half that for your as more that as you And being sort on had year, is specifically is kind

Sachin Lawande

Yes.

So Emmanuel, me let first. that take

of that. for quarter might very from we we visibility and from in to the you OEMS, a quarter, what stand this remainder from result of as demand in the where be able imagine, the perspective supply also good deliver point importantly, as the environment, the fairly but we constraint the So side will this have at

the to But of other said production or initial respect to Ford So to on from also, planned with comment produces. within that are that perspective, it's content having hard what for any not a not because OEM we that, that saying content It's privy OEM their vehicles. all we me Ford is we like because end our the necessarily provide within vehicles their content plans. Ford, might have be higher on typically you, XXX% mind XXX%

expect there helping to some in level the first mix of we is in So had that also is quarter. see we seen quarter That that us. the continue second

knowing supply And we supply on the of so and deliver see could what in saw from much that demand the where based that was out. comfortable we we a with QX year play how the come we feel knowledge much, quite than perspective, rest and higher of

Emmanuel Rosner

guess to helpful And gear Okay. financials. the perspective. very I a That's switching

these sizable quite then and How are when growth you engineering spend sustainable decline had a sales in SG&A. recover in levels further? So

Jerome Rouquet

Yes. morning Thanks. Emmanuel. Good

rate, That's engineering a percentage, sustainable. are, X% engineering. So at about percentage of our for I in as net sales are terms our you look QX SG&A is as that levels really levels run well as of talking if would we say

on have than more in ballpark We kind side. we are numbers That's full year. bit X% talking the the little of SG&A a about the got for mind

it place actions, in shows and year, we what restructuring say to all go And bit But last QX categories. we in if will that up shows it's have QX, I that of little a QX well. put these able generally, as little is as So showing sticking. discipline increase fact would think, in we sales been bit, a well cost it demonstrate, all the is the on I are the

continue we monitor kind are the carefully, we to these go we thinking forward. So of that levels but as are about very

Emmanuel Rosner

good to you. Thank That's Okay. hear.

Sachin Lawande

you. Thank

Operator

Markets. Capital of Your Picariello line next from James is question the with KeyBanc

James Picariello

Good morning Hi. guys.

Sachin Lawande

Good morning.

James Picariello

first just to can production Just lower, you maybe a second up complete sense be noted half on the obviously mention second half for the midpoint But full year backdrop. is framework? within quarter your year which sequentially the makes split given industry you versus full year maybe guide, the reiterated set of your

Sachin Lawande

Yes.

at of will you about, vehicle I if production. So about good context way look to a the talk in That's it. it think

the half supply that you that kind based because guidance given, the look when initial had being estimate that anticipated be the So on first than the of of we at the second higher the had simply was we lower. to half or impact of

stand compared seen first, lower more is weeks we Now to we right, three that two. already probably three week And than our quarter about estimate than a weeks year. second an in closer the this the be two impact in our have with first about where of expect quarter to the of by we that to supply to

of sense kind calendarization of of a gives that that So the you impact.

do will the revenue. the having So of stronger in half to to supply I see our be coming But estimate. as said our clearly, in we weighted half in initial compared second us that, we a as mentioned terms earlier, second more

So hopefully that comes through.

the execute be will feels will point, well within We say, this some modest plan. have If so, to at have But suppliers range for, we towards. on guided how our see well that it some would is that upside. there like potential I we

James Picariello

year really run the maybe captured helpful. you that's during this guide pretty for were basis? then full quarter. in confirm those And should incrementals No, Can savings for the restructuring quarter million? what ratable it. to year this on incremental Got was $XX clearly a relative strong And savings

Jerome Rouquet

Yes.

things. two maybe So

XX%. in First they one, saw QX, we the that are in fact, incremental

and XX%. chain the essentially exactly costs, And supply because had. exclude cost are, they you you controls restructuring it's that If the at have said, even fact, in actions of we as

earlier, saw by that net SG&A was and by reduced and year-over-year XX% Emmanuel XX%. You we engineering have pointing

the to So got we incremental that's What not careful be new really what's showing the rate. margins. this is in that is run

going QX going year-over-year cost early XXXX. comps year, we of are last fact, get into starting tougher in the the in savings pretty as these are year, we implemented As to

savings XXXX, much We rest and discipline. XXXX of had restructuring terms we about million what savings $XX there's are year-over-year. cost is savings very for are in talked of an cost is million In through, of a see restructuring $XX QX absolute what And number we with by which The about restructuring, incremental in line announced. $XX million. to coming we

James Picariello

lot. Thanks a

Sachin Lawande

Thank you.

Operator

of Citi. question Itay Michaeli from the with line is final Your

Itay Michaeli

Great. Thanks. Good morning everybody.

of one you in mix Just just product new engineering how comment of on you new clusters historical the margin just what and the on digital average margins terms to on semiconductor was continue compares excluding the are QX the question can margin to for expansion cost margin, you more if pretty because I robust, issues. in seeing well sequential course was margins the are seeing And that as specifically, launches? company? the as curious

Sachin Lawande

Itay. Hi Yes.

the the are end higher We little of more of a kind expect a continue definitely see the go benefiting quarter on. in do trend true going And to is environment. constrained by in said that that But having the leaning be of product. that mix to the we has that, we bit terms the the been, this of towards believe last as we also that fourth is forward, based general And business way, year. in

norm. new is that too So say the early to whether

how see us it develops. let So

some orient see build will that environment now. in to of expecting the by and all are OEMs We have as to the towards end vehicles they they benefit constrained more know prioritize as higher what we

that so we help, And see. should will but

impact way our see to as and exactly how in We will has wait line. what it and bottom an

Itay Michaeli

That's very helpful. Thank you.

bookings. follow-ups quick two the Just on

for opposed what so the you think, seeing you Sachin, I mentioned, could vehicle are EVs First, an I cluster I one-third for a about was of you your maybe XX% seeing done mid-cycle the were And was think wins for update I in terms quarter, the of EVs. of mid-cycle redesigns? on that also demand from can refreshes in bookings and be clusters. your hoping pipeline? as maybe hoping are to last to what then refresh mix talk you future roughly of customers QX the for were

Sachin Lawande

Yes.

it's last think to So I similar second very half the of year. what saw in we

to of EVs, new a of of all imagine, to across interest respect see So would there's EVs year for the well. you somewhere for in our and we the we With our now be updates business tracking the as year with as full OEMs. seem rest the that lot are XX% to of mid-cycle around board expecting wins

for we the going I see example and What's will about vehicle expect is that new those on great to us a across we as The It's content same beneficial product ICE on talked for Same displays. somewhere ICE that microZone many that SmartCore are that for XX% vehicles so around see would to products, XX% the is thing And to well we our here going display models, of we EVs. as is EVs. won. that really cuts win products launch our that of for EVs. be

And so platform-agnostic terms going or largely of of us larger the that's I powertrain-agnostic, significantly of higher say, making in which and helps in should to are for a these be our number case, because wins to now covering we products it's continue models. some

cost certainly should beneficial. on forward. be into content going those will that's which engineering better and The So margins better, the translate amortized

Itay Michaeli

all helpful. Thank That's you. very

Kris Doyle

the call and call interest of today's Visteon. first everyone, Thank earnings ongoing in this you. our for quarter for participating Thank in And XXXX. concludes you, your

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

Operator

earnings call. quarter XXXX Visteon's concludes This first

You may now disconnect.

Visteon (VC) 2 May 212021 Q1 Earnings call transcript