VC - Earnings call 4 2023 | Visteon Corporation

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Ryan Wentling

Good morning. I'm Ryan Wentling, Vice President of Investor Relations and Treasurer. Welcome to our earnings call for the fourth quarter and full year 2023. Please note, this call is being recorded [Operator Instructions].

Before we begin this morning's call, I'd like to remind you that 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 this to Information Forward-Looking morning. today's entitled materials Investors section for on were posted page the details. Presentation of for refer Please additional call Visteon's website download already investors.visteon.com to the done visit you not material Please have so. if

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

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

to call Now I the will Sachin. turn over

Sachin Lawande

and full XXXX would performance and with delivered summary recoveries. our across to Page call. I customers, for We excellence to sales Ryan, a year chain strengthened start morning, our increased like XXXX, removing In you, on our million XX% the our our team as you outlined good supply and by demonstrated performance long-term when quarter commitment full for X. year of record operations Thank of of impact earnings Thank foundation fourth everyone. growth. joining or base financials. We our metrics $XXX further about a across and our many

operational of year by margin XXX to strong another the sales XX%, year, SmartCore $XXX EBITDA trends delivered to compared of than We billion. The basis full points excellent is electrification, more the well improved digital strong million demand performance. by our than year. Adjusted respond the by XX% than more sales. clusters and $X.XX car growth driven reached as at with our company makers the more Our strong margin a of digitalization BMS as was year over for growth prior product XX% up doubling our prior as up products and sales and of

last XXXX. above year beginning the Adjusted guidance flow in midpoint the and year. cash EBITDA of issued free the of our million came Our in adjusted at $XXX was

flow conversion of adjusted yielded Our year. results for on free has the with cash great focus conversion EBITDA adjusted flow cash to a XX%

very of a vehicle XXXX, We in our on in sales foundation models We number which high performed well the for strengthening coming launched products will growth. in future also drive our growth quarters.

for $X box company, our production. We on $XXX sales won customer sustain into I which to digital the new Jerome on to our X also portfolio our business and as We in midterm cockpit of for delivering capital well record with during will the for for over win product as strong our on the the before as billion performance the it the both will strategy. our and year, logos discuss products. We addition outlook and junction the a provide help repurchased in pages battery subsequent more of balanced shares programs performance of growth details of financials. million these business, XXXX XXXX handing get expanded XXXX allocation XXXX over customer

of sales base its done strategic growth the of job digital the focus great COVID-XX continued industry subsequent a the shortages. of Page from since its the cockpit XX% reflecting by year lows supply This delivered and executing our demand has we our the sales company strong of X. XXXX and objectives our and year-over-year. of and about high to sales over semiconductor XXXX, XXXX, shows of another plan growth The electrification base executing recovery growing $X on years Turning products. In slide the and billion strategic base X our for

some the of growth of about that growth. a sales sales mix strike created in timing a customer our the temporary slower programs pocket have at quarterly UAW by air without roll-off the China us a $XX of been combined follow-on older million. in one-timers that with the quarterly higher points impacted of couple impacted and cost by would negative in our Our the programs ramp-up few QX new our sales and We and of were Detroit growth customers

We the also XXXX accomplishments stage experienced would a of the customer in beyond. XXXX like also more for China sets in and than to in our QX negative the outperformance key rest some mix continued of for year. I highlight that

ramped well the products momentum and the industry. very as solidified digital the continues digital strong share trend category. market leader production SmartCore digitalization in we Our clusters launched infotainment our including this cockpit as in of and to product were recently products, clusters, Sales in as global gain up performed XXXX digital in of position

in of to launch total SmartCore for half domain clusters shipments Just in our unique controllers it our the to to our X OEMs, the new vision our peers. solutions in highly the were of any software the most amongst Sales for cloud compared in will strengthened help coming up industry. We probably digital launches [indiscernible] are X/X and China. customers launching how growth, in U.S. about line X our SmartCore to digital customers, is that system Tier is quarters. We this cluster which position new in new current the cockpit number cockpit considering over the with products continue value by moved X category, of and This in GMC the Ford these brings grow of SmartCore and chain systems. supplier with robust had complex to challenging another this year product

and win are at integrated the and terms in separate developed we in infotainment of latest our avoids future. domain will we advantage a the X that the in-house two-wheeler. for Level a as the monitoring features, which X is ] automotive-specific cockpit software advanced month capabilities the global quarter controller including demonstrates offer Our quarter, need from This the applications. Last first ECUs services the CES, is developing on third the competitive features that which believe at one in additional ADAS cockpit on today. Store be OEM Level driver the a implemented dedicated fourth other camera-based with Visteon first in with driver and of displayed growing electronics view up X case software, followed monitoring, with systems wins [ level App SmartCore Algo integration connected and fully surround next We and

product Our connected XXXX App vehicle in go Store for and apps, added several with other multiple technology popular models launched Amazon that Reliance X we including and compelling with our will OEMs it continues GM a that to electric good and Music mature, makes XXXX. solution Spotify, made progress BMS production in on cockpits. We into [indiscernible]

business offers in our electrification battery junction what cockpit. we smart product power BMS. our very extending the line have to expand This and the beyond consolidate for to electronics first a box, our won milestone for we also portfolio electronics and potential electrification us important a believe done similar Visteon, product We is battery

mentioned I of added customers already, as the demonstrating Lastly, we in success strategy. XXXX, new X our go-to-market

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at the product About different a to digital there growth products of Turning We at on product launched is about around world. across With Visteon. had passenger with XX% launches were X-wheeler for market XXXX continued XX OEMs growth for XXX X. successful models runway launches XX%, year for the clusters. global of of in and vehicle commercial the of plenty still highlighting clusters, penetration the line digital largest Page

other customers BMS in XX%, were other rest and of and which than for the with saw in accounted digital launch cockpit products another in infotainment Asia, as and were remainder the Europe in other SmartCore, were Our perspective, regional higher such products. From launches North model were America. X/X activity About about new half and displays a XXXX regions. our

products for vehicles. and are cockpit digital powertrain Our and clusters, agnostic electric infotainment, digital both suited ICE are well displays SmartCore and

on including with XXXX, sales XX% GM. driver the multiple of electric models were During our our in system of are vehicle These growth BMS at XXXX. main vehicles, launches BMS launches our approximately

planned domain China, display and several for GMC a Now quarter our expect quarters, key the first with source additional represent significant a for controller this with There product like vehicle highlight In we XX-inch growth. a to I our coming models would the launches. launched customer with in to launch future SmartCore customer. we and of this of cockpit Ranger, are fourth Ford this

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in SUVs the market. to top brands is amongst American launched a America. the for content our XX-inch supplier on OEMs, reinforces one cluster Rogue and continue key North we which the Nissan deliver North on to of be best-selling in to Lastly, the This represents Japanese market value a selling ability digital the

Turning to Page X.

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few side we a our wins On fourth the highlight for during the X had the quarter. right fourth system. Android-based wins for upgraded We infotainment quarter of significant the key page,

connected that mid apps and voice use surround assistant, and domain of camera-based SmartCore, cost-effective view valued smartphone features cockpit of high-volume more need with end as the rear the such updates. highly and solutions Mass-market software Auto are vehicles like projection offer great language and Android over-the-air for with that natural While also high-performance controllers silicon upper system, market. and CarPlay choice

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to this Visteon. share to like On for for our Turning would industry the X. I XXXX page, and Page outlook

sales with year outperformance. market another a of strong anticipating double-digit are XXXX growth company for in We the

XXXX expecting compared vehicle slightly largely line are forecast of with Global's S&P XXXX. to global We production down in to January be as

down nonrecurrence to Europe perspective, production at in higher China. to slightly regional decline customer expected strike, is while America, modestly due largely it's vehicle to expected X% in Our customers' negative production to of vehicle be the more North is be a slightly and about expected year-over-year. From UAW

has more electric challenging production over year. Forecasting vehicle past become the much

than for already vehicles in EV forecast line GM S&P this well with XXXX. EV with BMS year X Global. In OEMs our in GM, production we BMS have should with drive with products addition the that a other launches vehicle Nevertheless, more conservative several more launches new outlook additional our sales launched is and to higher considers customer with as as

to supply Turning chain. the

environment We a this improved expect much for year. semiconductors

for customers. need and lower our a forecast we result, a As market resulting purchases open from recoveries

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low XX% XX% anticipating digits range. year, For over a the growth we in are double the market full of to

to Turning Page X.

execute market beyond we strategic to our our Looking plan. expect XXXX, we growth as outperformance continue

We of the operational and Visteon's in electrification growing the strong electronics supported fundamental fast-growing of and targeting digitalization created domains cash changing have and our an the industry-leading manner. portfolio, suited of attractive returns very advantage industry cockpit megatrends proven and X commercial by multiyear the growth electric powertrain. means and electronics, take a comes profile automotive excellence that that growth this with opportunities an by flow capabilities is generation. is And that's software in automotive well the product to

early over representing and annually of have over when double-digit sales billion $X targeting X-year quarters. gave not the of few outlook through cockpit business supply we drivers are We our changed strong our dynamics increase we fundamentals some The for billion BMS over market when of in been growth remain $X.X the changed impact have our of the the market Day. past midterm recoveries Investor XXXX. That's removing period. and What The chain low XXXX an in and that from has are XXXX highlighting substantially digital main remain growth on products.

sales As right $X.X you can primary reduction factors X the our of see page, compared the billion are of on the target. original driving bottom to there

XXXX. customers production for First, about to forecast the from forecast the been XXXX reduced compared by X% vehicle our has early

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summary, company XX%, sales well of The EBITDA over XX%. X. growth higher production. resulted the and performed in delivered market to successful on Page In a strong execute growth very and base commercial plans, We of a continued very driven which margin Turning XXXX. and our industry by strong team operational to adjusted had

business. future for billion $X.X We products launching continue to by winning XXX momentum new build growth and in new

we our $XXX to Finally, million capital commitment with return of executed to repurchases. shareholders share on

Now I presentation the will Jerome. turn over to

Jerome Rouquet

set good year X% in you, Thank Sachin, results impact chain comparable. of and of the quarter of excluding execution. million. morning, operational difficult another quarter, everyone. Visteon posted prior sales a demonstrating against commercial $XXX QX solid fourth recoveries, When base grew supply and robust were the sales a

We program. Several the for Our we base BMS were Sachin roll-ons impacted factors domain the by in of sales. the performance our the sales and $XX mentioned strike. new fourth earlier slower demand strong UAW roll-offs experienced was see ramp-up cockpit customer as as by to from the displays our timing continue digital controllers, We well and by of million sales supported approximately ramp clusters, quarter on. of lost ongoing impacted

these headwinds transitory. Consistent to year, We of be X the expect we China. first to in experience largely quarters customer with mix continue headwinds the

recoveries reduced to to of has continue were $XX the of the XXXX. We XXXX market on compared open of purchases in trend XXXX, continue second significantly supply year-over-year. to situation these the this related minimal expect in market and fourth result This to and recoveries purchases in been million by half chain as to mostly increase exposure our we has reliance improved declined Open Supply ease semiconductor last OEMs. The our domestic roughly year. expect we quarter

pricing with nonrecurrence bucketed offset as in engineering and improvement reminder, million onetime but million by operational margin partially engineering recoveries, mostly benefited good quarter the was an Adjusted headwind exchange. the although sales controls, of timing a for the year. increasing year. $XXX for lower neutral was foreign cost are recoveries EBITDA adjusted the As EBITDA, manufacturing efficiencies of spending pass-through as result of combined prior expense nature, from of and as from diluted the well the program from prior versus spending, customer percentages. Adjusted $XX the in EBITDA project improvements quarter, the a Lower

EBITDA XX.X%, foreign for excluding of roughly adjusted quarter. effect the million margin more a exchange, normalized $XX was Our flow run adjusting and but was rate cash free the [indiscernible] our XX%. Adjusted was in

and repurchases $XXX result Our $XXX million and flow ended capital. in of cash EBITDA adjusted Share strong a and We million. position neutral free performance of million working and full $XXX adjusted the the a were million year. the quarter was for quarter trade the total fourth of cash cash with other net $XX higher

reflects Turning of prior excludes of Visteon we our continue Sales sales $X.XX $XXX We of sales base leveraging illustrated to SG&A. are adjusted to an product year-over-year growth. cost to and $XX engineering year during the The margin $XXX Base $XXX and billion, what technology XX% in generation. million proud an to impressive $XXX or robust EBITDA engineering in the which from for as meaningful XXXX. compared was and invest The driven $X.XX sales, production. team recoveries. Adjusted supply recoveries, or associated Page increase XX% EBITDA primarily boxes growth, million operational year-over-year customer in in XX. year. market was increase in support flow to improvement I efficient increase in on million. increases million in semiconductor a was dotted year-over-year. of Net totaled modest in the million the which $XX future an growth in approximately increase Customer impact of reduction were strong year, the the sales billion. launches recoveries the roughly the achieve with significant delivered higher while base reflects decline and notably by The million recoveries initiatives, industry strong higher record am able expansion increased chain cash were

As sales, to $XX basis increased as slightly a X.X%. increased percentage sales, and to XXX Adjusted remained million of net in improvement year-over-year year-over-year. point a EBITDA Adjusted SG&A of flat at XX% XXXX, a percentage improved X.X%. engineering margin

wanted on the return our slide, I not invested on While highlight capital. to

substantial largely in as years view increasingly tax-effected was This over XXXX. in adjusted in base. Visteon supports in modest adjusted our Our and driven been in EBIT by capital calculated XX% leases EBITDA return an opportunity. and has increases ROIC invested equity, The metric improvement by our debt is that past improvement compelling investment our

Turning XX. balance Starting We cash and Page with to $XXX sheet. a the the position of $XXX a million with net cash position ended of million. total year

repurchase share at million $XXX million We repurchases have share. a of an near-term a of material We authorization. to announced repaid $XXX $XX This conjunction of attractive our approximately we result no and fourth amortization XXXX our debt our In XXXX average million. with an the brought approximately year interest Investor rate repurchased full we million in March shares as current Day, $XX price for X.X%. per maturities quarter, $XXX.XX quarterly payments. In

We return to share will in to continue to be opportunistic order in shareholders. our repurchases capital

higher million our generated the the to were free related prior income trade year our now in item stabilization capital quarter than like increasing We to year. Related profitability EPS. explain I in flow. due period. of of to the related a against working the increased XXXX. cash some in year change the impacted partially the chain The balances. is and U.S. would higher and expenditures. our offset a primarily but allowance briefly on EBITDA profitability our related other of $XX our and to tax supply and inventory Primarily flow due that allowance a valuation U.S., in year-over-year, outflow result and $XXX cash a valuation significant in payments taxes build, income primarily prior reduction improvement capital in to to in million the prior Cash adjusted cash share no adjusted to result working cash deferred assets. declined as higher capital and improvement net and as fourth per noncash of in the year, taxes we net the by both Turning lower had The jurisdictions, to to of compared current million impact earnings had in tax benefit taxes, the This our for a cash, $XXX improved higher

the the million were allowance change and business our X.X% any of our health not electrification. payments profile by was of we positive sign of low valuation cash increased manufacturing or reflecting higher remained to CapEx rates. tax do result from a and ongoing sales, income expect in our interest as this investments offset While go-forward $XXX of reduction. Interest

cash flow We have years. in generation increased steadily recent free our

in conversion medium-term targets. in was XXXX with ratio XX% Our line is and our

due increase to Our the improved has taxes, management working cash diligent cash and performance adjusted in other capital, like trade of been EBITDA largely interest items and cash CapEx.

that consistent including elements capital debt-like robust and our attributes. flow into has structure generation, flow We cash have years, years business for continue both successfully generator, come to and CapEx structural team few just expect this our Visteon support limited a the a capital, across to a working transformed In grows. as we and intensity substantial cash capital tax

Turning to Page XX.

X% guidance at increase our $X.X sales to XXXX, in an $X the is midpoint billion, sales. represents range for which base billion For

assumed anticipated be market X%, in the growth while we have range XX% customer is Visteon midpoint, the by to on Focusing of production approximately of declined XX%. to the

level recoveries offset between efficiencies, pricing an of margin increase and spend. $XXX partially EBITDA side, to primarily base is commercial downs. further engineering The standard the we're million, lower a the in of EBITDA strong higher continued midpoint. be in is net year-over-year $XXX assuming performance increase year-over-year the adjusted by customer sales, representing operating result and On of EBITDA some addition XX.X% Adjusted at headwind in to customer adjusted price from expected million

million range and net teams range the to million, at percentage Adjusted the in which, XX% flow flow. be a anticipate of growth. $XXX as conversion we invest sales, XXXX continue future cash mid-X% EBITDA As between of to in of $XXX to free we in mid-X% support is the expected midpoint, adjusted cash be a technology adjusted in and into SG&A to our engineering free be to is to

finally, expect be Despite will CapEx CapEx range. And as continued we growth. even million to approximately quarterly for XXXX future over not investments, followed are though growth. our as up the we of expect forecasted sales a a low mid-X% outflow the our $XXX and course providing working result of year, these quarter lower the expect We percentage a in sales to saw as to we is similar invest modest sequentially the for point our of EBITDA capital guidance, be year represent in of be first the by what to of a progressive ramp we remain and we XXXX.

to XX. Turning Page

that Looking long XXXX noted term, increase base of sales over This as at targets between billion. profile double-digit is for sales our earlier. is expectations business $X.X outlined $X and this attractive our and the an billion reflects and current market for growth market in XXXX, dynamics Sachin earlier, of Overall, an on an with low is basis. our annual Sachin the XXXX growth

from a adjusted ongoing XX% $XXX In represents manufacturing, engineering this over cost CAGR business the and as XXXX, target dollar EBITDA of of in to as basis growth the be point is adjusted margin increase Our is margin driven by well This increase XXX a leveraging expected which the XX.X%, XXXX. million is of across the our period. in approximately fixed terms, EBITDA SG&A.

what XX% over team of flow convert to cash proud has expect the very few years. free to We in to XXXX. I'm adjusted of accomplish EBITDA XX% been past adjusted the to able

our increased sales $X have billion compared to We XXXX. by

high for have same new cash We're plan the When strengthening compared profitably significant level to in grown at flow. wins, business growth on investment and our substantial the nearly of years, generating and record in to sales, continued through deliver next has in have I'm XXXX, EBITDA EBITDA growth We our for excited period. been adjusted people. free cash foundation product launches our flow few and our we I doubled, look future

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

for expansion company the cash positioned margin growth, top flow have free generation. We line and

commercial We on open for have profile have to Thank and time an your this a call now exciting would the today. I discipline demonstrated and deliver focus strong growth for profitably. growth to you questions. your like operational

Operator

[Operator will question our from Instructions] with take Spak Joe UBS. We first

Joseph Spak

Maybe on 'XX. just the a couple to revised start,

commentary from management's was own you EV I taking were programs, think of prior guys your making for targets you assessment. you sort necessarily that some the weren't of

even obviously, revised of a can drastically -- targets? world comments, changed Now type maybe those little the top provide more of but planning sort as what since has the sort of into line bit color XXXX you how went to

Sachin Lawande

I'll Sure, that, Joe. take

all, is the first not X the EV BMS So are or it's of all There that actually driving production reduction. really factors.

BMS. last has production impacted digital The is customer And first second specifically one reduction. about China, outlook the lower overall say, both would and I customers. our products cockpit through contributing, XXXX lower again, is vehicle say actually would all and our as is us say, well the mix half as would production of for that EV in the that I I driver which And in QX. the And affects the driver more, is

continue be through to a XXXX. and mix little still but this moderate headwind forward going expect a bit We to

our in for line models production as the now their the Global, lower S&P I been revenues, you with say not conservative for and has outlooks volume are projection those vehicle shared come at if BMS-related that customers. XXXX per a just by our expectations Now significantly example. specific being little look more with would in volume from than down we us the that XXXX. from are But our has more expectations earlier

the two, in is would EV China. at and sales customer lower and So our really I production. more say us [indiscernible] reduction production then X affecting afoot factors, in a right? customers our BMS mix Overall, that Number

each that sales a said having our new those product level XXXX base target our sales. expecting to all at And would that compared X have this we of for means years to grow. we're -- grow double-digit Now still of X lines that, low as

Joseph Spak

as of follow But growth it relatively I assuming, you're pass low Okay. across comparison. our the of seeing flattish just a market, like environment, the double-digit But control we're you and relative you negative then mentioned. And sort that -- to some of growth on supply that, over I'll maybe this on. part like that base, and to with guess, mix, market, can't

what organic single possible. some rate and know some like on still Now counting where But going organic would a that that grow share you double-digit your worse of mix. sort exposure clearly is that you obviously, content sounds digit, don't like little look if customers what you sort like like high it customers of of that if -- -- you now based have for of translates negative of be loss to and bit and is might your at some even relatively over say still your some growth of understanding on growth won you're steadier. the But for have to growth you market low faster, a this those

Sachin Lawande

thing our first are customers already OEMs would we expect this is not The whom I faster factored are with have in would some don't on as but have concerned. the that going business like in customers we EVs EVs with don't Joe, grow that far than time as customers period say, we of you especially that have, to

assumptions certainly are that EV about. into you production dynamic So taking talked already this account vehicle our

XXXX year and can right? year, would more that been overall our being production full to are what terms exposure that market in because able it a that we is the way understand transpired not suppressed. in, at looking us, to, on that. are XXXX obviously, a last customers, it to But of necessarily is For our year be at. With we what Now has that say and we passed faster we away I we been what beginning vehicles control largely have those specifically last have likely BMS that even don't year gave far to can we've grow expected has guidance, volumes going when the sales has of the since except don't more

than a in has XXXX So been delay. the like expected. we ramp-up year slower almost It's

look we so in would XXXX look like other to terms And thought of expecting are what BMS in more we like words. sales XXXX

we reasonable that to would that of get a to have where level what and to should assumption But accomplish. believe in be our a targets. be our to is customers able our there we ramp-up 'XX, has for production and us and set terms 'XX to are certain that of in assumption those to pass Now have able I of come

Joseph Spak

may when just your share. like exposure guess negative That the your I slightly for the I for. the But factored so don't or into lose programs comments. to of you rephrase are volume those that expectation also have for customers you mix appreciate on, question, maybe faster growing customers some you with that -- say

Sachin Lawande

Absolutely.

Operator

take question Michaeli next with Itay We'll Citi. our from

Justin Barell

This Justin for is Itay. Great.

Slide maybe a So on XX. one quick

you what assuming You're let maybe the providing overview, high-level what the 'XX recovery I us maybe Can there. in guide you're in guess, and implied giving 'XX for are the know of and then base as that's of bucket kind recoveries that the well?

Jerome Rouquet

step It's a Maybe on let bit Yes. little that. Jerome, recovery. me I'll take back

our XXXX open last therefore, that's and So and generally, largely declined we over have have quarters because seen as declined, have associated down market purchases recoveries recoveries well. coming the of few the

$XXX XXXX, close In So recovered, in open we to XXXX. have were including recoveries. purchases we'll million we you EUR million to if recovered market -- XXX recall, close of

it surcharges. again mix coming fairly on. which 'XX into have We we go to impact purchases. There the positive that open see a is as therefore, market that by And XXXX. in we we some is the rolling into factor it that driven impacting positive some as substantial than rolling go that And most as off is us a now positive programs So of play are is programs second a reduction. into have fact more we relates burden way,

XXXX, going that less $XXX So bit we lead is than And recoveries. us because same down million also which for in 'XX of XXXX, for cost And March contemplate then to is little to reductions the into of see as from we've $XXX XXXX. a them assumptions the back we it plan X as a kept and had coming well our suppliers of million.

the levels from had way ] in that we reduction [ to slow very a million down the in all high So XXXX. 'XX, $XXX

Justin Barell

maybe target percentage have already or us out then help sticking do And of you maybe... helpful. terms the if you 'XX, Super booked Perfect. to can sales of in

Sachin Lawande

about Yes. a it. talk We can little

booked. to at targets look that the need we sales when of typically, So be

changes And And the expectations, they in would extensions hybrid our a of range we term be have model between I we exceeded you and XX% wins go-to-market. EV years that happened initial helping. And business will of would pretty we program of some that helpful for as X XXXX. know, to level the good to account which by are say customers, in had a We sales as out. some their of the going our these to XX% that need vehicles some are robust extended near also with that ICE as new within XXXX and be rethink portfolio also of is which EVs have see on that we believe

Operator

And take Barclays. next Levy with will Dan our question from we

Dan Levy

about I margins. First, a the ask wanted to question

weighed So by fourth quarter, the was That you down strike. did XX.X%.

from the you what are to an maybe I could of you from us true quarter bridge, run make was basically fourth too not which recognize a for XX%? some or of did representative closer bridge said XXXX. extrapolate run that necessarily you XXXX, the midpoint think guiding X that the the You're to in rate we I a Perhaps XX.X% XX.X% much the shouldn't XQ give quarter, to rate, offsets but

Jerome Rouquet

Thanks, Yes. Dan.

normalize margin for to our earnings. that as And done try always we few So I've last report quarters. EBITDA now we the

positively because items or EBITDA negatively. or exceptional they anomalies Just are impacting

QX. as that in engineering amount that for in XX.X%, And from And traditional, essentially were fact low surprised specifically, bit probably to fairly had say. you I book able came a had we We improved of recoveries mentioned. So we spend the QX, of for we by little that pretty was or QX were our but the a that most QX. EBITDA would it's

and take QX, out normalized when had you maybe our is XX%, out level that take So in EBITDA to closer that as some effects slightly negative of well, higher. we

below run the well of rate with as billion. level $X kind a slightly that's sales So

an get we've next we'll Most basis that come improvement. the go we as in XX going into got additional to point XXXX. year, from So of sales is the improvement

a you the level growing if XX% are recoveries. X% We of face and at value exclude at

will that's through flow fairly EBITDA. that significant improvement So a

let's to from engineering and in good we've that's I EBITDA we've a to G&A, terms, continuing of as going increasing last or terms been to partial kind got are, into in of the and got as flattish dollar an are quarters. And say, say well offset which of 'XX. a -- finally, We our the by offset for percentage, but that coming level seeing that And see efficiencies. operational then offset now fairly few

generally, we I to think pretty say or running may we've would we guidance the to curve of We XX%. guidance ahead remember the finished original year I that our XXXX. been guided had that at EBITDA, ahead you well and midpoint of the our in of and XX.X% -- closer

it into comfortable XX.X% next that kind year. And going of helps So we with pretty the therefore, we got. feel

Dan Levy

that. Great. I'll just -- follow-up but a then a on second And question.

follow-up the the maybe could about environment are you what about the some maybe for as uptake on on just of is recoveries, products platforms of automakers reduced just neutral, of BMS, we've it's is talk And net EVs. heard question delaying second ICE decline comment my you then extension within Just ex EBITDA recoveries reduced if is could the it's the impact cost?

premium generally the are we the of know think I trend content. that more EVs adopting there's

or slower extent still platforms? intact outlook are EV So extension some other to what does the what your like controllers contemplate uptake? of extent To products the maybe despite domain XXXX digital clusters

Jerome Rouquet

to first and the question the take will I second Sachin. give

very of terms in point. that's recovery, a good So

as And market fact, that the XXXX this in so on cases to reason are way negative I Generally, And [indiscernible]. way. 'XX purchases, us are the the to as positive recover open fact in we we're all we not it's associated going assuming well some that gave reduction therefore, any reasons neutral. In X the recoveries in largely the recoveries the matching fact to a in P&L because favorable is a reduction XXXX. have in less decrease earlier seeing we we second mix in for buy the impact therefore, well the going are less, are impacting are and

side go 'XX. there we So no into virtually as impact on is that P&L

on We an has obviously pricing, not impact normally the like give recoveries have in our assumed a se. That of normal but customers. level P&L, we reduction to per

Sachin Lawande

content on the near are perhaps have are which growth, as of content this a that's down on way. not products are is sorry, of launched from to in are already perhaps as EVs the vehicles, slow Regarding ICE that good benefit advantage restricted we and models. And grow take and just of increase full to topic to programs very extremely going our that, right? introduction or well term seeing electric we -- the their engineered digital portfolio the the in many of to a the hybrid that We expected positioned extension new cockpit of by

increase been, increase have the XX couple happening the are in the industry. growth XXXX, quarters cockpit look of digital, driver right? represented. One clusters is we ICE of were compared largely is content, had on major growth. half in data consecutive growth right? seeing clusters customers, driven if We even with are the digital We by over you cockpit general a content market, at last vehicles. If has about extremely at for that market, look our shipments of the in where XX% of a the of that ICE/hybrid our roughly XX%, to well and mostly you point our on vehicles, all years, our

and those lot about that further answer not so are factored -- we extensions that some more are I formal the 'XX programs in we So the content of we And of has extensions. of in. think where confirmation will we and have do about ahead And there accounted have have potential those for, say would once we customers there's only that happening, know factored is with for terms digital our there already guidance, in general. question how a into much few runway growth our I your a been to

content I because majority EVs net would today the ICE is for positive competitive. remain is revenue are have these grow to expected if a So to us and kind say vehicles of that that's our on depressed, of slightly on

Operator

Baird. we Luke And will Junk our from with take next question

Luke Junk

volumes you market start, highlighted we growth Within the year, on touch XXXX here. incrementally you mix to in that, Slide aggregate as just approach could this both to and to well that, launches China drivers over BMS want impacts And X, as then to XXXX 'XX within forecasting To [indiscernible] could better year. in exiting view just of electronic you could terms in your I understand hoping maybe if specifically. this EV I'm -- moderating the

Sachin Lawande

sure, Yes, Luke.

to customers expect so vehicle Visteon a say we said on production is to some in saw what headwind, in would largely, in And will 'XX. Slide continue for mix again occur customer to X, From viewpoint, but compared as see also and it that China. I expect to reiterate we we expectations moderation to And face XXXX. as 'XX, we like negative a our moderate what to we have will

as ramp contributing into of drivers up well As we over our is that driver I XXXX, continuing see be towards at the we growth launched to less nonrecurrence then the one, X% of major growth slide end started the said, high of on identified still to that's market, sales, of as X% XXXX of the continues look products the negative have were the right, of through market. The of which the you our grow. XXXX, their ramp of start about BMS production, that's as of to XXXX. up so. And I And this over in of which which third the the we #X in to growth but new And mentioned number in as market. delayed first driver them major all sort to one-timers they terms

growth We continue into that of to expect XXXX.

X in on, also I planned are so launched vehicles more have about already say, GM would far and with XXXX. We

with first whom with our we In addition be launches will year. having X BMS that, our additional are we business to diversifying OEMs this

still growth. And a I XXXX, to is going would strong the though it strong for driver expectations GOM. growth XX% earlier even BMS our beginning be than there's of a is us, XX% So say to lower in

to factors, the about you growth rest launches. model includes BMS other launches and the nonrecurrence If X although X% for model timers, BMS, of the the split the between also X is new think X% the of new

Luke Junk

]. the Obviously, existing helpful grappling of was [ to of then we And year That just it. the extensions ICE you maybe on terms hybrid dynamics OEMs go into could the of beginning in thinking evolving some around session with comment hoping follow-up, environment about Got and mentioned you EV here. the award as platforms. for things my

starting point could the this hoping And put number good you is good, [ year plus of be for that point on a awards. a we in a means finer still number should Just bad billion what ]? or of otherwise $X kind

Sachin Lawande

portfolio Yes, Luke, about think absolutely. you if And if earlier, our I've with and to to made you product it. back the what go additions said we have

is the have market expanded us. available that continuously We to

so XXXX, what as to cockpit expect new would well business we we to And say, line of similar, and product would opportunities well. had I in of there the the I terms is digital robust, perform us itself, pipeline that for see pretty

is vehicles. from the seeing market that viewpoint and we're Android more infotainment that the a services vision particular, a with together, coming market, are in changes of upper mass connected things now ] but the all the of services [ going and of just is technology at lot into through end that One not going

opportunities very of So pipeline strong there.

last that repeat comes of we we electrification, extension our it discussed, when power BMS, have year year this into well. have other we as as and we an a as Now win to we beyond expanded electronics. And hope with product customers that line the well had

that a performance pretty we this have last similar saying year that year. new would would would we I from feel year comfortable say business as a So win

Operator

next of question Bank America. our Babcock take from will we with John And

John Babcock

higher I over on that guys And as into more -- vehicles And how just guess I'm demand a this to as you're technology as quickly vehicles. used starting then carry for vehicles? provide starting I has mean, pertains how of much it just to and this curious, follow-up I kind those been ed market how talking a to the much kind to that. you're of OEMs, And of much down obviously, have might see lot content mass out, and content you in what time? of curious I'm

Sachin Lawande

the growing successor were lot think are opportunities clusters follow-on of market at if our coming market adding look of targets. coming more all new wins terms vehicles, Great The segment. The see content vehicles. we typically market for the market has digital question. And the already. in cockpit not especially if the which are But in the at mass infotainment, a upper and these you the is you And and Yes. of right. end opportunities. segment content, C mass would past products more B now that's opportunities, the these either

downloadable talk Now And the trend, And services larger about Number displays, more fundamentally OTA. talk that? more connected that that, brings about what's is right? within digitalization requires in and that driving we infotainment electronics. one apps, capable content

to business cutting drive It expect whether see an powertrain the is somewhat opportunities or powertrain. is we irrespective -- continue ICE trend is that a across or as small of forward. so go it continue EV the a trend hybrid, we And this and will to our

Jeffrey Osborne

here. to then way carried to how just quick cost needs And frame market Okay. be much ultimately segment? that come a for follow-up there a to mass Is the into down

Sachin Lawande

wins, have with X are both in wins about I call, infotainment that talked are this demonstrated, fact, segment. the we think market we those mass X on for as

the with as systems of the to very affordable the semiconductor market. base now is is to that of So base, it that as well done display we the good supply the cost -- working the work Visteon drive in segment supply has for where

Okay.

result believe, the a a integration, putting displays we hardware we at that that the as and points have software to done, integration that, affordable. technologies, very a competitive offer us are vertical in is we products And platforms, have manufacturing for of set of good so especially position price

we taking go of see that the So forward. not a more as it do industry we hurdle for as

Operator

We Colin Fargo. will with Langan Wells question take from our next

Colin Langan

want and I the just sorry, I to Just takes the recap, year. get sure in just to make puts

on imply it -- was look XX% normalization million, then be about flat. in those know takes conversion should the Is is EBIT going ratios right? continuing on like if other $XXX $XXX semi then sales and impact of more $XX so year? but thinking and about the It we we that Is there a also into still headwind be like as million puts that And recall was a Or increase a the that of there up million, we to So recoveries. thinking Any go I of of help? EBIT. that that would exclude mentioned sort looks that QX, you next And Is help. conversion? some impact. R&D up. about in SG&A is lower

Jerome Rouquet

Yes. Yes. Colin, it's Jerome.

back by So -- you're once additional out at value right. the are The you're of sales down, I But in our the coming -- low the $XXX million just recoveries, below increased, of X% you which face year-over-year. sales. impact think,

-- contributing in to that's So and terms EBITDA. obviously

a originally So finished in going forecasting bit engineering of for terms have year-over-year. being of than had year up sales, expected. We've We we are other with factors, little XXXX at mid-X%. a we X.X% lower we engineering the what were and do

in but well, given dollar obviously, percentage, as in percentage increase slight increase a the as the well term -- increase sales an So as increase.

be we be will we dollar that's percentage So continuing done will the in fairly in negative but a year, SG&A slight into next engineering again, obviously last go invest we've but are as increase years. to in it in flat a terms. few as

normal You pricing been deliver as well, over to able in accounted we've All will negative puts give other well we continue customers. efficiencies the that is effects that few years And this slight last have then to our by takes terms then for. as operational to we've that and deliver offset of and in XXXX.

another next about with at And going in I'm high very that's incrementals that's single the all it the incrementals. the to look way consistent few digits, kind got as been double -- in progressing into sales last that's the XXXX. we've base overall, sorry, we've have of Maybe years. of way digits So year. way to And we well on going

Colin Langan

effects? mentioned referring negative you What to You the there, negative? are

Jerome Rouquet

negative into assumptions made [ do EBITDA. the going FX bit we ] We well have as for on do a sales little XXXX have of currency. little a of of some and Yes, with a bit we've --

Colin Langan

a question. quick Just

I tax should right mentioned start kind that's tax tax you place asset are why a What XX%. you're paying thinking I [indiscernible] of the change bit. like mean, rates usually, You Is doesn't your releasing a the we range? backing that when XX%, low for it into changed. kind And wasn't if of higher? be deferred

Jerome Rouquet

good question. Yes. No, it's a

in QX So with we've our valuation in million. allowance to $XXX of a the tune had large one-timer release the U.S.

a tax So that's noncash really item.

generally, look I a very our is There is think proxy the standpoint, will our is expense. over seen good variability, takeaway cash some mid-XXs. think as we've if said. in as in we than time from into And what ETR. a for obviously you key prior on taxes can tax mid-XX go I well cash similar the that ETR But 'XX profile a you as converge count tax as towards our income our years. Generally,

you So to be to XXXX. good I a taxes cash for proxy think evaluate are what going need that's if

Operator

take our next We Sachs. with question from will Goldman Delaney Mark

Mark Delaney

the more with Visteon your And of OEMs? you Chinese an remain comment is somewhat positioned Chinese OEMs? improve do with domestic to how expects to domestic on customer auto the company The opportunity see exposure you headwind. Can a

Sachin Lawande

with wild been question, be out a fighting OEMs it to in very lot And set good the going there of believe In might Mark. that there level caught customers. you expect sustainable. share. of that to We market environment. call be for long a the not is -- what important consolidate. a of has happening OEMs bit in to and wrong little China, us the of And what's very be west know, of type Yes. environment as market for A prove the number to That's what ultimately, an we it's not some of in this that do run, might

thing. that's So one

also the is even of ] and shift now the have a [ That long ago, mix too and It's JV XXXX more previously used be touched well. to between in mix roughly we way in having XX:XX Now pronounced as was favor that domestic it OEMs. other that, there domestic said about not upon OEMs around.

So others. we like that our that Ford. the domestic longer-term [indiscernible] launch OEMs by GMC growing believe we a addressing We And been have OEMs. and with domestic talked business about play with have with

a set We have of excited and very them. are content about we for are planned that the launch. with And very vehicles potential good

taking So grow falling perhaps very our necessarily OEMs some of we the exposure into domestic measured are the to to steps without pitfalls.

QX but believe profitability desire. we what still position improve saw in navigate very So far, will with in those which we -- mix that interim, waters be negative, it negative has will the some see will out worked growth the mix are well. In we from and we dynamic, we good deliver to a

Mark Delaney

mix instead your electronics of than anticipate EVs, sell EVs? currently faster hybrids own you do away OEM revenue or the electronics customers next vehicles -- might think ICE do was you -- XXXX programs? revenue question agnostic similar onto ship you ICE your if And hybrid new give if percent of from can to My you'd be and those What digital to and with [indiscernible] EV is sense you your coming regards of digital customers forecast. how us a from

Sachin Lawande

Yes. Yes.

our total already, a And line over portion earlier small in mentioned market. on of that sales single EVs, the in I our was And As sales only of we growing came right? XXXX, from been XX% have of with BMS. with our EVs just digits customers low

are we with So China. positioned outside well to EVs today to respect exposure the

China and grow with we But new in are As our very well outside EV outside launch of models. I to mentioned, expect China is of customers market different we as positioned, somewhat China, the that regard.

incremental grow our to will a are Now also that this that's production I with the new to and BMS the to which business. that, net revenue us. GM of see and of BMS OEMs acceleration with going addition ramp-up to added we see models And in revenues with X this year, mentioned them will that are year, we further other launches our diversify faster launching

to the So XXXX, we on parts BMS sort assumed a we have growth our similar which account customers will launches Europe in is the the business. follow of have one what that and EVs that outside of then exposure Americas. of largely fastest-growing with is of of And

Ryan Wentling

earnings for you, results. in year and Thank Thank and Visteon. call for quarter the fourth full everyone, interest XXXX our your participating concludes call in today's This ongoing you.

Operator

Results Call. Earnings gentlemen, Fourth XXXX And concludes and Year Full and this Visteon's Quarter ladies

may now You disconnect.

Visteon (VC) 20 Feb 242023 Q4 Earnings call transcript