- Solid financial performance
- Sales of $2.0 billion
- Adjusted EBITDA of $189 million; net income of $50 million
- Electronics & Corporate adjusted EBITDA of $84 million
- Cash from operations of $173 million
- Increased full-year 2015 guidance for Electronics and Corporate adjusted EBITDA and adjusted free cash flow
- Reflects improved performance partially offset by unfavorable currency
- Sale of ownership interest in Halla Visteon Climate Control expected by end of second quarter, sharpening focus on high-growth cockpit electronics business
Visteon Corporation (NYSE: VC) today announced first-quarter 2015 results, reporting sales of $2.03 billion and net income attributable to Visteon of $50 million, or $1.10 per diluted share. Adjusted EBITDA, a non-GAAP financial measure as defined below, was $189 million, compared with $161 million in the same period last year.
"We achieved strong quarterly adjusted EBITDA on the fundamental strength of our cockpit electronics businesses in a positive overall market, combined with benefits from engineering synergies and manufacturing costs," said Tim Leuliette, president and CEO. "We continue to realize value for our customers and shareholders through the ongoing integration of the former Johnson Controls electronics business. With the upcoming sale of our ownership interest in Halla Visteon Climate Control Corp., we will be singularly focused on our profitable, technology-focused electronics business, where we are well-positioned to capitalize on dynamic growth of the connected vehicle ecosystem."
Cash from operating activities in the first quarter totaled $173 million, compared with $96 million from the same period in 2014. Adjusted free cash flow, a non-GAAP financial measure as defined below, was $139 million for the first quarter of 2015.
First Quarter in Review
Visteon reported first-quarter sales of $2.03 billion, an increase of $311 million compared with the same quarter a year earlier. Hyundai-Kia accounted for approximately 31 percent of those sales and Ford Motor Company 26 percent. On a regional basis, Asia accounted for 48 percent of sales; Europe 29 percent; North America 21 percent; and South America 2 percent. An additional $22 million of sales was classified as discontinued operations.
Electronics sales totaled $781 million, an increase of $342 million from the first quarter last year. The increase is primarily attributable to the acquisition of the global automotive electronics business of Johnson Controls Inc., effective July 1, 2014. Climate sales of $1,240 million were $28 million lower year-over-year. The decrease reflected unfavorable currency, partially offset by higher volumes.
Gross margin for the first quarter of 2015 was $212 million, compared with $179 million a year earlier. Selling, general and administrative (SG&A) expenses were $96 million, or 4.7 percent of sales, for the first quarter of 2015, compared with $81 million, or 4.7 percent of sales, a year earlier. Year-over-year results for gross margin and SG&A were both impacted by the Johnson Controls electronics acquisition. The $33 million increase in gross margin also included higher sales volume and new business impacts, along with cost efficiencies, partially offset by the impact of unfavorable currency.
Adjusted EBITDA for the first quarter of 2015 was $189 million, compared with $161 million for the same period a year earlier, primarily reflecting the impact of the JCI electronics acquisition, favorable volume and new business, and positive cost performance, partially offset by currency impacts.
For the first quarter of 2015, the company reported net income attributable to Visteon of $50 million, or earnings per share of $1.10 per diluted share. First-quarter net income included an income tax benefit of $33 million related to favorable audit developments, a loss of $23 million related to discontinued operations, and $18 million of restructuring, transformation and integration costs. Adjusted net income, which excluded restructuring and other transaction costs, was $93 million, or $2.04 per diluted share.
Sale of Ownership Interest in Halla Visteon Climate Control
During the first quarter, Visteon received all antitrust approvals required for the previously announced sale of its approximate 70 percent ownership interest in Halla Visteon Climate Control Corp. (HVCC) to an affiliate of Hahn & Company – a South Korea-based private equity company – and Hankook Tire Co. Ltd. Completion of the transaction is subject to, among other things, the approval of Visteon's shareholders at a special meeting May 18. Assuming shareholder approval is received, Visteon expects the transaction to be completed by the end of the second quarter of 2015.
Cash and Debt Balances
As of March 31, 2015, Visteon had global cash balances totaling $916 million. Total debt as of March 31 was $957 million. Included in the balances was HVCC cash of $462 million and HVCC debt of $346 million.
For the first quarter of 2015, Visteon generated $173 million of cash from operations, compared with $96 million in the same period a year earlier. Capital expenditures in the quarter were $55 million, $3 million higher than the first quarter of 2014. Adjusted free cash flow was $139 million in the quarter, compared with $64 million generated in the first quarter of 2014. Visteon generated $12 million of cash from operations related to the Electronics Product Group and Corporate costs. Electronics capital expenditures totaled $23 million, and adjusted free cash flow for Electronics and Corporate totaled $6 million in the quarter, which includes a $33 million seasonal investment in working capital.
Full-Year 2015 Outlook
Visteon adjusted its full-year 2015 guidance for its key financial metrics to reflect improved performance despite the negative impact of currency movements. The company projects 2015 sales for the Electronics Product Group of $3.0 billion. Adjusted EBITDA for the Electronics Product Group and Corporate costs is projected in the range of $245 million to $265 million . Adjusted free cash flow, as defined below, for the Electronics Product Group and Corporate costs is projected in the range of $40 million to $80 million .