First Quarter Summary
- Product sales of $1.85 billion, up 43 percent from first quarter 2009
- Net income of $233 million
- Adjusted EBITDA of $161 million, up $139 million from first quarter 2009
- Cash generated by operating activities of $40 million, a $315 million year-over-year improvement
- Cash balances of $1.1 billion
Visteon Corporation (OTC: VSTNQ) today announced its first-quarter 2010 results, reporting net income of $233 million, or $1.79 per share, on product sales of $1.85 billion. For the first quarter of 2009, Visteon reported a net income of $2 million, or 2 cents per share, on product sales of $1.3 billion. Adjusted EBITDA, as defined below, for the first quarter of 2010 was $161 million, compared with $22 million in the first quarter of 2009.
“Increased global vehicle production, combined with our ongoing operational improvements and cost-reduction efforts, drove our year-over-year financial improvement,” said Donald J. Stebbins, chairman, chief executive officer and president. “We benefited from aggressive actions taken over the past year to keep our cost structure in line with significantly reduced global volumes. Although in the near term we remain concerned about European production volumes, we’re confident that our worldwide engineering and manufacturing footprint positions Visteon to support new global vehicle programs and grow with our customers around the world.”
Approximately 27 percent of Visteon’s first-quarter product sales were to Ford Motor Co. and 24 percent to Hyundai-Kia, with Renault-Nissan and PSA Peugeot-Citroen each accounting for about 7 percent of product sales. On a regional basis, Europe accounted for 39 percent of total product sales, with Asia representing 35 percent, North America 20 percent and South America 6 percent.
First Quarter 2010 Results
For the first quarter of 2010, total sales were $1.9 billion, including product sales of $1.85 billion and services revenue of $58 million. Product sales increased by $551 million, or 43 percent, year-over-year as higher production and new business wins, net of plant divestitures and closures, increased sales by about $414 million. Foreign currency further increased sales by about $146 million. The company experienced higher sales in each of the major regions in which it operates, reflecting increased production volumes by all customers as vehicle sales rebounded in response to stronger global economic conditions.
Gross margin for the first quarter was $418 million, compared with $45 million a year earlier. Factors contributing to this improvement included a $251 million gain related to the termination of certain company-paid medical, prescription drug and life insurance coverage benefits under certain U.S. other post-retirement employee benefit (“OPEB”) plans; and the impact of higher customer production levels and net cost performance; partially offset by foreign currency.
Selling, general and administrative expense for the first quarter totaled $113 million, an increase of $5 million compared with the same period a year ago, as cost reductions were largely offset by an expense of $14 million related to the OPEB termination.
For the first quarter, the company reported net income of $233 million, or $1.79 per share. This compares with net income of $2 million, or 2 cents per share, in the same period a year ago. First quarter 2010 results included a $237 million net gain related to the OPEB termination, while first quarter 2009 results included a deconsolidation gain of $95 million related to Visteon UK Ltd.
Adjusted EBITDA for the first quarter was $161 million, compared with $22 million for the same period a year ago. During the first quarter, Visteon won approximately $141 million of business, with more than half generated in Asia.
Cash Flow and Liquidity
For the first quarter of 2010, Visteon generated $40 million in cash from operations, compared with an outflow of $275 million for the first quarter of 2009. The improvement was largely attributable to higher net income, lower trade working capital outflow and the impact of the automatic stay on interest payments. Capital expenditures in the first quarter were $25 million, equal to the amount a year earlier. Free cash flow, as defined below, was positive $15 million in the first quarter, compared with a use of $300 million in the first quarter of 2009.
As of March 31, 2010, Visteon had global cash balances, including restricted cash, of nearly $1.1 billion.
Visteon is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Chelmsford, UK; the company has facilities in 25 countries and employs approximately 28,500 people.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements, including, but not limited to,
- the potential adverse impact of the Chapter 11 proceedings on our business, financial condition or results of operations, including our ability to maintain contracts and other customer and vendor relationships that are critical to our business and the actions and decisions of our creditors and other third parties with interests in our Chapter 11 proceedings;
- our ability to maintain adequate liquidity to fund our operations during the Chapter 11 proceedings and to fund a plan of reorganization and thereafter, including obtaining sufficient “exit” financing; maintaining normal terms with our vendors and service providers during the Chapter 11 proceedings and complying with the covenants and other terms of our financing agreements;
- our ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted from time to time and to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 proceedings and to consummate all of the transactions contemplated by one or more such plans of reorganization or upon which consummation of such plans may be conditioned;
- conditions within the automotive industry, including (i) the automotive vehicle production volumes and schedules of our customers, and in particular Ford's and Hyundai-Kia’s vehicle production volumes, (ii) the financial condition of our customers or suppliers and the effects of any restructuring or reorganization plans that may be undertaken by our customers or suppliers or work stoppages at our customers or suppliers, and (iii) possible disruptions in the supply of commodities to us or our customers due to financial distress or work stoppages;
- new business wins and re-wins do not represent firm orders or firm commitments from customers, but are based on various assumptions, including the timing and duration of product launches, vehicle productions levels, customer price reductions and currency exchange rates;
- general economic conditions, including changes in interest rates and fuel prices; the timing and expenses related to internal restructurings, employee reductions, acquisitions or dispositions and the effect of pension and other post-employment benefit obligations;
- increases in raw material and energy costs and our ability to offset or recover these costs, increases in our warranty, product liability and recall costs or the outcome of legal or regulatory proceedings to which we are or may become a party; and
- those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2009 ).