VISTEON CORP Q1 FY2025 earnings call

• Visteon delivered strong operating and financial results in Q1 2025, with net sales flat but outperforming market. Adjusted EBITDA and free cash flow were strong.
• Display product line was a standout, with sales growth and new business wins. Multi-year investments in display capabilities paying off.
• New business wins totaled $1.9 billion, led by displays and digital cluster product wins. Secured new business with Toyota, six OEMs in rest of Asia, Cherry in China, and two-wheeler OEMs in India.
• New product launches included 16 vehicle models, with digital cockpit and BMS products launching. Display growth driven by trend of larger displays in vehicles.
• Addressed tariff impact, with manufacturing plants in Mexico and USMCA-compliant parts mostly not subject to tariffs, but proposed tariffs on non-US content of auto parts creating uncertainty.

Net sales were $934,000,000, essentially flat to prior year but outperformed underlying customer production volumes with a 10% growth over market. Adjusted EBITDA was $129,000,000 representing a margin of 13.8%, a record. Adjusted free cash flow was $38,000,000. The display product line was a standout, with strong sales and new business wins. Displays contributed significantly to sales growth and new business, with the company emerging as a top supplier of large displays.

Not reaffirming full-year guidance due to tariff uncertainty. Anticipated impact on industry production volumes and vehicle mix. Focus on preserving cash, fortifying balance sheet, and evaluating capital allocation. Scenarios considered with potential outcomes for sales and margins, but waiting for clarity on tariffs and production schedules.

• Tariff uncertainties: Proposed tariffs on non-US content of auto parts could impact Visteon's products imported from Mexico, creating uncertainty in industry production volumes and vehicle mix. Potential for additional tariffs and their impact on customer production schedules and costs.
• Impact on China business: Slowing domestic market and market share loss of global OEMs in China, but Visteon positioned to support Chinese OEMs exporting outside China.

Q: Can you help us better understand your confidence in being able to achieve offsetting remaining tariff costs and discussions with customers?

A: Discussions with customers have been constructive; focus on working with customers to reduce exposure, but some costs will need to be passed on to customers.

Q: Are customers still active with new vehicle designs and conducive to additional awards?

A: Environment remains stable, new business activity expected to remain robust with a strong pipeline of opportunities across product lines.

Q: What is the impact on production schedules and call-off activity?

A: Customer orders remained stable in Q1, with no meaningful pull ahead, but dealer inventories pulled down. Order scenario stable for Q2.

Q: How do margins normalize and what are the unusual items?

A: Adjusted EBITDA margin was 13.8% with ~$15 million of one-time commercial items, mostly cost recoveries negotiated with customers.

Q: Thoughts on new business wins and revenue acceleration?

A: Strong new business pipeline, expect displays and other product lines to drive growth, with potential for revenue acceleration beyond initial guidance.

Q: Working with China local OEMs on export business?

A: Distinct quality expectations between China and export markets, Visteon positioned to support with aggressive timelines and ability to defend pricing for exports.

Q: Facilities relocation and tariff impact management?

A: Focus on being a good partner to customers, will consider manufacturing footprint changes if business case justifies, but current focus on mitigating tariff impact with customers.