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| 8-K - 8-K - VISTEON CORP | d413082d8k.htm |
Visteon Actions to Deliver Value
Tim Leuliette
2012 Citi Global Industrials Conference
September 19, 2012
Strictly Private and Confidential
Today We Will
Summarize Visteon at a glance
Provide historic and recent context for today’s presentation Offer a value-creating action plan for each key business and JV Address priorities for uses of cash Discuss lump sum pension actions
Visteon is Sharply Focused on Creating Value for Our Shareholders
Page 2
Visteon at a Glance
Global auto supplier of climate, electronics and interiors products
Global manufacturing / engineering footprint with emphasis on low-cost regions Strategically positioned to capitalize on emerging market growth Strong balance sheet
2011 Key Financials
(Dollars in Millions) 2011
Adjusted Sales $6,983
Adjusted EBITDA 685
% Margin 9.8%
Debt / EBITDA 0.9x
Headcount 25,650
Key Businesses
Climate Electronics
$4.1 Billion $1.4 Billion
Yanfeng
Interiors Visteon
$1.7 Billion $6.3 Billion
Unconsolidated
Sales
Global, Strategically Positioned in Mature and Emerging Markets, Strong Technology
Page 3
Visteon: An Asian-Centric Company
Consolidated
South
America
North 6%
America
17%
Asia
Pacific
43%
Europe
34%
Including Non-Consolidated
South
North America
America 3%
10%
Europe
21%
Asia
Pacific
66%
Visteon is an Asian-Centric Company, with European Operations, and Limited North American Presence
Page 4 Note: Represents Q2 2012 YTD.
A Valuable Customer Base
We are Proud of the Customers We Serve and Will Act Only in Their Best Interests
Page 5
Sales Profile – Six Months YTD 2012
Consolidated Including Non-Consolidated
Electronics
Electronics 15%
18%
Product Climate
Interiors
Line Interiors 60% 47%
22%
Climate
38%
Other
20% Other Hyundai / Kia
Hyundai / Kia 22% 26%
GM 1% 32%
Mazda 2%
JLR 2% JLR 2%
Customer VW 2% Mazda 3%
PSA 5% PSA 4%
Renault / GM 7% Ford
Nissan 9% Ford Renault / 17%
27% Nissan 8% VW 11%
Total Sales $3.4 Billion $6.0 Billion
Page 6
Historical Context
Three-Year Restructuring
Spin-OffSpin-Off FromFrom Ford Ford 2006-2009
y BecameBecame independent,independent, publicly publicly Exited / addressed 38 non-core /
tradedtraded company company underperforming facilities Ch. 11 Emergence
y $$ 19+19+ billionbillioninin sales sales Focused on core products and Emerged from Ch. 11
y y SignificantSignificant NorthNorth America America enhanced customer and on October 1, 2010
geographic diversification
manufacturingmanufacturing footprintfootprint with with Relisted on NYSE on
leasedleased MasterMaster UAWUAW workforce workforce Significant cost reductions January 10, 2011
2000 2005 2006 2007 2008 2009 2010 2011 2012
ACH Transaction Ch. 11 Reorganization Asset Optimization
23 North America facilities Filed for Ch. 11 protection Sold Lighting business
returned to Ford, including in the U.S. on May 28, 2009 Sold NA headquarters
UAW workforce and related Facility restructurings, Closed Cadiz facility
legacy liabilities legacy liability and debt Announced intention to
Ford support for further reductions sell Interiors business
restructuring to improve the Delisted from NYSE on 2011 adjusted sales of
business March 6, 2009 $7.0 billion
Several Significant and Transformational Actions
Page 7
Strategic Cornerstones
Base strategic decisions on “industrial logic” and a realistic assessment of strengths and weaknesses
– No smaller than #3 in relevant market presence
– Core strengths must include technology or “know-how” leverage
Provide customers with well financed, international-capable businesses with exciting products
– Financial performance must support R&D and capex investment
– Must have presence where customers want to be
– Capable of weathering economic challenges – being a predator, not prey
Share price performance is an outcome of optimal strategic decisions and robust execution
– Lean, fast, hungry and global
– Focused, minimal overhead with strong leadership
Focused on Continued Strategy of Optimizing Visteon’s Business Portfolio to Maximize Shareholder Value
Page 8
Visteon: The Plan
70% 100% 100% 100% 50%
Visteon Visteon Visteon Yanfeng
Climate Interiors Electronics Visteon
Contribute Visteon Climate to HCC for cash Remains non-core 40%
60%
Establishes “New Halla-Visteon Climate Continue to pursue YFV
Group” (HVCG) as single consolidated options Electronics
Climate entity with leadership of all global
Climate operations Interiors will be
exited at a time Electronics Yanfeng Visteon
Consolidation of these two operations into when value #5 global market YFV and affiliated
one has been a major customer demand objectives are met position Yanfeng Visteon
Headquartered in Korea with global customer Significant integration Electronics represent a
presence and Korean leadership supported and technology dynamic marriage of
by international management team synergies with FVE global presence with
Visteon is equity holder (70%) in HVCG Asian-centric power,
Focused on low-cost operations and
Transfer limited SG&A and operating resources to optimizing global technological prowess
make business globally self-capable scale and ownership
Core YFV business is
Target transaction completion during Q1 2013 Interiors, which Visteon
is exiting
Corporate Rightsizing y Need to monetize at
Minimal footprint right value at right time
Staff businesses with lean and only “necessary” support
Rothschild and Goldman Sachs Engaged by Visteon to Pursue Strategic Options to Enhance Customer, Partner and Shareholder Value
Page 9
Halla-Visteon Climate Group – The Gold Standard
Clear #2 global Climate player, with 13% market share
Customer-focused solutions provider with worldwide presence Leading product and technology portfolio One of only two “full-line” suppliers Low-cost, Asian-centric manufacturing footprint Strong balance sheet and cash flow profile Significant three-year backlog Gaining share in a growing market
A World-Class Climate Organization
Page 10
Benefits to Halla Climate
Creates #2 global Climate player, with headquarters in Korea Geographic expansion Customer diversification
Combines two financially attractive platforms to make Halla-Visteon a premier global climate company
Earnings accretive
Broader manufacturing footprint
Maintains a strong / conservative balance sheet
Halla-Visteon well positioned for consolidation opportunities in climate sector
Opportunity for operational improvement and synergies
Combination of Operationally Linked Businesses Under HCC Leadership
Page 11
Benefits to Visteon
Achieves long-term objective of consolidating Visteon’s Climate operations
Aligns Halla and Visteon’s climate businesses’ operating structures Better serves global customer base Most viable path to merging climate businesses Increases corporate liquidity Enhances strategic and operational flexibility for climate segment Opportunity to realize intrinsic value for wholly owned assets Ownership “optionality”
Value Enhancing for Visteon Shareholders
Page 12
Climate Product Line
Product Line Overview
2011 Sales $4.1 billion (8.9% Margin)
EBITDA Margin
Global Mkt #2 (13% Share)
Position
Headcount 12,700
Consolidated 30
Mfg Facilities
Unconsolidated 5
2011 Consolidated Sales Breakdown
By Customer By Region
SA
Other NA 2%
21% 17%
Mazda1%
VW 1% Hyundai /
Chrysler 1% Kia
Suzuki 1% 51% AP
EU 56%
25%
Ford
24%
Key Products and Market Positions
Go Forward Plan
Business Focus y Drive leading, innovative and world-class products and technologies for customers y Accelerate Visteon / Halla integration y Significant backlog launching over next three years
Strategic Focus y Contribute Visteon Climate business to Halla y Leverage powerful #2 market position
#2 in the World, Poised for Future Growth
Page 13 Note: EBITDA margin based on Adjusted EBITDA (excluding equity in affiliates and non-controlling interests).
Interiors Product Line
Product Line Overview
2011 Sales $1.7 billion (ex. Duckyang)
EBITDA Margin (4.9% Margin)
Global Mkt #2 (12% Share)
Position
Headcount 6,750
Consolidated 27
Mfg Facilities
Unconsolidated 26
2011 Consolidated Sales Breakdown
By Customer By Region
Other
AP
14% Nissan /
GM Renault 18%
3% 30%
VW
5%
SA
21% EU
PSA 61%
24% Ford
24%
Key Products and Market Positions
Go Forward Plan
Business Focus
New leadership in place to drive change
Maintain investment to drive continued long-term
technological offerings for customers
Capitalize on strong positions in Asia
Strategic Focus
Sale or alternative strategic placement of
consolidated business
Currently Evaluating All Opportunities for Interiors Business
Page 14 Note: EBITDA margin based on Adjusted EBITDA (excluding equity in affiliates and non-controlling interests).
Electronics Product Line
Product Line Overview
2011 Sales $1.4 billion (7.8% Margin)
EBITDA Margin
Global Mkt #5 (7% Share)
Position
Headcount 6,250
Consolidated 11
Mfg Facilities
Unconsolidated 8
2011 Consolidated Sales Breakdown
By Customer By Region
SA
Other 6%
22% AP
17%
Ford
Mitsubishi 43% EU
4% 47%
JLR 4%
Mazda 6%
Nissan / Renault NA
7% Tier 1—Ford 30%
14%
Key Products and Market Positions
Instrument Clusters
OEM Audio Head Units
Electronic Climate Controls
Go Forward Plan
Business Focus
Continue to provide innovative solutions and
technologies for customers
Maintain disciplined investments in business
Strategic Focus
Optimize global scale and ownership to create
the most value for Visteon customers and
shareholders
Address Electronics’ Strategy and Global Position
Page 15 Note: EBITDA margin based on Adjusted EBITDA (excluding equity in affiliates and non-controlling interests).
Yanfeng Visteon
Overview y 50% / 50% joint venture between Visteon / HASCO (SAIC) in China
??Established in 1994
??Unconsolidated affiliate for Visteon y Pre-eminent auto supplier in China with five primary businesses
– Interiors, Seating, Electronics, Exteriors and Safety y SVW, SGM and SAIC represent about 65% of sales; export 7% y 91 facilities and 29,000 employees y 2011 consolidated PRC GAAP revenues of $6.3 billion
??30% sales CAGR since 2000
YFV Business Structure
Huayu
Visteon 50% 50% Automotive
Corporation Systems Co. Ltd
(HASCO)
100% 60% 50% 50% 50%
YFV YFV YFJC YFPO YFKSS
Interiors (1) Electronics Seating Exterior Key Safety
VC Ownership %
Indirect 50% 30% 25% 25% 25%
Direct Varied 40% — — —
Effective 50% 70% 25% 25% 25%
Total YFV Group 2011 Customer Mix
Other 9%
Ford 5% SVW
34%
Japan / Korea OEMs 7%
Concentration
Export & Overseas 7% with Key
Other China OEMs 6% China OEMs
SAIC 4%
SGM 28%
Valuable Asset with Robust Growth Profile –Monetize Over Time and at the Right Value
Page 16 (1) Eleven operating companies with various ownership percentages.
Uses of Visteon Cash
Increase strong market positions / competitive advantages by continuing to drive innovation and quality Strict focus on disciplined R&D and capex investments that meet necessary return thresholds
Meet pension, debt and other obligations
Maintain / improve current leverage profile and credit rating
Share buyback
Debt reduction
Invest in Business
Mandatory Obligations
Shareholder Returns
Visteon Will Use Cash to Invest in the Business, Meet Mandatory Obligations and Return Capital to Shareholders
Page 17
Visteon Announces Defined Benefit Lump Sum Offer
On September 19, 2012, Visteon announced a lump sum buyout option to most of their U.S. deferred vested defined benefit plan participants
– Represents nearly 10,000 of the 20,000 total U.S. plan participants
– To be funded with pension plan assets
This program will reduce Visteon risk and volatility as well as administrative costs associated with the U.S. defined benefit plan
Eligible participants will be given an option to select a lump sum payout or to maintain their existing benefit
Election Window scheduled from October 1 to November 9, 2012
A one-time, non-cash year-end P&L charge will result from the buyout
– Total charge will depend upon participation rate, value of assets and discount rate at year end
Lump Sum Settlements Provide Opportunity for Visteon to Significantly Reduce Liabilities and Administrative Costs at Current Interest Rate Levels
Page 18
Defining Success Milestones
Contribute Climate business to Halla, create HVCG – a global climate powerhouse
Provide Visteon shareholders “optionality” in HVCG ownership
Sell Interiors business
Address Electronics’ strategy and global position
Monetize YFV, over time…and at right value
Rightsize corporate functions in response to actions above
Page 19
Appendix
Strictly Private and Confidential
Forward-Looking Information
This presentation 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, Our ability to satisfy future capital and liquidity requirements; including our ability to access the credit and capital markets at the
times and in the amounts needed and on terms acceptable to us; our ability to comply with financial and other covenants in our
credit agreements; and the continuation of acceptable supplier payment terms;
Our ability to satisfy pension and other post-employment benefit obligations;
Our ability to access funds generated by foreign subsidiaries and joint ventures on a timely and cost effective basis;
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, work stoppages, natural disasters or civil unrest;
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 December 31, 2011).
Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date
of this presentation, and which we assume no obligation to update.
Page 21
Use of Non-GAAP Financial Information
Because not all companies use identical calculations, Adjusted Sales and Adjusted EBITDA used throughout this presentation may not be comparable to other similarly titled measures of other companies. The reconciliations include all information reasonably available to the Company at the date of this presentation and the adjustments that management can reasonably predict.
Page 22
Reconciliation of Non-GAAP Financial Information
Adjusted Sales
2011 2012
(Dollars in Millions) Full Year 1st Qtr 2nd Qtr
Net sales, products (incl. discontinued operations) $8,047 $1,856 $1,819
Less: Discontinued operations 515 139 126
Net sales, products $7,532 $1,717 $1,693
Less: Duckyang sales 549 — -
Adjusted sales $6,983 $1,717 $1,693
The Company defines Adjusted Sales as net product sales, adjusted to exclude Duckyang sales.
Adjusted EBITDA
2011 2012
(Dollars in Millions) Full Year 1st Qtr 2nd Qtr
Net Income (loss) attributable to Visteon $80 ($29) $75
Interest expense, net 27 9 6
Loss on debt extinguishment 24 — -
Provision for income taxes 127 27 42
Depreciation and amortization 295 64 67
Restructuring and other (income), expense net 11 63 11
Equity investment gain —— (63)
Other non-recurring costs, net 30 5 2
Discontinued operations, net 91 11 11
Adjusted EBITDA $685 $150 $151
The Company defines Adjusted EBITDA as net income (loss) attributable to Visteon, plus net interest expense, provision for income taxes and depreciation and amortization, as further adjusted to eliminate the impact of asset impairments, gains or losses on divestitures, net restructuring expenses and other reimbursable costs, certain non-recurring employee charges and benefits, reorganization items, and other non-operating gains and losses.
Page 23
Reconciliation of Climate Financial Information
Climate
2011 2012
(Dollars in Millions) Full Year 1st Qtr 2nd Qtr
Product Sales $4,053 $1,023 $1,065
Gross Margin $351 $89 $81
Employee Severance and Other (3) — (1)
Adjusted Gross Margin $354 $89 $82
% of Adjusted Sales 8.7% 8.7% 7.7%
SG&A
Product Line Specific and Allocated SG&A (190) (47) (46)
Employee Severance and Other 3 1 -
Adjusted SG&A ($187) ($46) ($46)
Adjusted EBITDA
Adjusted Gross Margin $354 $89 $82
Adjusted SG&A (187) (46) (46)
Exclude D&A 194 43 47
Adjusted EBITDA (excl. Equity in Affil., NCI) $361 $86 $83
% of Adjusted Sales 8.9% 8.4% 7.8%
Equity in Affiliates 3 1 1
Non-Controlling Interests (64) (16) (9)
Adjusted EBITDA $300 $71 $75
Page 24
Reconciliation of Interiors Financial Information
Interiors
2011 2012
(Dollars in Millions) Full Year 1st Qtr 2nd Qtr
Product Sales $2,285 $400 $357
Less: Duckyang Sales 589 — -
Adjusted Sales $1,696 $400 $357
Gross Margin $139 $18 $17
Duckyang Gross Margin 8 — -
Employee Severance and Other (2) — (1)
Adjusted Gross Margin $133 $18 $18
% of Adjusted Sales 7.8% 4.5% 5.0%
SG&A
Product Line Specific and Allocated SG&A (95) (20) (18)
Duckyang SG&A 5 — -
Employee Severance and Other 1 — -
Adjusted SG&A ($89) ($20) ($18)
D&A 41 8 8
Duckyang D&A 2 — -
Adjusted D&A $39 $8 $8
Adjusted EBITDA
Adjusted Gross Margin $133 $18 $18
Adjusted SG&A (89) (20) (18)
Adjusted D&A 39 8 8
Adjusted EBITDA (excl. Equity in Affil., NCI) $83 $6 $8
% of Adjusted Sales 4.9% 1.5% 2.2%
Duckyang EBITDA 5 — -
Equity in Affiliates, ex. equity investment gain 143 38 35
Non-Controlling Interests (7) (1) -
Adjusted EBITDA $224 $43 $43
Page 25
Reconciliation of Electronics Financial Information
Electronics
2011 2012
(Dollars in Millions) Full Year 1st Qtr 2nd Qtr
Product Sales $1,367 $322 $299
Gross Margin $128 $27 $30
Employee Severance and Other (20) (4) -
Adjusted Gross Margin $148 $31 $30
% of Adjusted Sales 10.8% 9.6% 10.0%
SG&A
Product Line Specific and Allocated SG&A (87) (21) (19)
Employee Severance and Other 1 — -
Adjusted SG&A ($86) ($21) ($19)
Adjusted EBITDA
Adjusted Gross Margin $148 $31 $30
Adjusted SG&A (86) (21) (19)
Exclude D&A 45 10 8
Adjusted EBITDA (excl. Equity in Affil., NCI) $107 $20 $19
% of Adjusted Sales 7.8% 6.2% 6.4%
Equity in Affiliates 22 3 4
Non-Controlling Interests (3) (1) -
Adjusted EBITDA $126 $22 $23
Page 26
Visteon