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Visteon(VC) - 2023 Q4 - Annual Report
VCVisteon(VC)2024-02-20 12:09
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Financial Performance - Visteon reported net sales of 3,954millionfortheyearendedDecember31,2023,representingayear−over−yearincreaseof53,954 million for the year ended December 31, 2023, representing a year-over-year increase of 5% and a base sales growth of 12% when excluding pricing impacts from supply chain recoveries [130]. - Adjusted EBITDA for 2023 was 434 million, or 11% of sales, reflecting operational leverage from higher volumes and cost discipline, an increase of 86millioncomparedto2022[130].−Visteon′sgrossmarginimprovedto86 million compared to 2022 [130]. - Visteon's gross margin improved to 487 million in 2023, up from 368millionin2022,drivenbyfavorablecostperformanceanddesignchanges[133].−NetincomeattributabletoVisteonCorporationfor2023was368 million in 2022, driven by favorable cost performance and design changes [133]. - Net income attributable to Visteon Corporation for 2023 was 486 million, a significant increase of 362millioncomparedto362 million compared to 124 million in 2022 [133]. - Adjusted EBITDA for the year ended December 31, 2023, was 434million,anincreaseof434 million, an increase of 86 million from 348millionin2022,drivenbyfavorablevolumesandmix[147].CashFlowandInvestments−Thecompanygenerated348 million in 2022, driven by favorable volumes and mix [147]. Cash Flow and Investments - The company generated 267 million in cash from operating activities in 2023, up from 167millionin2022,reflectinga167 million in 2022, reflecting a 100 million increase [160]. - Net cash used in investing activities increased to 123millionin2023from123 million in 2023 from 68 million in 2022, primarily due to a 44millionriseincapitalexpenditures[162].−Netcashusedinfinancingactivitiesroseto44 million rise in capital expenditures [162]. - Net cash used in financing activities rose to 156 million in 2023 compared to 9millionin2022,mainlydueto9 million in 2022, mainly due to 106 million in common stock repurchases and 29millionindividendspaid[163].−Thecompanyhascommittedtoinvest29 million in dividends paid [163]. - The company has committed to invest 15 million in two entities focused on the automotive sector, having contributed 12milliontowardsthiscommitmentasofDecember31,2023[154].BalanceSheetandShareholderReturns−Thecompanymaintainedastrongbalancesheetandannounceda12 million towards this commitment as of December 31, 2023 [154]. Balance Sheet and Shareholder Returns - The company maintained a strong balance sheet and announced a 300 million share repurchase program, having repurchased 106millionofcommonstockin2023[127].−AsofDecember31,2023,thecompanyhadtotalcashandequivalentsof106 million of common stock in 2023 [127]. - As of December 31, 2023, the company had total cash and equivalents of 518 million, with 383 million located outside the U.S. [151]. - The corporate credit rating as of December 31, 2023, is BB- by Standard & Poor's, influencing access to additional capital [150]. Tax and Pension Obligations - The company recorded a benefit from income taxes of 248 million in 2023, an increase of 293millioncomparedtothepreviousyear,largelyduetoanon−cashtaxbenefitrelatedtodeferredtaxassets[143].−Thecompanyexpectstomakecontributionsof293 million compared to the previous year, largely due to a non-cash tax benefit related to deferred tax assets [143]. - The company expects to make contributions of 9 million to its U.S. defined benefit pension plans and 7milliontoitsnon−U.S.plansduring2024[152].−Thecompanyhasapproximately7 million to its non-U.S. plans during 2024 [152]. - The company has approximately 142 million in unfunded net pension liabilities as of December 31, 2023, with 113millionattributabletoU.S.plans[174].MarketConditionsandRisks−Theglobalautomotivemarketisexpectedtogrowfasterthanvehicleproductionvolumesastheindustryshiftstowardsdigital,electric,andautonomousvehicles[126].−Visteonfacedchallengesfromsemiconductorshortagesbutcontinuedproactiveinitiativestoincreaseproductavailabilityandminimizecostimpacts[131].−ThecompanyisexposedtosignificantrisksfromsupplychaindisruptionsduetotheongoingconflictbetweenRussiaandUkraine[187].−Thecompanyfacespotentialimpactsfromashortageofcriticalcomponents,includingsemiconductors,fromsuppliers[187].CurrencyandCommodityRiskManagement−Thehypotheticalpretaxgainorlossfroma10113 million attributable to U.S. plans [174]. Market Conditions and Risks - The global automotive market is expected to grow faster than vehicle production volumes as the industry shifts towards digital, electric, and autonomous vehicles [126]. - Visteon faced challenges from semiconductor shortages but continued proactive initiatives to increase product availability and minimize cost impacts [131]. - The company is exposed to significant risks from supply chain disruptions due to the ongoing conflict between Russia and Ukraine [187]. - The company faces potential impacts from a shortage of critical components, including semiconductors, from suppliers [187]. Currency and Commodity Risk Management - The hypothetical pretax gain or loss from a 10% favorable or adverse change in quoted currency exchange rates is estimated to be approximately 21 million for foreign currency derivative financial instruments as of December 31, 2023 [192]. - The company manages market risks through fixed price contracts and derivative instruments strictly for hedging purposes, not for speculative trading [189]. - The company does not enter into foreign exchange contracts to mitigate translation exposure from foreign operating income into U.S. dollars [191]. - The company may utilize derivatives in the future to manage select commodity risks if acceptable hedging instruments are identified [194]. Operational Challenges - Selling, general, and administrative expenses increased to 207millionin2023,representing5.2207 million in 2023, representing 5.2% of net sales, primarily due to higher personnel costs [137]. - The company recorded a non-cash impairment charge of 5 million in 2022 due to the closure of its Russian facility [169]. - A 25 basis point decrease in the discount rate is expected to have a pretax pension expense impact of less than -1millionforbothU.S.andNon−U.S.plansin2024[179].−A25basispointincreaseinthediscountrateisprojectedtoresultinapretaxpensionexpenseincreaseof+1 million for both U.S. and Non-U.S. plans in 2024 [179]. - A 25 basis point increase in the discount rate is projected to result in a pretax pension expense increase of +16 million for the U.S. plan in 2023 [179]. - The company anticipates a pretax pension expense increase of +$1.6 million with a 25 basis point decrease in expected return on assets [179]. - The company regularly audits its tax provisions and accrues for contingencies related to income tax risks [183].