Visteon(VC) - 2023 Q1 - Quarterly Report

Part I - Financial Information This section details Visteon's unaudited Q1 2023 financial performance, including statements and notes, showing increased net sales and net income Condensed Consolidated Financial Statements This section presents Visteon's unaudited Q1 2023 financial statements, including income, balance, cash flow, and equity, with detailed notes Condensed Consolidated Statements of Comprehensive Income (Loss) This statement details Visteon's Q1 2023 and Q1 2022 comprehensive income, highlighting significant growth in net sales and net income | Financial Metric | Q1 2023 (In millions) | Q1 2022 (In millions) | Change | | :--- | :--- | :--- | :--- | | Net sales | $967 | $818 | +18.2% | | Gross margin | $110 | $76 | +44.7% | | Income before income taxes | $52 | $31 | +67.7% | | Net income attributable to Visteon | $34 | $22 | +54.5% | | Diluted earnings per share | $1.18 | $0.77 | +53.2% | Condensed Consolidated Balance Sheets This statement presents Visteon's financial position as of March 31, 2023, and December 31, 2022, detailing assets, liabilities, and equity | Balance Sheet Item | March 31, 2023 (In millions) | December 31, 2022 (In millions) | | :--- | :--- | :--- | | Total current assets | $1,664 | $1,710 | | Total assets | $2,405 | $2,450 | | Total current liabilities | $964 | $1,035 | | Total liabilities | $1,598 | $1,676 | | Total Visteon stockholders' equity | $720 | $675 | | Total equity | $807 | $774 | - Cash and equivalents decreased from $520 million at the end of 2022 to $484 million as of March 31, 2023[13] Condensed Consolidated Statements of Cash Flows This statement summarizes Visteon's cash flows from operating, investing, and financing activities for Q1 2023 and Q1 2022 | Cash Flow Activity | Q1 2023 (In millions) | Q1 2022 (In millions) | | :--- | :--- | :--- | | Net cash used by operating activities | $(19) | $(21) | | Net cash used by investing activities | $(20) | $(21) | | Net cash used by financing activities | $(5) | $(4) | | Net decrease in cash | $(36) | $(50) | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations for the financial statements, covering segment operations, share repurchases, contingencies, and sales breakdowns - The company operates as a single reportable segment, Electronics, which provides vehicle cockpit electronics products like digital instrument clusters, domain controllers, displays, and infotainment systems[23] - On March 2, 2023, the Board of Directors authorized a new $300 million share repurchase program, effective through December 31, 2026, with no shares repurchased as of March 31, 2023[60] - The company faces several contingencies, including litigation with Van Buren Township over bond payments, a U.S. Treasury review of potential sanctions violations, and potential customer claims due to semiconductor supply shortages[79][80][83] | Net Sales by Geography | Q1 2023 (In millions) | Q1 2022 (In millions) | | :--- | :--- | :--- | | Europe | $346 | $283 | | Americas | $276 | $239 | | China Domestic | $128 | $142 | | China Export | $83 | $48 | | Other Asia-Pacific | $177 | $134 | | Net Sales by Product Line | Q1 2023 (In millions) | Q1 2022 (In millions) | | :--- | :--- | :--- | | Instrument clusters | $474 | $390 | | Infotainment | $134 | $110 | | Cockpit domain controller | $113 | $82 | | Information displays | $97 | $133 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2023 financial results, noting an 18% increase in net sales to $967 million, leading to $110 million gross margin and $99 million Adjusted EBITDA - The company's strategic priorities focus on Technology Innovation in the digital cockpit, achieving Long-Term Growth, and Enhancing Shareholder Returns while maintaining a strong balance sheet[94] | Metric | Q1 2023 (In millions) | Q1 2022 (In millions) | Change (In millions) | | :--- | :--- | :--- | :--- | | Net Sales | $967 | $818 | +$149 | | Gross Margin | $110 | $76 | +$34 | | Net Income (attributable to Visteon) | $34 | $22 | +$12 | | Adjusted EBITDA | $99 | $71 | +$28 | - The $149 million increase in net sales was primarily driven by volume, mix, and net new business (+$180 million) and customer pricing (+$15 million), partially offset by unfavorable currency (-$31 million)[99][100] - Adjusted EBITDA increased by $28 million year-over-year, mainly due to favorable volumes and mix (+$43 million) and customer pricing (+$15 million), partially offset by unfavorable currency (-$9 million) and higher net engineering costs (-$10 million)[111] - As of March 31, 2023, the company had total liquidity of $546 million, comprising $146 million in available affiliate working capital lines and $400 million under its revolving credit facility[114] Quantitative and Qualitative Disclosures About Market Risk The company identifies primary market risks as foreign currency, interest rates, and commodity prices, using derivatives for hedging, mainly for the euro and Brazilian real - The company's primary market risks are foreign currency exchange rates, interest rates, and commodity prices[131] - Derivative instruments are used to mitigate market risks and not for speculative or trading purposes, with key hedged currencies including the euro and Brazilian real[131][132] - A hypothetical 10% adverse or favorable change in currency exchange rates would result in a pre-tax loss or gain of approximately $21-22 million in the fair value of currency derivative instruments as of March 31, 2023[134] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls were effective as of March 31, 2023, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[139] - No material changes occurred in the company's internal control over financial reporting during Q1 2023[140] Part II - Other Information This section provides supplementary information, referencing legal proceedings and risk factors, confirming no Q1 2023 unregistered equity sales or share repurchases, and listing exhibits Legal Proceedings This section incorporates by reference legal proceedings information detailed in Note 14 of the financial statements - For information on legal proceedings, refer to Note 14, "Commitments and Contingencies," in the financial statements[143] Risk Factors This section directs readers to the company's 2022 Annual Report on Form 10-K for a comprehensive discussion of risk factors - A detailed discussion of risk factors is available in the company's Annual Report on Form 10-K for the year ended December 31, 2022[144] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no purchases of its common stock by or on behalf of the company or affiliates during Q1 2023 - The company did not repurchase any of its common stock during the first quarter of 2023[145] Exhibits This section states that the exhibits accompanying this Form 10-Q are listed in the Exhibit Index on page 34 - The exhibits filed with this report are listed on the "Exhibit Index" on Page 34[146]