Visteon(US:VC)2025-07-24 11:23markdown Part I - Financial Information [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201%20-%20Condensed%20Consolidated%20Financial%20Statements) Visteon's unaudited H1 2025 financials show decreased net sales, increased net income, asset growth, and improved operating cash flow [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Visteon's Q2 2025 net sales decreased, while H1 2025 net sales also declined, but net income for the first half increased Consolidated Statement of Income Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $969 | $1,014 | -4.4% | $1,903 | $1,947 | -2.3% | | **Gross Margin** | $141 | $147 | -4.1% | $279 | $266 | +4.9% | | **Net Income (to Visteon)** | $65 | $71 | -8.5% | $130 | $113 | +15.0% | | **Diluted EPS** | $2.36 | $2.54 | -7.1% | $4.73 | $4.05 | +16.8% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Visteon's total assets increased to $3.192 billion and total equity grew to $1.498 billion Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Cash and Equivalents** | $668 | $623 | | **Total Current Assets** | $1,723 | $1,596 | | **Total Assets** | $3,192 | $2,862 | | **Total Current Liabilities** | $921 | $916 | | **Total Liabilities** | $1,694 | $1,552 | | **Total Equity** | $1,498 | $1,310 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 net cash from operations improved to $165 million, while investing cash flow increased due to a $50 million acquisition Consolidated Statement of Cash Flows Highlights (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $165 | $126 | | **Net Cash used by Investing Activities** | ($115) | ($72) | | **Net Cash used by Financing Activities** | ($38) | ($36) | | **Net Increase (Decrease) in Cash** | $45 | ($10) | | **Cash at End of Period** | $671 | $508 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, a $55 million acquisition, new quarterly dividend, share repurchases, and segment revenue - On May 21, 2025, Visteon acquired a user experience electronics engineering consulting company for **$55 million** in cash, plus up to **$9 million** in contingent consideration, to enhance product development and customer experience capabilities[32](index=32&type=chunk) - On July 22, 2025, the Board of Directors initiated a recurring quarterly cash dividend of **$0.275 per share**, payable on September 5, 2025[59](index=59&type=chunk)[82](index=82&type=chunk) - The company has a **$300 million** share repurchase program authorized through December 31, 2026, with **74,334 shares** purchased for approximately **$7 million** during the first six months of 2025[79](index=79&type=chunk) Net Sales by Product Line (H1 2025 vs H1 2024, in millions) | Product Line | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Instrument clusters | $886 | $888 | -0.2% | | Infotainment | $265 | $237 | +11.8% | | Information displays | $248 | $185 | +34.1% | | Cockpit domain controller | $228 | $286 | -20.3% | | Body and electrification electronics | $200 | $261 | -23.4% | | Other | $76 | $90 | -15.6% | [Management's Discussion and Analysis (MD&A)](index=26&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses strategic priorities, financial results, and liquidity, highlighting Q2 2025 sales decline and H1 2025 Adjusted EBITDA growth [Executive Summary](index=26&type=section&id=Executive%20Summary) Visteon's strategic priorities include technology innovation, long-term growth, and balanced capital allocation, with customer production expected to decline - Strategic priorities include **Technology Innovation**, **Long-Term Growth**, and **Balanced Capital Allocation**[113](index=113&type=chunk) - Capital allocation focuses on organic initiatives, inorganic opportunities (such as the recent **$50 million** acquisition), and returning capital to shareholders via a **$300 million** share repurchase program and a new **$0.275** quarterly dividend[113](index=113&type=chunk) - Market outlook: S&P forecasts a slight increase in global production for 2025, but Visteon's customer vehicle production is expected to decline by a **mid-single-digit percentage**[117](index=117&type=chunk) [Results of Operations - Q2 2025 vs Q2 2024](index=28&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Q2 2025 net sales decreased by $45 million to $969 million due to lower volumes and pricing, with Adjusted EBITDA at $134 million Q2 Net Sales and Gross Margin Bridge (in millions) | Description | Net Sales | Gross Margin | | :--- | :--- | :--- | | **Q2 2024** | **$1,014** | **$147** | | Volume, mix, and net new business | ($24) | ($5) | | Currency | $4 | $1 | | Customer pricing | ($35) | ($35) | | Engineering costs, net | — | ($3) | | Cost performance, design changes and other | $10 | $36 | | **Q2 2025** | **$969** | **$141** | Q2 Adjusted EBITDA Reconciliation (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Income (to Visteon)** | $65 | $71 | | Depreciation and amortization | $27 | $24 | | Non-cash, stock-based compensation | $12 | $11 | | Provision for income taxes | $28 | $25 | | Other adjustments | $4 | $5 | | **Adjusted EBITDA** | **$134** | **$136** | [Results of Operations - H1 2025 vs H1 2024](index=32&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) H1 2025 net sales decreased by $44 million to $1.903 billion, but gross margin improved and Adjusted EBITDA increased to $263 million H1 Net Sales and Gross Margin Bridge (in millions) | Description | Net Sales | Gross Margin | | :--- | :--- | :--- | | **H1 2024** | **$1,947** | **$266** | | Volume, mix, and net new business | $2 | $1 | | Currency | ($16) | ($6) | | Customer pricing | ($70) | ($70) | | Engineering costs, net | — | $2 | | Cost performance, design changes and other | $40 | $86 | | **H1 2025** | **$1,903** | **$279** | H1 Adjusted EBITDA Reconciliation (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Income (to Visteon)** | $130 | $113 | | Depreciation and amortization | $52 | $46 | | Non-cash, stock-based compensation | $23 | $21 | | Provision for income taxes | $56 | $44 | | Other adjustments | $2 | $14 | | **Adjusted EBITDA** | **$263** | **$238** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Visteon maintains strong liquidity with **$671 million** cash and **$400 million** credit, funding capital expenditures, acquisitions, and shareholder returns - Total cash and cash equivalents were **$671 million** as of June 30, 2025[153](index=153&type=chunk) - The company has **$400 million** available under its revolving credit facility and an additional **$145 million** in affiliate working capital lines[152](index=152&type=chunk) - Operating cash flow for H1 2025 increased to **$165 million** from **$126 million** in H1 2024, driven by higher Adjusted EBITDA and favorable working capital changes[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Visteon manages market risks from currency, interest rates, and commodity prices using derivatives, with a 10% adverse currency change impacting derivatives by **$22 million** - The company manages risks from foreign currency, interest rates, and commodity prices through operational actions and derivative instruments[172](index=172&type=chunk) - A hypothetical **10%** adverse change in foreign currency exchange rates would result in a **$22 million** pre-tax loss in the fair value of derivative instruments, which would generally be offset by gains on the underlying hedged exposures[175](index=175&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204%20-%20Controls%20and%20Procedures) As of June 30, 2025, Visteon's disclosure controls and procedures were effective, with no material changes to internal control - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[179](index=179&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[180](index=180&type=chunk) Part II - Other Information [Legal Proceedings](index=42&type=section&id=Item%201%20-%20Legal%20Proceedings) Legal proceedings information, including litigation and product warranty claims, is incorporated by reference from Note 15 - Information regarding legal proceedings is incorporated by reference from Note 15, "Commitments and Contingencies"[182](index=182&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A%20-%20Risk%20Factors) No new risk factors are disclosed; investors are referred to the 2024 Form 10-K for comprehensive details - The company directs investors to the risk factors disclosed in its 2024 Form 10-K filed on February 18, 2025[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no purchases of its common stock during the second quarter of 2025 - No shares of the company's common stock were repurchased during the second quarter of 2025[184](index=184&type=chunk) [Exhibits](index=42&type=section&id=Item%206%20-%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and interactive data files (XBRL) - The exhibits filed with this report include Rule 13a-14(a) and Section 1350 certifications from the CEO and CFO, as well as XBRL data files[186](index=186&type=chunk)[188](index=188&type=chunk)