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Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 10, 2017

 

 

VISTEON CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-15827   38-3519512

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

One Village Center Drive, Van Buren Township, Michigan   48111
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (800)-VISTEON

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

SECTION 7 – REGULATION FD

Item 7.01. Regulation FD Disclosure.

Senior executives of Visteon Corporation (the “Company”) are expected to make a presentation on January 10, 2017 to investors and security analysts at Deutsche Bank’s 2017 Global Auto Industry Conference in Detroit, Michigan, which will include a discussion of the Company’s strategy, financial profile and related matters, including certain financial information. In connection with such presentation, the Company is making available the presentation slides attached hereto as Exhibit 99.1, which are incorporated herein by reference.

The information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SECTION 8 – OTHER EVENTS

Item 8.01. Other Events.

On January 9, 2017, the Board of Directors of the Company authorized a share repurchase program of up to $400 million of common stock through March 2018. The press release announcing this repurchase authorization is attached hereto as Exhibit 99.2.

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01. Financial Statements and Exhibits.

 

Exhibit No.

   

Description

99.1    Presentation slides from the Company’s presentation at the 2017 Global Auto Industry Conference to be held on January 10, 2017.
99.2    Press release dated January 10, 2017.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    VISTEON CORPORATION
Date: January 10, 2017     By:  

/s/ Brett D. Pynnonen

      Brett D. Pynnonen
      Vice President and General Counsel

 

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EXHIBIT INDEX

 

Exhibit No.

   

Description

   

Page

99.1    Presentation slides from the Company’s presentation at the 2017 Global Auto Industry Conference to be held on January 10, 2017.   
99.2    Press release dated January 10, 2017.   

 

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EX-99.1

Slide 1

Deutsche Bank Global Auto Industry Conference January 10, 2017 Exhibit 99.1

Slide 2

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: conditions within the automotive industry, including (i) the automotive vehicle production volumes and schedules of our customers, (ii) the financial condition of our customers and the effects of any restructuring or reorganization plans that may be undertaken by our customers, including work stoppages at our customers, 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; our ability to execute on our transformational plans and cost-reduction initiatives in the amounts and on the timing contemplated; 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; 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, 2015). 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. New business wins, re-wins and backlog 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.

Slide 3

Visteon today and shareholder value creation A global leader in automotive cockpit electronics delivering a rich, connected cockpit experience for all cars from luxury to entry segment Manufacturing locations 22 10,000 Employees 18 Countries Technical centers 18 $3.1B Annual sales (Electronics) Company headquarters Van Buren Township, Michigan, United States 3-year total shareholder return (12/30/13 – 12/30/16) Visteon 68% S&P 500 30% Peer Group (1) 14% (1) Peers include Autoliv, BorgWarner, Continental, Delphi and Gentex.

Slide 4

Broadest cockpit electronics portfolio in the industry The only pure-play cockpit electronics supplier in the industry Global market share leader across multiple products Debuted the first internet app infotainment platform at CES 2017 First to market with cockpit domain controller Instrument clusters Head-up displays Information displays Infotainment Audio Cockpit domain controllers Telematics

Slide 5

Strategic imperatives communicated at 2016 DB Conference Status update Focused and disciplined execution of strategy is accelerating positive results Strengthen the Core Move Selectively to Adjacent Products Deliver Cost Efficiencies Build organization with exceptional talent across variety of disciplines $5.4 billion in new business wins in 2016 Launched record number of new products in 2016 with 41 in China Launched first internet app infotainment platform at CES 2017 2nd major award for SmartCoreTM cockpit domain controller Expanded into windshield head-up displays business Increased adjusted EBITDA margin from 9.5% in 2015 to ~11% in 2016 Generated ~$155 million of adjusted free cash flow in 2016 $2.2 billion in 2016 capital returns

Slide 6

Strong growth in China – the world’s largest automotive market Strong position in the world’s largest automotive market Visteon Domestic China Sales 20% sales CAGR in domestic sales from 2015-2017 2017 Drivers and Assumptions Domestic vehicle production volumes forecasted to grow at ~5% Continued sales tax incentive for small cars New product launches drive Visteon sales faster than market Infotainment and SmartCoreTM are largest opportunities for Visteon Early engagement with China OEMs on autonomous technology Joint Venture Partnerships Strong partnerships with “Big 4” automakers (together represent over 50% of China auto market) (Dollars in millions)

Slide 7

Delivering on technology roadmap 2015 Launched domain controller for cockpit 2017 Launched next-generation infotainment 2018 Launch autonomous driving domain controller platform More than 1,100 total visitors (by appointment only) Over 500 visitors, representing 45 vehicle manufacturers More than 100 investors 41 media and industry analyst briefings with publications such as Automotive News, Forbes, New York Times, TheStreet.com SmartCoreTM PhoenixTM

Slide 8

Visteon 5-year business plan Sales CAGR of 9% outpacing industry production volume growth of 2.4% 16% CAGR (2019-21) 9% CAGR (2016-2021) Visteon Electronics Sales Business Plan Assumptions IHS global production volumes forecasted to grow at 2.4% CAGR from 2016-2021 (reduced from prior plan projection of 3.0%) Key drivers: Improved backlog of $16.5 billion provides strong level of sourced business Growth in three key segments – Clusters 11% CAGR, Infotainment 20%, Head-up Displays 75% New offerings including SmartCoreTM and PhoenixTM drive higher software content China sales outpacing overall company growth rate (Dollars in billions)

Slide 9

Record new business wins driven by technology leadership Electronics only New business wins focused on faster growing markets (Dollars in billions) $5.4 billion consolidated new business wins 11% Increase $16.5 billion current backlog (lifetime) Note: Backlog represents cumulative remaining life-of-program booked sales. 26% Increase

Slide 10

Backlog provides solid foundation for five-year plan 2017-2021 percent sourced sales Note: Backlog represents cumulative remaining life-of-program booked sales. (1) Reflects estimated new business wins needed in 2017 and 2018 to achieve 5-year sales outlook. A portion of these wins would launch by 2021, with the remainder launching in future years. $3.1-3.2 $3.5 $4.7 ~100% Sourced 78% Sourced 42% Sourced 90% Sourced 58% Sourced $4.0 $3.3 NBW required in 2017/18 to achieve 5-year outlook $16.5 billion current backlog (Dollars in billions) (1) Plan assumes annual new business win rate of ~$6 billion in 2017 and 2018 (vs. $5.4 billion in 2016) $16.5 $6.5 $5.5 2017-2021 sourced business 2022+ sourced business Business that will launch in 2017- 2021 Business that will launch post 2021

Slide 11

New technology offerings drive higher growth Instrument clusters Head-up displays Information displays Entry infotainment SmartCore™ Telematics Autonomous driving Visteon Core Products New Offerings Visteon 2016-2021 CAGR vs. Market Phoenix™ infotainment

Slide 12

2017 strategic imperatives Strengthen Core Business Develop Level 3/4 Autonomous Driving Platform Accelerate China Business Deliver higher sales and improve margins to ~11.5% Drive new business wins to achieve combined ~$12 billion target for 2017/2018 Continued focus on operational excellence Achieve double-digit China sales growth in 2017 Introduce SmartCoreTM and PhoenixTM technologies in China Leverage joint venture relationships to drive adoption of new offerings Leverage SmartCoreTM technology platform for sensor fusion Early engagement with selected customers Launch technology platform at CES 2018

Slide 13

Capital Deployment Strategy and Financial Guidance Deutsche Bank Global Auto Industry Conference

Slide 14

$3.5 billion of capital returns to shareholders since 2012… …Committed to future shareholder distributions (Dollars and shares in millions) Represents the dollar weighted average of the average price of shares purchased during the period 2012 through 2015 (adjusted for $43.40 per share special distribution) and the actual average price for shares purchased in 2016. Average Price of All Repurchase Programs (1) $51.25 Special Distribution Share Repurchases New share repurchase authorization for $400 million to be executed through March 2018 Adjusted Free Cash Flow Opportunity for additional capital returns $2,236 $3,536 12/31/16E Fully Diluted Share Count: ~33.3M

Slide 15

Full-year 2016 and 2017 guidance Raising guidance for 2016 with continued margin improvement in 2017 (Electronics product group) FY 2016 Prior Guidance FY 2016 NEW Guidance Sales ~$3.1B ~$3.1B Adjusted EBITDA $325 - 335M $340 - 345M Adjusted EBITDA Margin 10.5% - 10.8% ~11% Adjusted free cash flow $125 - 150M $155 - 160M FY 2017 Guidance $3.1 - 3.2B $355 - 370M ~11.5% $165 - 180M

Slide 16

Reaching long-term margin objective faster than anticipated Increasing margins through cost leverage and increased software content in new offerings Adjusted EBITDA margin (Electronics Product Group) Raising the company’s long-term Adjusted EBITDA Margin objective from 12% to 14% while investing in future technologies ~ ~

Slide 17

Delivering shareholder value Long-Term Growth Through Technology Leadership Margin Expansion / Cash Flow Generation Return Enhancement Through Capital Deployment Revenues to grow to $4.7B in 2021 with current backlog and future business wins Leadership in next-gen infotainment and SmartCoreTM domain controller technologies Improved adjusted EBITDA margin by ~150 bps in 2016 Raising long-term adjusted EBITDA margin objective from 12% to 14% Track record of capital returns: over $3.5 billion since 2012 New share repurchase authorization for $400 million to be executed through March 2018

Slide 18

Appendix Deutsche Bank Global Auto Industry Conference

Slide 19

Use of non-GAAP financial information Because not all companies use identical calculations, adjusted EBITDA, free cash flow and adjusted free cash flow used throughout this presentation may not be comparable to other similarly titled measures of other companies. In order to provide the forward-looking non-GAAP financial measures for full-year 2016 and 2017, the Company is providing reconciliations to the most directly comparable GAAP financial measures on the subsequent slides. The provision of these comparable GAAP financial measures is not intended to indicate that the Company is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this presentation and the adjustments that management can reasonably predict.

Slide 20

2017 volume and exchange rate assumptions Global volumes forecasted to increase 1.3% in 2017 2017 full-year impact of movements in FX rates (3) Key exchange rate assumptions 2017 production volumes (1) (2) (1) Source: IHS November 2016 forecast. (2) As of January 9, 2017. (3) Excluding hedges.

Slide 21

2017 vs. 2016 Y/Y drivers Volume: IHS global volumes increase 1.3% in 2017 vs. 2016 Key Visteon customers forecasted to grow below overall market Net New Launches: solid net new product launches Currency: unfavorable impact of Chinese RMB and Euro Pricing: in-line with historical levels Volume / Mix: volume growth offset by unfavorable mix Currency: unfavorable impact of Chinese RMB and Euro Business Equation: material and manufacturing cost savings and lower fixed costs more than offset customer pricing givebacks Sales Adjusted EBITDA

Slide 22

2016 and 2017 guidance reconciliation Adjusted EBITDA (Electronics Product Group)

Slide 23

2016 and 2017 guidance reconciliation (cont’d) Free Cash Flow and Adjusted Free Cash Flow (Electronics Product Group)

Slide 24

Instrument cluster market overview Market Analysis Market Size Market Share (By Revenue) Significant increase on “ALL digital” design solutions Architectural changes to function oriented “Domain Controller” Sourcing models separating HW from SW providers Higher display performance (optical, resolution, size), linkage to Advanced Driver Assistance System and Autonomous Driving Electrification driving power efficiency $7.3B $9.7B 29% 31% 1% -6% -11% CAGR Revenue ($B) Volume (M) 32% 22% 6% -3% -3% CAGR $7.3B $7.7B $8.2B $8.7B $9.4B $9.7B 6% Data Source: IHS Global Production Forecast March-2016. MTJ Cluster Market Analysis 2015-2016, April 2016 (D5 = Fully digital; D4 = Hybrid - gauges & large color TFT; D3 = Hybrid with mid size display; D2 = Hybrid with dot matrix / mono TFT; D1 = gauges & small LCD)

Slide 25

Center information display market overview Market Analysis Market Size Market Share (By Revenue) Consumer electronics experience drives demand in automotive (pleasure and aesthetics – OEM design studio/marketing key initiators for early engagement) Increase in Display functions (size, sensing, gesture, haptic feedback, functional safety, biometric) Advancement in SOC technology and price reduction are driving multi displays use, separation of silver box, and replacing traditional devices (buttons, mirrors) Improved optical quality (resolution, brightness, viewing angle, local diming, HDR) Seamless integration and functional surfaces extend outside the “traditional display” area (secret till lit, light effects, touch) 55% -21% CAGR 52% -25% CAGR 11% $2.5B $2.6B $3.0B $3.3B $3.8B $4.3B Revenue ($B) Volume (M) $2.5B $4.3B Data Source: IHS Q3 2016 Display Market Report, w/Visteon intelligence updates.

Slide 26

Head-up display market overview Market Analysis Market Size Market Share (By Revenue) Strong market trend for wider HUD image Strong demand for Augmented Reality HUD from Premium pulled by Autonomous Driving WHUD maintains higher market shares but balanced by CHUD introductions for lower car segments Market will more than triple in volume and revenue within the plan period (2016 -2021) as Market changes from niche to mainstream 25% 33% CAGR 33% 40% CAGR 29% $0.5B $0.6B $0.8B $1.0B $1.3B $1.6B NA NA Revenue ($B) Volume (M) $0.5B $1.6B Data Source: Marketing Technology Japan CO, Ltd.2014&2016 ; Techno Systems Research 2015; IHS 2014 ; Visteon IFS and Visteon Product Management Triangulations

Slide 27

Audio market overview Market Analysis Market Size Market Share (By Revenue) Audio market decline as revenue transitions to Entry Infotainment Commodity market with high cost-focus (product price & engineering bill) Does not include a color TFT display – therefore not a good solution for integrating functionality with a smartphone Semi-AM competitors (FlyAudio) in Emerging Markets Revenue ($B) Volume (M) $5.2B $2.8B -11% 22% CAGR 5% -9% 22% CAGR 6% -11% $5.2B $4.9B $4.4B $4.1B $3.4B $2.8B Audio Data Source: IHS Component Forecast Database from July 2016  normalized on IHS Worldwide Production Forecast from March 2016. Translated by Visteon into Market Segmentation. Visteon ASP estimates are applied by market segment to derive revenues and validated with data from Baird Equity Research Sept. 2015.

Slide 28

Infotainment market overview Market Analysis Market Size Market Share (By Revenue) Largest revenue product line Moderate growth rate in Mid / High; large growth in Entry (volume and revenue) Mid/High grows by adding C/D segments; Entry as base Audio replacement Large number of infotainment suppliers with 5 controlling 50% of the market Key drivers are smartphone integration, apps, FOTA, open source standards, cyber security Revenue ($B) Volume (M) $15.7B $22.2B -11% 22% CAGR 5% -9% 22% CAGR 6% 7% $15.7B $16.6B $18.2B $19.4B $21.1B $22.2B All Info Data Source: IHS Component Forecast Database from July 2016  normalized on IHS Worldwide Production Forecast from March 2016. Translated by Visteon into Market Segmentation. Visteon ASP estimates are applied by market segment to derive revenues and validated with data from Baird Equity Research Sept. 2015.

Slide 29

Telematics market overview Market Analysis Market Size Market Share (By Revenue) Increasing wireless complexity Multiple access & security needs Connected services (FOTA / Vehicle data services) High-speed vehicle networking (Ethernet) Increasing data volume and speeds European eCall regulation Revenue ($B) Volume (M) $2.7B $6.0B 2016 Visteon share includes Connectivity revenue that is not TCUs; TCU market share = 1% 14% CAGR 17% CAGR $2.7B $3.4B $4.2B $4.8B $5.5B $6.0B Data Source: Strategy Analytics for Revenue and Volume; IHS for market share

Slide 30

EX-99.2

Exhibit 99.2

 

LOGO   NEWS RELEASE

Visteon Announces New $400 Million Share Repurchase Authorization

VAN BUREN TOWNSHIP, Mich., Jan. 10, 2017 – Visteon Corporation (NYSE: VC) today announced that its board of directors has authorized a share repurchase program of up to $400 million of common stock to be executed through March 2018, reflecting the company’s strong balance sheet and free cash flow generation. Visteon expects to fund the repurchases through excess cash on hand.

“We are pleased to announce this new repurchase program, further underscoring our commitment to driving value for our shareholders,” said Sachin Lawande, Visteon president and CEO. “This authorization demonstrates our board’s confidence in Visteon’s ability to generate value over the long term as we continue to execute on our exciting growth initiatives as a differentiated provider of cockpit electronics. We believe that there is significant upside for Visteon given the exciting future of the connected car, and we are uniquely well-positioned to deliver on that potential.”

This new authorization follows the company’s successful track record of returning approximately $3.5 billion of capital to shareholders since 2012 through share buybacks and special distributions.

Shares may be repurchased from time to time in open market transactions or in privately negotiated transactions depending on market and economic conditions, share price, trading volume, alternative uses of capital and other factors. Such purchases will be made in accordance with applicable U.S. securities laws and regulations.

About Visteon

Visteon is a global company that designs, engineers and manufactures innovative cockpit electronics products and connected car solutions for most of the world’s major vehicle manufacturers. Visteon is a leading provider of instrument clusters, head-up displays, information displays, infotainment, audio systems, telematics solutions and SmartCore™ cockpit domain controllers. Visteon also supplies embedded multimedia and smartphone connectivity software solutions to the global automotive industry. Headquartered in Van Buren Township, Michigan, Visteon has approximately 10,000 employees at more than 40 facilities in 18 countries. Visteon had sales of $3.25 billion in 2015. Learn more at www.visteon.com.

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Contacts:

Media:

Jim Fisher

734-710-5557

734-417-6184 – mobile

jfishe89@visteon.com

Investors:

Bill Robertson

734-710-8349

william.robertson@visteon.com

 

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