Visteon has reported sales of US$770m and net income attributable to Visteon of $28m, or $0.81 per diluted share in the third quarter.
Adjusted EBITDA was $75m for the third quarter, compared with $65m in the same period last year. Adjusted net income, a non-GAAP financial measure as defined below, was $38m for the third quarter, or $1.10 per diluted share. Average diluted shares outstanding during the third quarter totaled 34.4m.
In the first three quarters of 2016, global vehicle manufacturers awarded Visteon new business wins amounting to $4.1 billion of lifetime revenue. Third-quarter wins totaled $1.3 billion. The ongoing backlog, defined as cumulative remaining life-of-program booked sales, was approximately $16.2 billion as of 30 September 2016.
“During the quarter, our engineering and manufacturing execution was very strong, and we continue to improve margins and free cash flow despite lower than expected production volumes,” said Visteon president and CEO Sachin Lawande. “We also continue to win new business at a record pace. Our third-quarter wins included our second major award for our SmartCore cockpit domain controller technology for a 2020 European vehicle program, as well as a fully reconfigurable instrument cluster that extends this technology to a broader range of vehicles.”
Lawande added: “Our third-quarter results demonstrate our ability to increase margins while focusing on delivering long-term growth. As a result of our strong performance, we are increasing the low end of our full-year guidance for Electronics Product Group adjusted EBITDA and adjusted free cash flow.”
Third quarter detail
Visteon reported third-quarter sales of $770m, a decrease of $38m compared with the same quarter last year. Electronics Product Group sales totaled $749m in the third quarter of 2016, a decrease of $22m from the third quarter last year. The decrease is primarily related to lower production volumes and customer pricing partially offset by new business. Other operations sales totaled $21m in the third quarter of 2016, a decrease of $16m from the third quarter last year, primarily related to the sale of an Interiors European facility in 2015.
For the Electronics Product Group, on a regional basis, Asia accounted for 41% of sales, Europe 29%, North America 28%, and South America 2%.
Visteon gross margin for the third quarter of 2016 was $105m or 13.6% of sales, 0.6 points higher than the prior year. Selling, general and administrative expenses were $53m, or 6.9% of sales, for the third quarter, compared with $59m, or 7.3% of sales, a year earlier.
For the third quarter of 2016, the company reported net income attributable to Visteon of $28m, or earnings per share of $0.81 per diluted share, compared with $5m and $0.12 for the same period in 2015. The third quarter improved by $23m compared with the same period last year, primarily reflecting increased net income related to the Electronics Product Group and discontinued operations.
Third-quarter Visteon net income includes $13m of impairment-related charges, and $5m of restructuring expense, partially offset by income from discontinued operations of $7m and $1m in net gain on the sale of non-consolidated affiliates. Adjusted net income, which excludes these costs, was $38m, or $1.10 per share.
Adjusted EBITDA for the Electronics Product Group was $75m for the third quarter, compared with $67m for the same quarter last year. The improvement primarily reflected cost efficiencies. Adjusted EBITDA for Other Operations was break-even, $2m higher than adjusted EBITDA for the third quarter of 2015.
Cash and Debt Balances
As of 30 September 2016, Visteon had global cash balances totaling $854m. Total debt as of 30 September was $371m.
For the third quarter of 2016, Visteon generated $24m of cash from operations, compared with $70m in the same period a year earlier. Capital expenditures for the third quarter of 2016 were $19m, compared with $29m during the third quarter of 2015. Adjusted free cash flow was $25m in the quarter, compared with $77m in the third quarter of 2015. Adjusted free cash flow decreased year over year, reflecting timing of trade working capital and higher cash taxes.
Visteon generated $33m of cash from operations related to the Electronics Product Group in the third quarter. Capital expenditures for the Electronics Product Group totalled $18m and adjusted free cash flow was $23m.
During the first quarter of 2016, Visteon entered into an accelerated stock buyback program with a third-party financial institution to purchase shares of common stock for an aggregate purchase price of $395m. Under the program, Visteon paid the financial institution $395m and received an initial delivery of 4,370,678 shares of common stock using a reference price of $72.30. The program was concluded in October 2016 and the company received an additional 1,211,979 shares. In total, Visteon purchased 5,582,657 shares at an average price of $70.75 under this program.