Visteon Corporation (
Q4 2011 Earnings Conference Call
February 27, 2012 8:30 AM ET
Chuck Mazur – VP, IR
Don Stebbins – Chairman, CEO, and President
Marty Welch – EVP and CFO
Himanshu Patel – JPMorgan
Kirk Ludtke – CRT Capital Group
Brian Johnson – Barclays Capital
Colin Langan – UBS
Matt Stover – Guggenheim
John Lovallo – Bank of America Merrill Lynch
Good morning and welcome to the Visteon Fourth Quarter Full-Year 2011 Earnings Call.
All lines have been placed on a listen-only mode to prevent background noise. As a reminder, this conference call is being recorded.
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Before we begin this morning’s conference call, I’d like to remind you 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 statements. Please refer to the slide entitled “Forward-looking Information” for further information.
Presentation materials for today’s call were posted to the company’s website this morning. Please visit
to download the materials if you have not already done so.
I would now like to introduce your host for today’s conference call, Mr. Chuck Mazur, Vice President, Investor Relations for Visteon Corporation.
Mr. Mazur, you may begin.
Thank you, Christie. Good morning and thank you for joining us for Visteon’s fourth quarter and full-year 2011 earnings call. As Christie mentioned, our presentation materials have been posted to the Investor Relations section of our website.
Today’s presenters are Don Stebbins, Chairman, CEO and President; and Marty Welch, Executive Vice President and Chief Financial Officer. Following the formal presentation, we will open up the lines to take your questions.
With that, I would like to turn it over to Don.
Thanks Chuck, and good morning, everyone. During today’s presentation I will review Visteon’s 2011 fourth quarter and full-year performance and then I will turn the call over to Marty for the financial review.
As we take you through our 2011 financial results, we want to stress our strong operational performance and our investments in our product portfolio. For the year, we were awarded over $1 billion in incremental new business, showing growth across all of our product lines and in all regions of the world.
During 2011, we expanded our geographic footprint, by opening new facilities in Morocco, Russia, China, India and Indonesia. This continues our progress into the growth markets of the world. We also continued to make investments in technology and innovation to support our customers. Last year, we invested approximately $600 million in research and development and capital expenditures.
During 2011, we continued to improve quality and reduce warranty costs. This performance was recognized by our customers through over 50 different awards. We also received a PACE Award nomination. We also continued to focus on our asset optimization. In 2011, we completed the sale of a portion of our Duckyang joint venture, while also signing a non-binding memorandum of understanding to sell a significant majority of our interiors business to Yanfeng Visteon. And on February 15
, we completed the closure of our Spanish electronics facility.
In 2011, our financial performance was strong. Adjusted EBITDA was $685 million, the highest ever achieved by Visteon. Our full-year adjusted EBITDA margin was 8.5%, which was the third consecutive year of improvement and we are on track to achieve our goal of double-digit adjusted EBITDA margins by 2014. Our balance sheet remains strong and we funded our 2012 and part of our 2013 pension obligation. YFV, our large unconsolidated subsidiary in China had another record year, with sales reaching $6.3 billion. And lastly, we are reaffirming our full-year 2012 guidance given at Deutsche Bank Conference in January.
As I mentioned, on November 30
, we signed a non-binding MoU to sell a majority of our interiors business to YFV. We continue to work with YFV to complete this complex transaction. This transaction will strengthen our 17-year relationship with SAIC and HASCO, it also allows us to retain a 50% ownership in a truly global interiors business. Overall, it will create the second largest global interior supplier, serving more than 30 customers from over 60 facilities in 16 countries.
On slide five, I also want to give you an update on our Spanish electronics facility. Last June, we announced that we had the made very difficult decision to close our electronics facility in Cadiz, Spain. In early February of this year, we reached agreement with the employees, local unions and governmental authorities regarding specific closure arrangements. And on February 15
, cash payments totaling $45 million were made to cover severance and other agreed upon costs.
On slide six, we provide our new business wins for 2011. They totaled almost $1.1 billion or 13.2% of 2011 revenue, which is an all-time record. We had important wins in each of our four product lines with over 60% of the wins in 2011 from our climate business and 24% in electronics. Similarly, the wins were concentrated in the Asia Pacific and European regions, 45% and 29% respectively.
Slide seven shows the break down of our full-year sales of $8 billion by product line and by customer. The slide also shows the impact of our nonconsolidated joint venture sales of $4 billion. Climate, our largest product line, generated 49% of total consolidated sales for the year. And, on a market penetration basis, interiors was our largest product line, accounting for 42% of our sales, largely due to YFV. Hyundai-Kia accounted for 31% of our full-year sales and Ford accounted for 27%. If we include our nonconsolidated affiliates, Hyundai-Kia and Ford contributed 22% and 21% of our sales respectively.