vc-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

________________

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 001-15827

VISTEON CORPORATION

(Exact name of registrant as specified in its charter)


State of	Delaware		38-3519512
(State or other jurisdiction of incorporation or organization)			(I.R.S. 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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $.01 Per Share	VC	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No__

Indicate by check mark whether the registrant: has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer,” "smaller reporting company" and “emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ü Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ü

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ü No ☐

As of April 21, 2022, the registrant had outstanding 28,111,246 shares of common stock.

Exhibit index located on page number 35.

Visteon Corporation and Subsidiaries

Index


Part I - Financial Information		Page
	Item 1 - Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	3
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Condensed Consolidated Statements of Changes in Equity (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3 - Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4 - Controls and Procedures	33
Part II - Other Information		34
	Item 1 - Legal Proceedings	34
	Item 1A - Risk Factors	34
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	34
	Item 6 - Exhibits	34
Exhibit Index		35
Signatures		35

Part I

Financial Information

Item 1.Condensed Consolidated Financial Statements

VISTEON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions except per share amounts)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Net sales	$	818	$	746
Cost of sales	(742)		(673)
Gross margin	76		73
Selling, general and administrative expenses	(44)		(45)
Restructuring and impairment	(7)		1
Interest expense	(3)		(3)
Interest income	1		1
Equity in net income of non-consolidated affiliates	3		—
Other income, net	5		4
Income (loss) before income taxes	31		31
Provision for income taxes	(8)		(12)


Net income (loss)	23		19
Less: Net (income) loss attributable to non-controlling interests	(1)		(3)
Net income (loss) attributable to Visteon Corporation	$	22	$	16

Comprehensive income (loss)	$	27	$	1
Less: Comprehensive (income) loss attributable to non-controlling interests	(1)		(2)
Comprehensive income (loss) attributable to Visteon Corporation	$	26	$	(1)




Basic earnings (loss) per share attributable to Visteon Corporation	$	0.79	$	0.57




Diluted earnings per share attributable to Visteon Corporation	$	0.77	$	0.56

See accompanying notes to the condensed consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)


	(Unaudited)
	March 31,		December 31,
	2022		2021
ASSETS
Cash and equivalents	$	402	$	452
Restricted cash	3		3
Accounts receivable, net	539		549
Inventories, net	331		262
Other current assets	176		158
Total current assets	1,451		1,424
Property and equipment, net	374		388
Intangible assets, net	116		118
Right-of-use assets	133		139
Investments in non-consolidated affiliates	58		54
Other non-current assets	111		111
Total assets	$	2,243	$	2,234
LIABILITIES AND EQUITY
Short-term debt	$	—	$	4
Accounts payable	539		522
Accrued employee liabilities	68		80
Current lease liability	28		28
Other current liabilities	214		218
Total current liabilities	849		852
Long-term debt, net	349		349
Employee benefits	190		198
Non-current lease liability	111		117
Deferred tax liabilities	28		27
Other non-current liabilities	74		75
Stockholders’ equity:
Preferred stock (par value $0.01, 50 million shares authorized, none outstanding as of March 31, 2022 and December 31, 2021)	—		—
Common stock (par value $0.01, 250 million shares authorized, 55 million shares issued, 28 million shares outstanding as of March 31, 2022 and December 31, 2021)	1		1
Additional paid-in capital	1,339		1,349
Retained earnings	1,686		1,664
Accumulated other comprehensive loss	(225)		(229)
Treasury stock	(2,260)		(2,269)
Total Visteon Corporation stockholders’ equity	541		516
Non-controlling interests	101		100
Total equity	642		616
Total liabilities and equity	$	2,243	$	2,234

See accompanying notes to the condensed consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Operating Activities
Net income (loss)	$	23	$	19
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization	27		27
Non-cash stock-based compensation	5		4
Equity in net loss (income) of non-consolidated affiliates, net of dividends remitted	(3)		—
Impairments	4		—
Other non-cash items	1		1
Changes in assets and liabilities:
Accounts receivable	6		4
Inventories	(71)		(17)
Accounts payable	25		2
Other assets and other liabilities	(38)		(29)
Net cash (used by) provided from operating activities	(21)		11
Investing Activities
Capital expenditures, including intangibles	(21)		(18)
Contributions to equity method investments	(1)		—
Loan repayments from non-consolidated affiliates	—		2
Other	1		1
Net cash used by investing activities	(21)		(15)
Financing Activities
Short-term debt, net	(4)		—
Net cash used by financing activities	(4)		—
Effect of exchange rate changes on cash	(4)		(10)
Net decrease in cash, equivalents, and restricted cash	(50)		(14)
Cash, equivalents, and restricted cash at beginning of the period	455		500
Cash, equivalents, and restricted cash at end of the period	$	405	$	486

See accompanying notes to the condensed consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions)

(Unaudited)


	Total Visteon Corporation Stockholders' Equity
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Visteon Corporation Stockholders' Equity		Non-Controlling Interests		Total Equity
December 31, 2021	$	1	$	1,349	$	1,664	$	(229)	$	(2,269)	$	516	$	100	$	616
Net income (loss)	—		—		22		—		—		22		1		23
Other comprehensive income (loss)	—		—		—		4		—		4		—		4
Stock-based compensation, net	—		(10)		—		—		9		(1)		—		(1)

March 31, 2022	$	1	$	1,339	$	1,686	$	(225)	$	(2,260)	$	541	$	101	$	642


	Total Visteon Corporation Stockholders' Equity
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Visteon Corporation Stockholders' Equity		Non-Controlling Interests		Total Equity
December 31, 2020	$	1	$	1,348	$	1,623	$	(304)	$	(2,281)	$	387	$	123	$	510
Net income (loss)	—		—		16		—		—		16		3		19
Other comprehensive income (loss)	—		—		—		(17)		—		(17)		(1)		(18)
Stock-based compensation, net	—		(11)		—		—		9		(2)		—		(2)
Dividends declared to non-controlling interest	—		—		—		—		—		—		(3)		(3)
March 31, 2021	$	1	$	1,337	$	1,639	$	(321)	$	(2,272)	$	384	$	122	$	506

See accompanying notes to the condensed consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Summary of Significant Accounting Policies

Basis of Presentation - Interim Financial Statements

The condensed consolidated financial statements of Visteon Corporation and Subsidiaries (the "Company" or "Visteon") have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments, except as otherwise disclosed) that management believes are necessary for a fair presentation of the results of operations, financial position, stockholders' equity, and cash flows of the Company for the interim periods presented. Interim results are not necessarily indicative of full-year results.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported herein. Considerable judgment is involved in making these determinations and the use of different estimates or assumptions could result in significantly different results. Management believes its assumptions and estimates are reasonable and appropriate. However, actual results could differ from those reported herein. Events and changes in circumstances arising after March 31, 2022, including those resulting from the impacts of COVID-19 and the subsequent semiconductor supply shortage, as further described in Note 14, "Commitments and Contingencies", will be reflected in management's estimates in future periods.

Allowance for Doubtful Accounts: The Company establishes an allowance for doubtful accounts for accounts receivable based on the current expected credit loss impairment model (“CECL”). The Company applies a historical loss rate based on historic write-offs by region to aging categories. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts of future losses, as necessary. The Company may also record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. The allowance for doubtful accounts was $4 million as of March 31, 2022 and December 31, 2021.

Recently Adopted Accounting Pronouncements

Government Assistance - In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance." to increase the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for the assistance, and the effect of the assistance on an entity’s financial statements. The amendments in this update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. The adoption of the guidance did not have a material impact on the Company’s condensed consolidated financial statements.

NOTE 2. Non-Consolidated Affiliates

Investments in Affiliates

The Company's investments in non-consolidated equity method affiliates include the following:


	March 31,		December 31,
(In millions)	2022		2021
Yanfeng Visteon Investment Co., Ltd. ("YFVIC") (50%)	$	36	$	36
Limited partnerships	12		10
Other	10		8
Total investments in non-consolidated affiliates	$	58	$	54

Variable Interest Entities

The Company evaluates whether joint ventures in which it has invested are Variable Interest Entities (“VIE”) at the start of each new venture and when a reconsideration event has occurred. The Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE having both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company determined that YFVIC is a VIE. The Company holds a variable interest in YFVIC primarily related to its ownership interests and subordinated financial support. The Company and Yangfeng Automotive Trim Systems Co. Ltd. ("YF") each own 50% of YFVIC and neither entity has the power to control the operations of YFVIC; therefore, the Company is not the primary beneficiary of YFVIC and does not consolidate the joint venture.

The Company's investments in YFVIC consists of the following:


	March 31,		December 31,
(In millions)	2022		2021
Payables due to YFVIC	$	31	$	20
Exposure to loss in YFVIC:
Investment in YFVIC	$	36	$	36
Receivables due from YFVIC	49		48


Maximum exposure to loss in YFVIC	$	85	$	84

Equity Investments

In 2018, the Company committed to make a $15 million investment in two funds managed by venture capital firms principally focused on the automotive sector pursuant to limited partnership agreements. As a limited partner in each fund, the Company will periodically make capital contributions toward this total commitment amount. As of March 31, 2022, the Company has contributed a total of approximately $10 million toward the aggregate investment commitments. These limited partnerships are classified as equity method investments.

NOTE 3. Restructuring and Impairments

Given the economically-sensitive and highly competitive nature of the automotive electronics industry, the Company continues to closely monitor current market factors and industry trends, including potential impacts related to COVID-19, taking action as necessary which may include restructuring actions. However, there can be no assurance that any such actions will be sufficient to fully offset the impact of adverse factors on the Company or its results of operations, financial position and cash flows.

Current restructuring actions include the following:

•Due to the current geopolitical situation in Eastern Europe the Company will indefinitely suspend operations in Russia beginning in the second quarter 2022. As such, the Company recorded $1 million of restructuring expense primarily related to employee severance. As of March 31, 2022, $1 million remains accrued related to this action.

•During the first quarter 2022 the Company approved and recorded $1 million of restructuring expense, primarily impacting Europe, in order to improve efficiencies and rationalize the Company's footprint. As of March 31, 2022, $1 million remains accrued related to this action.

•During 2021 the Company approved various restructuring programs, primarily impacting Europe and Brazil in order to improve efficiencies and rationalize the Company's footprint. During the first quarter 2022 the Company recorded an additional $1 million of expense in Brazil related to these actions. As of March 31, 2022, $3 million remains accrued related to these programs.

•During 2020 the Company approved various restructuring programs impacting engineering, administrative and manufacturing functions to improve efficiency and rationalize the Company’s footprint. As of March 31, 2022, $7 million remains accrued related to these programs.

•During 2018, the

SEC Form 10-Q filed by Visteon Corporation