2006 Credit Suisse Conference

Transcription

1 2006 Credit Suisse Conference September 7, 2006

2 Our Three-Year Plan Restructure Improve Base Operations Grow the Business Action underperforming and non-strategic facilities Achieve competitive cost sourcing and footprint for manufacturing, engineering and SG&A Increase quality and on-time delivery Deliver financial results: cash flow and EBIT-R Optimize supplier partnerships Identify and implement operating efficiencies Reduce premium costs Improve systems and infrastructure Leverage focused product strategy Increase innovation Expand diversified customer base Achieve profitable sales growth Leverage technology for global competitive advantage Invest in our people Control our destiny Drive year-over-year improvement Beat the Competition 2

3 First Half Highlights Improved financial performance year/year and sequentially Completed seven-year, $800 million secured term loan Executing the three-year plan; restructuring on target Enhancing global footprint Solid new business wins with diverse customers across all key products 3

4 Restructuring Plans Likely Timing to Implement 11 Likely Restructuring Action Fix Sell Other Remaining items in 2006 are divestitures No significant negative change in cost, timing or expected savings from activities Current efforts are focused on 2007 items Please see appendix for important disclosures regarding Forward Looking Information". On Track 4

5 Enhancing Manufacturing Footprint Dalian, China Climate Control Second climate facility in China Supports multiple Hyundai models Capacity for 1 MM units p.a. 300 employees Gebze, Turkey Climate Control HVAC and cooling modules Supports Hyundai Accent 150 employees Nitra, Slovakia Interiors & Climate Door panels Peugeot 207 Climate control for Kia Will employ 400 people Climate Control -- Dalian, China Production at Nitra faciltiy in Slovakia 5

6 Global Technical Capability Visteon Corporate Offices and Innovation Center, U.S. Kerpen Corporate Office & Innovation Center, Germany Mexico Technical Center Shanghai Technical Center 6

7 Driving Operational Excellence Improving all areas of our operations Focusing on speed and performance Substantial quality and safety improvements in the first half 2006 Continued focus on cash flow and capital allocation Improving visibility further down in the organization Performance Driven Culture 7

8 8 Improving the Operations Lost Time Case Rate % 0.21 $600 $550 $500 $450 $400 $586 Capital Expenditures 32% $450 $ $ YTD $ Bud 2006 Current OEM PPM Inventory 66% YTD E

9 Recent Launches Air Induction System and Boston Acoustics Jeep Compass Cockpit and console Nissan Quest Door panels, rear lights Peugeot 207 USB audio interface module Volkswagen Golf, Golf Plus, Jetta, Touran and Passat Climate, Electronics and Interiors Ford Galaxy and S-MAX Powertrain cooling system Ford Mustang Shelby GT500 Boston Acoustics premium-branded audio USB audio interface -- Courtesy of Volkswagen AG 9

10 Recent Business Wins DaimlerChrysler Air Induction System, A/C Lines (North America) Front and Rear Lighting (North America) Ford Front HVAC Module (Global) Hyundai/Kia Full Thermal System (Asia Pacific) Asian OEM Instrument Panel, (North America) North America OEM 2009 model year Radar-based Side Object Awareness 10

11 Trends and Technologies Connectivity Personalized Interiors Advanced Information Displays Advanced Refrigerant Technologies 11

12 Product Sales Comparison 1H Non-Ford $ 3,512 35% $ 2,969 52% Ford ROW 1,363 14% 1,339 24% Ford NA 5,115 51% 1,371 24% Total $ 9,990 $ 5,679 ACH transaction decreased Ford sales by $3.9 billion and non-ford sales by $439 million Lower volumes on key North America platforms at various customers offset by new business Please see appendix for important disclosures regarding Forward Looking Information". 12

13 Product Cost of Sales Comparison 1Q 06 2Q 06 1H 06 Sales $2,816 $2,863 $5,679 COS 2,573 2,553 5,126 Gross Margin 8.6% 10.8% 9.7% Gross margin increase of $163 million from First Half 2005 Lower post retirement expense, benefit changes & transfers Material and manufacturing cost reductions Benefits of ACH transactions Price reductions, raw material increases and currency, partial offsets Please see appendix for important disclosures regarding Forward Looking Information". 13

14 SG&A Comparison 1Q 06 2Q 06 1H 06 SG&A $168 $194 $362 % Product Sales 6.0% 6.8% 6.4% First half significantly lower than 2005 ACH transactions Lower bad debt expense Lower pension & OPEB expense, cost efficiencies Incentive compensation partial offset Please see appendix for important disclosures regarding Forward Looking Information". 14

15 Net Income 1Q 06 2Q 06 1H 06 Operating income $ 76 $ 95 $ 171 Interest expense, net (39) (38) (77) Equity in affiliates Income taxes (30) (17) (47) Minority interests (7) (10) (17) Change in accounting (4) - (4) Extraordinary item Net Income $ 3 $ 50 $ 53 Memo: Asset impairments included above $ - $ (22) $ (22) Please see appendix for important disclosures regarding Forward Looking Information". 15

16 EBIT-R 1Q 06 2Q 06 1H 06 Net income $ 3 $ 50 $ 53 Interest expense, net Income taxes Asset impairments Extraordinary Gain - (8) (8) EBIT-R $ 72 $ 119 $ 191 Memo: Depreciation & Amortization $ 102 $ 106 $ 208 Please see appendix for important disclosures regarding Use of Non-GAAP Financial Information. 16

17 EBIT-R Since ACH Transactions 4Q 05 1Q 06 2Q 06 Net income $ 1,338 $ 3 $ 50 Interest expense, net Income taxes Asset impairments Extraordinary Items (1,832) - (8) EBIT-R $ (102) $ 72 $ 119 Memo: Depreciation & Amortization $ 122 $ 102 $ 106 Please see appendix for important disclosures regarding Use of Non-GAAP Financial Information. 17

18 Free Cash Flow 1Q 06 2Q 06 1H 06 Net income $ 3 $ 50 $ 53 Depreciation and amortization Postretirement benefit relief (23) (49) (72) Asset impairments Extraordinary item, net of tax - (8) (8) Trade working capital * (96) (107) (203) Other assets, liabilities, and non-cash items (18) Cash provided from (used by) operating activities (32) Capital expenditures (85) (98) (183) Free cash flow $ (117) $10 $ (107) Cash $ 881 $ 836 Net Debt** 1,202 1, * Defined as change in accounts receivables, inventory and trade payables as disclosed in the consolidated statements of cash flows. ** Net debt is defined as total debt (2Q 06 - $2.04 billion; 1Q 06 $2.08 billion) less cash (2Q 06 - $836 million; 1Q 06 - $881 million). Please see appendix for important disclosures regarding Use of Non-GAAP Financial Information. 18

19 Financing Update Closed on seven-year $800 million secured term loan Repaid $350 million and $241 million term loans Retired $150 million of 8.25% notes Replaced June 07 revolver of $500 million with two facilities totaling $675 million $325 million European securitization $350 million U.S. secured revolver Maturity extended and borrowing cost reduced Please see appendix for important disclosures regarding Forward Looking Information". 19

20 Production: Not Just Ford N.A. First half Ford Europe higher than 2005 with strong 3Q expected, favorable to plan First half Nissan North America production lower than 2005, stabilizing in 2H Hyundai volumes higher with the Sonata and Santa Fe in U.S., some impact from labor disruptions in Korea expected Ford N. America down announced production is lower than expected 2H 2H Expected to to be be challenging Please see appendix for important disclosures regarding Forward Looking Information". 20

21 Ford North American Content Historic CPV of about $3,000 for both cars and trucks 2005 Proforma CPV of about $800 with cars higher than trucks Significant content on Five Hundred, Montego and Freestyle produced in Chicago includes significant content from ACH Facilities Low content on Milan, Fusion and Zephyr in Mexico 2006 production mix more heavily weighted to new cars 21

22 Why Visteon Global business Diverse customer base, expansion with growing OEMs Strong product portfolio Leadership committed to driving operational improvements Restructuring plans to improve the business Significant year-over-year EBIT-R improvements Improving free cash flow through 2008 Improved results in each of the next 3+ years * Please see slides titled Use of Non-GAAP Financial Information and Forward Looking Information in the appendix to this presentation for further information. 22

23 Appendix

24 24 Forward Looking Information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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 general economic conditions, including changes in interest rates and fuel prices; the automotive vehicle production volumes and schedules of our customers, and in particular Ford s vehicle production volumes; our ability to satisfy our future capital and liquidity requirements and comply with the terms of our existing credit agreements and indentures; the financial distress of our suppliers, and other significant suppliers to our customers, and possible disruptions in the supply of commodities to us or our customers; our ability to implement, and realize the anticipated benefits of, restructuring and other cost-reduction initiatives and our successful execution of internal performance plans and other productivity efforts; the timing and expenses related to restructurings, employee reductions, acquisitions or dispositions; increases in raw material and energy costs and our ability to offset or recover these costs; the effect of pension and other post-employment benefit obligations; increases in our warranty, product liability and recall costs; the outcome of legal or regulatory proceedings to which we are or may become a party; as well as those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2005). We assume no obligation to update these forward-looking statements.

25 Use of Non-GAAP Financial Information 25 Throughout this presentation, the Company has provided information regarding certain non-gaap financial measures. These measures include free cash flow, and EBIT-R. Free cash flow represents cash flow from operating activities less capital expenditures. EBIT-R represents net income (loss) before net interest expense and debt extinguishment cost and the provision for income taxes, excluding impairment, extraordinary item and net unreimbursed restructuring charges as well as the one-time gain on the ACH Transactions. Management believes that free cash flow is useful in analyzing the Company s ability to service and repay its debt and it uses the measure for planning and forecasting in future periods, as well as in management compensation decisions. Free cash flow is not a recognized term under accounting principles generally accepted in the United States ( GAAP ) and does not reflect cash used to service debt and does not reflect funds available for investment or other discretionary uses. Management believes EBIT-R is useful to investors because it provides meaningful supplemental information regarding the Company s operating results because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company s continuing operating activities. Management uses this measure for planning and forecasting in future periods, as well as in management compensation decisions. EBIT-R is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of EBIT-R may not be comparable to other similarly titled measures of other companies. Additionally, EBIT-R is not intended to be a measure of free cash flow for management s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The amounts shown for EBIT-R, as presented herein, differ from the amounts calculated under the definition of EBITDA used in our debt instruments. The definition of EBITDA used in our debt instruments is further adjusted for certain non-recurring charges and other items and is used to determine compliance with financial covenants.

26 26 EBIT-R (in millions) 1Q 06 2Q 06 1H 06 Net income / (loss) $ 3 $ 50 $ 53 Interest expense net Provision for income taxes Asset impairments Extraordinary item - (8) (8) EBIT-R $ 72 $ 119 $ 191

27 27 EBIT-R (cont d) (in millions) 2Q 05 4Q 05 Net income / (loss) $(1,238) $ 1,338 Interest expense net Provision for income taxes (2) 23 Gain on ACH transactions - (1,832) Asset impairments 1, EBIT-R $ (33) $ (102)

28 28 Free Cash Flow (in millions) 1Q 06 2Q 06 1H 06 Cash (used by) provided from operating activities $ (32) $ 108 $ 76 Capital expenditures (85) (98) (183) Free cash flow $ (117) $ 10 $ (107)