Executive Summary

Q2 2025 EPS and profitability beat Street amid softer revenue; diluted EPS of $2.36 and adjusted EPS of $2.39 with adjusted EBITDA of $134M and a 13.8% margin matched last quarter’s record, supported by favorable one‑time commercial items and cost discipline .
Revenue of $969M fell year over year on lower Battery Management System (BMS) volumes and China softness, partially offset by new cockpit electronics launches; revenue was slightly below consensus while EPS was above .
Guidance reinstated and raised: FY25 sales $3.70–$3.85B, adjusted EBITDA $475–$505M, adjusted FCF $195–$225M; capex ~$115M, net engineering ~6% of sales; dividend initiated at $0.275/share, share repurchases to resume .
Bookings and product traction remained strong: $2.0B in new wins, 21 launches including a 25‑inch panoramic display on Audi Q3 and SmartCore programs at Volvo/Polestar; display sales up ~20% YoY, expanding into adjacent markets (CV/two‑wheelers) .

What Went Well and What Went Wrong

What Went Well

Record‑level margins and cash generation: adjusted EBITDA margin 13.8% (matching Q1) and Q2 adjusted free cash flow of $67M; H1 operating cash flow $165M and H1 adjusted FCF $105M underscore cash conversion discipline .
Commercial wins and launches: $2.0B quarterly bookings (YTD $3.9B), 21 launches including Audi Q3 panoramic display; “These results underscore the growing importance of the cockpit experience and the strength of our technology portfolio” — CEO Sachin Lawande .
Capital allocation confidence: dividend initiation ($0.275/share) and plan to resume buybacks, reflecting strong net cash ($361M) and cash generation; bolt‑on HMI/UX acquisition closed for $50M .

What Went Wrong

Revenue headwinds: Net sales declined YoY to $969M due to lower BMS volumes and China softness, with growth‑over‑market at −1% (ex‑China +4%) .
China drag persisted: management cited ongoing share shift toward domestic OEMs; while sequential sales improved, China lowered global growth‑over‑market by five points in Q2 .
Nonrecurring items elevated: ~$10M favorable one‑time items in Q2 (and ~$15M in Q1) aided margins; management does not expect similar levels in H2, implying normalized margins in low‑12% on lower H2 volume .

Financial Results

Trend vs prior periods

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Millions)	$939	$934	$969
Gross Margin ($USD Millions)	$134	$138	$141
Net Income Attributable ($USD Millions)	$122	$65	$65
Diluted EPS ($USD)	$4.37	$2.36	$2.36
Adjusted EPS ($USD)	$4.44	$2.40	$2.39
Adjusted EBITDA ($USD Millions)	$117	$129	$134
Adjusted EBITDA Margin (%)	12.5%	13.8%	13.8%

Actual vs Wall Street consensus (S&P Global)

Metric	Actual Q2 2025	Consensus Q2 2025	Surprise
Revenue ($USD Millions)	$969	$974.2*	Miss
Primary EPS ($USD)	$2.39 (Adj EPS)	$2.1463*	Beat
EBITDA ($USD Millions)	$134 (Adj EBITDA)	$119.9*	Beat

Values retrieved from S&P Global.*

KPIs

KPI	Q1 2025	Q2 2025
New Business Wins ($USD Billions)	$1.9	$2.0
Product Launches (count)	16	21
Operating Cash Flow ($USD Millions)	$70	$95
Adjusted Free Cash Flow ($USD Millions)	$38	$67
Net Cash ($USD Millions)	$343	$361
Capex ($USD Millions)	$35	$31
Growth‑over‑Market (%)	10%	−1% (ex‑China +4%)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales ($USD Billions)	FY 2025	$3.65–$3.85	$3.70–$3.85	Raised (midpoint)
Adjusted EBITDA ($USD Millions)	FY 2025	$450–$480	$475–$505	Raised
Adjusted Free Cash Flow ($USD Millions)	FY 2025	$175–$205	$195–$225	Raised
Capex ($USD Millions)	FY 2025	~$150 (planning assumption)	~ $115	Lowered
Net Engineering (% of Sales)	FY 2025	N/A	~6%	New detail
Q3 Sales Level	Q3 2025	N/A	“Close to Q1 2025 levels”	New detail
Dividend	Q3 2025	N/A	Initiated $0.275/share, payable Sep 5; record Aug 18	Initiated
Share Repurchases	2H 2025	Paused in Q2	Plan to resume opportunistically	Resuming
Tariffs Assumption	FY 2025	USMCA compliant parts exempt	Assumed unchanged; 97% flows exempt; pass‑through if changed	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Tariffs/macro	Deferred FY25 guidance due to tariff uncertainty (Q1)	Direct exposure low; 97% of Mexico‑US flows USMCA compliant; guidance assumes unchanged policy	Risk moderating; modeled explicitly
AI/technology & platformization	SmartCore/HPC wins; AI‑aligned portfolio (Q4)	Platform approach enabling “China speed”; investments in AI‑driven engineering/process improvements	Execution and speed improving
Product performance (Displays)	Multiple large display wins (Q4)	Display sales up ~20% YoY; Audi Q3 25" panoramic display; 48" OLED win with German luxury OEM	Accelerating
BMS and Electrification	Flexible BMS launches; electrification wins (Q1)	BMS lower YoY but sequentially higher; modeling Q3/Q4 similar to Q2; expanding content into power electronics	Stabilizing near‑term; pivot to power electronics
Regional trends	Outperformance ex‑China (Q4)	Americas strong (Ford/VW/Nissan); Europe outperformed production; China sequential improvement but YoY drag	Mixed; China drag easing
Vertical integration	Ongoing insourcing (Q4)	Pixomolding insourced in MX/TN; backlight unit/optical bonding insourcing to de‑risk China dependency	Progressing, cost/risk benefits
Capital allocation	Buybacks in 2024; strong FCF (Q4)	Dividend initiation; buybacks to resume; net cash $361M	More balanced returns

Management Commentary

“Our second quarter represents another quarter of proof points supporting our long-term growth strategy. We launched 21 new products across eight OEMs, secured $2.0 billion in new business, and expanded into adjacent markets.” — Sachin Lawande, President & CEO .
“Adjusted EBITDA margin for the quarter was a solid 13.8% matching the record margin percentage that we set last quarter…normalized margins were in the mid‑twelve percent range.” — Jerome Rouquet, CFO .
“Virtually all goods that we ship from Mexico to the U.S. are USMCA compliant and our direct exposure to tariffs under the current tariff structure is very low…97% are USMCA compliant.” — Management .
“We won a 48‑inch pillar to pillar OLED display with a leading German luxury automaker…display sales were up about 20% over prior year.” — Management .
“We completed the acquisition of an engineering services company…focused on automotive user interface design…positions Visteon to engage with carmakers early during the concept phase.” — Management .

Q&A Highlights

Market share and bookings: Analysts probed drivers of share gains; management cited display capabilities, platform approach, and growing AI/CDC demand; bookings breadth across displays/clusters and CDC supports mid‑term growth .
EBITDA outlook: Guidance raised to ~$490M at midpoint; H1 included ~$25M nonrecurring commercial recoveries, with fewer expected in H2; normalized margins ~12% on lower H2 volumes .
BMS cadence and footprint: Sequential improvement; H2 modeled similar to Q2; pivot to add power electronics content to EVs/hybrids to offset lower BMS volumes over time .
Capital returns: Target minimum net cash ~$100M; dividend initiated alongside reactivation of buybacks under remaining authorization ($125M) .
China execution: “China speed” enabled by platform modularity; recent fast‑cycle wins/launches (e.g., Chery display) and stronger CDC roadmap; sequential China improvement expected H2 .

Estimates Context

Q2 2025: Revenue slightly missed consensus ($969M vs $974.2M*) while adjusted EPS beat ($2.39 vs $2.1463*) and adjusted EBITDA beat ($134M vs $119.9M*) as commercial recoveries and cost discipline supported margins .
FY 2025 consensus: Revenue ~$3.736B*, EPS ~9.12*, EBITDA ~$496M*; raised guidance ranges (sales $3.70–$3.85B; EBITDA $475–$505M; FCF $195–$225M) imply alignment around Street midpoints with potential upside on profitability if operational run‑rate persists .
Values retrieved from S&P Global.*

Where estimates may adjust: Street likely revises EPS/EBITDA higher near guidance midpoint given sustained 13.8% margins in H1, with revenue assumptions reflecting lower BMS/China offset by new launches and FX tailwind .

Key Takeaways for Investors

Quality beat: EPS and adjusted EBITDA outperformed on disciplined execution and commercial recoveries; watch H2 normalization (low‑12% margin) as nonrecurring fades .
Guidance credibility restored: Reinstated and raised FY25 guidance de‑risks tariff narrative and supports multiple expansion; dividend initiation adds shareholder return ballast .
Structurally stronger display franchise: ~20% YoY display growth, marquee Audi Q3 launch, and a 48" OLED luxury award underpin cockpit content momentum into FY26–28 .
China is stabilizing, not fixed: Sequential improvement expected with CDC transitions; still a drag YoY — position sizing should reflect ongoing regional risk while recognizing platform speed edge .
Electrification pivot: Near‑term BMS headwinds but strategy to expand into power electronics increases EV/hybrid content per vehicle as OEMs push affordability .
Capital allocation: Net cash $361M and H1 cash generation support resumed buybacks plus new dividend; expect opportunistic repurchases in H2 .
Near‑term trading setup: Q3 sales expected close to Q1 levels amid seasonality; catalysts include additional display/SmartCore launches, bookings cadence, and tariff status quo confirmation .

VISTEON CORP (VC)·Q2 2025 Earnings Summary