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VC

VISTEON CORP (VC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was operationally solid despite softer volumes: sales $939M, Adjusted EBITDA $117M (12.5% margin), adjusted EPS $4.44; FY24 set records for Adjusted EBITDA ($474M) and adjusted FCF ($300M) .
  • 2025 outlook guides flat sales at midpoint ($3.65–$3.85B) with margin resilience (Adj. EBITDA $450–$480M; ~12.4% midpoint margin) and adjusted FCF $175–$205M; guidance excludes any tariff impact, a key macro risk/catalyst .
  • Strategic momentum continued: $6.1B 2024 bookings across clusters ($1.1B), SmartCore/infotainment ($1.5B), displays ($2.6B), electrification ($0.7B); 95 launches; expanded wins with Toyota and first SmartCore HPC AI-cockpit award (Zeekr) .
  • Estimate context: S&P Global consensus data was unavailable due to data retrieval limits; we cannot quantify beats/misses vs Street for Q4 (see Estimates Context) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • Margin execution: Adjusted EBITDA margin rose to 12.5% (+70 bps YoY) on cost discipline, strong ops, favorable engineering recoveries; FY24 Adjusted EBITDA a record $474M (+$40M YoY) .
  • Commercial traction: $6.1B of 2024 bookings with balanced mix (displays $2.6B; SmartCore/infotainment $1.5B; clusters $1.1B; electrification $0.7B); deepening ties with Toyota and first wins at Maruti Suzuki; 95 launches .
  • AI/technology positioning: Introduced SmartCore HPC to run LLMs in-car; first HPC award at Zeekr; unveiled Cognito AI assistant; vertical integration in cameras, display backlights, molding to support cost/innovation .

What Went Wrong

  • Topline softness: Q4 sales $939M declined vs Q3 ($980M) and YoY ($990M), reflecting lower customer production and reduced recoveries as semiconductor supply normalized .
  • China headwinds: Underperformance persisted given global OEM share losses; management sees 2025 as a trough in China before improvement in 2026 .
  • 2025 BMS moderation: Management forecasts BMS sales flat to slightly down in 2025 due to IRA/tariff uncertainty and elevated supply chain inventories (high single-digit % of 2024 sales) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$990 $980 $939
Diluted EPS (GAAP)$12.98 $1.40 $4.37
Adjusted EPS ($)$13.01 $2.26 $4.44
Gross Margin ($M)$130 $131 $134
Adjusted EBITDA ($M)$117 $119 $117
Adjusted EBITDA Margin (%)—12.1% 12.5%
Operating Cash Flow ($M)$98 $98 $203
Free Cash Flow ($M)$55 $70 $162
Adjusted Free Cash Flow ($M)$57 $73 $165
S&P Global Consensus RevenueN/A (data unavailable)—N/A (data unavailable)
S&P Global Consensus EPSN/A (data unavailable)—N/A (data unavailable)
  • Non-GAAP context: Q4 2024 adjusted EPS excludes restructuring/other items; 2024 included a $49M non-cash U.S. tax valuation allowance benefit (vs $313M in Q4’23), which inflated prior-year GAAP EPS and complicates YoY EPS comparability .

Product/booking breakdown (FY24):

Booking Category (FY24)Amount ($B)
Displays$2.6
SmartCore & Infotainment$1.5
Clusters$1.1
Electrification$0.7
Total New Business Wins$6.1

KPIs:

  • New product launches: 95 (FY24) .
  • Q4 working capital/cash: Operating cash flow $203M; Q4 adjusted FCF $165M, aided by several one-time working capital benefits expected to reverse in 2025 .
  • Share repurchases: $63M in 2024; $131M authorization remaining as of year-end .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesFY2025—$3.65B–$3.85BNew
Adjusted EBITDAFY2025—$450M–$480M (~12.4% margin at midpoint)New
Adjusted Free Cash FlowFY2025—$175M–$205MNew
Tariff AssumptionsFY2025—Excludes any 2025 tariff impactNew
Sales TargetFY2027—$4.15BNew
Adjusted EBITDA MarginFY2027—13.3%New
Adjusted FCF ConversionFY2027—>40% of Adjusted EBITDA (~$230M)New

Additional quarterly cadence: management expects slight sequential declines in revenue and EBITDA in Q1 2025 .

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/technology initiativesEmphasis on displays growth, SmartCore expansion; software/platform approach underscored Strategy pillars include software-defined vehicle; margin/cash outperformance; foundation for mid-term growth Launch of SmartCore HPC to run LLMs; debut of Cognito AI assistant; further vertical integration in cameras/displays Improving
Supply chain/recoveriesCustomer recoveries declining YoY as semi supply improves; stable sequentially Recoveries declined YoY; stable sequentially; FX headwind Market outperformance partly offset by reduced recoveries and lower customer production Normalizing
Tariffs/macroLower LVP vs initial plan; China mix drag; Ford refresh delays Europe softness; China headwinds Tariffs are a material risk; not included in 2025 guide Worsening risk
Product performanceDisplays/digital clusters double-digit growth; electrification ramp (GM) Displays and clusters grew; SmartCore ex-China strong; BMS ramp (GM, Stellantis) Adj. EBITDA margin +70 bps YoY; strong ops; net engineering lower due to timing Mixed but resilient
Regional trendsOutperform in Americas/Europe/Asia ex-China; China underperformed Outperform in Americas/rest of Asia; Europe slight decline; China double-digit underperformance Q4 outperformance ex-China; China remains weak; 2025 low point, recovery in 2026 China bottoming in 2025
R&D execution/engineeringNet engineering 4.9% of sales in Q2; timing helped Net engineering 4.8% of sales; China spend reductions 2025 net engineering to high-5% of sales; SG&A high-4% Normalizing higher in 2025

Management Commentary

  • “Visteon delivered a strong performance in 2024 with robust sales of $3.87 billion, record adjusted EBITDA of $474 million and record adjusted free cash flow of $300 million” .
  • “We introduced a high-performance version of SmartCore, called SmartCore HPC, that can run AI models in the car and secured our first win with Zeekr… and introduced an industry-first software solution for AI-based user interface called Cognito AI” .
  • “Our guidance does not include any impact from these or any other potential tariffs” .
  • “Adjusted EBITDA margin was 12.5% of sales, an increase of 70 basis points compared to the prior year” .

Q&A Highlights

  • Outlook and mix: Customer production headwinds at Ford/GM (Americas), Mercedes (Europe), Nissan/Mazda (Asia) drive conservative 2025 mix; China seen as low point in 2025 with recovery starting 2026 .
  • BMS trajectory: 2025 BMS flat-to-down on IRA/tariff uncertainty and inventory along extended battery supply chain; 2024 BMS ~high single-digit percent of sales .
  • Bookings: 2025 pipeline “quite robust” after subdued 2024 quoting; target remains >$6B in new wins .
  • Margin bridge: 2027 margin expansion to 13.3% driven ~50% by scale (SG&A/engineering leverage) and ~50% by operational/vertical integration improvements .
  • Working capital/FCF: Q4 adjusted FCF benefited from one-time timing items (collections, engineering recoveries, inventory), not expected to repeat in 2025; ~40% EBITDA-to-FCF conversion targeted .

Estimates Context

  • S&P Global consensus EPS and revenue for Q4 2024 were unavailable due to data retrieval limits at the time of analysis; as a result, we cannot quantify beat/miss vs Street for this quarter. We default to company-reported actuals above and note that “Consensus comparisons are not included due to unavailable S&P Global data” [GetEstimates error].

Where estimates may need to adjust:

  • Street models assuming 2025 sales growth may need to align to VC’s flat base sales outlook and slightly higher net engineering spend (high-5% of sales) while maintaining ~12.4% EBITDA margin at midpoint .
  • China revenue trajectory likely reset to trough in 2025 with recovery modeled from 2026, and BMS revised flat-to-down in 2025 before resuming modest growth with new customer launches .

Key Takeaways for Investors

  • 2025 setup: Flat sales but resilient profitability (Adj. EBITDA $450–$480M; ~12.4% midpoint margin) and 40% EBITDA-to-FCF conversion targeted; watch Q1 seasonality (sequential down) .
  • China trough and recover: Management expects 2025 to mark the low point in China, with new launches and domestic/global OEM share stabilization driving improvement from 2026 .
  • AI-cockpit optionality: SmartCore HPC and Cognito AI establish leadership as AI migrates into the cockpit; first HPC win at Zeekr is strategic for 2026+ content growth .
  • Display/cluster mix shift: Displays poised to rival clusters in size; vertical integration supports competitiveness and margin as content moves down-market .
  • Electrification near-term pause: BMS moderates in 2025 on policy/inventory overhang, then resumes with additional OEM launches; calibrate expectations accordingly .
  • Tariff risk is live: Guidance excludes tariffs; any enactment could be a downside catalyst for 2025, partly mitigated by customer engagement on offsets .
  • Cash discipline continues: Q4 FCF benefitted from one-timers that unwind in 2025; medium-term target is >40% conversion and growing FCF by 10% CAGR to 2027 (~$230M) .