Visteon Corp (VC) 2012 Q1 法說會逐字稿

Good morning, and welcome to the Visteon first-quarter 2012 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.

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 on the Company's website this morning.

Please visit www.visteon.com/earnings to download the material if you have not already done so.

I would now like to introduce your host for today's conference call, Mr.

Scott Deitz, representing Investor Relations for Visteon Corporation.

Mr.

Deitz, you may begin.

Thank you, Stephanie.

Good morning, everyone.

Thanks for joining us for what we estimate will be about a one-hour call.

We appreciate you taking the time to join us for Visteon's view toward the first-quarter 2012.

Today we'll provide you with a recap of our results for the quarter, and insights associated with our overall performance.

As Stephanie mentioned, a presentation deck associated with today's call is posted on Visteon's website within the IR Section; and just a reminder that our website is simply www.visteon.com.

And as many of you may know, the Q was also filed this morning with the news release.

We are joined today by Don Stebbins, Chairman, CEO and President; and Marty Welch, Executive Vice President and Chief Financial Officer.

As you'd expect, following Don and Marty's prepared remarks, we'll open the call to your questions.

Again, thanks for joining us.

With that, I turn it over to Don.

Thanks, Scott, and good morning, everyone.

During today's presentation, I will review Visteon's first-quarter 2012 performance, and then I'll turn the call over to Marty for the financial review.

In the first quarter, our consolidated sales totaled $1.7 billion, and our adjusted EBITDA was $150 million, representing an adjusted margin of 8.7%.

Our balance sheet remains strong with $721 million in cash, and $596 million of debt, translating into a net cash position of $125 million.

Our $220 million asset-backed revolving credit facility remains undrawn.

We continue to focus on the profitable and efficient use of our assets.

In the first quarter, we completed the closure of our Spanish Electronics facility, and announced the sale of our Lighting product group to Varroc.

In April, we also completed the sale of our corporate headquarter's campus.

For the full-year 2012, we are updating our guidance to reflect the impacts of the sale of our Lighting product group and the Grace Lake Corporate Center.

We have made no other changes to our guidance.

Our updated product sales guidance is $6.6 billion to $7 billion, and our updated adjusted EBITDA guidance is $620 million to $660 million.

Our free cash flow guidance is now $5 million to $30 million, which includes approximately $35 million of cash closure costs related to the Spanish plant closure.

On slide 3, as I mentioned, on April 17, we completed the sale of our Grace Lake Corporate Center in Van Buren Township, Michigan for proceeds of approximately $81 million.

As part of that transaction, we signed a 15-year lease for the space we currently occupy at the Grace Lake Corporate Center.

The sale of the Grace Lake Corporate Center is another step in our drive to focus on our core business, and create shareholder value.

On March 12, we announced the sale of our Lighting product line to the Varroc Group for $92 million in cash.

Varroc is a global automotive supplier headquartered in India.

The transaction includes the sales of Visteon's wholly-owned lighting facilities in the Czech Republic, Mexico, and India, for $72 million, as well as the sale of Visteon's 50% ownership stake in a Chinese joint venture for $20 million.

The sale of Lighting allows Visteon to focus on our core climate and electronics businesses, and our joint venture relationships, all of which are positioned for profitable growth and market leadership.

We expect the Lighting transaction to close in the early third quarter, and after the transaction, Visteon will have no further lighting operations.

Slide 5 shows the breakdown of our first-quarter revenue of $1.7 billion by product line and by customer.

If we include the sales from our non-consolidated joint ventures, our market penetration increases by $1.2 billion to a total of $2.9 billion.

Climate, our largest product line, generated 59% of our total consolidated sales in the quarter.

Including our non-consolidated joint ventures, Interiors was our largest product line, accounting for 45% of our sales, largely due to Yanfeng Visteon, our non-consolidated joint venture in China.

Climate represented 39% of our sales, including non-consolidated JVs, followed by Electronics at 16%.

From a customer perspective, Hyundai-Kia accounted for 32% of our first-quarter sales, and Ford accounted for 26%.

If we include our non-consolidated affiliates, Hyundai-Kia and Ford contributed 26% and 18% of our sales, respectively.

On slide 6, we compare our regional sales to global production by region.

On the left-hand side of the slide is a summary of our global production by region.

As you can see, the Asia-Pacific region accounted for 52% of worldwide vehicle production during the first quarter of 2012, which is up slightly from 51% in the first quarter of 2011.

Europe has decreased to 25% from 27% last year, due to continued softness in the region.

North America has increased its share to 19% from 17% in 2011, and South America has decreased to 4% versus 5% last year.

As you can see on the right-hand side of the slide, our sales distribution is well aligned with global vehicle production by region.

We continue to experience strong growth in Asia, with the region accounting for 43% of our total consolidated sales in the first quarter, Europe represented 36%, North America 16%, and South America 5%.

Including our non-consolidated affiliates, Asia accounted for 64% of our sales, while Europe, North America and South America represented 23%, 10%, and 3%, respectively.

Would now like to turn the call over to Marty.

Thanks, Don, and good morning, everyone.

Visteon's first-quarter 2012 financial results report Visteon's Lighting product line as a discontinued operation.

Our income statement has been adjusted to exclude Lighting sales, gross margin, SG&A, and other Lighting-specific income and expense.

Lighting's net profit impact has been recorded on one line on the income statement, called Discontinued Operations.

There are no adjustments to the cash flow statement related to discontinued operations presentation.

For the remainder of this presentation, all first-quarter 2012 and historical financials reflect Lighting as a discontinued operation.

Slide 8 provides a summary of our first-quarter 2012 financial results compared to the first quarter of last year.

As we've highlighted on previous calls, our 2012 and 2011 results are impacted by a number of items that make year-over-year comparisons difficult.

Our 2012 financials are impacted by the deconsolidation of our Duckyang joint venture, which was effective on October 31, 2011.

2011 and 2012 gross margin, SG&A, and net income were also impacted by employee charges, severance costs, and non-operating costs.

For the rest of this presentation, I will refer to adjusted sales, adjusted gross margin, adjusted SG&A, and adjusted EBITDA, which exclude these items.

Reconciliations between our reported financials and our adjusted financials are provided on pages 22 and 23 of this presentation.

Slide 9 provides a summary of our first quarter year-over-year comparisons.

First-quarter 2012 adjusted sales of $1.7 billion, or $19 million lower than the first quarter of 2011.

The decrease is more than explained by the year-over-year impact of unfavorable currency.

Adjusted gross margin was $138 million, or 8% of sales.

Our adjusted gross margin is $6 million below 2011, primarily driven by unfavorable product mix and currency, which more than offset a positive business equation of $22 million.

Adjusted SG&A was $90 million, lower than 2011 on an absolute basis, as well as on a percentage basis.

Adjusted EBITDA was $150 million for the quarter, $10 million below last year.

Finally, our free cash flow reflects an improvement of $71 million versus the first quarter of 2011.

Slide 10 highlights our adjusted sales and adjusted gross margin performance for the quarter.

Volume and mix increased sales by $35 million in the quarter, reflecting strong growth in Asia, partially offset by continued softness in European markets.

Currency had a $33 million unfavorable impact on sales, principally reflecting the strengthening dollar versus most major currencies, including the euro and the Korean won.

Other changes primarily reflects year-over-year customer pricing, the impact of design changes, and commercial agreements.

Moving to the right side of the slide, our first-quarter adjusted gross margin was $138 million, down $6 million versus last year.

The year-over-year decrease reflects negative product mix during the quarter, and the unfavorable impact of currency.

Partially offsetting these impacts was positive business equation of $22 million.

We continue to place considerable internal emphasis on improving our business equation, and expect positive business equation for the remainder of the year.

Slide 11 highlights our adjusted sales and adjusted gross margin performance for the first quarter by product segment.

The Climate product line experienced growth in both adjusted sales and adjusted gross margin versus 2011.

Sales primarily reflect higher volumes in Asia, while gross margin benefited from higher volumes, as well as positive business equation.

Electronics and Interiors both experienced decreases in adjusted sales and adjusted gross margin year-over-year.

Both product lines are heavily dependent upon European region, and sales were negatively impacted by weak European production environment, and a weaker euro versus the dollar.

Similarly, adjusted gross margin for Electronics and Interiors were impacted by unfavorable volumes and currency, which more than offset the impact of a positive business equation for both product lines.

Turning to slide 12, we remain focused on our overhead cost structure.

Adjusted SG&A expense totaled $90 million for the first quarter of 2012, $2 million better than the first quarter of 2011.

Adjusted SG&A as a percent of adjusted sales improved as well to 5.2%.

On the next slide, for the first quarter of 2012, equity and net income of Visteon's non-consolidated affiliates totaled $42 million, down $2 million from 2011.

The decrease primarily reflects a small decrease in profitability at our Yanfeng joint venture, as it incurred costs relating to the MOU agreement.

On the next slide, free cash flow for the first quarter was a use of $34 million, representing a $71 million improvement versus 2011.

Cash from operating activities of $19 million included $41 million of restructuring-related payments that are primarily related, as Don noted, to the closure of our Cadiz, Spain Electronics facility.

Capital expenditures were $53 million in the quarter, and over 60% of our capital spending was related to our Climate product line, and will support future customer program launches and capacity expansion.

Cash balances were $721 million as of March 31, 2012, down $25 million from year-end 2011.

These cash balances do not include the $1 billion in cash at our YFV joint venture, or the $79 million of net proceeds from the sale of the Grace Lake Corporate Center, which was received in April.

Taking a look at our full-year guidance, as Don said earlier, we're updating our full-year 2012 guidance for the impact of the Lighting and Grace Lake Corporate Center transactions.

It should be noted that we are assuming the Lighting transaction closes on July 1.

Accordingly, the first six months of our guidance reflects discontinued operations accounting treatment for the lighting product line.

The remaining six months of 2012 exclude Lighting entirely.

We're projecting full-year product sales of $6.6 billion to $7 billion, down approximately $500 million versus our prior guidance.

Full-year adjusted EBITDA is projected at $620 million to $660 million, $30 million lower than our prior guidance.

Full-year free cash flow is projected at $5 million to $30 million, $20 million below our prior guidance.

We've also updated our full-year depreciation and amortization, and capital spending estimates to reflect these two transactions.

Slide 17 provides a walk from our 2011 actual results for product sales and adjusted EBITDA to our 2012 guidance for these items.

We first adjusted our 2011 product sales and adjusted EBITDA for the year-over-year impacts of Duckyang, the Lighting sale, and the Grace Lake Corporate Sale, and currency.

The sale of Grace Lake Corporate Center has zero impact on sales, but results in approximately $6 million of increased rent expense in 2012.

Next, we adjusted the remaining items that explained our year-over-year changes to product sales and adjusted EBITDA.

Volume and mix is expected to negatively impact 2012 product sales and adjusted EBITDA.

Product sales are primarily being impacted by lower European production volumes.

We expect adjusted EBITDA to be impacted by unfavorable product mix in the Climate and Electronics product groups.

Continued strong net new business wins will positively impact both our product sales and adjusted EBITDA.

These wins primarily relate to the Climate product group.

Customer pricing and other revenue changes will have a negative impact on product sales, while business equation will improve adjusted EBITDA.

With that, I will turn it back over to Don.

Thanks, Marty.

As we look forward into 2012, our teams are focused on continuing our investments in technology, mitigating the near-term issues of declining volumes in Europe, completing the announced transactions as quickly as possible, continuing to win new business, and generating free cash flow.

With that, I'll turn it back over to Scott to get the Q&A started.

Okay.

Stephanie, let's open the lines for a good Q&A dialogue.

(Operator Instructions)

Colin Langan, UBS.

Is there any update on the Interiors MOU, sort of the timing of when that might close?

In terms of the timing of the Interiors MOU, we're looking to finalize that in the second quarter, and if that occurs during that timeframe, we would expect closing that transaction sometime before the end of the year.

Okay, and how much did that impact your margin, or your equity income?

Was that a big impact, would the equity income been up if there wasn't these MOU costs?

We don't have the specific disclosure on how much deal cost they're entering into, but they are working very, very hard and doing significant worked on the MOU, as are we.

Okay, and any color on the change in the Board, any reason why the members step down, and did those seats that are still vacant need to be filled, or is it just possible to kind of leave them just go down and have a smaller Board?

Yes, I'd phrase it this way, Collin, that each of the individual Board members assess their own priorities based upon what's going on in their personal and professional lives, and so these four Directors decided not to run for re-election.

I think importantly, they did so without any disagreements with the Company, or any matter related to the operations, the strategy, any procedures or policies of the Company.

So in terms of adding only one member at this time, it's what the Board felt was to do it appropriately, and I think the 8-K that was filed certainly indicated that we have engaged with a worldclass search firm to surface other candidates.

Okay, and last year, I know at the Investor Day you talked a lot about optimizing the portfolio products, and you're in the process of transferring Lighting -- or sorry.

Lighting is sort of discontinued and Interiors is being, hopefully going to move into the MOU, Into YFV.

What is your view now?

Are you going to reassess when the Board changes in June, or are you still kind of considering additional portfolio optimization type actions going forward?

Certainly when the new Board, if you want to characterize them as that.

Essentially there's only one new member.

The strategy of the Company was unanimously approved however many months ago, 12 or 15 or 18 months ago as we came out of Chapter 11, and in terms of getting down to two product groups and strong JV partnerships, is exactly where we've tried to drive the Company, and that's where we're driving the Company now.

From our perspective, we need to get those transactions closed, and that's what we're working on doing.

Brian Johnson, Barclays Capital.

Have a couple of housekeeping questions, just as we try to tease out the discontinued op effects, and then a more strategic question.

So on the housekeeping, if we think about the guidance walk, compared to the prior guidance, can you give us a sense of the split between the Lighting impact and the Grass (sic) Lake impact, and were there any business drivers at all, or is it purely mechanical for those two transactions?

No.

So the only adjustments that we made to guidance were for those two transactions, Brian, and what we've got coming out of the guidance is, as I mentioned 0.5 years worth of EBITDA on Lighting, which I think is $24 million, and the Great Lakes Corporate Center for the partial year is $6 million, and so there's about -- that's basically the $30 million reduction in EBITDA that we're reflecting there.

Okay.

So, wait.

You said half year of EBITDA?

I thought we were going back and restating --

Well, we are.

Not just this year, and the whole year.

Yes, I'm glad that you asked that question.

So taking it to discontinued operations merely means that we reduce it to one line item on the income statement, and it's not line item by line item consolidated, but the EBITDA and the earnings are still in there.

Okay.

So that's what I wanted to clarify.

So the adjusted EBITDA includes, for this quarter includes the Lighting discontinued ops income?

Right.

That's flowing into adjusted EBITDA?

And we anticipate that it will also include it for the second quarter.

Right, and then in the third quarter and fourth quarter, you don't have that?

(Multiple speakers) From the point in time that we close, we will no longer have it, that's right.

You're saying that's roughly $20 million for the half year?

Yes, $20 million, $24 million, something like that, right.

Okay.

So there was about a $40 million annual run rate in that division?

Right.

Then so that implies about $10 million of rent you're now paying/no longer collecting from Mr.

Quigley next door with Dana?

(laughter).

Correct.

There's something there about being a tenant and landlord.

I think it's kind of ironic.

So given those puts and takes, how did first quarter really kind of track versus in the core operating businesses where your original plan was?

I think from my perspective, I'm pleased.

I think when we were back in the Deutsche Bank conference in January, we indicated that the first half of the year would be a little softer than the second half.

We actually outperformed our own expectations a little bit in the first quarter, and from a cash perspective we significantly outperformed our expectations.

Yes, all that despite volumes not going our way.

Okay, and then more strategically.

The question is, just kind of as part of that, any sense of how you can help us understand how Halla's, since their financials aren't out yet, contributed to that?

If we look at that Climate performance, how should we think about Halla versus the non-Halla Climate?

Right.

The Halla's going to be posted on Monday.

There'll be a button on our website on Monday morning, you'll be able to click through to the Halla numbers.

They are in the middle of changing over to Korean IFRS, and they were not able to meet this timing.

They did meet this timing for our year end, because we had more time and we're working with them to accelerate their closing process, but you'll be able to see their numbers on Monday by clicking into our website.

So if I look at the improvement in adjusted gross margin, is that from Halla, is that from non-Halla climate, or wait and we'll try to tease it out on Monday?

Climate's basically flat for the quarter, Year over year.

Okay, and I'm just saying, are the trends similar at both components of it?

Brian, it's difficult for us, given the public float, anything we say here would be out in front of the Korean markets, which we really don't want to do.

Okay.

We'll loop back off-line early next week.

Yes, thank you.

So you'll be able to see it on Monday, and if you want to circle back, we can certainly do that.

Which gets to the age-old strategic question.

Any new thinking /progress on cleaning up the corporate structure, one way or another?

They take your thermal business, you take their climate business, on the Halla side?

There certainly seem to be some spikes in the Halla stock off and on in March and April that some people thought there might be something underneath that smoke?

Well, the easy answer is there really is no update from what we've previously said.

Okay, and any time frame for an update?

If we were to ever announce a transaction, it would go to everybody at the same time.

Kirk Ludtke, CRT Capital Group.

I wanted to touch on the slide10 a little bit, which I thought was very helpful, and I was wondering if you could maybe expand on the adverse mix that you're experiencing, and then also with respect to FX, I think it probably is not a surprise that FX negatively impacted the year over year revenue comparison, but it had a bigger impact on profitability than we were expecting.

So I'm just curious if you can expand on why that was, and anything you can share with respect to what you expect going forward, that would be great.

Sure.

So on the mix front, as you know, businesses award in these product lines basically three years in advance.

So we're launching products now that were put on the books some time ago, and in some cases, they're lower margin than the business we have going forward.

So we have had some products rolloff or complete, if you will, that were a little bit higher margin than the products that are replacing them.

We do, later on this year and next year, expect to launch further products that'll kind of bring us back a little bit on margin.

In terms of FX, I think we are heavily impacted by the euro, there's no impact there's no question about that in the Electronics and the Interiors businesses.

Is this the kind of impact that we should -- relationship between revenues and gross profit that we should expect going forward?

Well, you've got a little bit of a double-dip going on here, and Don can speak to this too, but we have the exchange impact and we also have lower volumes in Europe because economic activity is lower.

So it's double dipping us in that sense.

Okay, and with respect to the guidance, you did say it was going to be backend loaded.

I guess it'll be, just to clarify, it sounds like maybe the second quarter will be -- would you expect the second quarter to be relatively weak and then stronger second half?

That's what we're going to expect?

Right.

So we really don't give quarterly guidance.

Each quarter we try to update our annual guidance, and what we said back in January, I think we even had a slide on it in the January presentation, you can take a look at on the website.

We do have some reasons why we believe the second half of the year will be stronger than the first half of the year.

Okay, and then with respect to Yanfeng's margins, it sounds like -- will those recover as the year progresses, do you think?

Yes.

I think certainly, volumes are going to recover.

Our estimate is that the market will grow kind of 7%-ish, in that range, which would be $1 million or $1.2 million in terms of increased units from last year.

No question that the Chinese market has certainly retreated from years past, but the other thing that is important for Yanfeng-Visteon is their two largest customers at YFV or Shanghai GM and Shanghai VW, and you guys certainly know the market shares that those two companies have.

So also, if you take a look at the data, where the volumes are falling off in China is at the very low end where those two manufacturers are not really dominant players.

So they continue to be quite strong.

Excellent.

Thank you, and I think Marty mentioned that there was $1 billion of cash at Yanfeng-Visteon, did I hear that right?

Yes.

Yes he did.

Is there a debt number for Yanfeng-Visteon?

It's not been disclosed, but it's minimal.

John Murphy, Bank of America Merrill Lynch.

Just a question.

If you look at page 15 and look at the full year guidance, I think there's a lot of confusion the way that you're presenting this, because you have Lighting in there for part of the year, but you're telling us you're deconsolidating it.

There's a question of the impact Yanfeng in here as well.

If we were to look at this guidance, right, and think about really what's going to go on this year when you adjust for Yanfeng, Lighting, and the Grace Lake facility, that would be really helpful.

Is there a way to kind of say, okay, our sales, adjusted EBITDA, and free cash flow adjusted for those items is going to be X, so that we can understand how to model this going forward and what the Company will look like?

Yes.

Sure, in other words the deconsolidation of Lighting has no impact on earnings or EBITDA until we actually sell it, okay?

So it merely takes it out of the sales line, all of the various lines on the income statement, and puts the net results on one line.

So it's kind of like equity accounting, if you will, if you are familiar with that.

So deconsolidation is an explanation of why sales are going down, but it has nothing to do with EBITDA or profit, and the only other adjustment that we've put through this guidance is the adjustment to now we have rent expense, which does impact EBITDA from the sale of the Grace Lake Center.

So what your saying --

There are no other adjustments that have gone through this guidance other than those two items.

Okay.

So if we were to look at this EBITDA, it would be how much lower for sales coming out of the business?

$24 million.

That is an assumption of the EBITDA for the second half.

That assumes that we would close Lighting on July 1, because we had to make some assumption, so that's the EBITDA for the second half of Lighting when we don't own it at all.

As far as what came out of EBITDA for Lighting for the first half, nothing came out, because even though it's on a discontinued ops presentation basis, the earnings basis are still in there.

Got you, okay.

Then sort of just a second question to try to get our numbers straight here as well, As we look at the income statement, we can get to an operating income line of $48 million based on the numbers you're giving us.

I'm just curious, as we look at the interest expense and equity income or taxes, there is no impact that we should be adjusting for.

So our loss from continuing ops on the income statement should be -- or actually your income, I should say, should be $54 million, you're non-controlling interest should still be $18 million.

So our net income from continuing ops should be about $36 million.

Is that the correct interpretation?

Just trying to get down to the net income line.

Yes, more or less.

We'd be happy to get back to you off-line and get more detailed and some modeling questions if you want, but globally --

It's important stuff to get out there, though, in the markets so people know what the numbers are versus their estimates.

I think that's right.

Globally, you're right.

Yes.

Okay, and then if we were to think about the $1 billion at YFV that you highlighted as potential cash available to you, I'm just curious what mechanisms you could use to get to that $1 billion in cash, and how really available that is to you as a corporate entity over here?

John, just so we're all clear, we didn't highlight that that is cash that's going to become available to us.

It is part of our process in trying to disclose more and more about YFV.

These are conversations that we have with our partner, and are trying to get them comfortable with us disclosing more about both the balance sheet and the income statement at YFV.

They've allowed us to disclose that the cash balances at YFV are $1 billion, and that there's a minimal debt level.

It's not a discussion, at least today, about how are we going to get our hands on that or anything like that.

It's really just to try to allow people to understand a tiny bit more about the YFV balance sheet.

John, they are growing tremendously.

They're still building plants, investing in tooling and equipment, all of which they are internally funding.

Okay, and then just lastly, I know this kind of asked in probably a couple of different ways, but, as far as the Halla stake, Don, there's not any real update that you guys can give us here at all, I don't think on timing, but maybe if you could remind us of what maybe the challenges or hurdles of executing that might be for you, just so we can understand what kind of hurdles you need to clear to actually execute on that?

I'll just repeat what we've said in the past, which is there are some advantages to owning 100% of the Halla shares, and that needs to be weighed against other uses of capital, and of course you would never go out to try to buy that 30%, unless you were comfortable with the price that you had to pay, and that your customer base would be okay with you doing that.

Jim Rice, Kazazian Capital.

Just following up on that Halla question, you highlight that you might consider buying in the other 30% if your customers are okay with it, but how about your shareholders?

You have done an extremely poor job of shareholder value creation here since you guys have come out of bankruptcy, and the story about having four of your Board members stepping down completely independent of each other I don't buy.

So the question is, what are you guys going to do to accelerate shareholder value creation here?

Can you buy back stock, and why not let shareholders nominate some more Board members instead of just putting one new Board member in?

Well, certainly in terms of the shareholder nomination process, that certainly has been available all year, and certainly that's an option that's available to people.

We did extend the date to 10 days after the proxy was filed.

So that certainly is available.

In terms of creating shareholder value, from our perspective, certainly portfolio optimization has been one piece of how we're going about doing that, and I think we've outlined three significant steps today that we've been working on, which is the sale of Lighting, the sale of the Interiors business, and the sale of the Grace Lake Corporate Center.

Secondly, in terms of how we feel that driving shareholder value, or what the other aspects of that is, are improving the margins of the business, improving the cash flow of the business, continuing to win new business, and strengthening the organization, and I can demonstrate that we're making progress in all those fronts, and we'll continue to do so.

That's not what shareholders want.

Shareholders want to see some more action here in terms of a further breakup of the Company, and you have not been executing on the margin front or the sales line.

Well, if we can --

I don't know why you guys seem happy with your progress, and I just want to highlight that shareholders are not happy with the progress here.

Well, I don't think that's correct in terms of a statement that all shareholders are unhappy with the progress, and if we can just break it down a little bit,.

Point one in terms of the new business wins and growing the top line, we won over $1 billion of new business last year, which is a record for the Company as a percentage of the revenue of the Company.

If you look inside those new business wins, some of them are quite exciting for us in terms of the technology and the customer base.

In terms of the margin, the EBITDA margin last year was 8.5%.

This year, it will be, if you use the guidance, it will be kind of somewhere north of 9%.

We have, so we are continuing to improve the margin, and again, whether you or an individual shareholder want to break up the Company, that's your prerogative, but from the Company's strategic plan, we've identified what we're going to do in terms of the assets that we have, and we're moving down the path in terms of running a business that has two businesses.

One is Climate, one is Electronics, and significant joint venture relationships.

Why don't you by back some stock?

That's something that the Board discusses from time to time, and the Board has not approved that path.

All right.

This is Scott.

Anything else, Jim?

If not, we're going to plow ahead.

Be happy to talk about it off-line further if you'd like.

Thank you.

Susan Anderson, Constellation Capital.

Thank you very much.

I just want to go back to the guidance questions again, just to make sure that I understand what's happening here.

So the $30 million drop from the prior guidance is comprised of $24 million in the second half of Lighting that you no longer will have, right?

That's correct.

Then $6 million of nine months of Graceland earnings?

Yes, 7.5 months, but yes.

Okay.

So when I look at that, I'm a little confused, because your segment disclosure in the last 10-K indicated that you had $12 million or so of full-year gross profit out of your Lighting operations.

So how does that translate into over $40 million, which is what your saying now?

Right.

The Lighting business has gotten quite a bit better.

As with all of our businesses, we work on them constantly, and 2012 is a pretty good year for Lighting.

I see.

So Varroc, then, got a great deal.

You sold it for $92 million, and let's call it $48 million and 12 months' worth of EBITDA.

So they're getting it for about a little bit less than 2 times EBITDA, is that about right?

Well, the other thing to keep in mind here is that as you take out a business of that size from the whole of Visteon, you don't necessarily get a pro rata share of SG&A out.

It's something we're very aware of, we keep working on, but we've got a lot of fixed costs here that we need to continue to work on in this Company.

I see.

Okay, and then with regard to the Graceland part of it, from looking at the press release, it was a sale lease-back, so are there incremental lease costs that'll be running through EBITDA, or interest costs that we should factor in?

Right.

The $6 million is the incremental rental cost for the prior year 2012, because we closed on it in the middle of April.

On an annual basis, the incremental rent is about $10 million of cash.

We had a gain on the sale, which under sale lease-back accounting we'll get amortized in over the life of the lease, in this case 15 years.

So the P&L hit will actually be $8.5 million while the cash hit is $10 million.

We also have some space that we are not using.

We, Visteon, are not using, that we have an opportunity to sublease.

So we have an opportunity to mitigate that number a little bit more.

Importantly in the transaction as well, the space that we have leased to GE and to Dana, the lease now runs directly to the landlord and Visteon is not involved in that space at all.

Okay, and then switching the topic a little bit, you used to disclose your new business wins.

Would you mind sharing that number for the quarter again?

New business wins, we covered that in January at the Deutsche Bank.

We don't typically update that on a quarterly basis.

Okay.

So for those of us who weren't at the Deutsche Bank?

The slides are actually on the website and you can pull it up there.

I'm just seeing if we can find it here.

All right.

I can look for it there.

The backlog is $1 billion, which breaks down $300 million in 2012, $600 million in 2013 and $100 million in 2014 and if you back out the Lighting business, that will reduce by approximately $30 million to $970 million.

So my expectation will be, it will be well over $1 billion once we get through this new business cycle.

Patrick Bartels, Monarch.

All my questions have been answered.

Thank you.

Dean Machado, LionEye Capital.

It's Dean Machado.

Is there a business reason to keep $1 billion in cash at YFV?

Well, first of all it's a joint venture and it's not our call.

It's a 50-50 joint venture.

So it is the subject of the combined Board of Directors of YFV.

Second of all, they have significant growth, which they have been funding internally.

So I think those are the two most important things to think about.

I think the third would be that you have to look at the structure of YFV, and so we talk about it as if, sometimes as if it's one entity, when in reality it's five joint ventures underneath the YFV umbrella, and then underneath them, there's multiple other unconsolidated and consolidated subsidiaries.

So this is a number that is the rollup of all those entities.

Right.

I presume that.

What I was asking was, does that number need to stay at the JV/JVs for some specific business purpose?

Meaning does it need to be there to be put up against payables?

Is there some other sort of accounting reasons that it needs to be there?

Not that I'm aware of.

So it's just cash that has accumulated over time?

Right, and it's the way that they have chosen to finance the business.

Okay, and then on the Lighting business, I think, along with others, am surprised at the EBITDA numbers for that business, and if I take the $24 million that you're talking about, that's $48 million full year.

I presume that's a four-wall EBITDA number, if you will, sort of pre-allocations?

More or less, yes.

Can you give us a sense for what sort of those corporate allocations are?

We've not really gotten into that kind of disclosure.

I don't think that'd be appropriate now.

Visteon is a central core of a lot of fixed costs.

Lighting is a relatively small part of the pie.

We work very hard at taking those costs out.

As you can see, our SG&A costs can continue to go down quarter after quarter after quarter, but by selling Lighting we don't immediately get a big dip down in our central core costs.

Right, and then just sort of a last one, more of a strategic question.

Most of the talk has been around buying in the 30% of Halla that you don't own.

Has there been any discussion on selling the 70% of Halla that you do own?

Yes.

In terms of the strategic analysis, what we would continue and we have and we've looked at a number of different scenarios with Halla.

We've not said publicly whether or not we're buying or selling Halla shares.

What we've said is that there are advantages to us owning 100% of the Halla shares, and that we need to weigh, though, any of those alternatives against the uses of cash that we have.

It's a tremendously good business.

We're number two in the world in terms of our Climate business, and so I would say that we're going to continue to invest in our Climate business globally, not just the Halla piece but our entire Climate business.

Colin Langan, UBS.

I'm sorry, my question was already answered.

[Roth Burner], WCM.

Just a quick question.

Is there any issues with regards to the repatriation of that capital at Yanfeng, and are you currently exploring ways with either Rothschild or whomever to bring that back?

Is that something that's under study?

No, it is not under study today.

Okay.

Thank you.

There's no legal barrier to it.

It's a matter of the judgment of the Board of Directors of Yanfeng.

(Operator Instructions)

David Lynn, Wells Fargo Securities.

I just had a quick question on that guidance, $6.6 billion to $7 billion.

If you guys did not view the Lighting sale and the sale of the Great Lake, would your $7.1 billion and $7.5 billion guidance that you provided previously, would that have been maintained?

Yes.

Ladies and gentlemen, this concludes today's conference call.

Thank you for your participation.

You may now disconnect at this time.

Good day.

Thank you, Stephanie.