Visteon Corporation (VC) Earnings Call Transcript & Summary

Welcome to Visteon's Annual Meeting of Shareholders. Today, we will be hearing from our Chairman of the Board, Fran Scricco; and CEO, Sachin Lawande. With that, I'll turn the call over to Fran.

Thank you, operator. Good morning, ladies and gentlemen. I've been informed by the inspector of elections that a quorum is present or represented by proxy. Therefore, it's my privilege to call Visteon's Annual Shareholder Meeting to order. I would like to note that this year, we've added an audio call so that shareholders can listen to the meeting if they prefer not to attend in person. In this time of uncertainty, your support for the health and welfare of Visteon's employees and fellow shareholders is greatly appreciated. To begin today's meeting, I'm pleased to introduce other members of the Visteon Board who are joining the meeting via conference call: James Barrese, Naomi Bergman, Jeff Jones, Joanne Maguire, Bob Manzo, David Treadwell and Rouzbeh Yassini-Fard. CEO and President, Sachin Lawande; CFO, Jerome Rouquet; General Counsel, Brett Pynnonen; and Company Secretary, Heidi Sepanik, are participating from Grace Lake Lodge, our physical meeting location. I would like to briefly outline the format of the meeting for this year. First, I will cover the formal business of the meeting as described in the agenda, and then Sachin will provide a few general comments about our business. Let us now proceed with the matters to be voted on today. Broadridge Financial Corporation (sic) [ Broadridge Financial Solutions ] has been appointed as the inspector of election for this meeting. After we finish discussing the matters to be voted upon, those of you who wish to vote your shares at the meeting may do so using the ballots provided. I now declare the polls open for voting. The first item to be voted upon is the election of 9 directors. These individuals have been designated by the Board of Directors as candidates for election based upon the recommendation of the Corporate Governance and Nominating Committee. Additional information about each nominee is included in the proxy statement. The Board of Directors recommends a vote for each of the 9 nominees named in the proxy statement. The next item of business is Proposal #2, which relates to the appointment of the independent registered public accounting firm. The Audit Committee has selected Ernst & Young to audit the company's books for 2020. Angie Kelly, the partner in charge of the Visteon Audit, is with us today. The Board of Directors recommends a vote for this proposal. We will now proceed to Proposal 3, which relates to the advisory approval of the company's executive compensation program and practices as described in the proxy statement. Our executive compensation programs seek to align management's interest with our stockholders' interest to support long-term value creation and pay for performance. This philosophy and the compensation structure are essential to our ability to attract, retain and motivate individuals who could achieve superior financial results in the best interest of the company and its stockholders. Our program also aligns the financial interest of our senior management team with those of our stockholders by delivering a substantial portion of their total compensation in the form of equity awards and other long-term incentive vehicles. The Board of Directors recommends a vote for this proposal. We will close the polls immediately following the discussion of the last proposal. So if you have not voted, or wish to revoke a previous proxy, now is the time to cast your ballot. If you mailed in a proxy or if you voted over the telephone or by the Internet, you don't need to vote now unless you wish to change your vote. To vote your shares at the meeting, you should use the ballots provided to you when you entered the meeting. The final item of business today is Proposal 4, which relates to the approval of the company's 2020 Incentive Plan. The Board has adopted the 2020 Incentive Plan, subject to your approval, because the company's existing incentive plan terminates this year. The 2020 Incentive Plan provides a means by which the company's key personnel can acquire and maintain an equity interest in the company as well as be paid incentive compensation, thereby strengthening their commitment to the welfare and success of the company. For these reasons which are discussed in more detail in the proxy statement, your Board of Directors recommends a vote for this proposal. [Voting]

There being no further discussion related to the proposals listed in the proxy statement, we will now close the polls. I now declare the polls closed. Heidi, at this time, may we please hear the preliminary voting results?

With respect to Proposal 1, the election of directors, each of the Director nominees received a majority of the votes cast. On Proposal 2, relating to the appointment of the independent auditor, a majority of the votes cast were in favor. On Proposal 3, relating to advisory approval of the company's executive compensation program, a majority of the votes cast were in favor. And finally, on Proposal 4, relating to the approval of the 2020 Incentive Plan, a majority of the votes cast were in favor.

Thank you, Heidi. In view of the results, I declare that each of the nominees for Director has been duly elected a Director of the company, and Proposals 2, 3 and 4 have been approved. That takes care of the official business of the meeting. Now Sachin will provide a few brief comments regarding our business operations. Sachin?

Thank you, Fran. First, I want to thank our shareholders for their investment in Visteon. We value your trust and work hard every day to deliver sustainable shareholder value, especially during this challenging and unprecedented times created by the COVID-19 pandemic. Before I talk about our industry and Visteon's business operations, I would like to acknowledge the 11,000 Visteon employees across the world who work hard every day for our customers despite the challenging environment. The automotive industry is in the midst of one of the most significant crisis it has ever faced, triggered by the outbreak of coronavirus. We have responded by proactively strengthening our cash position to over $800 million at the end of the first quarter and reducing cost through multiple actions that are already taking place. These actions include eliminating contract resources, placing strict controls on all expenses, implementing temporary salary reductions and postponing projects that are not critical in the near term. These steps will partially offset the impact of the drop in automotive production volumes expected in the second quarter and will provide additional cash to weather the storm created by COVID-19. While responding to the crisis has consumed much of our attention and energy, the company continued to execute on its growth strategy by launching new and exciting products and winning new business with vehicle manufacturers. In the first quarter, we launched 13 new products with 9 different OEMS, including our first Android-based infotainment system, which debuted in Volkswagen Group's new vehicle model The Nivus, for the South American market. This infotainment solution represents the first instance of Visteon's platform approach to infotainment system development, a new strategy that allows us to deliver at scale while controlling cost, quality and innovation. We also won $800 million of new business in the first quarter, which is a very good performance in light of the disruption that was caused across the globe. More than $500 million of this was for digital clusters, which underscores our strong position as the market leader in this key and growing segment of the cockpit. The sudden and growing nature of the coronavirus outbreak forced many countries in which we operate to shut down offices and manufacturing plants for extensive periods of time. The company was able to deploy an effective work-from-home infrastructure so that critical customer programs would not be adversely impacted. Some of the restrictions are now being lifted at most of our locations, and we are now able to contemplate return to work in phased manner. Visteon has implemented comprehensive safety protocols and procedures for our manufacturing plants and technical centers to safeguard our employees as they start returning to their jobs. Most of our customers have already restarted their vehicle manufacturing operations, although at low capacity, and we expect production levels to gradually increase as the threat of coronavirus hopefully recedes in the coming months. We have been actively transforming Visteon over the past several years into a global leader in automotive cockpit electronics, through leadership in technology, innovation and cost. We believe the secular trends in cockpit electronics that were the main drivers of the industry prior to the pandemic will largely remain intact and continue to drive future growth for the industry. Visteon is well-positioned with the right product and technology portfolio to continue to capitalize on these industry trends. In closing, I'm proud of how our team has come together in this crisis and what we have been able to accomplish and overcome. We remain confident in our ability to simultaneously manage the crisis and execute our strategy and emerge as a stronger company. Now I would like to turn it back to Fran.

Thank you, Sachin. On behalf of everyone at Visteon, I wish all our shareholders good health. This meeting is hereby adjourned.

This concludes our annual meeting of shareholders. Thank you for participating in today's call and your ongoing interest in Visteon. You may now disconnect.