Good morning. I'm Ryan Ghazaeri, Director of Capital Markets and Strategic Planning. Welcome to our Earnings Call for the Third Quarter of 2022. Please note, this call is being recorded and all lines have been placed on listen-only mode to prevent background noise. Before we begin this morning's 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 guarantee the future results and conditions but rather our 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 page entitled forward-looking information for additional details. Presentation materials for today's call were posted on the Investor section of Visteon's website this morning. Please visit investors.visteon.com to download the material if you've not already done so. Joining us today, are Sachin Lawande, President and Chief Executive Officer; and Jerome Rouquet, Senior Vice President and Chief Financial Officer. We have scheduled this call for one hour and we'll open the lines for your questions after Sachin and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you, for joining us. I will now turn over the call to Sachin.

Thank you, Ryan. Good morning, everyone. And thank you, for joining our Third Quarter 2022 Earnings Call. Page 2, summarizes results for the third quarter. The Company performed very well despite the industrywide challenges that have impacted vehicle production and inflated costs. Our third quarter sales were $1,026 million, an increase of 63% year-over-year making it the highest quarterly sales since I joined the company. Adjusted EBITDA was $95 million or 9.3% of sales, an increase of $53 million compared to prior year due to the higher sales and a strong commercial and operational discipline. Adjusted free cash flow for the third quarter was an inflow of $59 million, a strong EBITDA was partially offset by an increase of working capital. The company delivered another quarter of strong sales growth compared to customer and global industry vehicle production our 14th consecutive quarter of better-than-market performance. Our robust product launch cadence is a major driver of our sales growth, the sales of all our core products growing at double digit percentage levels in the third quarter. Year-to-date, we've launched 32 new products which will contribute to continued future sales growth. We won about $2 billion of new business in the third quarter bringing our year-to-date total to slightly over $5 billion and putting us on track to achieve our full-year target of $6 billion. We continue to build momentum in our display product line with the investments we've made over the past few years. Since the start of 2021, we've won $2.7 billion of displays business and mostly at the high-end of the automotive market. I will provide more details on our third quarter performance as well as our near-term outlook on the subsequent pages before handing it over to Jerome to discuss the financials. Turning to Page 3. When excluding…

Thank you, Sachin. And good morning, everyone. Visteon's third quarter financial results reflect another quarter of strong performance. Our teams continue to do a remarkable job both on the commercial and on the operational side of the business. Q3 sales were $1026 million, we're presenting another record quarter for Visteon. Our strong sales performance continues to be driven by ongoing high quality product launches from recent quarters. While customer demand remains elevated, we're still navigating through the semiconductor shortages focusing on improving supply through constant interactions with customers and suppliers as well as through engineering redesigns and open market purchases. Adjusted EBITDA was $95 million, representing a margin of 9.3% for the quarter. Adjusted EBITDA benefitted from higher sales volumes as well as ongoing commercial and cost discipline. Incremental cost from semiconductor shortages and supply chain constraints remained elevated this quarter. We continue to actively mitigate inflation in our negotiations with customers remain on track. Customer recoveries from open market purchases were approximately $19 million in the quarter diluting margins by approximately 90 basis points. Adjusted free cash flow for the quarter was an inflow of $59 million driven primarily by higher EBITDA and our ongoing activities to optimize capital expenditures. Inventory levels increased as a result of the continued supply chain disruptions. We ended the quarter with a total cash of $365 million and $349 million of debt, resulting in a net cash position of $16 million. Turning to Page 11. Third quarter sales of $1026 million represents our highest level of sales since 2015 and an increase of $395 million compared to last year. This year-over-year increase is primarily driven by higher customer production volumes, strong growth of the market due to recent product launches and favorable pricing, partially offset by unfavorable exchange rates. Excluding the year-over-year impact…

[Operator Instructions] Your first question comes from the line of Shreyas Patil with Wolfe Research.

Hi, thanks a lot. Thanks for taking my question. Yes, maybe -- wanted to just start with SmartCore side. I didn’t see it mentioned and in the new business wins in the quarter. But curious of the high level, how are you working with OEMs when it comes to embedded software. As you talk a lot about, you talked about it and previously about and got a high degree of Visteon code in these product wins 10 million lines of code across three operating systems, so quite complex. And but we know the auto makers are looking to get more involved in the cockpit, I mean, also as we look further out we are seeing similarly and with that integrate the cockpit domain into another domain to tell it. So, just curious about it and that is an area where this gen might love to get into as well.

Thank you, Shreyas. And that's a great question by the way. So, first of all, as we have been saying first now a couple of years this trend towards cockpit domain controller offers definitely starting to now hit stride. And we are seeing more and more OEMs get interested in this indicated products. Now the issue is that this products as I've mentioned and you re-equated are fairly complex, has multiple operating systems and are using some of the latest more silicon type chips from our advanced technology providers. Now these chips and the silicon and the software that are comprised at. In many of the applications across the different OEMs are very similar. And so, we have developed at Visteon this platform that we call SmartCore that is able to provide an abstraction of the underlying capabilities of these devices that allows applications to be then piled on top of it. Now, some of the applications are also going to be very common right whether it is things like CarPlay, Android Auto, navigation, multimedia et cetera. But some would be very specific to that OEM. And of course the user interface sometimes referred to as HMI in this industry, would be very unique and specific to that OEM. So, our value proposition is that we would be able to provide OEMs that want to build their own system a better starting point than they would try to do that all on their own. And with the pace of change they're focusing whether in silicon or in the underlying software still matters. We have to do this for multiple OEMs with we have already multiple OEMs, multiple programs, that we have been developing and we have this asset that we have explained before more than 10 million lines of code.…

Okay, great. That's really helpful. And then, Jerome, I appreciate you'll provide an updated guidance, thanks to you. But as we think about the prior guidance that the 2020, '23, a $4 billion in and 12% EBITDA margin, and obviously a weakened end market volume expectations come down since you gave that guidance I think at the beginning of 2021. So, maybe at a high level, can you just talk about some of the levers that you can pull into next year that it still support that kind of expansion and even if end market volumes are lower, are there additional cost actions you could take so it still get you towards that target at least on an EBITDA level.

Sure, good morning, Shreyas. So, as you said we will give more color and in final guidance you know not Q4 calls but today I would say that the way we see 2023 developing, still remains very much a supply based a play. And that's what we're watching. So, we're still seeing that the semiconductor challenges that we see this year will continue into next year, especially the first half of next year. We are seeing general improvements but we still have got this trickle parts that remain constrained and therefore preventing us from supplying to the level we would like to supply. As we've mentioned before, our orders per quarter are close to a $1 billion and but our sales our product sales are lower than that because of our inability to supply 100% of the products. So, I think that's one area that we'll have to watch very carefully. I will say our growth of the market has been strong in Q4, it's been so in fact since the beginning of the year. We expect still mid-teens growth of the market going into next year and will obviously refine that as we go into 2023. We'll have to watch obviously currency as we move into next shaping our headwind so far this year. So, the assumptions we'll have to make as well for '23 will be important. And then, maybe pricing is the final area that we got to look at. We have had very elevated stock buy levels in Q3 and in fact in Q2 as well. We expect this to somehow reducing moving into next year as supply will improve and that will obviously reduce our recoveries. Won't have an impact on EBITDA dollars, it will have a positive impact on our EBITDA margin. So, that's another consideration that we'll have to take into account as we go into next year. So, there is a lot of moving pieces at this point and we'll turn up these various areas as we go into Q4 earnings.

Okay. Thanks.

Your next question comes from the line of Mark Delaney with Goldman Sachs.

Yes. Good morning, thank you very much for taking the questions. The first is hoping to better contextualize how demand trends may be evolving and understand that generally has been pretty strong. Can you give a bit more qualitatively on what Visteon is seeing both in terms of how some of the macroeconomic trends that we have impacting the types of order levels you're seeing from your customers but also how that some being impacted by some of the program and how been opportunity that you have?

Yes, sure. I'll take that first, and Jerome if you like to add anything to it, feel free. The main thing that I would like to reiterate here is we are still supply limited. Demand is extremely strong. We have been seeing that for the last three quarters and that continues as we look into the quarter as well. And thus because if you look at the orders that our customers have, those for us are very strong very robust. And so, we feel like we work this the rest of the year and probably going into next year. We're still a phase in supply constraints as the more limiting factor, not demand. Now, the reason for that is if you look at the product line speculation offer, these are the lines there's other products that the car makers need to be able to meet the competitive and their customers' expectations. Digital clusters as a trend this will continue for the next few years given in large extent by the success of the commodities like ADAS largely displace of other also a very strong trend that will continue. So, this is launches that will had which by the way if I look at the last four quarters coming into Q3, there are over 50 launches and as long as we continue to be on their path, we will have lot of demand for the product and then that I do not expect to unnecessarily see it the use. Now, yes we are all watching the macro environment and we will see how that develops. Depending up on what happens here, we are watching Europe carefully. Europe was extremely strong in Q3, most be very strong in Q4 as well and have to watch what in fact energy and other considerations in Europe might have on demand. And over here we know what inflation does to the demand. But for now, we haven’t seen any softness in the demand as our OEMs will place orders on this.

That's helpful. And maybe you'd have to help us please better understand what kind of global LVP level maybe needed for Visteon to be at $4 billion of revenue next year. And we're realizing you're not guiding it at this point and in understand the comments are on being supply constraint. But at one point you talked about roughly $89 million of global production we needed to do that kind of revenue level on 2023. You just have $4 billion annualized this quarter with LVP at something between $83 million and at $84 million annualized and I know some of the revenue this quarter pass throughs and by not sustainable but at the same time it seems like you're you know your content per vehicle is growing maybe faster than you've had a year or so ago. So, any sort of range of LVP in 2023 that maybe necessary to equate to that $4 billion of revenue and then we can make our own assumptions around where we think LVP will be given some of these macroeconomic inputs and supply chain dynamics. Thanks.

Yes, sure. A couple of things that I would mention. One, the revenue this quarter, yes, it's at the top line it is over a $1 billion but effectively when you look at some of the pass through, it is maybe just a shade under $900 million as the organic revenue if able to call it that. So, at this levels of production, we feel comfortable that we could achieve that or maybe will slightly better if supply improves. So, we are bidding a site of where we need to be at around it levels. So, more than vehicle production which clearly are now with the go through market that we have experienced, we all understand that we will not perhaps need the 89 million units of vehicles that we bought at the time when we talked about $4 billion as a target. We think we could do achieve that with a lower level of vehicle production. What was important is that some critical semiconductors that are still holding our production back need to improve next year for us to be able to achieve that 4 million. Now, when you look at our total semiconductor, by portfolio, these are not all of the parts. These are only a small fraction of the parts that we buy. But those still can hold us back. These are the golden screws, so to speak. So we need to get a uplift in the production of those or a modest improvement, and a combination of that plus the redesigns that we have done. So I would say that if you think about where we’re at just shy of 900 million 10% -15% improvement overall. And so most of it coming from the supply side, and the vehicle production will obviously reflect that. So I would say it will be less than what we thought we needed in the past. And anywhere between five percentage points of improvements, or thereabouts, I think should be good enough.

Your next question comes from the line of James Picariello with BNP Paribas Exane Research.

Can you, within the updated guidance can you just maybe confirm what is the baked in assumption for your past two revenue based on another very strong recovery almost 130 million in the third quarter? What’s kind of assume for the fourth quarter here?

Yes. So what we’ve assumed essentially, is a Q4 sales level I would say base sales product sales level to be similar to what we’ve had in Q3. The major difference that we’ve baked in our Q4 assumption is the fact that we’re assuming at this point, that spot by sales will be lower, and it will be lower by approximately $40 million - $50 million. So that’s kind of the assumption that we have for now in our Q4 guidance.

That’s helpful. And I mean, it sounds as though the third quarter came in from a recovery or spot purchase perspective, you came in heavier than you had anticipated, I think, correct me if I’m wrong, but just curious, how dynamic is this? Is the situation from with respect to the chip supply and how, what’s kind of the turnaround? Or how dynamic you guys have to realize maybe that you’re short what you need, and that you’d have to go to the market? I mean, is this a weekly kind of surprised? Or is it? Is there a better visibility to it?

Yes. That’s a great question. And so yes, to answer that directly, it is week by week. So every week – Of course, and sometimes day by day, right. But it is extremely dynamic. But as I mentioned earlier there’s not that we have consensus across all of the semiconductors. It’s a smaller set of semiconductors which have been very constrained. And the issue with the constraint is that there are no buffers in the whole supply chain. So we could be affected by some logistics issue somewhere. It’s not just the production. So there are a host of things that can impact us when there are no buffers and that’s what we’ve had to deal with in Q3 and we expect that environment to largely be the same in Q4 now. At the same time, even when you look at Q3 the reason why our sales were better than even what we had anticipated was the supply came in better than we had imagined at the beginning of the quarter. And we expect those improvements to also happen in Q4 especially with the softening of demand in other industries, consumer industrial, etc. Some of the parts, other views are also used in those other industries. So we expect some improvement from there which should reduce the demand on open market purchases. But these are very dynamic things and hard to predict which is why the range is a little bit wider than you would otherwise have given.

I would add as well on that the forecasting [Indiscernible] is extremely challenging for the reasons that Sachin said but if you think about it, you first need to see what kind of parts are going to be shorter. You need to understand what kind of availability would be the brokers level. Prices from brokers change every day, every week. And they vary massively. And then you have finally the OEM willingness to pay for these elevated prices. So it’s a lot of parameters that have got to be put in and all these varies on a daily basis and therefore makes it a little bit hard to forecast just for price.

Understood super helpful. Just very quickly. For your second wireless BMS customer, are you supplying that customer with a digital cluster or any other product besides the wireless panels?

We are, across their portfolio of vehicles, we are supplying displace and disrupt clusters are more likely than not, if you look at our portfolio of customers for clusters, we would like, we would mostly be supplied to virtually all of them. Right? So we only have a few OEMs that are not part of our portfolio for customers. So yes.

Your next question comes from the line of Luke Junk with Baird.

Good morning. Thanks for taking the questions. The supply chain question, but I want to ask it a little differently Sachin. So you’ve been of course, talking about demand being over a billion dollars on a quarterly basis from your customers and what I just want to better understand is how much you think you can control with the redesigns to close the gap versus that $900 million base level this quarter versus what customers are actually asking for and maybe to animate that if we could also just expand on the amount of redesign activity as 2022 has progressed, kind of how that has evolved. Thank you.

Yes, good question, Luke. And I want to quantify exactly how much of the revenue is attributable to the redesign. But I’ll say that, without that we would have been meaningfully lower and we can, to a great extent, control that, but it has been a little bit of a shifting sort of a target. The constraints have not remained in the same set of chips. So we have had to chase the constraints a little bit. So we’ve talked about the numbers we have launched in terms of the designs, and we have a multiples of that, that are in progress in some shape of development that will soon be launched. It’s important to note that when we do the redesigns, we actually even maintain the original design as well. So that gives us that broader access to chips, rather than just to switch from one to the other. So I think if we execute the ones we have on the slate, by the second half of next year, we should be in a position to control our own destiny with respect to supply. That’s the way to think about it.

And then a follow up question. Just hoping if there’s anything you can share to help us better understand the scope of the add on wireless BMS award this quarter relative to your initial were with that customer, either the scope across platform or even relative dollar terms, either would be great. Thank you.

Yes. No that is very interesting topic, because if we’re to take a step back here. And we have three customers that we have talked about for our BMS solution. One of them is in production, the others will enter production in, I think, 2024 timeframe. But what’s also happening between when we first started to work on BMS systems and now is that we’re seeing the industry go through a transition towards more higher voltage battery packs to enable fast charging. So this is really what we see as a change that has actually been accelerating. And so our wireless BMS first of all, it’s been designed to support that which is what you see are reflected in this event. And just to kind of scope the magnitude of this we had about, I think seven or eight vehicles initial aboard that has more than doubled In the updated one, and then the volumes have also gone up very nicely. And it includes this higher configuration. And anytime you have a higher voltage of 800 volts is not the only voltage by the way, there are intermediate ones as well. But as you go up to above 400, you need more battery cells to enable that increase. And that means this greater content for BMS. So we have talked about earlier, the BMS range in terms of content being around 350 to 500 with this higher voltage battery packs, actually exceeding the upper end of that range. But overall is a mix. I would still say that it will be somewhere between 350 to 500, maybe, depending upon the OEM and their mix of vehicles might push that average closer to the upper end of that range as an average selling price.

Your next question comes from a line of Emmanuel Rosner with Deutsche Bank.

Thank you very much. Maybe just following up on wireless BMS, again, I think your partner for all these initial wins was advanced devices. And I think they’ve announced another wireless BMS when recently said something that does tell quoting on into become the Q1 there?

So I wouldn’t mention anything specific to that particular announcement. But in general, the way it works is that the silicon choice is made ahead of the tier one supplier choice. And so you can imagine, we have been working, as you said, very closely with this particular partner for a long time. And therefore, we are engaged with multiple OEMs together with them. And that’s where I would like to leave it at. And so as and when these decisions get made with certainly people are bringing it to you and talking to you about it. One thing I would say is, since the beginning of this year, as I mentioned this in my earlier remarks that this changes to high voltage what has caused a lot of these discussions to be delayed, because we have had to adjust and change the designs to meet these newer requirements. But those discussions I would expect to see come to a conclusion fairly soon. And we should be able to talk more about some of the awards that will hopefully bring here.

Then I wanted to ask you about the free cash flow guidance again. Can you please go back over the drivers of sort of the timing on working capital, and to what extent this will get sort of back on the results in early 2025.

Yes sure Emmanuel. So we’ve revised our cash flow guidance for the full year to be at the midpoint at a level of 50. You may remember in Q2 we have already indicated that we would be towards the low end of the previous guidance range, which at the time was 85. So most of the, if not all of the change relates to working capital. And there are two elements to it. The first one is inventory. We’ve increased inventory in Q3. We are planning to have a modest reduction in Q4. And the second item relates to the timing of collection of recoveries. We have some deals, which are fairly late in the quarter and therefore it makes the collection slipped into the following quarter. So we are improving on that as we get a better cadence with our customers but there is still some I would call leakage or timing differences. So we are improving on that in Q4 but it will be not as good as we had originally anticipated. And that’s the reason why we’ve lowered our guidance. We have equally kept a fairly large range from 30 to 70 given the sensitivity of some of these items.

Into 2023, would you expect further improvement here? Like should some of these items become a tail end versus your normalized free cash flow profile next year?

Yes. We will give obviously more guidance at the time, but we are clearly expecting to generate adjusted free cash flow in ‘23. And we’ll have to look at the dynamic of working capital. But what I would say is that maybe just to think about inventory itself. I think data collection will probably get more normalized over time. But on the inventory side, we have increased our safety levels, just to be more protected towards variability. So that’s one reason as to why inventory have increased. We have also integrating the fact that our volumes are higher. So you would expect as well as volumes go up to have a little bit more inventory. Today, our inventories are slightly higher than 30 days. We probably would expect them to be normalized slightly below the 30 days. So slightly below the month. So that’s the opportunity that we are going to work with understanding again, that volumes will be higher next year.

And if I just squeeze one more. So given like a good color on percentage for potential revenue development into next year. Could you do the same in terms of margin? What would be sort of like the things you’d be watching in terms of what could get you towards your margin targets? And what could constitute headwinds as we think, into next year?

Yes. Sure. So no major changes to what we’ve said in the past. Obviously, volume is for us critical. It’s the, it was, gives us the scale. And we’ve seen that very much this quarter versus last one year ago, where volumes were much lower. So volume is critical, obviously, for us to achieve our targets. We are thinking about as well, on the positive side about some of the inefficiencies that we’ve seen this year, around freight, ongoing the plans. We expect these to somehow reverse out next year. The one the two areas we’ll have to look at are obviously inflation and the associated pricing. So that’s the, these are the two areas we’ll have to look at. Spot buy, as I mentioned earlier on would be we think will subside a little bit and the levels will reduce. And that’s ultimately good news because that means supply is improving. But this is what’s good news for a margin percentages. So these are kind of the moving piece on the EBITDA side details.

Your next question comes from the line of David Kelley with Jefferies.

Thanks for taking my question. Maybe a question on high level kind of Europe exposure. Can you talk about product demand? And how you’re seeing mix tracking in the region? And can you give us some color on customers schedule visibility in Europe and how that’s factoring into your yearend outlook?

Yes, sure. So first of all, I would say Europe was pretty strong in Q3. The demand was when Q3 tends to be usually a softer quarter for production in Europe. But we haven’t seen any softening in demand. And it has been pretty hot. So I would expect that to continue into Q4 and we haven’t seen in terms of their product placements, any change to the contrary. So everything seems to be like what we have had in the third quarter. The mix is also very much similar to what we have elsewhere nicely for us. That means these two clusters are primarily displays cockpit domain controllers. So you all of the talk about the challenges that Europe faces we are not seeing that in our orders that we see from customers as yet. Still seems pretty strong.

And then maybe one quick follow up just looking at the new business wins slide. I think 45% of business wins, so far in 2022 are for EVs. And if we take a step back, can you talk a bit about kind of the content per vehicle opportunity you’re seeing and EV wins today versus ICE wins understanding it’s not exactly apples to apples, but any sort of color on that multiplier would be great.

Yes. So when we talk about it, first of all, David 45%. Just to be clear, what this means is that these wins that we have the 5 billion of the 45% of them have some content on EVs, right? There are vehicles that cut across EVs and ICE models. So they’re also represented here and for us EVs, as I said before, are generally a positive, net positive because typically they have larger displays, and more electronics and software content. So what we’re seeing is, in the near term, more display opportunities for EVs, in addition to BMS, and PDC, Public Domain Controllers, so those are the two that I would highlight. And what you’re also seeing in both cases, that the average sales prices of these displays and Public Domain Controllers are going up with this multi display systems that we talked about earlier as well as more higher performance, smart port systems. So it’s a positive development. And as we continue to win our, hopefully, our share of the market in that area that’s going to help also lift growth of a market on account of these dynamics.

Thanks, David. And thanks, everyone. This does conclude our earnings call for the third quarter of 2022. Thank you, everyone, for participating in today’s call and your ongoing interest in Visteon If you have any follow up questions, please contact me, Kris Doyle directly. Thank you.

This concludes Visteon third quarter 2022 results earnings call. You may now disconnect.