Visteon Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 18, 2025

Key Takeaways

  • Visteon delivered a record 2024 performance with $3.87 billion in sales, $474 million in adjusted EBITDA (12.3% margin) and $300 million in adjusted free cash flow.
  • The company secured $6.1 billion of new business wins in 2024, including first awards for its high-performance SmartCore HPC and onboard charger/DC-to-DC converter products.
  • Visteon outperformed underlying vehicle production by 4 percentage points in 2024, driven by strong demand for smart cores, large displays, digital clusters and battery management systems across all regions.
  • For 2025 Visteon guides to flat base sales of $3.75 billion, facing headwinds from lower customer vehicle production, China market share shifts and slightly reduced BMS volumes.
  • Through 2027 the company targets sales of $4.15 billion (mid-single-digit CAGR), EBITDA margin expansion to 13.3% and free cash flow conversion above 40%, underpinned by next-gen cockpit, display and electrification launches.
AI Generated. May Contain Errors.
Earnings Conference Call
Visteon Q4 2024
00:00 / 00:00

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Ryan Wentling
Ryan Wentling
VP of Investor Relations & Treasurer at Visteon

Good morning. I'm Ryan Wendling, Vice President of Investor Relations and Treasurer. Welcome to our earnings call for the fourth quarter and full year '20 '20 '4. 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.

Ryan Wentling
Ryan Wentling
VP of Investor Relations & Treasurer at Visteon

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 page entitled Forward Looking Information for additional details. Presentation materials for today's call were posted on the Investors section of Visteon's website this morning. Please visit investors.visteon.com to download the material if you have not already done so. Joining us today are Sachin Lawande, President and Chief Executive Officer and Jerome Roque, Senior Vice President and Chief Financial Officer.

Ryan Wentling
Ryan Wentling
VP of Investor Relations & Treasurer at Visteon

We have scheduled the call for one hour, and we'll open the lines for your questions after Sachin's and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you for joining us. Now I will turn the call over to Sachin.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Thank you, Ryan, and good morning, everyone. Thank you for joining our fourth quarter and full year twenty twenty four earnings call. Visteon delivered a strong performance in 2024 with robust sales of $3,870,000,000 record adjusted EBITDA of $474,000,000 and record adjusted free cash flow of $300,000,000 all of which are outstanding numbers for our company. Our product portfolio is well aligned with key industry trends of digitalization, software defined vehicle and electrification. Demand for Visteon products that enable these trends such as smart core, large displays, digital clusters and BMS was strong and resulted in our sales outperforming underlying customer vehicle production by four percentage points.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

In The Americas, Visteon outperformed the market by double digits driven by ramp up of digital cluster and electrification products. In Europe, Visteon outperformed the market by mid single digits with the launch of digital clusters and large displays in mass market passenger vehicles as well as on heavy commercial vehicles. In Asia, robust demand for large displays and smart core drove mid single digit market outperformance in Japan and India. And while market headwinds faced by our customers in China muted our performance, Visteon delivered 9% growth over market outside of China. We secured $6,100,000,000 of new business wins in 2024 with strong demand for our large displays, smart core and digital cluster products.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We achieved important milestones in new product introduction with first wins for our high performance smart core and onboard charger and DC to DC converter, which further expands our product portfolio into fast growing parts of the market. While our customers had lower than average quote activity in 2024, I'm pleased that the breadth and strength of our product portfolio enabled us to exceed our new business win target for the full year. Adjusted EBITDA was a record $474,000,000 driven by strong operational execution and our continued focus on cost control. Adjusted EBITDA margin was a record 12.3% for the year, a 130 basis point improvement compared to last year. Adjusted free cash flow was also a record at $300,000,000 for the year.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We delivered on our commitment to balanced capital allocation with more than $100,000,000 deployed to M and A and share repurchases. Overall, our 2024 performance is proof of the strength of our product portfolio, a continued focus on operational excellence and our best in class cost structure. Turning to Page three, key industry trends of digitalization, software defined vehicle and electrification continue to drive increased digital content in the vehicle. Visteon's product portfolio is aligned with these trends, which was also reflected in our new product launches in 2024. Software driven features and functions are growing rapidly in the mid and upper part of the market, which is driving demand for our industry leading SmartCore and large display products.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Nearly 30% of our 2024 launches were for these products, which are a key driver of our market outperformance. The trends of digitalization and connected car are now impacting mass market vehicles. Digital clusters and Android based infotainment systems are becoming mandatory features of affordable vehicles in all regions of the world. We're also seeing commercial vehicle and two wheeler OEMs start to offer digital cockpit systems. About 40% of our launches in the year were for products targeting this section of the market.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

As shown on this page, in the fourth quarter, we launched digital clusters on the popular Citroen C4 and on a scooter for TVS, an Asian two wheeler OEM. Our wireless BMS offers OEMs the flexibility to offer a range of electric vehicles with different battery configurations without re engineering the system, which reduces time to market and cost. In Q4, we launched our wireless BMS system on the Jeep recon, our second launch with Stellantis. We launched a total of 95 new products in 2024 with 21 different OEMs globally and on ICE, hybrid and fully electric vehicles. This is a testament to the strong execution capability of the Visteon team and to the powertrain agnostic nature of the business.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Turning to Page four, we delivered $6,100,000,000 of new business wins in 2024, making it our third straight year at or above the $6,000,000,000 level. We made significant progress on our strategic initiatives to diversify our customer base and expand into adjacent end markets. The breadth of our product portfolio and success in new customer acquisitions enabled us to win a high level of new business despite lower than usual customer quoting activity. OEMs from Japan, Korea and India accounted for about 40% of the total wins with Toyota emerging as the top customer for bookings for Visteon in 2024. We also won our first cockpit business with Maruti Suzuki, the market share leader in India with significant runway for further expansion.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Customer interest for large displays was strong across all regions and we won substantial displays business with multiple OEMs including Lexus, Mahindra, Stellantis, Volvo and Audi. Our displays, design and manufacturing capabilities are a competitive advantage for the company and most of these are conquest wins for Visteon. In China, we expanded our base of domestic OEM customers by winning a SmartCore program with FAW and a large display program with Dongfeng. Both these wins are for new affordable electric vehicles that are expected to launch at the beginning of twenty twenty six. In the fourth quarter, we won our first high performance smart core program with Zieker, the premium EV brand of Geely, the leading domestic OEM in China.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Smart core HPC is designed to run large language models for AI in the cockpit, which requires significantly higher processing power than the usual cockpit domain controllers. This system will launch in mid-twenty twenty six in China and will be offered in the higher trims of ZEAKER's vehicle models. While China is leading the industry in bringing AI in the cockpit, we expect OEMs globally to follow quickly and bring the exciting potential of LLMs to their customers. Lastly, we won our first business for onboard charger and DC to DC converter with Mercedes Benz. This power electronics components offer best in class power conversion efficiency in a small package, which is critical for improving battery range and reducing charging time for electric vehicles.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Overall, 2024 was a very successful year for Visteon in terms of new business bookings. These wins highlight the breadth of our technology portfolio and our ability to stay in sync with emerging technology trends and launch new products. Moving to Page five. Before turning to our forward looking outlook, I wanted to take a moment to reflect on the highly successful year we had and the significant progress we made on our strategic initiatives. Our strategy is focused on addressing fast growing automotive technology domains with products that are aligned with the key industry trends coupled with the best in class cost structure.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We added new customers and expanded our business with leading OEMs in Asia, particularly in Japan and India, which was a key priority for the company. We achieved significant bookings for our digital products that support key industry trends, such as large displays and cockpit domain controllers, laying a solid foundation for our continued growth. We are also constantly innovating and enhancing our product portfolio. We displayed our onboard charger and DC to DC converter for the first time at CES in 2022 and delivered our first win for this product within two years in 2024. Expertise in emerging technologies is critical for continued success.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We strengthened our technology capabilities through bolt on acquisitions that complement our in house R and D and bring critical expertise in house. AI and large language models will drive the next cycle of innovation and content growth in the cockpit and require new hardware and software solutions. 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 as discussed on the previous page. And at CES earlier this year, we introduced an industry first software solution for AI based user interface called Cognito AI that enables carmakers to implement smart assistant features in their cockpits. Our technology platforms are a key competitive advantage for Visteon and we are continuously enhancing these platforms and integrating more functionality in them.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We integrated new software technologies such as Surround View and Software Defined Radio that eliminates the need for third party solutions, reducing the total system cost to carmakers. We're also driving vertical integration of hardware, bringing Tier two content in house to drive innovation and increase our competitiveness, while removing layers from the supply chain. In 2024, we started manufacturing of automotive cameras in house as well as designing backlight unit for displays and injection molding of various metal and plastic components used in our products. Our cost structure is already very competitive with most of our manufacturing and engineering footprint located in best cost regions. However, we continue to look for opportunities to further align our footprint to the evolving market dynamics.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

In 2024, we increased our resources to support growth in Japan and India, while reducing our footprint in China to reflect the changes to the market in that region. And as software is core to Visteon, we have established a training and development program to build a pipeline of talent to meet our growing needs for software developers that are specialized in key automotive technologies. This is truly a competitive advantage as it's very challenging to find such expertise in the market. We remain committed to a balanced capital allocation approach. We are laying the foundation for future growth with the organic growth initiatives I mentioned earlier, while layering in M and A to expand our product and technology offerings.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

We deployed $55,000,000 to M and A in 2024 and have a pipeline of additional tuck in acquisitions. We also returned capital to shareholders with $63,000,000 of share repurchases in the year. Overall, 2024 was an impressive year for Visteon as we expanded our product and customer base, delivered strong financial results and set ourselves up for future growth with strong bookings. Turning to Page six. On this page, I would like to share our sales outlook for 2025 and through 2027.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

For 2025, our customer vehicle production forecasts are based on S and P Global's January forecast and include company estimates where our production expectations differ from S and P. Global light vehicle production is expected to decline slightly with the mid single digit decline in Visteon's customers' vehicle production. Several of our largest customers including Ford and GM are expected to adjust production to work down elevated vehicle inventories. Our growth over market is expected to be mid to high single digit in 2025 with another year of outgrowth in every region outside of China. Our strong performance is driven by new product launches with several customers including Ford, Renault, Stellantis and Toyota as well as commercial vehicle and two wheeler OEMs.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Despite a strong performance in 2024, we expect electric vehicle sales in The U. S. To stay flat in 2025 due to tariff and incentive uncertainty. We are forecasting our BMS sales to be slightly lower in 2025, accounting for the elevated levels of electric vehicle inventory in the market. In China, where we have experienced sales headwinds in 2024 from the loss of market share by global OEMs, we expect our sales drop to moderate in 2025 and represent the low point for our sales in that market before recovering in 2026.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Overall, we are guiding to sales of $3,750,000,000 at the midpoint for 2025. This represents a flat base sales year over year despite the headwinds from lower customer vehicle production and recoveries as well as FX. This is a very solid performance as a strong product portfolio and business win momentum offset the near term market headwinds. Now turning to our outlook for 2026 and 2027. We're assuming that light vehicle production increases in line with S and P global forecasts for both years with customer mix improving from 2025.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Growth over market is expected to be in mid to high single digit in 2026 and 2027. We have some large smart core and display programs that are launching with customers in Asia and Europe that will drive our market outperformance in those regions. In China in particular, we have several new launches with domestic Chinese OEMs as well as German and Japanese OEMs that are expected to do relatively better and hold their market share in that region. Our BMS sales are expected to grow modestly in line with electric vehicle sales growth at GM and Cylantus and helped by the launch of BMS with a third customer based in Europe. Overall, we are targeting $4,150,000,000 in sales in 2027, which is a mid single digit sales growth CAGR relative to our 2025 sales guidance.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

This represents an attractive multi year growth profile as our strategic initiatives continue to gain traction. Now, I will turn the presentation over to Jerome.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Thank you, Sachin, and good morning, everyone. I want to start by taking a step back and looking at our financial performance over the past five years. For perspective, I would like to compare our current results to what we delivered in 2019, the last year before the COVID crisis. During this time, the industry has faced several challenges with significant supply chain disruptions and inflation, and yet we have grown revenue, improved margin and generated impressive free cash flow. Over the last five years, sales increased almost $1,000,000,000 compared to 2019, including recoveries.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Our leading market position in digital clusters and cockpit domain controllers drove strong growth in the first half of the period, while innovations in displays and electrification generated growth later in the period. We grew despite a substantial sales headwind from the changes in the China market since 2022. We doubled EBITDA over the same five year period. EBITDA margin reached a record of more than 12% in 2024, an improvement of four forty basis points compared to 2019. Our ability to grow revenue and significantly improve margins at the same time is a testament to our strong product portfolio and operational efficiency.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Improvements in margins have been the result of scale from additional sales, our laser focused cost approach and our drive for best cost footprint as well as an engineering platform approach, which allowed us to optimize cost while continuing to invest in the business. Our EBITDA to cash conversion was 38% on average over the five year period. This is the direct result of our increased profitability, our success in managing working capital as well as turning Visteon into an efficient business with light capital requirements, all supported by a strong balance sheet. Overall, Visteon has delivered impressive improvements in sales, margins and cash flow over the last five years With an innovative technology based product portfolio and a team focused on execution, Visteon has a strong foundation for continued profitable growth. Turning to Page nine.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

We had a very strong finish to the year with Q4 sales of $939,000,000 Compared to last year, sales benefited from our market outperformance, driven by new product launches and robust performance of our digital cockpit and electrification product lines, offset by lower customer production, lower recoveries as a result of improved semiconductor supply and annual pricing. In terms of performance by geography, Europe had double digit market outperformance, America has high single digit outperformance, while China underperformed. The weaker year over year performance in China is consistent with the trend from recent quarters and is due to the ongoing market share shifts towards domestic OEMs. While we remain underexposed to domestic OEMs relative to the market, we continue to make inroads with these customers, including a significant Q4 new business win for HPC with ZIKR, as mentioned by Sachin. Adjusted EBITDA was $117,000,000 for the quarter.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Our EBITDA performance was driven by continued cost discipline and strong operational performance. Net engineering, while including the recent acquisition we made in Q3 twenty twenty four, was lower due to the favorable timing of engineering recoveries, offset by higher SG and A. Margins improved to 12.5%, a 70 basis point expansion compared to the prior year. When adjusting for more normalized engineering and SG and A, our run rate margin exiting the year was around 12%. Adjusted free cash flow was a record $165,000,000 in the quarter, a result of our strong adjusted EBITDA and a significant inflow from working capital.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

This level of cash flow was above our expectations as we had several onetime working capital benefits. Lastly, we continued to return capital to shareholders in the fourth quarter, repurchasing 43,000,000 of our shares. We remain committed to our balanced capital allocation framework with allocations to organic growth, M and A and capital returns to shareholders. Overall, we delivered a strong fourth quarter with continued market outperformance, strong adjusted EBITDA margin with significant cash flow generation. We continue to launch a high number of new products and win new business, which will drive future growth.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Turning to Page 10. For the full year, sales were $3,870,000,000 representing a slight decrease year over year. Base sales, which excludes the impact of supply chain recoveries, were roughly flat compared to the prior year. Our next gen products, including digital clusters, displays, smart core and electrification, drove our 4% market outperformance. This market outperformance was offset by lower customer production, lower recoveries, price downs to customers and a headwind from FX.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

China was also a 5% headwind to growth of market as a result of our global OEMs losing shares in the market. Adjusted EBITDA for the full year was a record $474,000,000 a $40,000,000 improvement compared to the prior year. Our EBITDA performance was driven by solid incrementals on our growth of market and another year of significant operational improvements as we continue to optimize our manufacturing costs and increase vertical integration, which more than offsets the impact of annual pricing to customers. Net engineering costs were lower mostly due to the favorable timing of engineering recoveries, which can be lumpy in nature as well as lower spending in China in response to the challenges in the region. This decrease was despite additional engineering spending in 2024 associated with our acquisition of an outsourced R and D firm.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Net engineering costs as a percentage of revenue was 4.9%, which is below our normal run rate. SG and A as a percentage of revenue was 4.6% and in line with our expectations. Finally, we benefited from the non recurrence of the 15,000,000 recall charge incurred in 2023, but were also negatively impacted year over year by approximately $12,000,000 of foreign exchange, driven mostly by the Brazilian real and the Japanese yen, partially offset by the peso. EBITDA margin was 12.3% in 2024, an expansion of 130 basis points year over year. Turning to Page 11.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Visteon generated a record $300,000,000 of adjusted free cash flow in 2024. The improvement compared to the prior year was primarily due to higher adjusted EBITDA and an inflow from trade working capital. This trade working capital inflow was above our expectations as we benefited not only from the unwind from lower sales, but as well from several onetime benefits in the fourth quarter of twenty twenty four, some of which will reverse in 2025. Adjusting for these items, trade working capital would have been a modest outflow for the year and our conversion would have been between 4550% of EBITDA in 2024, closer to our targeted level of 40% conversion. Cash taxes were modestly higher than the prior period as we paid higher taxes in line with our increased profitability.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Interest was positive for the year as interest income on our invested cash exceeded the interest cost from our term loan. CapEx was $137,000,000 for the year, an increase of 12,000,000 compared to last year. The increase was primarily focused on investing for the future, including setting up our new plant in Tunisia as well as several vertical integration initiatives, including investing in our display product line. Our consistent cash flow generation and solid balance sheet enable significant allocations of capital to both invest in our future and return capital to shareholders. In 2024, we deployed $55,000,000 to M and A and $63,000,000 to share repurchases.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

We expect to continue executing on these important strategic initiatives. Turning to Page twelve. Before moving to our financial guidance, I would like to address the topic of tariffs. The tariff situation continues to evolve with the tariffs against Mexico and Canada currently postponed postponed until early March and global reciprocal tariffs proposed last week. If implemented, these tariffs would have a meaningful impact across the entire automotive industry and especially the supply base.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

We're working closely with our customers to identify mitigation actions and minimize any potential impact on Visteon should these tariffs be enacted. Our guidance does not include any impact from these or any other potential tariffs. Now let's turn to our 2025 guidance. Our guidance range for sales is $3,650,000,000 to $3,850,000,000 Excluding the impact of supply chain recoveries, our base sales are expected to be roughly flat year over year. We have assumed Visteon customer production declines mid single digits with customer production down the most in The Americas as OEMs right sized dealer inventory and in Europe due to the ongoing macroeconomic weakness.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Our growth of market is anticipated to be mid to high single digits, driven by strong expected performance for large displays, digital clusters and infotainment products. Regionally, we expect the strongest performance in rest of Asia and Europe, offset by continued double digit underperformance in China. Recoveries and FX are expected to be a 3.5% headwind in 2025. Adjusted EBITDA is expected to be between $450,000,000 and $480,000,000 representing a margin of 12.4% at the midpoint. This is a margin improvement year over year as continued strong commercial performance and further operating efficiencies partially offset the impact of a more normalized net engineering spend.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

As a percentage of 2025 sales, we anticipate net engineering to be in the high 5% range and SG and A to be in the high 4% range as we continue to invest in our teams to support future growth. We also expect FX to be a modest headwind to EBITDA in 2025. Adjusted free cash flow is expected to be between $175,000,000 to $2.00 $5,000,000 which at the midpoint is a conversion of 40% of adjusted EBITDA into adjusted free cash flow. We expect working capital to be a modest outflow for the year to come as the onetime benefits from 2024 unwind next year. CapEx is forecasted at $150,000,000 as we invest for future growth and margin expansion with several notable vertical integration initiatives planned for 2025.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

And finally, while we do not provide quarterly guidance, we expect a slight decline sequentially in both revenue and EBITDA in the first quarter of twenty twenty five. Turning to Page 13. Looking now to the medium term, we're providing 2027 targets for sales, adjusted EBITDA and adjusted free cash flow. For sales, our target for 2027 is $4,150,000,000 This represents a 5% growth CAGR and an increase of $400,000,000 in sales between 2025 and 2027. Our forecast assumes a modest LDP growth for our customers over the period.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

We're expecting growth of market of mid to high single digits in both 2026 and 2027, driven by the progress on our strategic initiatives. We expect our growth to be largely driven by launches of next generation products that align with our strategy of growing our business with wide space customers in rest of Asia in SDV enabling products with OEMs in Europe and in adjacent markets, including commercial vehicles and two wheelers. We continue to have significant new product launches, including a few key programs such as a display with Toyota, a cluster with Maruti Suzuki, a large CDC program with a luxury German OEM or multiple products on two wheelers with Honda, KVS, BMW and Royal Enfield and a high performance compute cockpit domain controller with Zeker in China. As a result, our product portfolio mix will continue to evolve with growth driven by displays, electrification and cockpit domain controllers, while at the same time expanding our market share with whitespace OEMs and in adjacent markets. In addition, we anticipate we will return to growth in China starting in 2026.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

For adjusted EBITDA, margins are expected to expand to 13.3% in 2027. This represents a 90 basis point increase from 2025. Roughly half of the increase in margin is from leveraging scale as we grow the business, and the other half relates to further improvements in operational performance and manufacturing costs, including vertical integration. Our continued focus on cost controls drives incrementals in the low 20% range. With regard to cash flow, we expect to convert more than 40% of adjusted EBITDA to adjusted free cash flow in 2027.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

This represents $230,000,000 of adjusted free cash flow or 10% CAGR from 2025 levels. As a result of our capital light business model, nearly 50% of the increase in EBITDA from 2025 to 2027 flows through adjusted free cash flow. Our strong level of cash flow will allow for significant capital to be deployed to M and A and shareholder returns. Overall, I am excited to deliver on this plan and the substantial growth in sales, EBITDA and free cash flow we are showing here. I am confident that the foundation we have put in over the past few years positions us very well for strong financial results through 2027.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Turning to Page 14. Visteon remains a compelling long term investment opportunity. We expect to benefit from a higher demand for more digital content in the cockpit regardless of powertrain and the growth of electric and hybrid vehicles. Visteon is well positioned for top line growth, margin expansion and free cash flow generation, while our strong balance sheet provides us with significant flexibility to pursue our capital allocation priorities. Thank you for your time today.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

I would like now to open the call for your questions.

Operator

Your first question comes from the line of Dan Levy with Barclays. Your line is now open. Please go ahead.

Dan Levy
Dan Levy
Analyst at Barclays Capital

Hi, good morning. Thank you for taking the questions. I wanted to ask a couple of questions on the revenue outlook and mix that in. First, maybe if we could just talk about the growth opportunity that you have ahead with, you know, the Asian OEMs, Toyota, etcetera. What percent of the revenue is it today?

Dan Levy
Dan Levy
Analyst at Barclays Capital

I think it's small. How significant is that in driving growth for this year and through 2027?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Great, great. Thanks, Dan. And let me take that question and Jerome can add more to it. So, this Asian OEMs historically have been underrepresented in our revenue makeup and I'm talking about OEMs primarily in Japan and India, so OEMs outside of China. And just to put things into historical context, the reason why they were underrepresented is because we were working with many of them in China where China was the focus for them as well with us in the past few years.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So as we started to see this transition happen in China with the loss of market share for global OEMs About a couple of years ago, we made it our strategic initiative to grow business with these OEMs outside of China. And in terms of our current share of revenue, I think they are like mid high single digit levels. And if you think about even by 2027, they would almost double in terms of their share of our revenue. So pretty robust growth and 80% between them I would say somewhere around 25% to 30% of the global vehicle production. So, it's a sort of a white space opportunity for us.

Dan Levy
Dan Levy
Analyst at Barclays Capital

Great. Thank you. Second question is on, also on mix dynamics. And it's maybe two parts of it. You know, you're talking about customer mix as a headwind this year, but improving next year.

Dan Levy
Dan Levy
Analyst at Barclays Capital

So, if you could unpack that. And you're saying China sounds like it's weak this year, but turns around the next couple of years. What's turning things around in China? So, customer mix, you know, yeah. Thank you.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yes. Let me walk you through that because it is something that does need a little bit of explanation. So, if you look at customer mix and I'll start with '24, overall production was down by let's say about a point in terms of LVP. Our customer mix was negative slightly by about 1.5% in 2024. And as we look at 2025, we are essentially looking at industry forecast, S and P Global's forecast mid January as well as the customer data that we get directly from our customers.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And I would say that customer data tends to be more accurate in the near quarters, first couple of quarters. After that, we tend to use more industry forecast to come up with our own perspective, a balanced perspective of how we feel the LVP will turn out. And the negative mix in 2025 is really driven by a few large customers that are forecasted by S and P Global to have lower production this year as compared to last year. For example, Ford and GM here in North America. In Europe, it is Mercedes primarily that's impacting us, just dragging our mix down.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And in Asia, there's Nissan and Mazda. Now most of that is second half of the year. So we will have to wait and see how much of that actually transpires. But as as I explained, it's really driven from what the industry forecast point to in terms of production. Now if you look at again the forecast for 2026, the mix is still negative but it improves from the 2025 level.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And so it's a moderating situation for us. Now when it comes to China, again taking maybe a step back because I think this is will be a topic for a lot of people listening today in terms of how do we see the China market and our performance there. Now historically, our business in China has been with global OEMs and Clusters has been our main product that we offer with them in China. And since 2022, the market has changed quite dramatically in many ways. So the transition to electric vehicles also caused a transition of the products in the markets from clusters and stand alone infotainment to CDCs and larger displays.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And as the market changed quite rapidly, local OEMs have lost a significant amount of share in that market. Now we were able to develop business with some domestic OEMs such as Geely, JMC and Dongfeng. But that business, although it has developed well, was not sufficient to offset the loss of sales that we saw with the global OEMs. Now this dynamic will continue also in 2025 but that impact is going to be moderated. We have a few product launches that I remarked in my prepared remarks with both international OEMs operating in China, the Germans and the Japanese who we think are going to do relatively well as compared to the rest of the global OEMs, but also with our domestic Chinese OEMs.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So that's what is causing us to think that our sales in China are going to be at a low point this year and then start to improve from 2026 onwards.

Dan Levy
Dan Levy
Analyst at Barclays Capital

Thank you. That's very helpful.

Operator

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

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Yes. Good morning and thanks very much for taking my questions. I was hoping to start with SmartCore. If we look at the SmartCore infotainment bookings in total for 2024, I think it ended up at about $1,600,000,000 compared to $2,700,000,000 last year. You did mention some momentum that was SmartCore specifically.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

So could you elaborate on how SmartCore bookings are tracking? I'd be especially interested if you had any success with multi domain controllers, which I know had been an area of focus for the company in the last few years. And as you think about SmartCore going forward, at the last Investor Day, you spoke about that getting to $1,000,000,000 of revenue in 2016. I recognize the industry environment has changed, but maybe you can update us on when you see SmartCore revenue reaching that sort of a level.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yes. Sure. So the thing I would like to first maybe discuss here is that what we're seeing is a couple of trends, right. So large displays and higher power smart core or computer domain controllers are really what's driving the products in the mid to upper section of the market. But there's also a lot of interest in standalone digital clusters IVI in more mass market.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So both those dynamics are happening at the same time. And we have inherently smart core wins tend to be lumpy. These are the more complex systems that carmakers have in their electronics portfolio. And so that's where there's a lot more activity that goes in into the coating and vetting of the suppliers. The other thing I would like to mention and which I also verified in my prepared remarks is that 2024 we saw a slightly lower level of customer activity in terms of coating especially in Europe and North America as the OEMs were dealing with the evolving market dynamics with lower than expected demand for EVs and what has been happening to their sales in China.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So if you look at 2023, we did pretty well and that was also mostly with Western OEMs. And in 2024, majority of our new business spends for the reasons I mentioned came from Asia and the products that that were of, I would say, interest to the OEMs there. Yes, some smartphones, but largely displays and standalone clusters and and and IVI or infotainment as many of those OEMs were a little late in following some of those trends and are now quickly catching up. Now I expect to see smart core activity in Europe and U. S.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Return back this year and next year. So things ultimately are a little lumpy when you talk about new business wins. But overall, I do expect it to be quite okay for us.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

And Sachin, that includes with multi domains as an area where you could get some bookings?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yeah. I think for us, when we talk about multi domain, we do see some body control functions getting integrated into SmartCore. So when we talk about SmartCore, HPC is a good example, we don't really classify that as a multi domain controllers for us still more of a integrated cockpit domain controller with some polyphony functions integrated. We don't yet see ADAS for example, integrated into a single compute cluster. That will probably take a little bit longer.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

My second question was just around bookings and you just alluded to it. But the quoting activity in 2024 you said was somewhat subdued. Could you talk about your expectations for the market opportunity for bookings in 2025? And do you have any guidance relative to the $6,000,000,000 that you did last year? Do you think you could grow out in 2025? Thank you.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yes, absolutely. In fact, the slowdown in 'twenty four that we that I mentioned is causing 'twenty five to be quite robust. Many of these OEMs have to still plan and launch new models. So the pipeline seems to be pretty robust and with this sort of a shift more towards Europe and US more. And from a product perspective, it does look very similar to what we have seen in the last couple of years. Displays are pretty strong as this SmartCore.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Thank you.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And in terms of the overall target for us, it remains the same 6,000,000,000 plus for the year as well.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Thank you.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Okay. Let's take the next question.

Operator

Your next question comes from the line of Tom Narayan with RBC. Please go ahead.

Tom Narayan
Tom Narayan
Lead Equity Analyst at RBC Capital Markets

Hi, Sasha and Jerome. Thanks for taking the questions. First one is on the '25 outlook. So you called out, I think it was Ford, GM, Mercedes, was it I think Nissan and Mazda for why your company weighted LVP is down mid single digits while SMP is flattish. But I mean, based on what I think those OEMs have said on their respective earnings calls or just in general, it might appear that your guys' forecast could be maybe conservative, just seeing if that's the case.

Tom Narayan
Tom Narayan
Lead Equity Analyst at RBC Capital Markets

And then, I appreciate the comments on China. Just as a housekeeping, what are you including in your growth over market expectation in 2025 for China or more ex China?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Sure. Sure. And Tom, you are correct. If you look at some of those OEMs that I mentioned, what they have publicly said, it would imply a more I would say our view being a little more conservative which is why I wanted to clarify earlier that what we have assumed is based on S and P Global's outlook for especially for the second half of the year. So there might be some upside if our customers' production plans do materialize.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So that's one point. In terms of growth of a market, if we again look at 2024 new product launches were really the drivers of our growth over market, especially in Americas which was a strong double digit performance. And Europe and Asia outside of China were mid single digit again driven by product launches. Now China Twenty Four was a bigger negative. Now as we look at 2025 more or less at a bigger picture the same dynamic space with China improving, moderating in terms of the loss, right, and the rest of the world more or less of I would say looking the same.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

It does shift a little bit. We have more launches in Europe that's going to drive market outperformance there stronger than rest of the regions. But overall, it should look very similar in terms of growth of market.

Tom Narayan
Tom Narayan
Lead Equity Analyst at RBC Capital Markets

Okay. Thank you. And my follow-up, a recurring theme that has appeared in the supplier basis earnings season and even before is this what's been called the urge to demerge. A couple of Tier one suppliers announcing their intentions to divest certain businesses to unlock shareholder value. Just curious how you view your portfolio of assets?

Tom Narayan
Tom Narayan
Lead Equity Analyst at RBC Capital Markets

I know in the prepared comments you talked about a pipeline of tuck ins and the M and As you did in 2024. It would appear that you're more likely to add assets instead of cutting. Just curious how you think about portfolio allocation? Thanks.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yes. That's a great question, Tom. And if you think about the spaces that we are focused on, there's a lot of activity there. There's a lot of content growth happening there driven by technology. So we really believe that we are in a position to take market share really based on our ability to add new product lines, right, and anticipate and position the company to take advantage of the emerging trends.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And you've seen us do that now repeatedly this 2024. We've launched a couple of products, SmartCode HPC, which I think is gonna be a big driver of growth for the company for a fairly long period of time as more content and especially AI start coming into the cockpit. And electrification our product line is continuing to expand. Very much along the lines that we have said earlier, if you go back a couple of years, we've been talking about adding powered electronics to our BMS portfolio and that is starting to come to life. So as our product landscape and technologies landscape grows, it's critical that we have expertise in all of the key technologies that are important.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And so we will continue to look for those types of acquisitions. So that's going to be our strategy for the midterm and we will see from there of it evolves.

Tom Narayan
Tom Narayan
Lead Equity Analyst at RBC Capital Markets

Thank you.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Thanks, Tom.

Operator

Your next question comes from the line of Colin Langan with Wells Fargo. Please go ahead.

Colin Langan
Colin Langan
Automotive & Mobility Analyst at Wells Fargo

Great. Thanks for taking my questions. Just wanted to look at the '27 sales target. It's over $1,000,000,000 lower than what you had talked about at the Investor Day. Can you just remind us what I know obviously a lot has changed in the last couple of years, but any way to bucket the major drivers here?

Colin Langan
Colin Langan
Automotive & Mobility Analyst at Wells Fargo

I mean, I know EV is one of the factors. Is it really just mostly customer mix effects?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Right, right. I'll start and then I'll also ask Jerome to maybe expand if I've missed anything. The main drivers are really, I would say, three that you can consider close to a billion dollars as you said, lower than what we thought it would be. Number one would be China. And so if you think about China where we were at and where the market is at now, we were expecting to see a steady growth from the 2023 levels.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And since then, we've lost almost about, I would say, five percentage points of revenue in China alone from just where we were at in 2023, let alone the growth. So if you consider what we were expecting, it's actually a bigger impact than a five percentage point that I mentioned. After that, you have electrification, right, BMS in particular. You may remember back in those days, the expectation was much higher in terms of the ramp up of electric vehicles and our customers and that has come down significantly. Between the two of them that's about 70%, eighty % of the impact in terms of the billion dollars that we are talking about.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And the rest is just production expectations. Our customers' production over that period of time has come down and that's really the third bucket. Jerome, do you have anything else?

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

I would just add the EV as well growth. So beyond BMS, which is for us essentially GM, EV was supposed to grow much more and we had some very specific programs that were on EV that obviously are not going to Photonics content. Exactly, yes. So that are not going to have the same impacts. So that's probably as well in the second bucket another area to mention.

Colin Langan
Colin Langan
Automotive & Mobility Analyst at Wells Fargo

Got it. And any color, where is your China? Obviously, China is number one on your list there. What is your China local mix in 2024? And where do you see it going by 2025 and 2026?

Colin Langan
Colin Langan
Automotive & Mobility Analyst at Wells Fargo

Or when are you able to catch up there? Or can you given some of the economics of Locals isn't always great?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Sure. Sure. Sure. So if you look at our revenue, it's about 10% of the company revenue that's our channel exposure now. And of that, the mix is sixtyforty, so 60% with global OEMs and four gs domestic.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

As you know, the market share is about, I would say, reversed, right? So the domestic OEMs have about 65% share of the market versus global OEMs 35. And that has come down quite quickly over the last couple of years. However, I would like to just point out that if you look at the performance of Global OEMs in the market in January of this year, although it's just one month's data, they have been able to hang on to their market share in January in terms of retail sales. So, global OEMs are at about 35%, which is the same rate that they exited last year at.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And that's the first time I've seen even though the data is, as I said, just one month data, that there hasn't been a further degradation of market share. And so I think that that's points to maybe some level of at least a slowdown in the erosion of the share and maybe at some point it will form a certain base level that we can work with. In the mid to long term, I do expect that German and Japanese OEMs in particular will have a certain share of the market that we can participate in and then the rest of the business will be of it the domestic OEMs.

Colin Langan
Colin Langan
Automotive & Mobility Analyst at Wells Fargo

Got it. All right. Thanks for taking my questions.

Operator

Your next question comes from the line of James Picariello with BNP Paribas. Your line is now open. Please go ahead.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

Hi, everyone.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

Just on free cash flow, can you confirm what specifically drove the working capital benefit in the quarter? How that influences your 2025 free cash flow outlook? And can you speak to the M and A pipeline, how that looks and will be balanced against share buybacks for this year? And also, what was the inorganic revenue contribution in the quarter? Apologies if I missed that. Thank you.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Yes. Thanks a lot, Jim. So we had a very good quarter in terms of cash flow generation indeed, and there are few drivers. And in fact, it's a lot of little things that added up to a fairly large number. So it was, as you just said, mostly from working capital.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Generally, I would say collections were very good with customers, but we were surprised in some cases with the timing of some of the payment from some customers. So that's one driver. The second driver is the fact that we had very good recoveries, engineering recoveries in Q4. And again, the timing of these recoveries allowed us to collect the cash in Q4 where normally it would have probably gone into Q1. So that's the second big driver.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Third large driver as well, we generated inventory reductions and that as well as driven some cash. And finally, what you have in Q4 generally is a reduction in sales and that generates some positive as well working capital. So some of that will not reoccur obviously in Q1, mostly the timing of the customer, the engineering recoveries and as well the inventory reduction. So that's why you have such a, let's say, large cash inflow in Q4 of twenty twenty four and we don't see that flowing through going into 2025. Our conversion, we think is still around the 40% from EBITDA into cash flow.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

So it's very consistent with what we've been generating in the last few quarters. In terms of capital allocation, we remain very balanced. We've done about $43,000,000 of share repurchases in Q4. When I say balance, we continue to invest in the business. We've bumped up a little bit.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

You probably saw in 2025 our CapEx spend to invest in vertical integration, whereas well, because of all the wins that we are having in rest of Asia, we need to as well rebalance a little bit our footprint and we're investing in India and rest of Asia to be able to accommodate that. We're investing in vertical integration, so that's one aspect of our capital allocation. We are working on a pretty extensive pipeline of M and A in 2025, and we're making good progress on that side. And then finally, we'll remain opportunistic on the share repurchase side. So again, a very balanced approach as far as capital allocation is concerned.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

And then maybe back to your final question. The acquisition we did in 2024, which was at the end of twenty twenty four, was pretty small in nature. It was more adding capabilities. So it's not really material to our numbers in definitely not in 2024 and not even in 2025. So we've not been disclosing any substantial information on that side.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

Got it. Okay, super helpful. And my last question just on BMS. You're assuming flat to slightly down this year to account for IRA tax credit repeal uncertainties. I, of course, think that's prudent.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

But just curious if that's getting informed by your own bottoms up roll up of customer indications or is it simply just an overlaid macro point of conservatism on your part? And if possible, could you also confirm what your BMS revenue total was in 2024? Thanks.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So, what we saw in 2024 was a pretty robust demand for our BMS product, especially with GM. And as you probably know, the supply chain pipeline is a little more extended for BMS than for some of our other products because we supply to the battery plant that then supplies to the vehicle manufacturing plant. So there are two reasons why we believe that it's good to be prudent. One, as we talked about the IRA credit potentially being at risk. Number two, overall demand is not as strong as perhaps was anticipated earlier.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

And as a result, there is a fair amount of inventory both of vehicles as well as from our perspective our product going into that extended supply chain. So we believe 2025 will be a year where that's going to get adjusted and balanced out and then '26 onwards we can expect to grow with the market. So that's really been the main thinking the driver behind our forecasting for a slightly lower BMS revenues for us in 2025. Jerome, you want

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

to talk about how big was the Our revenues in 2024 were high single digit for BMS. And as Sachin said, it was a great year for us with a lot of ramp ups and probably quite some inventory building as well.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

High single digit growth.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

Is that that's high single digit? Oh, high single digit percentage of total sales. Got it. Thank you.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Correct. Yes. Total sales.

James Picariello
Director & Sr. Automotive Analyst at BNP Paribas

Yes. Absolutely.

Operator

Your final question comes from the line of Priyas Patel with Wolfe Research. Please go ahead.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

Hey, thanks so much for taking my question. Jerome, you mentioned that 50% of the EBITDA margin improvement by 2027 is being driven by scale. And I was wondering if you could just expand on that. Is that mainly engineering and SG and A leverage? Or do you have capacity that needs to be filled out?

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

Yes. Absolutely, that's what I mean by scale. Generally, we've seen that this business is very sensitive to scale and we've done a great job over the years leveraging additional volume while keeping our SG and A and engineering at levels that are reasonable to use that word, not proportionally increasing to the level of sales. So that is what I do mean by scale. The rest of the improvement is coming from our operational improvement and we still have got a lot of areas that we can we think we can still improve.

Jerome Rouquet
Jerome Rouquet
SVP & CFO at Visteon

We've done, as I said, a pretty good job in the last few years. I'm mentioning vertical integration as one fundamental driver for us to improve margins and bring in hours as much as what we can control, not only for cost saving purposes by the way, but as well to stay relevant from the technology standpoint on some in some areas like displays. We will continue obviously to work on manufacturing productivity, but we do as well continue to work on engineering productivity, automation in engineering, AI as well will be a tool that we'll be using to be able to be more productive from an engineering standpoint. So there are a lot of drivers that we are considering as we look into 2027.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

Okay. And then just looking at 2024, clusters as a percent of total bookings was about 17% last year. It's about 40% of the current revenues. So just trying to get a sense of what happened, what you were seeing in clusters last year and how you're thinking about the growth rate for that business going forward?

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

Yes. So that's a good question, Trayus. And this goes back to the point that I was making about some of the changes we are seeing in terms of the product makeup as we go forward here. So standalone clusters and infotainment in mid to high segment of the market are going to be replaced by larger displays and copy domain controllers. So there will be some level of that sort of cannibalization, if you want to call it that.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

That's gonna happen in the industry. And and for us, we think that's a good thing because from an ASP viewpoint, both displays and CDC are higher than standalone clusters and IVI or infotainment. At the same time, we're seeing those go more down market in terms of more affordable vehicles. So the volumes are going to go up, ASPs are going to go down on those clusters and infotainment. And that's how we see the market evolve.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

What we have really done here is to anticipate these trends and position us to in a manner where we can take advantage of them. So we have a very strong displays and CDC business that's growing. Clusters is still growing. If you look at the volume, our Digital Clusters grew close to almost 17% in 2024 year over year, right. And ASPs have come down as those their product has gone into more value oriented vehicles.

Sachin Lawande
Sachin Lawande
President and Chief Executive Officer at Visteon

So we will continue to see this dynamic which is I think a very natural progression of how content is growing more starting with the upper end of the market and then coming down into the mass market.

Operator

This concludes Evisgen's fourth quarter and full year twenty twenty four results earnings call. You may now disconnect.

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